Notice2023-13347
Self-Regulatory Organizations; NYSE National, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change for Amendments to the Exchange's Rules Regarding Continuing Education Requirements
Primary source
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Published
June 23, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 120 (Friday, June 23, 2023)</title>
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[Federal Register Volume 88, Number 120 (Friday, June 23, 2023)]
[Notices]
[Pages 41161-41164]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-13347]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97745; File No. SR-NYSENAT-2023-11]
Self-Regulatory Organizations; NYSE National, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change for
Amendments to the Exchange's Rules Regarding Continuing Education
Requirements
June 16, 2023.
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 June 5, 2023, NYSE National, Inc. (``NYSE National'' 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
[[Page 41162]]
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
The Exchange proposes to amend Commentary .09 under NYSE National
Rule 2.2 (Eligibility of Other Persons to Participate in the Continuing
Education Program Specified in Rule 2.2(e)(3)) applicable to ETP
Holders to provide eligible individuals another opportunity to elect to
participate in the Maintaining Qualifications Program (``MQP''). The
proposed rule change is available on the Exchange's website at
<a href="http://www.nyse.com">www.nyse.com</a>, 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 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 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 under the rules of the self-regulatory
organizations. The CE Program for registered persons of NYSE National
members is codified under Rule 2.2(e).\4\ This proposed rule change is
based on a filing recently submitted by the Financial Industry
Regulatory Authority, Inc. (``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.
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\4\ See also Commentary .06 to Rule 2.1210 (All Registered
Persons Must Satisfy the Regulatory Element of Continuing
Education).
\5\ See Securities Exchange Act Release No. 97184 (March 22,
2023), 88 FR 18359 (March 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'').
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On May 25, 2022, the Exchange amended NYSE National Rules 2.1210
(Registration Requirements) and 2.2(e) (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.\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.
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\6\ See Securities Exchange Act Release No. 95062 (June 7,
2022), 87 FR 35836 (June 13, 2022) (SR-NYSENAT-2022-07) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change of
Amendments to the Exchange's Rules Regarding Continuing Education
Requirements).
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Prior to the MQP, individuals whose registrations as
representatives 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.
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\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).
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Under NYSE National Rule 2.2, Commentary .09, 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 May 25, 2022 (the implementation date of the MQP);
and (2) individuals who were participating in the Financial Services
Affiliate Waiver Program (``FSAWP'') under NYSE National Rule 2.1210,
Commentary .08 (Waiver of Examinations for Individuals Working for a
Financial Services Industry Affiliate of an ETP Holder) immediately
prior to May 25, 2022 (collectively, ``Look-Back Individuals'').\8\
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\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. NYSE National stopped accepting
new participants for the FSAWP beginning on May 25, 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.\9\
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\9\ 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 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-
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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, NYSE
National is also proposing to amend its rules to provide Look-Back
Individuals with a Second Enrollment Period.\11\ 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.\12\
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\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 May 25, 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.
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NYSE National believes that Look-Back Individuals generally have
greater awareness of the MQP, including due to news coverage, since the
program's launch.\13\ NYSE National believes that greater public
awareness of the MQP, coupled with a seven-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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\13\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion
with New Option for Licensing Grace Period, InvestmentNews (June 23,
2022), <a href="https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942">https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-for-licensing-grace-period-222942</a>.
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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 through a manner to be determined by FINRA.\14\
NYSE National 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.\15\
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\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, <a href="https://www.finra.org/registration-exams-ce/finpro/mqp">https://www.finra.org/registration-exams-ce/finpro/mqp</a> (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 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 proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\16\ in general, and
furthers the objectives of Section 6(b)(5),\17\ in particular, because
it is 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 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.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
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NYSE National 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. NYSE National 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 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
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
NYSE National has filed the proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6)
thereunder.\19\ 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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\18\ 15 U.S.C. 78s(b)(3)(A)(iii).
\19\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ 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
[[Page 41164]]
Commission to waive the 30-day operative delay so that the proposal may
become operative immediately upon filing. NYSE National 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. NYSE National 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, NYSE National
additionally 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.\22\
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\20\ 17 CFR 240.19b-4(f)(6).
\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ 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) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#651710090048060a0808000b1116251600064b020a13"><span class="__cf_email__" data-cfemail="f587809990d8969a9898909b8186b5869096db929a83">[email protected]</span></a>. Please include
File Number SR-NYSENAT-2023-11 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-NYSENAT-2023-11. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://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 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-NYSENAT-2023-11 and should
be submitted on or before July 14, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2023-13347 Filed 6-22-23; 8:45 am]
BILLING CODE 8011-01-P
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