Notice2023-15578
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Rules To Provide Eligible Individuals Another Opportunity To Elect To Participate in the Maintaining Qualifications Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 24, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 140 (Monday, July 24, 2023)</title>
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[Federal Register Volume 88, Number 140 (Monday, July 24, 2023)]
[Notices]
[Pages 47533-47536]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-15578]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97939; File No. SR-NASDAQ-2023-020]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Rules To Provide Eligible Individuals Another Opportunity To
Elect To Participate in the Maintaining Qualifications Program
July 18, 2023.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on July 6, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Supplementary Material .01 to
General 4, Rule 1240 (Eligibility of Other Persons to Participate in
the Continuing Education Program Specified in Paragraph (c) of this
Rule) to provide eligible individuals another opportunity to elect to
participate in the Maintaining Qualifications Program (``MQP'').
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to
complete continuing education consisting of a Regulatory Element and a
Firm Element. The Regulatory Element, which is administered by FINRA on
behalf of the Exchange, focuses on regulatory requirements and industry
standards, while the Firm Element is provided by each firm and focuses
on securities products, services and strategies the firm offers, firm
policies and industry trends. The CE Program is codified
[[Page 47534]]
under the rules of the self-regulatory organizations (``SROs''). The CE
Program for registered persons of Exchange members is codified under
General 4, Rule 1240.\3\
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\3\ See also General 4, Rule 1210.07 (All Registered Persons
Must Satisfy the Regulatory Element of Continuing Education).
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The Exchange proposes to amend Supplementary Material .01 to
General 4, Rule 1240 (Eligibility of Other Persons to Participate in
the Continuing Education Program Specified in Paragraph (c) of this
Rule). This proposal is based on a rule change recently submitted by
the Financial Industry Regulatory Authority, Inc. (``FINRA''), and is
intended to align the Exchange's continuing education rules with those
of FINRA so as to promote uniform standards across the securities
industry.\4\ The Exchange is proposing to adopt such changes
substantially in the same form as proposed by FINRA.
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\4\ See Securities Exchange Act Release No. 97184 (March 22,
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005) (``FINRA
Rule Change'').
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On September 21, 2021, the Commission approved a proposed rule
change to amend FINRA Rules 1210 (Registration Requirements) and 1240
(Continuing Education Requirements) to, among other things, provide
eligible individuals who terminate any of their representative or
principal registration categories the option of maintaining their
qualification for any terminated registration categories by completing
annual continuing education through a new program, the MQP.\5\
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\5\ See Securities Exchange Act Release No. 93097 (September 21,
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No.
SR-FINRA-2021-015). Other exchanges, including Nasdaq, subsequently
filed copycat rule filings to align their continuing education rules
with those of FINRA. See Securities Exchange Act Release No. 94400
(March 11, 2022), 87 FR 15286 (March 17, 2022) (Notice of Filing and
Immediate Effectiveness of File No. SR-NASDAQ-2022-021).
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Prior to the MQP, individuals whose registrations as
representatives or principals that had been terminated for two or more
years could reregister as representatives or principals only if they
requalified by retaking and passing the applicable representative- or
principal-level examination or if they obtained a waiver of such
examination(s) (the ``two-year qualification period''). The MQP
provides these individuals an alternative means of staying current on
their regulatory and securities knowledge following the termination of
a registration.\6\ Specifically, the MQP provides eligible individuals
a maximum of five years following the termination of a representative
or principal registration category to reregister without having to
requalify by examination or having to obtain an examination waiver,
subject to satisfying the conditions and limitations of the MQP,
including the annual completion of all prescribed continuing education.
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\6\ The MQP does not eliminate the two-year qualification
period. Thus, eligible individuals who elect not to participate in
the MQP can continue to avail themselves of the two-year
qualification period (i.e., they can reregister within two years of
terminating a registration category without having to requalify by
examination or having to obtain an examination waiver).
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Under Supplementary Material .01 to General 4, Rule 1240, the MQP
has a look-back provision that, subject to specified conditions,
extended the option to participate in the MQP to individuals who: (1)
were registered as a representative or principal within two years
immediately prior to March 15, 2022 (the implementation date of the
MQP); and (2) individuals who were participating in the Financial
Services Affiliate Waiver Program (``FSAWP'') under General 4, Rule
1210.09 (Waiver of Examinations for Individuals Working for a Financial
Services Industry Affiliate of a Member) immediately prior to March 15,
2022 (collectively, ``Look-Back Individuals'').\7\
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\7\ The FSAWP is a waiver program for eligible individuals who
have left a member firm to work for a foreign or domestic financial
services affiliate of a member firm. The Exchange stopped accepting
new participants for the FSAWP beginning on March 15, 2022; however,
individuals who were already participating in the FSAWP prior to
that date had the option of continuing in the FSAWP.
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In the FINRA Rule Change, FINRA noted that in Regulatory Notice 21-
41 (November 17, 2021), it announced that Look-Back Individuals who
wanted to take part in the MQP were required to make their election
between January 31, 2022, and March 15, 2022 (the ``First Enrollment
Period''). In addition to the announcement in Regulatory Notice 21-41,
FINRA notified the Look-Back Individuals about the MQP and the First
Enrollment Period via two separate mailings of postcards to their home
addresses and communications through their FINRA Financial Professional
Gateway (``FinPro'') accounts.\8\
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\8\ Look-Back Individuals were able to notify FINRA of their
election to participate in the MQP through their FinPro accounts.
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In the FINRA Rule Change, FINRA further noted that shortly after
the First Enrollment Period had ended, a number of Look-Back
Individuals contacted FINRA and indicated that they had only recently
become aware of the MQP. FINRA also noted that it also received
anecdotal information that a number of these individuals may not have
learned of the MQP, or the First Enrollment Period, in a timely manner,
or at all, due to communication and operational issues.\9\ In addition,
the original six-week enrollment period may not have provided Look-Back
Individuals with sufficient time to evaluate whether they should
participate in the MQP. For these reasons, FINRA recently amended its
rules to provide Look-Back Individuals a second opportunity to elect to
participate in the MQP (the ``Second Enrollment Period''). For similar
reasons, the Exchange is also proposing to amend its rules to provide
Look-Back Individuals with a Second Enrollment Period.\10\ The Second
Enrollment Period will be between the date of filing of this proposed
rule change, and December 31, 2023. In addition, the proposed rule
change requires that Look-Back Individuals who elect to participate in
the MQP during the Second Enrollment Period complete any prescribed
2022 and 2023 MQP content by March 31, 2024.\11\
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\9\ According to FINRA, this may have been a result of the
timing of FINRA's announcements relating to the MQP, which coincided
with the holiday season and the transition to the New Year. Further,
given that Look-Back Individuals were out of the industry at the
time of these announcements, it was unlikely that they would have
learned of the MQP, or the First Enrollment Period, through informal
communication channels.
\10\ The current rule text also provides that if Look-Back
Individuals elect to participate in the MQP, their five-year
participation period will be adjusted by deducting from that period
the amount of time that has lapsed between the date that they
terminated their registrations and March 15, 2022. To reflect the
availability of the Second Enrollment Period, the proposed rule
change clarifies that for all Look-Back Individuals who elect to
participate in the MQP, their participation period would also be for
a period of five years following the termination of their
registration categories, as with other MQP participants.
\11\ Look-Back Individuals who elect to enroll in the MQP during
the Second Enrollment Period would also need to pay the annual
program fee of $100 for both 2022 and 2023 at the time of their
enrollment.
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The Exchange believes that Look-Back Individuals generally have
greater awareness of the MQP, including due to news coverage, since the
program's launch.\12\ The Exchange believes that greater public
awareness of the MQP, coupled with a six-month enrollment period,
should help ensure that all Look-Back Individuals are aware of the MQP
and the availability of the Second Enrollment Period, and should
provide them with ample time to decide whether to participate in the
MQP.
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\12\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion
with New Option for Licensing Grace Period, InvestmentNews (June 23,
2022), <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
[[Page 47535]]
through a manner to be determined by FINRA.\13\ The Exchange also notes
that Look-Back Individuals who elect to participate in the MQP during
the Second Enrollment Period would continue to be subject to all of the
other MQP eligibility and participation conditions. For example, as
clarified in the proposed rule change, Look-Back Individuals electing
to participate during the Second Enrollment Period would have only a
maximum of five years following the termination of a registration
category in which to reregister without having to requalify by
examination or having to obtain an examination waiver.\14\
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\13\ In the FINRA Rule Change, FINRA noted that it anticipates
that Look-Back Individuals will make their selection to enroll in
the MQP during the Second Enrollment Period through their FinPro
accounts. See Enrolling in the MQP, <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.
\14\ For example, if a Look-Back Individual terminated a
registration category on May 1, 2020, and elects to participate in
the MQP on December 1, 2023, the individual's maximum participation
period would be five years starting on May 1, 2020, and ending no
later than May 1, 2025. If the individual does not reregister with a
member firm by May 1, 2025, the individual would need to requalify
by examination or obtain an examination waiver in order to
reregister after that date.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\15\ in general, and furthers the objectives of section
6(b)(5) of the Act,\16\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that providing Look-Back Individuals a second
opportunity to elect to participate in the MQP is warranted because
participation in the MQP would reduce unnecessary impediments to
requalification for these individuals without diminishing investor
protection. In addition, the proposed rule change is consistent with
other goals, such as the promotion of diversity and inclusion in the
securities industry by attracting and retaining a broader and diverse
group of professionals. The MQP also allows the industry to retain
expertise from skilled individuals, providing investors with the
advantage of greater experience among the individuals working in the
industry. The Exchange believes that providing Look-Back Individuals a
second opportunity to elect to participate in the MQP will further
these goals and objectives.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
proposed rule change, which harmonizes its rules with the recent rule
change adopted by FINRA, will reduce the regulatory burden placed on
market participants engaged in trading activities across different
markets. The Exchange believes that the harmonization of the CE Program
requirements across the various markets will reduce burdens on
competition by removing impediments to participation in the national
market system and promoting competition among participants across the
multiple national securities exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
NASDAQ has filed the proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \19\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\20\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. NASDAQ has indicated that
the immediate operation of the proposed rule change is appropriate
because it would allow the Exchange to implement the proposed changes
to its continuing education rules without delay, thereby eliminating
the possibility of a significant regulatory gap between the FINRA rules
and the Exchange rules, providing more uniform standards across the
securities industry, and helping to avoid confusion for Exchange
members that are also FINRA members. NASDAQ also noted that FINRA plans
to conduct additional public outreach efforts to promote awareness of
the MQP and the availability of the Second Enrollment Period among
Look-Back Individuals. Therefore, NASDAQ indicated that the immediate
operation of the proposed rule change is appropriate because it would
ensure that there is sufficient time for Look-Back Individuals to
consider whether they wish to participate in the program before the
December 31, 2023 deadline. For these reasons, the Commission believes
that waiver of the 30-day operative delay for this proposal is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\21\
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\19\ 17 CFR 240.19b-4(f)(6).
\20\ 17 CFR 240.19b-4(f)(6)(iii).
\21\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
section 19(b)(2)(B) \22\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\22\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
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Electronic Comments
<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#1260677e773f717d7f7f777c6661526177713c757d64"><span class="__cf_email__" data-cfemail="85f7f0e9e0a8e6eae8e8e0ebf1f6c5f6e0e6abe2eaf3">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2023-020 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-NASDAQ-2023-020. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<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 Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-NASDAQ-2023-020 and
should be submitted on or before August 14, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-15578 Filed 7-21-23; 8:45 am]
BILLING CODE 8011-01-P
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