[Federal Register Volume 89, Number 135 (Monday, July 15, 2024)]
[Notices]
[Pages 57438-57441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15405]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100474; File No. SR-PEARL-2024-27]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Its
Rules Relating to the Continuing Education for Registered Persons as
Provided Under Exchange Rule 3103
July 9, 2024.
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 June 28, 2024, 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.
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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 is filing a proposal to amend Interpretation and
Policy .01 to Exchange Rule 3103, Continuing Education, to reopen the
period by which eligible Members \3\ who participate in the Maintaining
Qualifications Program (``MQP'') will be able to complete their
prescribed 2022 and 2023 continuing education content.
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\3\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the
Exchange Rules for purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' See Exchange
Rule 100.
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The text of the proposed rule change is available on the Exchange's
website at https://www.miaxglobal.com/markets/us-equities/pearl-equities/rule-filings, at MIAX Pearl's principal office, and at the
Commission's Public Reference Room.
[[Page 57439]]
II. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 those 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 parts 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 Exchange proposes to amend Interpretation and Policy .01 to
Exchange Rule 3103, Continuing Education, to provide eligible Members
another opportunity to elect to reopen the period by which certain
participants in the MQP will be able to complete their prescribed 2022
and 2023 continuing education content.
In 2021, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') implemented rule changes, which amended its Continuing
Education (``CE'') Program 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 CE through a new program, the MQP.\4\ Under FINRA Rule 1240.01,
the MQP designated 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'') \5\ under FINRA 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'').
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\4\ 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 the Exchange,
subsequently filed copycat rule filings to align their continuing
education rules with those of FINRA. 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).
\5\ 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.
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In 2023, FINRA amended FINRA Rule 1240.01, to provide Look-Back
Individuals a second opportunity to elect to participate in the MQP
(the ``FINRA Second Enrollment Period'').\6\ The proposed rule change
required that Look-Back Individuals who elect to participate in the MQP
during the FINRA Second Enrollment Period complete any prescribed 2022
and 2023 MQP content by March 31, 2024. Look-Back Individuals who are
enrolled in the MQP, similar to other MQP participants, are able to
complete any prescribed CE and renew their annual MQP participation
through their FINRA Financial Professional Gateway (``FinPro'')
accounts.
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\6\ 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).
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In response to FINRA's rule changes and to facilitate compliance
with the Exchange's CE Program requirements by members of multiple
exchanges, the Exchange implemented rule changes to align with FINRA's
CE Program.\7\ Such rules, among other things, provide eligible
individuals who terminate any of their representative or principal
registrations the option of maintaining their qualification for any of
the terminated registrations by completing CE through the MQP. Further,
Exchange Rule 3103, Interpretation and Policy .01, includes a look-back
provision that, subject to specified conditions, extends the option for
maintaining qualifications following a registration category
termination to (i) individuals who have been registered as a
representative or principal within two years immediately preceding July
1, 2022, and (ii) individuals who have been participants of the FSAWP
immediately preceding July 1, 2022 implementation (i.e., Look-Back
Individuals).
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\7\ See Exchange Rules 3100, 3103, and 3104.
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Exchange Rule 3103 also provided Look-Back Individuals with a
second enrollment period, between September 18, 2023, and December 31,
2023 (the ``Exchange Second Enrollment Period''). Exchange Rule 3103,
Interpretation and Policy .01, requires that Look-Back Individuals who
elect to participate in the MQP during the Exchange Second Enrollment
Period complete any prescribed 2022 and 2023 MQP content by March 31,
2024.\8\
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\8\ The Exchange determined to treat the individuals who
enrolled during the first period (preceding July 1, 2022) the same
as those who enrolled during the second period (between September
18, 2023, and December 31, 2023) for purposes of the March 31, 2024,
deadline for completion of prescribed 2022 and 2023 CE content. This
is because those who had enrolled in the MQP during the first period
satisfied all of the eligibility criteria for enrollment during the
second period and would have been able to complete their prescribed
CE content by March 31, 2024, had they chosen to enroll during the
second period instead of enrolling during the first period.
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FINRA recently submitted a proposal related to its CE Program (the
``FINRA Rule Change'').\9\ The proposal set forth changes to FINRA Rule
1240.01, to provide Look-Back Individuals enrolled in the MQP in both
2022 and 2023 who did not complete their prescribed 2022 and 2023 CE
content as of March 31, 2024, the opportunity to complete such content
between May 22, 2024, and July 1, 2024, to be eligible to continue
their participation in the MQP.\10\ In addition, the proposed rule
change provides that any such individuals who will have completed their
prescribed 2022 and 2023 CE content between March 31, 2024, and May 22,
2024, will be deemed to have completed such content by July 1, 2024,
for purposes of the rule.
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\9\ See Securities Exchange Act Release No. 100067 (May 6,
2024), 89 FR 40520 (May 10, 2024) (SR-FINRA-2024-006) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend FINRA Rule 1240.01 To Reopen the Period by Which Certain
Participants in the Maintaining Qualifications Program May Complete
Their Prescribed Continuing Education Content).
\10\ This would include any Look-Back Individuals who were still
in the process of completing their prescribed CE content as of March
31, 2024.
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In the FINRA Rule Change, FINRA noted that it sent multiple
reminders, including a March 16, 2024 email, to Look-Back Individuals
who had enrolled in the MQP but had not completed their prescribed CE
to remind them of the March 31, 2024 deadline. In the FINRA Rule
Change, FINRA further noted that in the week leading up to the
deadline, FINRA noticed that several thousand of those individuals were
renewing their participation in the MQP for 2024 instead of completing
their prescribed CE.\11\ Per the FINRA Rule Change,
[[Page 57440]]
FINRA believes that some of those individuals may have been confused by
the layout of their FinPro accounts. Specifically, if they selected the
2024 renewal banner, which was prominently displayed on their FinPro
accounts, and completed the renewal process, they would not have been
automatically redirected to complete any prescribed CE. Therefore,
individuals may have inadvertently assumed that completion of the
renewal process alone would have satisfied all of the necessary
requirements to continue their participation in the MQP.\12\
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\11\ Look-Back Individuals who enrolled in the MQP have until
December 31, 2024, to renew their participation in the MQP for 2024,
provided that they complete their prescribed CE by the stated
deadline.
\12\ According to FINRA, a number of these individuals contacted
FINRA to confirm whether they were required to satisfy any
additional requirements other than completing the 2024 renewal. To
provide FINRA with additional time to assess the situation, FINRA
temporarily changed the March 31, 2024, due date for CE completion
in its systems. This may have compounded the confusion because any
Look-Back Individual who may have logged into their FinPro account
during this time would have seen an interim CE completion date and
would have been able to complete their prescribed CE content based
on that interim CE completion date.
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For similar reasons and to facilitate compliance with the
Exchange's CE Program requirements by members of multiple exchanges,
the Exchange is also proposing to amend its rules (i.e., Exchange Rule
3103, Interpretation and Policy .01) to provide Look-Back Individuals
enrolled in the MQP in both 2022 and 2023 who did not complete their
prescribed 2022 and 2023 CE content as of March 31, 2024, the
opportunity to complete such content between the effective date of this
filing, and July 1, 2024, to be eligible to continue their
participation in the MQP.\13\ In addition, the proposed rule change
provides that any such individuals who will have completed their
prescribed 2022 and 2023 CE content between March 31, 2024, and the
effective date of this filing, will be deemed to have completed such
content by July 1, 2024, for purposes of the rule.
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\13\ This would include any Look-Back Individuals who were still
in the process of completing their prescribed CE content as of March
31, 2024.
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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.\14\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \15\ 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) \16\ 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.
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\14\ 15 U.S.C. 78f(b).
\15\ 15 U.S.C. 78f(b)(5).
\16\ Id.
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The Exchange believes that reopening the period by which Look-Back
Individuals will be able to complete their prescribed 2022 and 2023 CE
content is appropriate under the circumstances. As FINRA noted in the
FINRA Rule Change, Look-Back Individuals who had enrolled in the MQP in
2022 and 2023 but had not completed their prescribed 2022 and 2023 CE
content by the March 31, 2024 deadline may have been confused, as
described above. The Exchange believes that participation in the MQP
reduces 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 reopening the CE completion period, as proposed, will
further these goals and objectives.
Further, the Exchange believes the proposed amendments reduce the
possibility of a regulatory gap between Exchange and FINRA rules,
providing more uniform standards across the securities industry. The
Exchange believes that the proposed rule change will bring consistency
and uniformity with FINRA's recently amended CE Program, which will, in
turn, assist members and their associated persons in complying with
these rules and improve regulatory efficiency. The proposed rule
changes make ministerial changes to the Exchange's CE rules to align
them with the CE rules of FINRA, in order to prevent unnecessary
regulatory burdens and to promote efficient administration of the
rules.
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.
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
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 from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
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.
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[[Page 57441]]
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 19b-4(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 proposed
rule change may become operative upon filing. The Exchange has stated
that a waiver of the operative delay would allow the Exchange to
implement the proposed changes to its CE rules without delay, thereby
eliminating the possibility of a significant regulatory gap between the
FINRA and the Exchange rules. The Exchange has also stated that a
waiver would provide more uniform standards across the securities
industry and help to avoid confusion for Exchange members that are also
FINRA members. The Exchange believes a waiver would also provide
immediately clarity to impacted individuals, thus minimizing the
potential for confusion regarding the time frames for satisfying
continuing education content in order to maintain eligibility to
participate in the continuing education program. For these reasons, the
Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the 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'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 the 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:
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-2024-27 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-2024-27. 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
10:00 a.m. and 3:00 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-2024-27 and should
be submitted on or before August 5, 2024.
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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15405 Filed 7-12-24; 8:45 am]
BILLING CODE 8011-01-P