[Federal Register Volume 80, Number 249 (Tuesday, December 29, 2015)]
[Notices]
[Pages 81390-81393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32648]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76732; File No. SR-BOX-2015-38]
Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend BOX Rule 2020 (Participant Eligibility and Registration) To
Replace the Limited Representative--Proprietary Trader and Limited
Principal--Proprietary Trader Registration Categories and Establish the
Securities Trader and Securities Trader Principal Registration
Categories
December 22, 2015.
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 14, 2015, BOX Options Exchange LLC (the ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, of
which Items I and II have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule 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 BOX Rule 2020 (Participant
Eligibility and Registration) to replace the Limited
[[Page 81391]]
Representative--Proprietary Trader and Limited Principal--Proprietary
Trader registration categories and establish the Securities Trader and
Securities Trader Principal registration categories. The text of the
proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room and also on the
Exchange's Internet Web site at http://boxexchange.com.
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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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 BOX Rule 2020 (Participant
Eligibility and Registration) to replace the Limited Representative--
Proprietary Trader and Limited Principal--Proprietary Trader
registration categories and establish the Securities Trader and
Securities Trader Principal registration categories. The Exchange is
also amending its rules to establish the Series 57 examination as the
appropriate qualification examination for Securities Traders and
eliminating the reference to the S501 continuing education program
currently applicable to Proprietary Traders.\3\ This filing is, in all
material respects, based upon SR-FINRA-2015-017, which was recently
approved by the Securities and Exchange Commission (``SEC'' or
``Commission'').\4\
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\3\ Currently, in order to supervise, representatives must first
pass the appropriate underlying qualification examination which is
either the Series 7 qualification examination which would allow a
representative to register as a General Securities Representative on
BOX or the Series 56 qualification examination which would allow a
representative to register as a Limited Representative--Proprietary
Trader on BOX. In addition to passing the Series 7 or Series 56,
representatives must also pass the Series 24 qualification
examination and register as a General Securities Principal if they
are registered as a General Securities Representative or as a
Limited Principal--Proprietary Trader if they are registered as a
Limited Representative--Proprietary Trader. After January 4, 2016,
the Series 57 qualification examination would replace the Series 56
qualification examination as the appropriate underlying
qualification examination for a representative to take prior to
taking the Series 24 qualification examination so that the
Representative may supervise proprietary trading on BOX.
Representatives would then register as a [sic] Securities Trader
Principal in order to supervise proprietary trading on BOX.
\4\ See Securities Exchange Act Release No. 75783 (August 28,
2015), 80 FR 41119 (July 14, 2015) [sic] (Order Approving a Proposed
Rule Change to Establish the Securities Trader and Securities Trader
Principal Registration Categories) (SR-FINRA-2015-017).
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a. Securities Trader Registration Category
BOX currently uses the Series 56 qualification examination for the
Limited Representative--Proprietary Trader registration category
referenced in BOX Rule 2020(b)(2).\5\ However, BOX allows
representatives who have passed the Series 7 qualification examination
and who are registered as a [sic] General Securities Representative on
BOX to conduct proprietary trading without having to take the Series 56
qualification examination and register as a Limited Representative--
Proprietary Trader. For representatives who are new to the industry or
have not yet taken a qualification examination, BOX requires the
representatives engaged in proprietary trading to take a qualification
examination, either the Series 7 or the Series 56, and then register as
a General Securities Representative or a Proprietary Trader on BOX.
After the implementation of the Series 57 examination on or after
January 4, 2016, BOX will no longer allow representatives with a
General Securities Representative registration to engage in proprietary
trading on BOX.\6\ Representatives who are not grandfathered prior to
the implementation of the Series 57 qualification examination or who
are new to the industry after implementation of the Series 57; [sic]
and are engaged in proprietary trading will be required to take the
Series 57 qualification examination and register as a Securities Trader
on BOX.
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\5\ See BOX Rule 2020(b)(2).
\6\ BOX will grandfather in anyone registered with Limited
Representative--Proprietary Trader registration prior to January 4,
2016 with the new Securities Trader registration category in FINRA's
Central Registration Depository (``Web CRD'') System.
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BOX notes that the proposed rule change does not impose any
additional examination burdens on persons who are already registered on
BOX. A person registered as a Limited Representative--Proprietary
Trader and Limited Principal--Proprietary Trader on the effective date
of the proposed rule change will be grandfathered in as a Securities
Trader or Securities Trader Principal, respectively, without having to
take additional examinations or any other actions. In addition,
individuals who were registered as either a Limited Representative--
Proprietary Trader or Limited Principal--Proprietary Trader prior to
the effective date of the proposed rule change will be eligible to
register as a Securities Trader or Securities Trader Principal without
having to take any additional examinations, provided no more than two
years have passed between the date they were last registered as a
representative and the date they register as a Securities Trader or
Securities Trader Principal.
On January 22, 2015, FINRA entered into a Termination Agreement
with the national securities exchanges that set forth the terms and
conditions that will govern the winding down of the Series 56
examination in advance of its replacement by the Series 57 examination
and the integration of the S501 Program into the S101 Regulatory
Element Continuing Education Program. The Series 57 qualification
examination will be recognized by FINRA and the other national
securities exchanges on January 4, 2016.
FINRA has developed the Series 57 qualification examination and has
filed the qualification examination with the Commission as part of a
separate proposed rule change.\7\ According to FINRA, while the Series
57 examination will include the core knowledge portion of the Series 7
examination, the Series 57 examination will also be based on the
current job functions of securities traders and include elements of the
Series 55 and Series 56 examination programs. In addition, FINRA has
filed a separate proposed rule change to establish the fee for the
Series 57 examination.\8\
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\7\ See Securities Exchange Act Release No. 76188 (October 19,
2015), 80 FR 64456 (October 23, 2015) (SR-FINRA-2015-042).
\8\ See Securities Exchange Act Release No. 76391 (November 9,
2015), 80 FR 70862 (November 16, 2015) (SR-FINRA-2015-044). BOX will
also file a separate rule filing in December 2015 to amend Section
VI (Regulatory Fees) of its Fee Schedule to remove Part C
(Registration and Continuing Education Fees) associated with Series
56 qualification examination and the S501 continuing education.
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b. Securities Trader Principal Registration Category
BOX current registration rules require a person seeking to register
as a Limited Principal--Proprietary Trader to have passed the
underlying qualification examination Series 56 and be registered
pursuant to Exchange Rules as a Limited Representative--Proprietary
Trader, and
[[Page 81392]]
have passed the Series 24 qualification examination.\9\ BOX proposes to
amend its rule text to replace Limited Principal--Proprietary Trader
registration category with a Securities Trader Principal registration
category in addition to replacing the Series 56 underlying
qualification examination with the Series 57 underlying qualification
examination. The Exchange also proposes to add a statement to clarify
that a person registered as a General Securities Principal under
2020(c)(1) above shall not be qualified to function in a Principal
capacity with responsibility over any area of business activity
described in Rule 2020(c)(2).
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\9\ See BOX Rule 2020(c)(2)(i)(A-C).
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2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Securities Exchange Act of 1934
(the ``Act''),\10\ in general, and Section 6(b)(5) of the Act,\11\ in
particular, in that 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. In particular, BOX believes that the proposed rule
change will streamline, and bring consistency and uniformity to, the
qualification and registration requirements for individuals engaged in
securities trading activities across different markets and for
principals responsible for supervising such activities, which will, in
turn, improve registration and compliance efforts.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
BOX 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.
BOX's proposed rule change to replace the Limited Representative--
Proprietary Trader registration category and qualification examination
Series 56 with the Securities Trader registration category and Series
57 qualification examination will reduce the burden on associated
persons currently required to be registered as proprietary traders by
harmonizing the registration requirements for representatives engaged
in securities trading activities across different markets. Under the
proposed rule change, associated persons would be eligible to engage in
securities trading activities by registering as Securities Traders and
passing a single comprehensive Securities Trader qualification
examination which is consistent with the other national securities
exchanges.
BOX believes that the proposed rule change relating to Securities
Trader Principals will harmonize the registration and qualification
requirements for principals that supervise securities trading
activities across different markets.
Further, the proposed rule change does not impose any additional
examination burdens on persons who are already registered. There is no
obligation to take the proposed Series 57 examination in order to
continue in their present duties, so the proposed rule change is not
expected to disadvantage current registered persons relative to new
entrants in this regard.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
(a) This proposed rule change is filed pursuant to paragraph (A) of
section 19(b)(3) of the Exchange Act \12\ and Rule 19b-4(f)(6)
thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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(b) This proposed rule change does not significantly affect the
protection of investors or the public interest, does not impose any
significant burden on competition, and, by its terms, does not become
operative for 30 days after the date of the filing, or such shorter
time as the Commission may designate if consistent with the protection
of investors and the public interest. The Exchange has requested that
the Commission waive the 30-day operative delay period for ``non-
controversial'' proposals and make the proposed rule change effective
and operative upon filing \14\ because the proposal is related to the
industry wide replacement of the proprietary trader registration
categories and Series 56 qualification examination with the Securities
Trader registration category and Series 57 qualification examination,
which will become effective on January 4, 2015 [sic].
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\14\ As required under Rule 19b-4(f)(6)(iii), the Exchange
provided the Commission with written notice of its intent to file
the proposed rule change along with a brief description and the 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.
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The Commission believes that waiving the thirty-day operative delay
is consistent with the protection of investors and the public interest,
because waiving the operative delay will enable BOX to have
registration and qualification requirements that are consistent with
those of the other national securities exchanges and FINRA. Therefore,
the Commission hereby waives the thirty-day operative delay and
designates the proposal operative as of January 4, 2016.\15\
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\15\ For purposes 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).
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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. 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
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BOX-2015-38 on the subject line.
Paper Comments
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-BOX-2015-38. 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
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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, on official business days between
the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE.,
Washington, DC 20549. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. 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-BOX-2015-38 and
should be submitted on or before January 19, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Brent J. Fields,
Secretary.
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\16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-32648 Filed 12-28-15; 8:45 am]
BILLING CODE 8011-01-P