80 FR 23844 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Submission of Financial Reports

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 82 (April 29, 2015)

[Federal Register Volume 80, Number 82 (Wednesday, April 29, 2015)]
[Notices]
[Pages 23844-23846]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-09916]



[[Page 23844]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74791; File No. SR-CBOE-2015-040]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Relating to Submission of Financial Reports

April 23, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 15, 2015, Chicago Board Options Exchange, Incorporated 
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II below, which Items have been prepared by the 
Exchange. The Exchange has designated this proposal as a ``non-
controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ 
which renders it effective upon filing with the Commission. The 
Commission is 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The Exchange proposes to amend its rules regarding the submission 
of financial reports. The text of the proposed rule change is provided 
below. Proposed new language is in italics; proposed deletions are in 
brackets.
* * * * *

Rule 15.5. Financial Reports

    Each Trading Permit Holder shall submit to the Exchange answers 
to financial questionnaires, reports of income and expenses and 
additional financial information in the type, form, manner and time 
prescribed by the Exchange.

. . . Interpretations and Policies:


.01 [Reserved.

.02 ]Trading Permit Holders [which]who are net capital computing 
must file electronically with the Exchange[`s Department of 
Financial and Sales Practice Compliance] any required monthly and 
quarterly FOCUS Reports utilizing the [WinJammer \TM\ ]system[,] or 
[such other ]software [as required]prescribed by the Exchange, which 
will be announced via Regulatory Circular.

.0[3]2 Trading Permit Holders who file an annual FOCUS Report and 
who are not net capital computing [have the option to ]must file 
electronically with the Exchange the annual FOCUS Report and 
Schedule 1 [by sending a hard copy to the Exchange or by filing 
electronically to]utilizing the system or software prescribed by the 
Exchange, which will be announced via Regulatory Circular.
* * * * *

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 II.A., II.B., and II.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 its rules regarding the submission 
of financial reports. CBOE Rule 15.5 requires each Trading Permit 
Holder to submit to the Exchange answers to financial questionnaires, 
reports of income and expenses, and additional financial information in 
the type, form, manner, and time prescribed by the Exchange. With 
respect to FOCUS Reports \5\:
---------------------------------------------------------------------------

    \5\ A ``FOCUS Report'' is the Financial and Operational Combined 
Uniform Single Report that broker-dealers file with their designated 
examining authority (``DEA'') pursuant to Rule 17a-5 under the Act. 
The FOCUS Report filing requirements for Trading Permit Holders for 
whom CBOE is the DEA are set forth in CBOE Rule 15.5, 
Interpretations and Policies .02 and .03.
---------------------------------------------------------------------------

     Rule 15.5, Interpretation and Policy .02 requires Trading 
Permit Holders which are net capital computing to file electronically 
with the Exchange's Department of Financial and Sales Practice 
Compliance any required monthly and quarterly FOCUS Reports utilizing 
the WinJammer\TM\ system,\6\ or such other software as required by the 
Exchange; and
---------------------------------------------------------------------------

    \6\ The WinJammer system is an internet-based system that 
Trading Permit Holders can log into and then input relevant FOCUS 
Report information.
---------------------------------------------------------------------------

     Rule 15.5, Interpretation and Policy .03 requires Trading 
Permit Holders who file an annual FOCUS Report and who are not net 
capital computing to, at their option, file the annual FOCUS Report and 
Schedule 1 by sending a hard copy to the Exchange or by filing 
electronically to the Exchange.
    The Exchange recently entered into a Regulatory Services Agreement 
(the ``RSA'') with the Financial Industry Regulatory Authority, Inc. 
(``FINRA''). FINRA provides its members and the members of exchanges 
for which it provides regulatory services access to its Firm Gateway 
system, which is a portal that provides consolidated access to various 
FINRA regulatory systems, including its financial reporting systems.\7\ 
One of these systems is the e-FOCUS system, through which members may 
submit their FOCUS Reports.
---------------------------------------------------------------------------

    \7\ Prior to the RSA, all Trading Permit Holders were able to 
submit Forms BD, U4, and U5 filings through WebCRD, which is 
accessible through the Firm Gateway, and Trading Permit Holders who 
are also FINRA members had access to the Firm Gateway in their 
capacity as FINRA members. Beginning on February 20, 2015, FINRA 
provided Trading Permit Holders who are not FINRA members with 
access to the Firm Gateway Request Manager, which streamlines the 
execution document request and production process and creates an 
audit trail of requests and productions. Beginning on March 16, 
2015, certain Firm Gateway financial filing and notification 
functions became available to Trading Permit Holders that are 
required to submit the financial information to the Exchange. As of 
that date, Trading Permit Holders may submit the information on a 
voluntary basis through the Firm Gateway system (or they may still 
submit directly to the Exchange). The Exchange will announce via 
Regulatory Circular the date on which it will require Trading Permit 
Holders to submit this financial information through Firm Gateway. 
FINRA has not yet made available to Trading Permit Holders that are 
required to file FOCUS Reports with the Exchange access to the Firm 
Gateway eFOCUS system. The Exchange will announce via Regulatory 
Circular the date on which it will begin to require the submission 
of FOCUS Reports through that system. See Regulatory Circular RG15-
026. Any changes to the form and manner of other financial filings 
required to be submitted by Trading Permit Holders to the Exchange 
in light of the RSA with FINRA will also be announced via Regulatory 
Circular pursuant to Rule 15.5.
---------------------------------------------------------------------------

    In connection with the RSA, FINRA is making the Firm Gateway 
available to Trading Permit Holders for the submission of various 
regulatory filings, including certain financial filings, such as FOCUS 
Reports. As a result, CBOE intends to require Trading Permit Holders 
that are required to submit FOCUS Reports to the Exchange to submit 
their FOCUS Reports through the Firm Gateway system, including Trading 
Permit Holders that are not net capital computing. Therefore, CBOE is 
proposing to amend Rule 15.5, Interpretations .02 and .03 to provide 
that FOCUS Reports must be filed electronically with the Exchange 
utilizing the system or software prescribed by the Exchange.\8\ CBOE

[[Page 23845]]

believes that requiring Trading Permit Holders to submit FOCUS Reports 
in this manner will streamline the processing of these reports. 
Additionally, CBOE believes the submission of these reports directly 
into the system of the Exchange's regulatory services provider, into 
which Trading Permit Holders will submit other financial reports, will 
provide for a more efficient and effective process for the collection, 
tracking, consolidation, and review of Trading Permit Holders' 
financial reports.
---------------------------------------------------------------------------

    \8\ CBOE does not believe it is necessary to name the system in 
the Rules, as the Rules already provide CBOE with the flexibility to 
use a system or software other than WinJammer and do not include the 
manner of filing for other financial reports. See Rule 15.5, 
Interpretation and Policy .02; see also, e.g. BATS Exchange, Inc. 
Rule 24.3; International Securities Exchange, LLC Rule 1402; and 
Miami International Securities Exchange, LLC (which rules do not 
specify an electronic system for the submission of any financial 
reports).
---------------------------------------------------------------------------

    Many Trading Permit Holders are FINRA members and thus already have 
access to and submit reports via the Firm Gateway system. Additionally, 
the majority of Trading Permit Holders that currently submit FOCUS 
Reports to the Exchange do so electronically, and CBOE understands that 
the FINRA e-FOCUS system operates in a similar manner to the WinJammer 
system, as they are both web-based systems into which Trading Permit 
Holders sign in and input the relevant information. Thus, the Exchange 
does not anticipate that Trading Permit Holders who currently submit 
FOCUS Reports through WinJammer will experience any significant 
systemic or operational burden in order to submit FOCUS Reports via the 
Firm Gateway system.
    The proposed rule change also makes technical, nonsubstantive 
changes to:
     Conform language in current Rule 15.5, Interpretations and 
Policies .02 and .03;
     renumber Interpretations and Policies .02 and .03 to .01 
and .02, respectively, as current .01 is only reserved; and
     specify in the Rules that CBOE will announce the 
applicable system or software by Regulatory Circular (as is specified 
in Rule 15.5 for other financial reports).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \10\ 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. Additionally, the Exchange believes 
the proposed rule change is consistent with the requirement in Section 
6(b)(5) of the Act that the rules of an exchange not be designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    In particular, the Exchange believes that the proposed change will 
create a more efficient and effective process for the Exchange's 
regulatory services provider, FINRA, to collect and review Trading 
Permit Holders' FOCUS Reports required to be filed with the Exchange, 
which fosters cooperation and coordination with FINRA in its 
performance of regulatory services with respect to Trading Permit 
Holders and CBOE's markets. By enhancing the process through which the 
Exchange (through its regulatory services provider) receives FOCUS 
Reports and allowing consolidation with other financial reports for 
electronic review, the Exchange believes the proposed rule change will 
promote just and equitable principles of trade and ultimately protect 
investors. Additionally, upon implementation, all Trading Permit 
Holders that are required to submit FOCUS Reports to the Exchange will 
be required to submit them in the same (and thus nondiscriminatory) 
electronic manner. Regulation of Trading Permits Holders continues to 
be performed by electronic processes, and thus the Exchange believes it 
is appropriate to require electronic submission of these reports so 
that they may be incorporated into these processes. By maintaining the 
flexibility within the rules for the Exchange to prescribe by 
Regulatory Circular which system or software will be used for the 
submission of FOCUS Reports, the Exchange believes it will be able to 
adjust, as necessary, its standards of financial reporting in a timely 
manner, particularly to the extent that new or enhanced software or 
systems are developed for this purpose.\11\ As discussed above, CBOE's 
and other exchanges' rules maintain this flexibility.
---------------------------------------------------------------------------

    \11\ To the extent CBOE changes the FOCUS Report submission 
software or system in the future, CBOE represents it will provide 
Trading Permit Holders with sufficient notice to comply with any 
such changes.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule changes will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change 
requires all Trading Permit Holders that are required to submit FOCUS 
Reports to submit those reports in the same electronic manner. Many 
Trading Permit Holders are also FINRA members and thus already have 
access to the Firm Gateway system. The majority of Trading Permit 
Holders that are required to submit FOCUS Reports to the Exchange 
currently do so electronically in a manner similar to what will be 
required when submission through the Firm Gateway system becomes 
mandatory, thus resulting in minimal additional burden. While some 
Trading Permit Holders will no longer be able submit hard copies of 
FOCUS Reports, the Exchange believes that any burden imposed by the 
proposed rule change is minimal and outweighed by the regulatory 
efficiencies that may be gained through electronic submission directly 
to the Exchange's regulatory services provider, who will be able to 
more efficiently and effectively review FOCUS Reports together with 
other financial reports in its system. The Exchange does not believe 
that the proposed rule changes will impose any burden on intermarket 
competition, as the proposed rule change is for regulatory purposes to 
enhance the process for Trading Permit Holders' submission and the 
Exchange's collection, tracking, consolidation, and review (through its 
regulatory services provider) of FOCUS Reports.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. 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 \12\ and 
subparagraph (f)(6) of Rule 19b-4 \13\ thereunder.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    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 23846]]

action is: (i) Necessary or appropriate in the public interest; (ii) 
for the protection of investors; or (iii) 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 change 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-CBOE-2015-040 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2015-040. 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 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 10:00 a.m. and 
3:00 p.m. Copies of the 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-CBOE-2015-040 and 
should be submitted on or before May 20, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ See 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-09916 Filed 4-28-15; 8:45 am]
 BILLING CODE 8011-01-P