Notice2022-27163
Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX Rule 2.160 (Registration Requirements and Restrictions on Membership)
Primary source
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Published
December 16, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 241 (Friday, December 16, 2022)</title>
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[Federal Register Volume 87, Number 241 (Friday, December 16, 2022)]
[Notices]
[Pages 77152-77157]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27163]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96473); File No. SR-IEX-2022-11]
Self-Regulatory Organizations; Investors Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend IEX
Rule 2.160 (Registration Requirements and Restrictions on Membership)
December 9, 2022.
Pursuant to section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on November 28, 2022, the Investors Exchange LLC (``IEX''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
and II below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78A.
\3\ 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
Pursuant to the provisions of section 19(b)(1) under the Act,\4\
and Rule 19b-4 thereunder,\5\ the Exchange is filing with the
Commission a proposed rule change to amend IEX Rule 2.160. The Exchange
has designated this proposal as non-controversial pursuant to Section
19(b)(3)(A)(iii) of the Act \6\ and provided the Commission with the
notice required by Rule 19b-4(f)(6)(iii) thereunder.\7\
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\4\ 15 U.S.C. 78S(B)(1).
\5\ 17 CFR 240.19B-4.
\6\ 15 U.S.C. 78S(B)(3)(A).
\7\ 17 CFR 240.19B-4(F)(6)(III).
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The text of the proposed rule change is available at the Exchange's
website at <a href="http://www.iextrading.com">www.iextrading.com</a>, at the principal
[[Page 77153]]
office of the Exchange, and at the Commission's Public Reference Room.
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 these statement may be examined at
the places specified in Item IV below. The self-regulatory organization
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
IEX is proposing to amend sections of IEX Rule 2.160 that relate to
continuing education requirements, lapses of registration of the
Securities Industry Essentials (``SIE'') examination, and waivers of
examinations for certain individuals working for a financial services
affiliate of a Member.\8\ The proposed rule change is based on changes
to registration and continuing education requirements made by the
Financial Industry Regulatory Authority, Inc. (``FINRA''), including a
change to require that the Regulatory Element of continuing education
be completed annually rather than every three years, and to provide a
path through continuing education for individuals to maintain their
qualification following the termination of a registration.\9\
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\8\ SEE IEX RULE 1.160(S) (DEFINING ``MEMBER'').
\9\ SEE SECURITIES EXCHANGE ACT RELEASE NO. 93097 (SEPTEMBER 21,
2021), 86 FR 53358 (SEPTEMBER 27, 2021) (SR-FINRA-2021-015) (THE
``FINRA APPROVAL ORDER''). OTHER EXCHANGES HAVE ALSO FILED RULE
CHANGES HARMONIZING THEIR REGISTRATION REQUIREMENTS AND CONTINUING
EDUCATION RULES WITH THOSE OF FINRA, SO AS TO PROMOTE UNIFORM
STANDARDS ACROSS THE SECURITIES INDUSTRY. SEE E.G., SECURITIES
EXCHANGE ACT RELEASE NO. 94400 (MARCH 11, 2022), 87 FR 15286 (MARCH
17, 2022) (SR-NASDAQ-2022-021); SECURITIES EXCHANGE ACT RELEASE NO.
94429 (MARCH 16, 2022), 87 FR 16268 (MARCH 22, 2022) (SR-MEMX-2022-
05); SECURITIES EXCHANGE ACT RELEASE NO. 95414 (AUGUST 3, 2022), 87
FR 48527 (AUGUST 9, 2022) (SR-BOX-2022-23).
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1. Background
In IEX Rule 2.160(p), the Exchange sets forth certain continuing
education (``CE'') requirements for its Members including requirements
to participate in the Regulatory and Firm Elements of training, which
are generally based on certain FINRA Rules.\10\ The Regulatory Element
focuses on regulatory requirements, and the Firm Element focuses on
enhancing covered registered persons' securities knowledge, skill, and
professionalism. The Regulatory Element CE program is administered to
industry participants by FINRA.\11\ Furthermore, FINRA's rule filing
amended Rules 1210.09 (``Waiver of Examinations for Individuals Working
for a Financial Services Industry Affiliate of a Member'') and 1210.08
(``Lapse of Registration and Expiration of SIE''), which are mirrored
by Supplementary Material .01 to IEX Rule 2.160(g) and Rule
2.160(o).\12\ The Exchange seeks to amend its rules to more closely
mirror FINRA Rules, as amended.\13\
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\10\ SEE FINRA RULE 1210 (REGISTRATION REQUIREMENTS) AND 1240
(CONTINUING EDUCATION REQUIREMENTS).
\11\ SEE IEX RULE 2.160(P)(A)(6).
\12\ SEE FINRA APPROVAL ORDER, SUPRA NOTE 9.
\13\ ID.
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2. Proposed Rule Change
FINRA has participated in extensive work with the Securities
Industry/Regulatory Council on Continuing Education (``CE Council'')
that has resulted in amendments to FINRA Rules 1210 and 1240.\14\
Following these changes, the Exchange seeks to align its registration
and continuing education requirements with those of FINRA by making the
following changes to IEX Rule 2.160.
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\14\ ID.
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A. Transition to Annual Regulatory Element for Registered Persons
Currently, the Regulatory Element prescribed in IEX Rule
2.160(p)(a) sets forth that training must be completed every three
years, and the content is broad in nature. Based on changes in
technology and learning theory, the Regulatory Element content can be
updated and delivered in a timelier fashion and tailored to each
registration category, which would further the goals of the Regulatory
Element.\15\ Therefore, to align the Exchange's Rules with changes made
by FINRA and to provide registered persons with more timely and
relevant training on significant regulatory developments, the Exchange
proposes amending IEX Rule 2.160(p)(a) to require registered persons to
complete the Regulatory Element annually by December 31, with the first
compliance date December 31, 2023.\16\ The proposed amendment would
also require registered persons to complete the Regulatory Element
content for each representative or principal registration category that
they hold, which would also further the goals of the Regulatory
Element.\17\ Under the proposed rule change, registered representatives
will have the flexibility to complete the Regulatory Element sooner
than December 31 of each year.\18\ Registered persons who would be
registering as a representative or principal for the first time on or
after the implementation date of the proposed rule change would be
required to complete their initial Regulatory Element for that
registration category in the next calendar year following their
registration.\19\ In addition, subject to specified conditions,
registered persons who would be reregistering as a representative or
principal on or after the implementation date of the proposed rule
change would also be required to complete their initial Regulatory
Element for that registration category in the next calendar year
following their reregistration.\20\
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\15\ WHEN THE FINRA CE PROGRAM WAS ORIGINALLY ADOPTED IN 1995,
REGISTERED PERSONS WERE REQUIRED TO COMPLETE THE REGULATORY ELEMENT
ON THEIR SECOND, FIFTH AND 10TH REGISTRATION ANNIVERSARY DATES. SEE
SECURITIES EXCHANGE ACT RELEASE NO. 35341 (FEBRUARY 8, 1995), 60 FR
8426 (FEBRUARY 14, 1995) (ORDER APPROVING FILE NOS. SR-AMEX-94-59;
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; AND SR-PHLX-94-52). THE CHANGE TO THE CURRENT
THREE-YEAR CYCLE WAS MADE IN 1998 TO PROVIDE REGISTERED PERSONS MORE
TIMELY AND EFFECTIVE TRAINING, CONSISTENT WITH THE OVERALL PURPOSE
OF THE REGULATORY ELEMENT. SEE SECURITIES EXCHANGE ACT RELEASE NO.
39712 (MARCH 3, 1998), 63 FR 11939 (MARCH 11, 1998) (ORDER APPROVING
FILE NOS. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; AND SR-NYSE-
97-33).
\16\ SEE PROPOSED IEX RULE 2.160(P)(A)(1).
\17\ ID.
\18\ ID.
\19\ ID.
\20\ SEE PROPOSED IEX RULE 2.160(P)(A)(4).
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Consistent with current requirements, registered persons who fail
to complete their Regulatory Element within the prescribed period would
be automatically designated as inactive.\21\ However, the proposed rule
change preserves the Exchange's ability to extend the time by which a
registered persons must complete the Regulatory Element for good cause
shown.\22\
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\21\ SEE PROPOSED IEX RULE 2.160(P)(A)(2).
\22\ THE PROPOSED RULE CHANGE CLARIFIES THAT THE REQUEST FOR AN
EXTENSION OF TIME MUST BE IN WRITING AND INCLUDE SUPPORTING
DOCUMENTATION, WHICH IS CONSISTENT WITH CURRENT PRACTICE.
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The Exchange also proposes amending IEX Rule 2.160(p)(a)(2) to
clarify that: (1) individuals who are
[[Page 77154]]
designated as inactive would be required to complete all of their
pending and upcoming annual Regulatory Element, including any annual
Regulatory Element that becomes due during their CE inactive period, to
return to active status; \23\ (2) the two-year CE inactive period is
calculated from the date individuals become CE inactive, and it
continues to run regardless of whether individuals terminate their
registrations; \24\ (3) individuals who become subject to a significant
disciplinary action may be required to complete assigned continuing
education content as prescribed by the Exchange; \25\ (4) individuals
who have not completed any Regulatory Element content for a
registration category in the calendar year(s) prior to reregistering
would not be approved for registration for that category until they
complete that Regulatory Element content, pass an examination for that
registration category or obtain an unconditional examination waiver for
that registration category, whichever is applicable; \26\ and (5) the
Regulatory Element requirements apply to individuals who are
registered, or in the process of registering, as a representative or
principal.\27\ The Exchange notes that it also proposes to make
conforming changes to IEX Rule 2.160(p)(a) to further align the IEX
Rule with FINRA Rule 1240(a).
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\23\ SEE PROPOSED IEX RULE 2.160(P)(A)(2).
\24\ ID.
\25\ SEE PROPOSED IEX RULE 2.160(P)(A)(3).
\26\ SEE PROPOSED IEX RULE 2.160(P)(A)(4).
\27\ ID.
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Under the proposed rule change, the amount of content that
registered persons would be required to complete in a three-year,
annual cycle for a particular registration category is expected to be
comparable to what most registered persons are currently completing
every three years. In some years, there may be more required content
for some registration categories depending on the volume of rule
changes and regulatory issues. In addition, an individual who holds
multiple registrations may be required to complete additional content
compared to an individual who holds a single registration because, as
noted above, individuals would be required to complete content specific
to each registration category that they hold. However, individuals with
multiple registrations would not be subject to duplicative regulatory
content in any given year. The more common registration combinations
would likely share much of their relevant regulatory content each year.
For example, individuals registered as General Securities
Representatives and General Securities Principals would receive the
same content as individuals solely registered as General Securities
Representatives, supplemented with a likely smaller amount of
supervisory-specific content on the same topics. The less common
registration combinations may result in less topic overlap and more
content overall.
B. Changes to Firm Element
IEX Rule 2.160(p)(b) (Firm Element) currently requires each firm to
develop and administer an annual Firm Element training program for any
person registered with a Member who has direct contact with customers
in the securities business of the Member relating to activity that
occurs on the Exchange (a ``covered registered person'').\28\ The rule
requires firms to conduct an annual needs analysis to determine the
appropriate training for covered registered persons.\29\ Currently, at
a minimum, the Firm Element must cover training in ethics and
professional responsibility as well as the following items concerning
securities products, services and strategies offered by the member: (1)
general investment features and associated risk factors; (2)
suitability and sales practice considerations; and (3) applicable
regulatory requirements.\30\ A firm, consistent with its needs
analysis, may determine to apply toward the Firm Element other required
training.\31\
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\28\ SEE IEX RULE 2.160(P)(B)(1).
\29\ SEE IEX RULE 2.160(P)(B)(2).
\30\ ID.
\31\ SEE IEX RULE 2.160(P)(B)(4).
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To better align the Firm Element requirement with other required
training, IEX proposes amending IEX Rule 2.160(p)(b) to expressly allow
firms to consider training relating to the AML compliance program and
the annual compliance meeting toward satisfying an individual's annual
Firm Element requirement.\32\ IEX also proposes amending the rule to
extend the Firm Element requirement to all registered persons,
including individuals who maintain solely a permissive registration
consistent with Supplementary Material .01 to IEX Rule 2.160(e),
thereby further aligning the Firm Element requirement with other
broadly-based training requirements.\33\ In conjunction with this
proposed change, IEX proposes modifying the current minimum training
criteria under IEX Rule 2.160(p)(b) to instead provide that the
training must cover topics related to the role, activities, or
responsibilities of the registered person and to professional
responsibility, and removing the not role-specific current requirements
that the Firm Element training at a minimum cover: (1) general
investment features and associated risk factors; (2) suitability and
sales practice considerations; and (3) applicable regulatory
requirements.\34\
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\32\ SEE PROPOSED IEX RULE 2.160(P)(B)(2)(D).
\33\ AS DISCUSSED, INFRA, THE EXCHANGE IS PROPOSING TO MAKE
THREE NON-SUBSTANTIVE CONFORMING EDITS TO IEX RULE 2.160(P)(A)(1) BY
CORRECTING THE REFERENCES TO ``COMMENTARY .02 TO RULE 2.160'' TO
PROPERLY CITE TO ``SUPPLEMENTARY MATERIAL .01 TO RULE 2.160(E)'' AND
CORRECTING REFERENCES TO ``COMMENTARY .01 TO RULE 2.160(G)'' TO
PROPERLY CITE TO ``SUPPLEMENTARY MATERIAL .01 TO RULE 2.160(G).
\34\ SEE PROPOSED IEX RULE 2.160(P)(B)(2)(B).
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C. Termination of Registration
Currently, individuals whose registrations as representatives or
principals have been terminated for two or more years may reregister as
representatives or principals only if they requalify by retaking and
passing the applicable representative- or principal-level examination
or if they obtain a waiver of such examination(s) (the ``two-year
qualification period'').\35\ The two-year qualification period was
adopted prior to the creation of the CE Program and was intended to
ensure that individuals who reregister are relatively current on their
regulatory and securities knowledge.
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\35\ SEE IEX RULE 2.160(O). THE TWO-YEAR QUALIFICATION PERIOD IS
CALCULATED FROM THE DATE INDIVIDUALS TERMINATE THEIR REGISTRATION
AND THE DATE FINRA RECEIVES A NEW APPLICATION FOR REGISTRATION. THE
TWO-YEAR QUALIFICATION PERIOD DOES NOT APPLY TO INDIVIDUALS WHO
TERMINATE A LIMITED REGISTRATION CATEGORY THAT IS A SUBSET OF A
BROADER REGISTRATION CATEGORY FOR WHICH THEY REMAIN QUALIFIED. FOR
INSTANCE, IT WOULD NOT APPLY TO AN INDIVIDUAL WHO MAINTAINS HIS
REGISTRATION AS A GENERAL SECURITIES REPRESENTATIVE BUT WHO
TERMINATES HIS REGISTRATION AS AN INVESTMENT COMPANY AND VARIABLE
CONTRACTS PRODUCTS REPRESENTATIVE. SUCH INDIVIDUALS HAVE THE OPTION
OF REREGISTERING IN THE MORE LIMITED REGISTRATION CATEGORY WITHOUT
HAVING TO REQUALIFY BY EXAMINATION OR OBTAIN AN EXAMINATION WAIVER
SO LONG AS THEY CONTINUE TO REMAIN QUALIFIED FOR THE BROADER
REGISTRATION CATEGORY. FURTHER, THE TWO-YEAR QUALIFICATION PERIOD
ONLY APPLIES TO THE REPRESENTATIVE--AND PRINCIPAL-LEVEL
EXAMINATIONS; IT DOES NOT EXTEND TO THE SECURITIES INDUSTRY
ESSENTIALS (``SIE'') EXAMINATION. THE SIE EXAMINATION IS VALID FOR
FOUR YEARS, BUT HAVING A VALID SIE EXAMINATION ALONE DOES NOT
QUALIFY AN INDIVIDUAL FOR REGISTRATION AS A REPRESENTATIVE OR
PRINCIPAL.
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IEX proposes to amend IEX Rule 2.160(o) to provide that a person
whose registration has been terminated for more than two years in a
registration
[[Page 77155]]
category will not be required to pass a representative qualification
examination appropriate to that registration category if the person has
maintained his or her qualification status for that registration
category in accordance with the maintaining qualifications program
detailed infra.\36\
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\36\ SEE PROPOSED IEX RULE 2.160(P)(C).
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And the Exchange proposes to amend Supplementary Material .01 to
IEX Rule 2.160(g), which describes the process for a waiver of
examinations for individuals working for a financial services industry
affiliate of a Member, to reflect that the waiver program stopped
accepting applications on March 15, 2022. IEX makes this proposal
because of the proposed changes to the Regulatory Element discussed
supra that make completion of the Regulatory Element an annual
requirement, which would also apply to people eligible for the
financial services industry affiliate waiver program (``FSAWP'').
D. Maintenance of Qualification After Termination of Registration
The Exchange proposes adopting subparagraph (c) under IEX Rule
2.160(p) and Supplementary Material .01 and .02 to IEX Rule 2.160(p)(c)
to 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 continuing education. The proposed rule change would not
eliminate the two-year qualification period set forth in IEX Rule
2.160(p)(a)(2). Rather, it would provide such individuals an
alternative means of staying current on their regulatory and securities
knowledge following the termination of a registration(s). Eligible
individuals who elect not to participate in the proposed continuing
education program would continue to be subject to the current two-year
qualification period. The proposed rule change is generally aligned
with other professional continuing education programs that allow
individuals to maintain their qualification to work in their respective
fields during a period of absence from their careers (including an
absence of more than two years) by satisfying continuing education
requirements for their credential.
The proposed rule change would impose the following conditions and
limitations:
<bullet> Individuals would be required to be registered in the
terminated registration category for at least one year immediately
prior to the termination of that category; \37\
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\37\ SEE PROPOSED IEX RULE 2.160(P)(C)(1).
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<bullet> Individuals could elect to participate when they terminate
a registration or within two years from the termination of a
registration; \38\
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\38\ SEE PROPOSED IEX RULE 2.160(P)(C)(2). INDIVIDUALS WHO ELECT
TO PARTICIPATE AT THE LATER DATE WOULD BE REQUIRED TO COMPLETE,
WITHIN TWO YEARS FROM THE TERMINATION OF THEIR REGISTRATION, ANY
CONTINUING EDUCATION THAT BECOMES DUE BETWEEN THE TIME OF THEIR FORM
U5 (UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRY REGISTRATION)
SUBMISSION AND THE DATE THAT THEY COMMENCE THEIR PARTICIPATION.
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<bullet> Individuals would be required to complete annually all
prescribed continuing education; \39\
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\39\ SEE PROPOSED IEX RULE 2.160(P)(C)(3).
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<bullet> Individuals would have a maximum of five years in which to
reregister; \40\
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\40\ SEE PROPOSED IEX RULE 2.160(P)(C).
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<bullet> Individuals who have been inactive for two consecutive
years, or who become inactive for two consecutive years during their
participation, would not be eligible to participate or continue; \41\
and
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\41\ SEE PROPOSED IEX RULE 2.160(P)(C)(4) AND (C)(5).
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<bullet> Individuals who are subject to a statutory
disqualification, or who become subject to a statutory disqualification
following the termination of their registration or during their
participation, would not be eligible to participate or continue.\42\
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\42\ SEE PROPOSED IEX RULE 2.160(P)(C)(1) AND (C)(6).
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In addition, the proposed rule change includes a re-eligibility
provision that would allow individuals to regain eligibility to
participate each time they reregister with a firm for a period of at
least one year and subsequently terminate their registration, if they
satisfy the other participation conditions and limitations.\43\
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\43\ SEE PROPOSED SUPPLEMENTARY MATERIAL .01 TO IEX RULE
2.160(P)(C).
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E. Conforming Changes
IEX also proposes to make conforming edits to IEX Rule 2.160 to
better align the rule text with FINRA Rules 1210 and 1240.
Additionally, IEX proposes to make three non-substantive conforming
edits to IEX Rule 2.160(p)(a)(1) by correcting the references to
``Commentary .02 to Rule 2.160'' to properly cite to ``Supplementary
Material .01 to Rule 2.160(e)'' and correcting references to
``Commentary .01 to Rule 2.160(g)'' to properly cite to ``Supplementary
Material .01 to Rule 2.160(g), in order to align the terminology used
in these rules with the rest of IEX's rulebook.
F. CE Program Implementation
As stated in the FINRA Approval Order, FINRA and the CE Council
also plan to enhance the CE Program in other ways, and these additional
enhancements do not require any changes to the FINRA rules.\44\ As it
relates to the rule changes themselves, the FINRA changes relating to
the Maintaining Qualifications Program and the FSAWP had an
implementation date of March 15, 2022.\45\ The Exchange's proposed
changes to the Maintaining Qualifications Program (subparagraph (c) of
Rule 2.160(p)) and to the FSAWP (Supplementary Material .01 to Rule
2.160(g)) will become effective on the date this proposed rule change
is filed. All other changes related to the FINRA Approval Order and to
the Exchange's rules relating to the Regulatory Element, Firm Element
and the two-year qualification period, will have an implementation date
of January 1, 2023.\46\
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\44\ SEE FINRA APPROVAL ORDER, SUPRA NOTE 9. AS DESCRIBED IN
MORE DETAIL IN THE FINRA APPROVAL ORDER, FINRA WILL WORK WITH THE CE
COUNCIL TO DEVELOP AND INCORPORATE ADDITIONAL RESOURCES IN
CONNECTION WITH THE REGULATORY AND FIRM ELEMENTS. SIMILAR TO FINRA,
THESE ADDITIONAL ENHANCEMENTS DO NOT REQUIRE ANY CHANGES TO THE
EXCHANGE RULES.
\45\ SEE FINRA REGULATORY NOTICE 21-41 AT <a href="https://WWW.FINRA.ORG/RULES-GUIDANCE/NOTICES/21-41">https://WWW.FINRA.ORG/RULES-GUIDANCE/NOTICES/21-41</a>.
\46\ ID.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with the
requirements of Sections 6(b) \47\ and 6(b)(5) of the Act,\48\ 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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\47\ 15 U.S.C. 78F(B).
\48\ 15 U.S.C. 78F(B)(5).
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As noted above, the proposed rule change seeks to align the
Exchange Rules with changes to FINRA rules which have been approved by
the Commission.\49\ The Exchange believes the proposed rule change is
consistent with the provisions of section 6(b)(5) of the Act,\50\ which
requires, among other things, that Exchange Rules must be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
[[Page 77156]]
investors and the public interest, and section 6(c)(3) of the Act,\51\
which authorizes the Exchange to prescribe standards of training,
experience and competence for persons associated with Exchange. The
proposed changes are based on the changes approved by the Commission in
the FINRA Approval Order,\52\ and the Exchange is proposing to adopt
such changes substantially in the same form proposed by FINRA with the
notable exception that this proposed rule change does not apply
retroactively, and the date FINRA implemented the changes to its CE
program has already passed.\53\ The Exchange believes the proposal is
consistent with the Act for the reasons described above and for those
reasons cited in the FINRA Approval Order.\54\
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\49\ SEE FINRA APPROVAL ORDER, SUPRA NOTE 9.
\50\ 15 U.S.C. 78F(B)(5).
\51\ 15 U.S.C. 78F(C)(3).
\52\ SEE FINRA APPROVAL ORDER, SUPRA NOTE 9.
\53\ OTHERWISE, IEX'S PROPOSED RULE CHANGES ARE SUBSTANTIALLY
SIMILAR TO THE CHANGES IN THE FINRA APPROVAL ORDER, WITH ONLY NON-
SUBSTANTIVE DIFFERENCES IN THE NOMENCLATURE AND ORGANIZATION OF
IEX'S AND FINRA'S REGISTRATION REQUIREMENT AND CONTINUING EDUCATION
RULES (E.G., FINRA RULE 1210.07, WHICH IS PART OF FINRA'S
REGISTRATION REQUIREMENT RULE, IS EQUIVALENT TO IEX RULE
2.160(P)(A)(1), WHICH IS PART OF IEX'S CONTINUING EDUCATION RULE).
\54\ SEE FINRA APPROVAL ORDER, SUPRA NOTE 9.
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The Exchange believes the proposed changes to the Regulatory
Element and Firm Element will help ensure that all registered persons
receive timely and relevant training, which will, in turn, enhance
compliance and investor protection. Further, the Exchange believes that
establishing a path for individuals to maintain their qualification
following the termination of a registration will reduce unnecessary
impediments to requalification and promote greater diversity and
inclusion in the securities industry without diminishing investor
protection.
Finally, the Exchange believes that the proposed conforming changes
to its continuing education and registration rules will enhance
compliance and investor protection by better aligning these rules with
the rules changed by FINRA, as well as aligning the terminology used
within these rules with the IEX Rule Book.
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 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 rule changes
adopted by FINRA, will reduce the regulatory burden placed on market
participants engaged in trading activities across different markets.
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 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 and Rule 19b-4(f)(6) thereunder.\55\
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\55\ 17 CFR 240.19B-4(F)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), 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 this proposed
rule change may become operative immediately upon filing. In addition,
Rule 19b-4(f)(6)(iii) \56\ requires a self-regulatory organization to
give the Commission written notice of its intent to file a proposed
rule change under that subsection at least five business days prior to
the date of filing, or such shorter time as designated by the
Commission. The Exchange has provided such notice.
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\56\ 17 CFR 240.19B-4(F)(6)(III).
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Waiver of the 30-day operative delay will allow the Exchange to
implement the proposed changes to its continuing education and
registration rules without delay, thereby eliminating the material
differences between FINRA and Exchange continuing education rules,
providing more uniform standards across the securities industry, and
helping to avoid ongoing confusion for Exchange Members that are also
FINRA members. For this reason, 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.\57\
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\57\ 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 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 to
determine whether the proposed rule change 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#d8aaadb4bdf5bbb7b5b5bdb6acab98abbdbbf6bfb7ae"><span class="__cf_email__" data-cfemail="6012150c054d030f0d0d050e1413201305034e070f16">[email protected]</span></a>. Please include
File Number SR-IEX-2022-11 on the subject line.
Paper Comments
<bullet> 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-IEX-2022-11. This file
number should be included in 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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
[[Page 77157]]
Reference Section, 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 will also be available for inspection and copying at the
IEX's principal office and on its internet website at
<a href="http://www.iextrading.com">www.iextrading.com</a>. All comments received will be posted without
change. Persons submitting comments are cautioned that we do not redact
or edit personal identifying information from comment submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-IEX-2022-11
and should be submitted on or before January 6, 2023. For the
Commission, by the Division of Trading and Markets, pursuant to
delegated authority.\58\
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\58\ 17 CFR 200.30-3(A)(12).
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27163 Filed 12-15-22; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 16, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.