Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.

Federal Register: December 30, 2009 (Volume 74, Number 249)

Notices

Page 69173-69175

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr30de09-132

SECURITIES AND EXCHANGE COMMISSION

Release No. 34-61231; File No. SR-FINRA-2009-092

Self-Regulatory Organizations; Financial Industry Regulatory

Authority, Inc.; Notice of Filing and Immediate Effectiveness of

Proposed Rule Change To Extend the Date by Which Eligible Registrants

Must Complete a Firm-Element Continuing Education Program To Qualify To

Engage in a Security Futures Business

December 23, 2009.

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 December 18, 2009, Financial Industry Regulatory Authority, Inc.

(``FINRA'') 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 FINRA. The Commission is

Page 69174

publishing this notice to solicit comments on the proposed rule change from interested persons.

\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   FINRA is a proposing to amend NASD Rule 1022 (Categories of

   Principal Registration) and NASD Rule 1032 (Categories of

   Representative Registration) to extend to December 31, 2012 the date by which eligible registrants must complete a firm-element continuing education program to qualify to engage in a security futures business.

   The text of the proposed rule change is available on FINRA's Web site at http://www.finra.org, at the principal office of FINRA, on the

   Commission's Web site at http://www.sec.gov, and at the Commission's

   Public Reference Room.

2. Self-Regulatory Organization's Statement of the Purpose of, and

   Statutory Basis for, the Proposed Rule Change

   In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A,

   B, and C below, of the most significant aspects of such statements.

   1. Self-Regulatory Organization's Statement of the Purpose of, and

      Statutory Basis for, the Proposed Rule Change 1. Purpose

      In 2003 [sic], FINRA modified the following registration categories to include the activities of engaging in and supervising securities futures: (1) Registered Options Principal (Series 4); (2) Limited

      Principal--General Securities Sales Supervisor (Series 9/10); (3)

      General Securities Representative (Series 7); and (4) Registered

      Options Representative (Series 42).\3\ FINRA also required that persons currently registered or becoming registered in these categories complete a firm-element continuing education requirement addressing security futures before they conducted any security futures business.

      FINRA instituted this continuing education requirement to ensure that registered personnel, who may not be familiar with risks, trading characteristics, terms and nomenclature of these products, or the fact that they are subject to the joint jurisdiction of the SEC and CFTC, receive the necessary training.

      \3\ See Securities Exchange Act Release No. 46663 (October 15, 2002), 67 FR 64944 (October 22, 2002) (Order Approving File No. SR-

      NASD-2002-40).

      FINRA initially considered replacing the firm-element continuing education requirement with revised qualification examinations for these categories that addressed security futures, however, such qualification examinations have not been implemented. In 2006, FINRA amended NASD

      Rule 1022 (Categories of Principal Registration) and Rule 1032

      (Categories of Representative Registration) to extend the date by which eligible registrants must complete the firm-element continuing education requirement to engage in a security futures business from

      December 31, 2006 to December 31, 2009.\4\ In view of the fact that there are no revised qualification examinations addressing security futures, FINRA intends to continue to require eligible registrants to complete the mandated firm-element continuing education requirement before engaging in any security futures business. The proposed rule change amends NASD Rule 1022 (Categories of Principal Registration) and

      NASD Rule 1032 (Categories of Representative Registration) to extend the date by which eligible registrants must complete the firm-element continuing education requirement to engage in a security futures business from December 31, 2009 to December 31, 2012.\5\

      \4\ See Securities Exchange Act Release No. 54617 (October 17, 2006), 71 FR 62498 (October 25, 2006) (Notice of Filing and

      Immediate Effectiveness of File No. SR-NASD-2006-118).

      \5\ The Commission notes that FINRA has proposed to amend its rule text to provide that, as of December 31, 2009, for eligible registrants, the deadline for completing a firm-element continuing education program in order to qualify to engage in security futures activities is the earlier of December 31, 2012, or one business day prior to the date a new examination that includes security futures products is offered.

      FINRA has filed the proposed rule change for immediate effectiveness. The implementation date will be December 31, 2009. 2. Statutory Basis

      FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\6\ which requires, among other things, that FINRA 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 investors and the public interest. The proposed rule change is necessary to continue to allow eligible registrants to complete a firm-element continuing education program that will qualify them to engage in a security futures business.

      \6\ 15 U.S.C. 78o-3(b)(6).

   2. Self-Regulatory Organization's Statement on Burden on Competition

      FINRA 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.

   3. 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.

3. Date of Effectiveness of the Proposed Rule Change and Timing for

   Commission Action

   Because the foregoing proposed rule change does not: (i)

   Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \7\ and Rule 19b- 4(f)(6) thereunder.\8\

   \7\ 15 U.S.C. 78s(b)(3)(A).

   \8\ 17 CFR 240.19b-4(f)(6).

   The Exchange has requested that the Commission waive the 30-day operative delay to permit the proposed rule change to become operative on December 31, 2009. The Commission finds that waiver of the operative delay is consistent with the protection of investors and the public interest because the waiver will keep in place the ability of registered persons to qualify to sell security futures by completing a firm-element continuing education program in lieu of an exam.

   Therefore, the Commission designates the proposal operative on December 31, 2009.\9\

   \9\ For purposes only of waiving the 30-day operative delay, the

   Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f).

   At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate 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.

4. Solicitation of Comments

   Interested persons are invited to submit written data, views and

   Page 69175

   arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:

   Electronic Comments

   Use the Commission's Internet comment form (http:// www.sec.gov/rules/sro.shtml); or

   Send an e-mail to rule-comments@sec.gov. Please include

   File Number SR-FINRA-2009-092 on the subject line.

   Paper Comments

   Send paper comments in triplicate to Elizabeth M. Murphy,

   Secretary, Securities and Exchange Commission, 100 F Street, NE.,

   Washington, DC 20549-1090.

   All submissions should refer to File Number SR-FINRA-2009-092. This file number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying 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 FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FINRA-2009-092 and should be submitted on or before January 20, 2010.

   \10\ 17 CFR 200.30-3(a)(12).

   For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\

   Florence E. Harmon,

   Deputy Secretary.

   FR Doc. E9-30925 Filed 12-29-09; 8:45 am

   BILLING CODE 8010-01-P