[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Notices]
[Pages 67378-67381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21350]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98515; File No. SR-PEARL-2023-49]


Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To Provide 
Eligible Members Another Opportunity To Elect To Participate in the 
Maintaining Qualifications Program

September 25, 2023.
    Pursuant to the provisions of 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 September 22, 2023, MIAX PEARL, LLC (``MIAX 
Pearl'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is filing a proposal to amend Interpretation and 
Policy .01 to Exchange Rule 3103, Continuing Education, to provide 
eligible Members \3\ another opportunity to elect to participate in the 
Maintaining Qualifications Program (``MQP'').
---------------------------------------------------------------------------

    \3\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
website at https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings, at MIAX Pearl's principal office, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Interpretation and Policy .01 to 
Exchange Rule 3103, Continuing Education, to provide eligible Members 
another opportunity to elect to participate in the Maintaining 
Qualifications Program (``MQP'').
    The continuing education program for registered persons of Members 
(``CE Program'') currently requires registered persons to complete 
continuing education consisting of a Regulatory Element and a Firm 
Element. The Regulatory Element is administered by the Financial 
Industry Regulatory Authority, Inc. (``FINRA''). 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 under the rules of the self-regulatory 
organizations. The CE Program for registered persons of Exchange 
Members is codified under Exchange Rule 3103, Continuing Education.\4\ 
This proposed rule change is based on a filing recently submitted by 
FINRA and is intended to harmonize the Exchange's continuing education 
rules with those of FINRA so as to promote uniform standards across the 
securities industry.\5\ The proposed rule change is discussed in detail 
below.
---------------------------------------------------------------------------

    \4\ See also Exchange Rule 3103, Interpretation and Policy .06, 
All Registered Persons Must Satisfy the Regulatory Element of 
Continuing Education.
    \5\ See Securities Exchange Act Release No. 97184 (Mar. 22, 
2023), 88 FR 18359 (Mar. 28, 2023) (SR-FINRA-2023-005) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change to 
Amend FINRA Rule 1240.01 To Provide Eligible Individuals Another 
Opportunity to Elect to Participate in the Maintaining 
Qualifications Program) (``FINRA Rule Change'').
---------------------------------------------------------------------------

    On June 10, 2022, the Exchange amended Exchange Rule 3100, 
Registration Requirements, and Exchange Rule 3103, Continuing 
Education, to, among other things, provide eligible individuals who

[[Page 67379]]

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.\6\ By that time, however, the 
First Enrollment Period, defined below, had expired, leaving many 
eligible individuals from being able to participate in the MQP. This 
proposed rule change will provide those eligible individuals a second 
opportunity to elect to participate in the MQP to maintain their 
qualification.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 95190 (June 30, 
2022), 87 FR 40560 (July 7, 2022) (SR-PEARL-2022-25) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend Exchange Rule 3100, Registration Requirements, Exchange Rule 
3103, Continuing Education Requirements, and Exchange Rule 3104, 
Electronic Filing Requirements for Uniform Forms).
---------------------------------------------------------------------------

    Prior to the MQP, individuals whose registrations as representative 
or principals 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.\7\ 
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.
---------------------------------------------------------------------------

    \7\ 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).
---------------------------------------------------------------------------

    Under Exchange Rule 3103, Interpretation and Policy .01, 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 July 1, 2022 (the implementation date of Exchange 
MQP); and (2) individuals who were participating in the Financial 
Services Affiliate Waiver Program (``FSAWP'') under Exchange Rule 3100, 
Interpretation and Policy .09, Waiver of Examinations for Individuals 
Working for a Financial Services Industry Affiliate of a Member, 
immediately prior to July 1, 2022 (collectively, ``Look-Back 
Individuals'').\8\
---------------------------------------------------------------------------

    \8\ 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 July 1, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
---------------------------------------------------------------------------

    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 FINRA's 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.\9\
---------------------------------------------------------------------------

    \9\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
---------------------------------------------------------------------------

    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 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.\10\ 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.\11\ The 
Exchange's Second Enrollment Period will be between the effective date 
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.\12\
---------------------------------------------------------------------------

    \10\ 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.
    \11\ 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 July 1, 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.
    \12\ 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.
---------------------------------------------------------------------------

    The Exchange believes that Look-Back Individuals generally have 
greater awareness of the MQP, including due to news coverage, since the 
program's launch.\13\ The Exchange believes that greater public 
awareness of the MQP, coupled with a four-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.
---------------------------------------------------------------------------

    \13\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion 
with New Options for Licensing Grace Period, InvestmentNews (June 
23, 2022), https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-forlicensing-grace-period-222942.
---------------------------------------------------------------------------

    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 through a manner to be determined by FINRA.\14\ 
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

[[Page 67380]]

examination or having to obtain an examination waiver.\15\
---------------------------------------------------------------------------

    \14\ 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.
    \15\ For example, if a Look-Back Individual terminated a 
registration category on July 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 July 1, 2020, and ending no 
later than July 1, 2025. If the individuals does not reregister with 
a member firm by July 1, 2025, the individual would need to 
requalify by examination or obtain an examination waiver in order to 
reregister after that date.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\16\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \17\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, 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. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \18\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange's rule proposal 
is intended to harmonize the Exchange's supervision rules, specifically 
with respect to the continuing education requirements with those of 
FINRA, on which they are based. Consequently, the proposed change will 
conform the Exchange's rules to changes made to corresponding FINRA 
rules, thus promoting application of consistent regulatory standards 
with respect to rules that FINRA enforces pursuant to its regulatory 
services agreement with the Exchange.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
---------------------------------------------------------------------------

    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 Members 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 Members, providing investors with the advantage 
of greater experience among the Members 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 
result in any burden on competition that is 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. Additionally, and as 
stated above, FINRA has recently submitted a filing to provide eligible 
individuals another opportunity to elect to participate in the 
Maintaining Qualifications Program in the same manner.\19\
---------------------------------------------------------------------------

    \19\ See supra note 5.
---------------------------------------------------------------------------

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

    Written comments were neither solicited nor received.

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

    MIAX Pearl has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\ 
Because the foregoing 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 for 
30 days after the date of the filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to 
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\22\
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ 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. MIAX Pearl 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. MIAX Pearl 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, MIAX Pearl indicated 
that the immediate operation of the proposed rule change is also 
appropriate because it would help to further notify Look-Back 
Individuals of their options and provide additional time for them to 
consider whether they wish to participate in the MQP 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.\25\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.19b-4(f)(6).
    \24\ 17 CFR 240.19b-4(f)(6)(iii).
    \25\ 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).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such

[[Page 67381]]

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 to determine whether the proposed rule should be 
approved or disapproved.

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:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-PEARL-2023-49 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-PEARL-2023-49. 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 (https://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 the 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-PEARL-2023-49 and 
should be submitted on or before October 20, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21350 Filed 9-28-23; 8:45 am]
BILLING CODE 8011-01-P