80 FR 35406 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Regulatory Related References

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 118 (June 19, 2015)

[Federal Register Volume 80, Number 118 (Friday, June 19, 2015)]
[Notices]
[Pages 35406-35407]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-15044]



[[Page 35406]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75173; File No. SR-CBOE-2015-027]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change To Update Regulatory Related References

June 15, 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 June 2, 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, II, and III below, of which Items I and III 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 proposes to amend its rules to update regulatory 
related references. The text of the proposed rule change is available 
on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the 
Secretary, 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 recently entered into a Regulatory Services Agreement 
(``RSA'') with the Financial Industry Regulatory Authority, Inc. 
(``FINRA''), pursuant to which FINRA, among other things, will provide 
certain regulatory services to the Exchange.\3\ As such, the Exchange 
proposes to make conforming changes to its rules to account for the new 
regulatory structure.
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    \3\ The Commission notes that while the Exchange has entered 
into an RSA with FINRA to provide regulatory services, the Exchange 
retains ultimate legal responsibility for, and control of, its self-
regulatory responsibilities. See, e.g., CBOE Rule 15.9(b) (``The 
Exchange may enter into one or more agreements with another self-
regulatory organization to provide regulatory services to the 
Exchange to assist the Exchange in discharging its obligations under 
Section 6 and Section 19(g) of the Securities Exchange Act of 1934. 
Any action taken by another self-regulatory organization, or its 
employees or authorized agents, acting on behalf of the Exchange 
pursuant to a regulatory services agreement shall be deemed to be an 
action taken by the Exchange; provided, however, that nothing in 
this provision shall affect the oversight of such other self-
regulatory organization by the Securities and Exchange Commission. 
Notwithstanding the fact that the Exchange may enter into one or 
more regulatory services agreements, the Exchange shall retain 
ultimate legal responsibility for, and control of, its self-
regulatory responsibilities, and any such regulatory services 
agreement shall so provide.'').
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    First, the Exchange seeks to rename the ``Regulatory Services 
Division'' to ``Regulatory Division'' and make conforming changes in 
Exchange Rules. As such, the Exchange seeks to replace all references 
to ``Regulatory Services Division'' with ``Regulatory Division'' in 
Exchange Rules 4.4 (Gratuities), 10.12 (Mandatory Closing of Fails), 
10.14 (Procedure for Closing Defaulted Contract), and 17.2 (Complaint 
and Investigation).
    Next, the Exchange seeks to eliminate references to ``Office of 
Enforcement'' in the Exchange Rules. By way of background, the Office 
of Enforcement was responsible for resolving disciplinary matters on 
behalf of the Exchange, which included negotiating settlements in 
disciplinary cases for the Business Conduct Committee's (``BCC'') 
consideration and in situations where a respondent in a disciplinary 
matter did not seek settlement, preparing and presenting the case for 
hearing before the BCC, as well as handling any subsequent appeals. The 
Exchange notes that while it continues to have responsibility for 
enforcing compliance with its rules, the Office of Enforcement services 
mentioned above transitioned to FINRA pursuant to the FINRA RSA. The 
Exchange therefore seeks to (i) remove the term ``Office of 
Enforcement'' from Rule 4.4 (Gratuities) and (ii) replace the term with 
``Regulatory Division'' in Rules 17.9 (Decision) and 17.10 (Review), as 
``Office of Enforcement'' is obsolete in light of the transition of 
certain regulatory functions to FINRA. Next, the Exchange seeks to 
replace current references to ``Exchange's Regulatory staff'' and 
``Regulatory staff of the Exchange'' to ``Regulatory staff'' in 
Exchange Rules 17.2 (Complaint and Investigation), 17.3 (Expedited 
Proceeding), 17.4 (Charges), and 17.8 (Offers of Settlement), as 
reference to Regulatory staff may now also refer to employees of FINRA 
who are performing regulatory services to the Exchange in accordance 
with the abovementioned RSA, not just employees of the Exchange. 
Finally, the Exchange proposes to provide in Interpretation .05 of Rule 
17.2 that references to ``Regulatory staff'' in Chapter XVII means the 
Exchange's employees in the Regulatory Division and ``as applicable, 
may also mean employees of the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') who are performing regulatory services to the Exchange 
in accordance with the regulatory services agreement entered into 
between the Exchange and FINRA.'' The Exchange believes the proposed 
clarifications maintain clarity in the rules and alleviate confusion. 
The Exchange notes that these are clarifying, non-substantive changes.
2. Statutory Basis
    The Exchange believes the proposed rule changes are consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\4\ Specifically, the 
Exchange believes the proposed rule changes are consistent with the 
Section 6(b)(5) \5\ 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).

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[[Page 35407]]

    In particular, the Exchange believes that removing the obsolete 
term ``Office of Enforcement'' from the rules, conforming references 
relating to Regulatory staff and expressly stating that references to 
``Regulatory staff'' may refer to staff at FINRA who are performing 
regulatory services to the Exchange in accordance with the RSA, 
maintains clarity in the rules and eliminates potential confusion. The 
alleviation of potential confusion will remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, protect investors and the public interest.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed changes to 
conform Exchange rules and alleviate confusion are not intended for 
competitive reasons and only apply to CBOE. The Exchange also does not 
believe the proposed rule change effects intramarket or intermarket 
competition, and notes that no rights or obligations of Trading Permit 
Holders are affected by the change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 \7\ 
thereunder. 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f).
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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-2015-027 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-CBOE-2015-027. 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-2015-027, and should be 
submitted on or before July 10,  2015.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-15044 Filed 6-18-15; 8:45 am]
 BILLING CODE 8011-01-P