[Federal Register Volume 88, Number 140 (Monday, July 24, 2023)]
[Notices]
[Pages 47533-47536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15578]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97939; File No. SR-NASDAQ-2023-020]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Rules To Provide Eligible Individuals Another Opportunity To 
Elect To Participate in the Maintaining Qualifications Program

July 18, 2023.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on July 6, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Supplementary Material .01 to 
General 4, Rule 1240 (Eligibility of Other Persons to Participate in 
the Continuing Education Program Specified in Paragraph (c) of this 
Rule) to provide eligible individuals another opportunity to elect to 
participate in the Maintaining Qualifications Program (``MQP'').
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to 
complete continuing education consisting of a Regulatory Element and a 
Firm Element. The Regulatory Element, which is administered by FINRA on 
behalf of the Exchange, focuses on regulatory requirements and industry 
standards, while the Firm Element is provided by each firm and focuses 
on securities products, services and strategies the firm offers, firm 
policies and industry trends. The CE Program is codified

[[Page 47534]]

under the rules of the self-regulatory organizations (``SROs''). The CE 
Program for registered persons of Exchange members is codified under 
General 4, Rule 1240.\3\
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    \3\ See also General 4, Rule 1210.07 (All Registered Persons 
Must Satisfy the Regulatory Element of Continuing Education).
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    The Exchange proposes to amend Supplementary Material .01 to 
General 4, Rule 1240 (Eligibility of Other Persons to Participate in 
the Continuing Education Program Specified in Paragraph (c) of this 
Rule). This proposal is based on a rule change recently submitted by 
the Financial Industry Regulatory Authority, Inc. (``FINRA''), and is 
intended to align the Exchange's continuing education rules with those 
of FINRA so as to promote uniform standards across the securities 
industry.\4\ The Exchange is proposing to adopt such changes 
substantially in the same form as proposed by FINRA.
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    \4\ See Securities Exchange Act Release No. 97184 (March 22, 
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005) (``FINRA 
Rule Change'').
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    On September 21, 2021, the Commission approved a proposed rule 
change to amend FINRA Rules 1210 (Registration Requirements) and 1240 
(Continuing Education Requirements) to, among other things, provide 
eligible individuals who terminate any of their representative or 
principal registration categories the option of maintaining their 
qualification for any terminated registration categories by completing 
annual continuing education through a new program, the MQP.\5\
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    \5\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No. 
SR-FINRA-2021-015). Other exchanges, including Nasdaq, subsequently 
filed copycat rule filings to align their continuing education rules 
with those of FINRA. See Securities Exchange Act Release No. 94400 
(March 11, 2022), 87 FR 15286 (March 17, 2022) (Notice of Filing and 
Immediate Effectiveness of File No. SR-NASDAQ-2022-021).
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    Prior to the MQP, individuals whose registrations as 
representatives or principals that had been terminated for two or more 
years could reregister as representatives or principals only if they 
requalified by retaking and passing the applicable representative- or 
principal-level examination or if they obtained a waiver of such 
examination(s) (the ``two-year qualification period''). The MQP 
provides these individuals an alternative means of staying current on 
their regulatory and securities knowledge following the termination of 
a registration.\6\ Specifically, the MQP provides eligible individuals 
a maximum of five years following the termination of a representative 
or principal registration category to reregister without having to 
requalify by examination or having to obtain an examination waiver, 
subject to satisfying the conditions and limitations of the MQP, 
including the annual completion of all prescribed continuing education.
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    \6\ The MQP does not eliminate the two-year qualification 
period. Thus, eligible individuals who elect not to participate in 
the MQP can continue to avail themselves of the two-year 
qualification period (i.e., they can reregister within two years of 
terminating a registration category without having to requalify by 
examination or having to obtain an examination waiver).
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    Under Supplementary Material .01 to General 4, Rule 1240, the MQP 
has a look-back provision that, subject to specified conditions, 
extended the option to participate in the MQP to individuals who: (1) 
were registered as a representative or principal within two years 
immediately prior to March 15, 2022 (the implementation date of the 
MQP); and (2) individuals who were participating in the Financial 
Services Affiliate Waiver Program (``FSAWP'') under General 4, Rule 
1210.09 (Waiver of Examinations for Individuals Working for a Financial 
Services Industry Affiliate of a Member) immediately prior to March 15, 
2022 (collectively, ``Look-Back Individuals'').\7\
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    \7\ The FSAWP is a waiver program for eligible individuals who 
have left a member firm to work for a foreign or domestic financial 
services affiliate of a member firm. The Exchange stopped accepting 
new participants for the FSAWP beginning on March 15, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
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    In the FINRA Rule Change, FINRA noted that in Regulatory Notice 21-
41 (November 17, 2021), it announced that Look-Back Individuals who 
wanted to take part in the MQP were required to make their election 
between January 31, 2022, and March 15, 2022 (the ``First Enrollment 
Period''). In addition to the announcement in Regulatory Notice 21-41, 
FINRA notified the Look-Back Individuals about the MQP and the First 
Enrollment Period via two separate mailings of postcards to their home 
addresses and communications through their FINRA Financial Professional 
Gateway (``FinPro'') accounts.\8\
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    \8\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
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    In the FINRA Rule Change, FINRA further noted that shortly after 
the First Enrollment Period had ended, a number of Look-Back 
Individuals contacted FINRA and indicated that they had only recently 
become aware of the MQP. FINRA also noted that it also received 
anecdotal information that a number of these individuals may not have 
learned of the MQP, or the First Enrollment Period, in a timely manner, 
or at all, due to communication and operational issues.\9\ In addition, 
the original six-week enrollment period may not have provided Look-Back 
Individuals with sufficient time to evaluate whether they should 
participate in the MQP. For these reasons, FINRA recently amended its 
rules to provide Look-Back Individuals a second opportunity to elect to 
participate in the MQP (the ``Second Enrollment Period''). For similar 
reasons, the Exchange is also proposing to amend its rules to provide 
Look-Back Individuals with a Second Enrollment Period.\10\ The Second 
Enrollment Period will be between the date of filing of this proposed 
rule change, and December 31, 2023. In addition, the proposed rule 
change requires that Look-Back Individuals who elect to participate in 
the MQP during the Second Enrollment Period complete any prescribed 
2022 and 2023 MQP content by March 31, 2024.\11\
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    \9\ According to FINRA, this may have been a result of the 
timing of FINRA's announcements relating to the MQP, which coincided 
with the holiday season and the transition to the New Year. Further, 
given that Look-Back Individuals were out of the industry at the 
time of these announcements, it was unlikely that they would have 
learned of the MQP, or the First Enrollment Period, through informal 
communication channels.
    \10\ The current rule text also provides that if Look-Back 
Individuals elect to participate in the MQP, their five-year 
participation period will be adjusted by deducting from that period 
the amount of time that has lapsed between the date that they 
terminated their registrations and March 15, 2022. To reflect the 
availability of the Second Enrollment Period, the proposed rule 
change clarifies that for all Look-Back Individuals who elect to 
participate in the MQP, their participation period would also be for 
a period of five years following the termination of their 
registration categories, as with other MQP participants.
    \11\ Look-Back Individuals who elect to enroll in the MQP during 
the Second Enrollment Period would also need to pay the annual 
program fee of $100 for both 2022 and 2023 at the time of their 
enrollment.
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    The Exchange believes that Look-Back Individuals generally have 
greater awareness of the MQP, including due to news coverage, since the 
program's launch.\12\ The Exchange believes that greater public 
awareness of the MQP, coupled with a six-month enrollment period, 
should help ensure that all Look-Back Individuals are aware of the MQP 
and the availability of the Second Enrollment Period, and should 
provide them with ample time to decide whether to participate in the 
MQP.
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    \12\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion 
with New Option for Licensing Grace Period, InvestmentNews (June 23, 
2022), https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942.
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    Look-Back Individuals who elect to enroll during the Second 
Enrollment Period would need to notify FINRA of their election to 
participate in the MQP

[[Page 47535]]

through a manner to be determined by FINRA.\13\ The Exchange also notes 
that Look-Back Individuals who elect to participate in the MQP during 
the Second Enrollment Period would continue to be subject to all of the 
other MQP eligibility and participation conditions. For example, as 
clarified in the proposed rule change, Look-Back Individuals electing 
to participate during the Second Enrollment Period would have only a 
maximum of five years following the termination of a registration 
category in which to reregister without having to requalify by 
examination or having to obtain an examination waiver.\14\
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    \13\ In the FINRA Rule Change, FINRA noted that it anticipates 
that Look-Back Individuals will make their selection to enroll in 
the MQP during the Second Enrollment Period through their FinPro 
accounts. See Enrolling in the MQP, https://www.finra.org/registration-exams-ce/finpro/mqp (describing the MQP enrollment 
process). FINRA further noted that it will inform Look-Back 
Individuals if it determines to provide an alternative enrollment 
method.
    \14\ For example, if a Look-Back Individual terminated a 
registration category on May 1, 2020, and elects to participate in 
the MQP on December 1, 2023, the individual's maximum participation 
period would be five years starting on May 1, 2020, and ending no 
later than May 1, 2025. If the individual does not reregister with a 
member firm by May 1, 2025, the individual would need to requalify 
by examination or obtain an examination waiver in order to 
reregister after that date.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act,\15\ in general, and furthers the objectives of section 
6(b)(5) of the Act,\16\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that providing Look-Back Individuals a second 
opportunity to elect to participate in the MQP is warranted because 
participation in the MQP would reduce unnecessary impediments to 
requalification for these individuals without diminishing investor 
protection. In addition, the proposed rule change is consistent with 
other goals, such as the promotion of diversity and inclusion in the 
securities industry by attracting and retaining a broader and diverse 
group of professionals. The MQP also allows the industry to retain 
expertise from skilled individuals, providing investors with the 
advantage of greater experience among the individuals working in the 
industry. The Exchange believes that providing Look-Back Individuals a 
second opportunity to elect to participate in the MQP will further 
these goals and objectives.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
proposed rule change, which harmonizes its rules with the recent rule 
change adopted by FINRA, will reduce the regulatory burden placed on 
market participants engaged in trading activities across different 
markets. The Exchange believes that the harmonization of the CE Program 
requirements across the various markets will reduce burdens on 
competition by removing impediments to participation in the national 
market system and promoting competition among participants across the 
multiple national securities exchanges.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    NASDAQ has filed the proposed rule change pursuant to section 
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
Because the proposed rule change does not: (i) significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\20\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. NASDAQ has indicated that 
the immediate operation of the proposed rule change is appropriate 
because it would allow the Exchange to implement the proposed changes 
to its continuing education rules without delay, thereby eliminating 
the possibility of a significant regulatory gap between the FINRA rules 
and the Exchange rules, providing more uniform standards across the 
securities industry, and helping to avoid confusion for Exchange 
members that are also FINRA members. NASDAQ also noted that FINRA plans 
to conduct additional public outreach efforts to promote awareness of 
the MQP and the availability of the Second Enrollment Period among 
Look-Back Individuals. Therefore, NASDAQ indicated that the immediate 
operation of the proposed rule change is appropriate because it would 
ensure that there is sufficient time for Look-Back Individuals to 
consider whether they wish to participate in the program before the 
December 31, 2023 deadline. For these reasons, the Commission believes 
that waiver of the 30-day operative delay for this proposal is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposal operative upon filing.\21\
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    \19\ 17 CFR 240.19b-4(f)(6).
    \20\ 17 CFR 240.19b-4(f)(6)(iii).
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

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Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2023-020 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File Number SR-NASDAQ-2023-020. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of the Exchange. Do not include 
personal identifiable information in submissions; you should submit 
only information that you wish to make available publicly. We may 
redact in part or withhold entirely from publication submitted material 
that is obscene or subject to copyright protection.
    All submissions should refer to File Number SR-NASDAQ-2023-020 and 
should be submitted on or before August 14, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-15578 Filed 7-21-23; 8:45 am]
BILLING CODE 8011-01-P