[Federal Register Volume 76, Number 163 (Tuesday, August 23, 2011)]
[Notices]
[Pages 52722-52724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-21465]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65147; File No. SR-CBOE-2011-075]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Amend Certain Registration and Qualification
Requirements
August 17, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934, 15 U.S.C. 78s(b)(1), notice is hereby given that on August 4,
2011, Chicago Board Options Exchange, Incorporated (``CBOE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by CBOE. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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) of the Securities
Exchange Act of 1934 (the ``Act''),\1\ the Chicago Board Options
Exchange, Incorporated (``CBOE'' or the ``Exchange'') proposes to amend
its rules regarding registration and qualification of individual
Trading Permit Holders and individual associated persons. The text of
the proposed rule change is availableon the Exchange's Web site (http://www.cboe.org/legal), at the Exchange's Office of the Secretary and at
the Commission's Public Reference Room.
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\1\ 15 U.S.C. 78s(b)(1).
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, Proposed Rule Change
1. Purpose
CBOE is proposing to amend Exchange Rule 3.6A to (i) exempt from
registration and qualification individual associated persons that are
restricted from accessing the Exchange (physically and electronically)
and that do not engage in the securities business of the Trading Permit
Holder or TPH organization related to activity that occurs at the
Exchange; and (ii) adopt
[[Page 52723]]
language that would eliminate the need to formally file a waiver
request for the appropriate category of registration if the individual
Trading Permit Holder or individual associated person maintains a
registration(s) in designated categories.
Pursuant to Rule 15b7-1,\2\ promulgated under the Exchange Act,\3\
``No registered broker or dealer shall effect any transaction in * * *
any security unless any natural person associated with such broker or
dealer who effects or is involved in effecting such transaction is
registered or approved in accordance with the standards of training,
experience, competence, and other qualification standards * * *
established by the rules of any national securities exchange * * *.
CBOE Rule 3.6A sets forth the requirements for registration and
qualification of individual Trading Permit Holders and individual
associated persons. In response to a request by the Division of Trading
and Markets of the Securities and Exchange Commission (the
``Commission'' or ``SEC''), CBOE recently amended its rules to expand
its registration and qualification requirements set forth in CBOE Rule
3.6A to include individual Trading Permit Holders and individual
associated persons that are engaged or to be engaged in the securities
business of a Trading Permit Holder or TPH organization.\4\ CBOE Rule
3.6A provides that these individuals must be registered with the
Exchange in the category of registration appropriate to the function to
be performed as prescribed by the Exchange. Further, Rule 3.6A
requires, among other things, that an individual Trading Permit Holder
or individual associated person submit an application for registration
and pass the appropriate qualification examination before the
registration can become effective. The revised requirements apply to
both CBOE and CBOE Stock Exchange (``CBSX'') Trading Permit Holders and
their associated persons.
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\2\ 17 CFR 240.15b7-1.
\3\ 15 U.S.C. 78a et seq.
\4\ See Securities Exchange Act Release No. 63314 (November 12,
2010), 75 FR 70957 (November 19, 2010) (SR-CBOE-2010-084).
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CBOE Rule 3.6A(a)(2) sets forth the types of individuals that are
exempt from registration.\5\ CBOE is proposing to amend this provision
to also exempt individual associated persons that are restricted from
accessing the Exchange (physically and electronically) and that do not
engage in the securities business of the Trading Permit Holder or TPH
organization related to activity that occurs on the Exchange. CBOE
believes that these individuals do not need to be registered with the
Exchange because these individuals do not access the Exchange directly
and do not engage in the securities business of the Trading Permit
Holder relating to activity that occurs on the Exchange. For example,
Firm XYZ (``XYZ'') is a CBOE TPH organization and a member of NYSE
AMEX, LLC (``AMEX''). XYZ employs a market-maker, ABC, who is an
associated person of XYZ registered as a market-maker with the AMEX
(and subject to the registration and qualification requirements of
AMEX). ABC would not be required to separately register with CBOE if
ABC (who does not have physical or electronic access to CBOE) submits
an order for execution to Broker DEF, a registered broker-dealer and
CBOE Trading Permit Holder, who executes the order at CBOE. Broker DEF
is subject to the registration requirements of CBOE.
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\5\ Even if an individual associated person is exempt from
registration with the CBOE under Rule 3.6A, Rule 17.1 provides, in
relevant part, ``A Trading Permit Holder or a person associated with
a Trading Permit Holder * * * shall be subject to the disciplinary
jurisdiction of the Exchange.''
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In conjunction with the registration requirements established by
SR-CBOE-2010-084, three new qualification examinations became available
on June 20, 2011 in the Central Registration Depository system
(``WebCRD''), which is operated by the Financial Industry Regulatory
Authority, Incorporated (``FINRA''). These registration categories
include the following (the required qualification examinations and
prerequisites, as applicable, associated with each registration
category are in parentheses): PT--Proprietary Trader (Series 56), CT--
Proprietary Trader Compliance Officer (Series 14, Series 56
prerequisite) and TP--Proprietary Trader Principal (Series 24, Series
56 prerequisite). CBOE is proposing to adopt language that would
eliminate the need to formally file a waiver request for the
appropriate category of registration if the individual Trading Permit
Holder or individual associated person maintains designated
registration categories. Specifically, CBOE is proposing to permit
individuals that maintain a Series 7 to satisfy the qualification
component associated with registration as a Proprietary Trader.
Similarly, CBOE is proposing to accept the Series 24 (including any
prerequisite examinations) to satisfy the qualification component
associated with registration as a Proprietary Trader Compliance
Officer. CBOE is also proposing to allow individual Trading Permit
Holders and/or individual associated persons that maintain the Series
9/10 and the Series 23 \6\ (including any prerequisite examinations) to
satisfy the qualification component associated with registration as a
Proprietary Trader Principal.
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\6\ The Series 23 is designed to test a candidate's knowledge of
the rules and statutory provisions applicable to the management of a
broker-dealer. It is CBOE's understanding that FINRA permits the
Series 23 as an alternative to the Series 24 for its members who are
registered as General Securities Sales Supervisors and who are
seeking to register and qualify as General Securities Principals.
The Series 23 examination covers material from the Series 24
examination not otherwise covered under the Series 9/10 examination.
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CBOE is proposing to limit the time period for which an automatic
waiver of the Series 56 would be granted for those individuals that
maintain a Series 7 registration. Any individual seeking an automatic
waiver of the Series 56 because they maintain a Series 7 registration
must complete all registration requirements in WebCRD for the
Proprietary Trader designation no later than December 31, 2011. In
addition, CBOE is proposing that because the Series 23 is not available
in WebCRD, each applicant must provide documentation of a valid Series
23 license to the Registration Services Department upon request for the
Series 24 registration in WebCRD.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\7\ in general, and furthers the objectives of Section 6(b)(1) \8\
of the Act in particular, in that it is designed to enforce compliance
by Exchange members and persons associated with its members with the
rules of the Exchange. The Exchange also believes the proposed rule
change furthers the objectives of Section 6(c)(3) \9\ of the Act, which
authorizes CBOE to prescribe standards of training, experience and
competence for persons associated with CBOE Trading Permit Holders, in
that this filing proposes to amend and clarify the registration and
qualification requirements set forth in Exchange Rule 3.6A. CBOE
believes the proposed changes are reasonable and set forth the
appropriate qualifications for an individual Trading Permit Holder and
individual associated person that is required to register under
Exchange Rule 3.6A, including, but not limited to, Market-Makers,
proprietary traders and individuals effecting transactions on behalf of
other broker-dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(1).
\9\ 15 U.S.C. 78f(c)(3).
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[[Page 52724]]
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of purposes of the Act.
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
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 \10\ and Rule 19b-4(f)(6) \11\
thereunder.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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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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.
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
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-CBOE-2011-075 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-CBOE-2011-075. 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 Web site 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 CBOE. 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 publicly available. All
submissions should refer to File Number SR-CBOE-2011-075 and should be
submitted on or before September 13, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-21465 Filed 8-22-11; 8:45 am]
BILLING CODE 8011-01-P