Notice2023-21350
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide Eligible Members Another Opportunity To Elect To Participate in the Maintaining Qualifications Program
Primary source
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Published
September 29, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 188 (Friday, September 29, 2023)</title>
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[Federal Register Volume 88, Number 188 (Friday, September 29, 2023)]
[Notices]
[Pages 67378-67381]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-21350]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98515; File No. SR-PEARL-2023-49]
Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Provide
Eligible Members Another Opportunity To Elect To Participate in the
Maintaining Qualifications Program
September 25, 2023.
Pursuant to the provisions of Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on September 22, 2023, MIAX PEARL, LLC (``MIAX
Pearl'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 provide
eligible Members \3\ another opportunity to elect to participate in the
Maintaining Qualifications Program (``MQP'').
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\3\ The term ``Member'' means an individual or organization
approved to exercise the trading rights associated with a Trading
Permit. Members are deemed ``members'' under the Exchange Act. See
Exchange Rule 100.
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The text of the proposed rule change is available on the Exchange's
website at <a href="https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings">https://www.miaxglobal.com/markets/us-options/pearl-options/rule-filings</a>, at MIAX Pearl's principal office, and at the Commission's
Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Interpretation and Policy .01 to
Exchange Rule 3103, Continuing Education, to provide eligible Members
another opportunity to elect to participate in the Maintaining
Qualifications Program (``MQP'').
The continuing education program for registered persons of Members
(``CE Program'') currently requires registered persons to complete
continuing education consisting of a Regulatory Element and a Firm
Element. The Regulatory Element is administered by the Financial
Industry Regulatory Authority, Inc. (``FINRA''). FINRA, on behalf of
the Exchange, focuses on regulatory requirements and industry
standards, while the Firm Element is provided by each firm and focuses
on securities products, services and strategies the firm offers, firm
policies and industry trends.
The CE Program is codified under the rules of the self-regulatory
organizations. The CE Program for registered persons of Exchange
Members is codified under Exchange Rule 3103, Continuing Education.\4\
This proposed rule change is based on a filing recently submitted by
FINRA and is intended to harmonize the Exchange's continuing education
rules with those of FINRA so as to promote uniform standards across the
securities industry.\5\ The proposed rule change is discussed in detail
below.
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\4\ See also Exchange Rule 3103, Interpretation and Policy .06,
All Registered Persons Must Satisfy the Regulatory Element of
Continuing Education.
\5\ See Securities Exchange Act Release No. 97184 (Mar. 22,
2023), 88 FR 18359 (Mar. 28, 2023) (SR-FINRA-2023-005) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Amend FINRA Rule 1240.01 To Provide Eligible Individuals Another
Opportunity to Elect to Participate in the Maintaining
Qualifications Program) (``FINRA Rule Change'').
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On June 10, 2022, the Exchange amended Exchange Rule 3100,
Registration Requirements, and Exchange Rule 3103, Continuing
Education, to, among other things, provide eligible individuals who
[[Page 67379]]
terminate any of their representative or principal registration
categories the option of maintaining their qualification for any
terminated registration categories by completing annual continuing
education through a new program, the MQP.\6\ By that time, however, the
First Enrollment Period, defined below, had expired, leaving many
eligible individuals from being able to participate in the MQP. This
proposed rule change will provide those eligible individuals a second
opportunity to elect to participate in the MQP to maintain their
qualification.
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\6\ See Securities Exchange Act Release No. 95190 (June 30,
2022), 87 FR 40560 (July 7, 2022) (SR-PEARL-2022-25) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Exchange Rule 3100, Registration Requirements, Exchange Rule
3103, Continuing Education Requirements, and Exchange Rule 3104,
Electronic Filing Requirements for Uniform Forms).
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Prior to the MQP, individuals whose registrations as representative
or principals had been terminated for two or more years could
reregister as representatives or principals only if they requalified by
retaking and passing the applicable representative- or principal-level
examination or if they obtained a waiver of such examination(s) (the
``two-year qualification period''). The MQP provides these individuals
an alternative means of staying current on their regulatory and
securities knowledge following the termination of a registration.\7\
Specifically, the MQP provides eligible individuals a maximum of five
years following the termination of a representative or principal
registration category to reregister without having to requalify by
examination or having to obtain an examination waiver, subject to
satisfying the conditions and limitations of the MQP, including the
annual completion of all prescribed continuing education.
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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 Exchange Rule 3103, Interpretation and Policy .01, the MQP
has a look-back provision that, subject to specified conditions,
extended the option to participate in the MQP to individuals who: (1)
were registered as a representative or principal within two years
immediately prior to July 1, 2022 (the implementation date of Exchange
MQP); and (2) individuals who were participating in the Financial
Services Affiliate Waiver Program (``FSAWP'') under Exchange Rule 3100,
Interpretation and Policy .09, Waiver of Examinations for Individuals
Working for a Financial Services Industry Affiliate of a Member,
immediately prior to July 1, 2022 (collectively, ``Look-Back
Individuals'').\8\
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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. 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 the FINRA Rule Change, FINRA noted that in Regulatory Notice 21-
41 (November 17, 2021), it announced that Look-Back Individuals who
wanted to take part in FINRA's MQP were required to make their election
between January 31, 2022, and March 15, 2022 (the ``First Enrollment
Period''). In addition to the announcement in Regulatory Notice 21-41,
FINRA notified the Look-Back Individuals about the MQP and the First
Enrollment Period via two separate mailings of postcards to their home
addresses and communications through their FINRA Financial Professional
Gateway (``FinPro'') accounts.\9\
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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-week enrollment period may not have provided Look-Back
Individuals with sufficient time to evaluate whether they should
participate in the MQP. For these reasons, FINRA recently amended its
rules to provide Look-Back Individuals a second opportunity to elect to
participate in the MQP (the ``Second Enrollment Period''). For similar
reasons, the Exchange is also proposing to amend its rules to provide
Look-Back Individuals with a Second Enrollment Period.\11\ The
Exchange's Second Enrollment Period will be between the effective date
of this proposed rule change and December 31, 2023. In addition, the
proposed rule change requires that Look-Back Individuals who elect to
participate in the MQP during the Second Enrollment Period complete any
prescribed 2022 and 2023 MQP content by March 31, 2024.\12\
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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 July 1, 2022. To reflect the
availability of the Second Enrollment Period, the proposed rule
change clarifies that for all Look-Back Individuals who elect to
participate in the MQP, their participation period would also be for
a period of five years following the termination of their
registration categories, as with other MQP participants.
\12\ Look-Back Individuals who elect to enroll in the MQP during
the Second Enrollment Period would also need to pay the annual
program fee of $100 for both 2022 and 2023 at the time of their
enrollment.
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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.\13\ The Exchange believes that greater public
awareness of the MQP, coupled with a four-month enrollment period,
should help ensure that all Look-Back Individuals are aware of the MQP
and the availability of the Second Enrollment Period and should provide
them with ample time to decide whether to participate in the MQP.
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\13\ See, e.g., Joanne Cleaver, FINRA Sets Big Change in Motion
with New Options for Licensing Grace Period, InvestmentNews (June
23, 2022), <a href="https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-forlicensing-grace-period-222942">https://www.investmentnews.com/finra-sets-big-change-in-motion-with-new-option-forlicensing-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\
The Exchange also notes that Look-Back Individuals who elect to
participate in the MQP during the Second Enrollment Period would
continue to be subject to all of the other MQP eligibility and
participation conditions. For example, as clarified in the proposed
rule change, Look-Back Individuals electing to participate during the
Second Enrollment Period would have only a maximum of five years
following the termination of a registration category in which to
reregister without having to requalify by
[[Page 67380]]
examination or having to obtain an examination waiver.\15\
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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 July 1, 2020, and elects to participate in
the MQP on December 1, 2023, the individual's maximum participation
period would be five years starting on July 1, 2020, and ending no
later than July 1, 2025. If the individuals does not reregister with
a member firm by July 1, 2025, the individual would need to
requalify by examination or obtain an examination waiver in order to
reregister after that date.
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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.\16\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \17\ requirements that the rules
of an exchange be designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \18\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange's rule proposal
is intended to harmonize the Exchange's supervision rules, specifically
with respect to the continuing education requirements with those of
FINRA, on which they are based. Consequently, the proposed change will
conform the Exchange's rules to changes made to corresponding FINRA
rules, thus promoting application of consistent regulatory standards
with respect to rules that FINRA enforces pursuant to its regulatory
services agreement with the Exchange.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(5).
\18\ Id.
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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 Members without diminishing investor
protection. In addition, the proposed rule change is consistent with
other goals, such as the promotion of diversity and inclusion in the
securities industry by attracting and retaining a broader and diverse
group of professionals. The MQP also allows the industry to retain
expertise from skilled Members, providing investors with the advantage
of greater experience among the Members working in the industry. The
Exchange believes that providing Look-Back Individuals a second
opportunity to elect to participate in the MQP will further these goals
and objectives.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
believes that the proposed rule change, which harmonizes its rules with
the recent rule change adopted by FINRA, will reduce the regulatory
burden placed on market participants engaged in trading activities
across different markets. The Exchange believes that the harmonization
of the CE program requirements across the various markets will reduce
burdens on competition by removing impediments to participation in the
national market system and promoting competition among participants
across the multiple national securities exchanges. Additionally, and as
stated above, FINRA has recently submitted a filing to provide eligible
individuals another opportunity to elect to participate in the
Maintaining Qualifications Program in the same manner.\19\
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\19\ See supra note 5.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
MIAX Pearl has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6) thereunder.\21\
Because the foregoing proposed rule change does not: (i) significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days after the date of the filing, or such shorter time as the
Commission may designate, it has become effective pursuant to
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\22\
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\20\ 15 U.S.C. 78s(b)(3)(A)(iii).
\21\ 17 CFR 240.19b-4(f)(6).
\22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. MIAX Pearl has indicated
that the immediate operation of the proposed rule change is appropriate
because it would allow the Exchange to implement the proposed changes
to its continuing education rules without delay, thereby eliminating
the possibility of a significant regulatory gap between the FINRA rules
and the Exchange rules, providing more uniform standards across the
securities industry, and helping to avoid confusion for Exchange
members that are also FINRA members. MIAX Pearl also noted that FINRA
plans to conduct additional public outreach efforts to promote
awareness of the MQP and the availability of the Second Enrollment
Period among Look-Back Individuals. Therefore, MIAX Pearl indicated
that the immediate operation of the proposed rule change is also
appropriate because it would help to further notify Look-Back
Individuals of their options and provide additional time for them to
consider whether they wish to participate in the MQP before the
December 31, 2023 deadline. For these reasons, the Commission believes
that waiver of the 30-day operative delay for this proposal is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposal operative upon filing.\25\
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\23\ 17 CFR 240.19b-4(f)(6).
\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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
[[Page 67381]]
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<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#780a0d141d551b1715151d160c0b380b1d1b561f170e"><span class="__cf_email__" data-cfemail="691b1c050c440a0604040c071d1a291a0c0a470e061f">[email protected]</span></a>. Please include
file number SR-PEARL-2023-49 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-PEARL-2023-49. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<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 the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection.
All submissions should refer to file number SR-PEARL-2023-49 and
should be submitted on or before October 20, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21350 Filed 9-28-23; 8:45 am]
BILLING CODE 8011-01-P
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