80 FR 41112 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change Relating to Trading Permit Holder Qualifications
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 134 (July 14, 2015)
Federal Register Volume 80, Issue 134 (July 14, 2015)
| Page Range | 41112-41114 | |
| FR Document | 2015-17290 |
[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)] [Notices] [Pages 41112-41114] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17290] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75317; File No. SR-CBOE-2015-012] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of Proposed Rule Change Relating to Trading Permit Holder Qualifications June 26, 2015. I. Introduction On May 4, 2015, Chicago Board Options Exchange Incorporated (the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange Commission (the ``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to amend its rules related to Trading Permit Holder requirements and direct access to the Exchange's Hybrid Trading System (``System''). The proposed rule change was published for comment in the Federal Register on May 20, 2015.\3\ The Commission received no comments on the proposed rule change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 74963 (May 14, 2015), 80 FR 29131 (May 20, 2015) (``Notice''). --------------------------------------------------------------------------- II. Description of Proposed Rule Change The Exchange proposes to amend its rules by (i) adopting new CBOE Rule 3.4A (Additional Trading Permit Holder Qualifications)to add additional qualification requirements for persons seeking to become and remain Trading Permit Holders, (ii) adding a requirement regarding access by Sponsored Users in CBOE Rule 6.20A (Sponsored Users), (iii) adding a requirement regarding access to the System in CBOE Rule 6.23A (Trading Permit Holder Connectivity), and (iv) making nonsubstantive changes to renumber the paragraphs in CBOE Rule 3.4 (Foreign Trading Permit Holders). The Exchange states that the proposed rule change is intended to accommodate the potential interest of non-U.S. persons or organizations in becoming Trading Permit Holders or accessing the System from foreign jurisdictions following the launch of Extended Trading Hours on the Exchange.\4\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 73704 (November 28, 2014), 79 FR 72044 (December 4, 2014). --------------------------------------------------------------------------- Trading Permit Holder Requirements The Exchange proposes to add additional requirements that will be applicable to all Trading Permit Holders through new proposed CBOE Rule 3.4A. Currently, CBOE Rules 3.2 (Qualifications of Individual Trading Permit Holders) and 3.3 (Qualifications of TPH Organizations) set forth the requirements for individuals and organizations, respectively, to become and remain Trading Permit Holders. For an individual to become and remain a Trading Permit Holder, CBOE Rule 3.2 requires the individual to (i) to be at least 21 years of age, (ii) be registered as a broker or dealer pursuant to Section 15 of the Act, or be associated with a Trading Permit Holder organization that is registered as a broker or dealer pursuant to Section 15 of the Act, and (iii) meet the qualification requirements to be a Trading Permit Holder under the Exchange's bylaws and rules. Similarly, for an organization to become and remain a Trading Permit Holder, CBOE Rule 3.3 requires the organization to (i) be a corporation, partnership, or limited liability company, (ii) be registered as a broker or dealer pursuant to Section 15 of the Act, and (iii) meet the qualification requirements to be a Trading Permit Holder under the Exchange's bylaws and rules. Further, CBOE Rule 3.4 imposes additional qualifications on Trading Permit Holders that do not maintain an office in the United States that prepares and maintains financial and other reports required to be filed with the Commission and the Exchange. These foreign Trading Permit Holders must (i) prepare all such reports, and maintain a general ledger chart of account and any description thereof, in English and U.S. Dollars, (ii) reimburse the Exchange for any expense incurred in connection with examinations of the Trading Permit Holder to the extent that such expenses exceed the cost of examining a Trading Permit Holder located within the United States, and (iii) ensure the availability of an individual fluent in English knowledgeable in securities and financial matters to assist the representatives of the Exchange during examinations.\5\ --------------------------------------------------------------------------- \5\ The proposed rule change makes nonsubstantive formatting changes to CBOE Rule 3.4 to revise the numbering of the paragraphs. --------------------------------------------------------------------------- Proposed CBOE Rule 3.4A(a) provides that, in addition to the requirements set forth in CBOE Rules 3.2 through 3.4, a Trading Permit Holder applicant must satisfy several new requirements. First, proposed CBOE Rule 3.4A(a)(i) provides that a Trading Permit Holder applicant must be domiciled in (with respect to [[Page 41113]] individuals), or organized under the laws of (with respect to organizations), a jurisdiction expressly approved by the Exchange. The proposed rule provides that when determining whether to approve a jurisdiction, the Exchange will consider whether: (i) The applicant will be able to supply the Exchange with such information with respect to the applicant's dealings with the Exchange as set forth in CBOE's rules, (ii) the Exchange will be able to examine the applicant's books and records to verify the accuracy of any information so supplied, (iii) approval of such application will comply with all applicable laws, rules, and regulations, and (iv) other factors that the Exchange reasonably and objectively determines may impact the applicant's ability to comply with the Exchange's rules and the Act or the Exchange's ability to accept Trading Permit Holders from the applicable jurisdiction. The proposed rule also provides that this approval may be limited to one or more specified categories of Trading Permit Holders or Trading Permit Holder activities in a jurisdiction or be contingent upon the satisfaction of specified conditions by all applicants from a jurisdiction to the extent such limits or conditions are necessary to satisfy clauses (i) through (iv). Second, proposed CBOE Rule 3.4(a)(ii) provides that a Trading Permit Holder applicant must be subject to the jurisdiction of the federal courts of the United States and the courts of the state of Illinois. Finally, proposed CBOE Rule 3.4(a)(iii) provides that a Trading Permit Holder applicant, prior to acting as agent for a customer, must be able to provide information regarding the customer and the customer's trading activities to the Exchange in response to a regulatory request for information pursuant to the CBOE's rules. To the extent an individual or organization is required by an applicable law, rule, or regulation to obtain written consent from a customer to permit the provision of this information to the Exchange, the applicant must obtain such consent.\6\ --------------------------------------------------------------------------- \6\ The Exchange also proposes to amend Rule 6.20A pertaining to Sponsoring Trading Permit Holders. The Exchange asserts that it needs the same information from Sponsored Users as it does from Trading Permit Holders. See Notice, supra note 3, at n. 7. Proposed new paragraph (c) under Rule 6.20A requires Sponsored Users to satisfy the requirements of CBOE Rule 3.4A(a) and only access the System from an approved jurisdiction. --------------------------------------------------------------------------- The Exchange intends to provide a list of approved jurisdictions and notify market participants, both initially and when updated, in a Regulatory Circular.\7\ Additionally, the Exchange intends to have a Web site that lists currently approved jurisdictions. --------------------------------------------------------------------------- \7\ Regulatory Circulars are publicly available on the Exchange's Web site. The Exchange states that it will issue a Regulatory Circular notifying market participants if it no longer intends to issue a Regulatory Circular to announce changes to the list of approved jurisdictions and only update the Web site. See Notice, supra note 3, at 29132. See also Regulatory Circular RG15- 014 (question #5 includes a current list of approved jurisdictions, subject to Commission approval of this proposed rule change). --------------------------------------------------------------------------- Proposed CBOE Rule 3.4A(b) allows the Exchange to determine at any time that a Trading Permit Holder can no longer comply with proposed CBOE Rule 3.4A. For example, this scenario could arise if the laws in the Trading Permit Holder's jurisdiction change in a manner that prevents compliance with CBOE Rule 3.4A. If the Exchange determines that the Trading Permit Holder is not in compliance with CBOE Rule 3.4A, then the Trading Permit Holder will have three months following the date of this determination to come into compliance. If the Trading Permit Holder does not come into compliance during that time period, the Exchange may terminate the Trading Permit Holder's status as a Trading Permit Holder.\8\ --------------------------------------------------------------------------- \8\ The Exchange asserts that this rule change is consistent with CBOE Rule 3.5(d), which among other things, permits the Exchange to determine not to permit a Trading Permit Holder to continue being a Trading Permit Holder if it fails to meet any qualification requirements for being a Trading Permit Holder after approval as a Trading Permit Holder. See Notice, supra note 3, at n. 5. --------------------------------------------------------------------------- The Exchange states that these proposed requirements will enhance the Exchange's regulatory oversight of its Trading Permit Holders' activity and its ability to monitor Trading Permit Holders' compliance with Exchange rules and the Act.\9\ While the proposed changes apply to all Trading Permit Holders, the Exchange indicates that certain jurisdictions may limit market participants' ability to share or access certain information.\10\ The Exchange states that the additional requirements are intended to assure the Exchange that it will be able to obtain the information necessary to perform its self-regulatory obligations and to comply with the applicable regulatory requirements in jurisdictions in which Trading Permit Holders are located.\11\ --------------------------------------------------------------------------- \9\ See id. at 29133. \10\ See id. \11\ See id. --------------------------------------------------------------------------- System Access and Sponsored Users The Exchange proposes to amend CBOE Rule 6.23A to provide that Trading Permit Holders, persons associated with Trading Permit Holders, and Sponsored Users with authorized access may only directly access the System from a jurisdiction expressly approved by the Exchange pursuant to CBOE Rule 3.4A(a).\12\ The Exchange asserts that the laws, rules, and regulations of a jurisdiction relating to exchange membership apply in the same manner to persons or entities accessing the System from such jurisdiction.\13\ For example, restrictions on supplying an exchange with certain information or providing access to books and records would apply whether the Trading Permit Holder was domiciled in such jurisdiction or was directly accessing the System from such jurisdiction. Accordingly, the Exchange asserts that direct access should only be permitted from approved jurisdictions for the same reasons discussed above.\14\ --------------------------------------------------------------------------- \12\ The Exchange asserts that it currently has similar authority under CBOE Rule 6.23A(e) to prescribe technical specifications regarding the establishment of an electronic connection to the System, arguing proposed CBOE Rule 6.23A(c) is similar to a ``specification'' because the location requirement will be part of the same process which the Trading Permit Holder must comply when establishing a connection to the Exchange. See id. at 29134. \13\ See id. at 29133. \14\ See id. at 29133-34. --------------------------------------------------------------------------- The Exchange also proposes to amend CBOE Rule 6.20A to require Sponsoring Trading Permit Holders to ensure that a Sponsored User satisfies the requirements of CBOE Rule 3.4A(a) and only directly accesses the System from an approved jurisdiction as set forth in CBOE Rule 6.23A(d). The Exchange asserts it would need the same information from Sponsored Users as it does from Trading Permit Holders and therefore the same requirements should apply.\15\ --------------------------------------------------------------------------- \15\ See id. at n. 7. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\16\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\17\ which requires, among other things, that the rules of a national securities 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 [[Page 41114]] 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. The Commission also finds that the proposal is designed to not permit unfair discrimination between customers, issuers, brokers, or dealers pursuant to Section 6(b)(5) of the Act.\18\ Further, the Commission finds that the proposed rule change is consistent with Section 6(b)(1) of the Act,\19\ which provides that an exchange must be so organized and have the capacity to be able to carry out the purposes of this Act and to comply, and to enforce compliance by its members and persons associated with its members, with the Act, the rules and regulations thereunder, and the rules of the exchange. --------------------------------------------------------------------------- \16\ In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \17\ 15 U.S.C. 78f(b)(5). \18\ Id. \19\ 15 U.S.C. 78f(b)(1). --------------------------------------------------------------------------- The Commission believes that the additional requirements prescribed by CBOE Rules 3.4A, 6.20A, and 6.23A are reasonably designed to assure the Exchange that it will be able to obtain the information necessary to perform its self-regulatory obligations. In this regard, the Commission notes that certain foreign jurisdictions may have laws, rules, or regulations that prohibit or restrict the sharing of certain information that would be necessary for the Exchange to adequately oversee the trading activity of Trading Permit Holders from such jurisdictions. Accordingly, the Commission believes that it is appropriate and consistent with the Act for the Exchange to require Trading Permit Holders to be domiciled in, or only directly access the System from, jurisdictions that would not impede the Exchange's ability to carry out its regulatory responsibilities, and that Trading Permit Holders are otherwise able to provide to CBOE pertinent information regarding their customers and their customers' trading activities in response to a regulatory request. The Commission believes that these new CBOE requirements will help facilitate the Exchange's surveillance, examinations, and inspections of Trading Permit Holders by helping to ensure that the Exchange has access to information necessary for it to enforce compliance by all Trading Permit Holders with CBOE's rules and the federal securities laws, consistent with the Act.\20\ With unencumbered access to the same level of information from each member, without regard to whether such members are located within or outside the U.S., the proposal is designed to support CBOE's ability to fulfil its regulatory mandate to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, and protect investors and the public interest, consistent with Section 6(b)(5) of the Act.\21\ --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f(b). In this regard, as noted above, the Rule provides that in approving a given jurisdiction, among other things, the Exchange will consider whether: The applicant will be able to supply the Exchange with such information with respect to its dealings on the Exchange, the Exchange will be able to examine the applicant's books and records to verify the accuracy of any information so supplied, and other factors that the Exchange reasonably and objectively determines may impact the applicant's ability to comply with the Exchange's rules and the Act. See CBOE Rule 3.4A(a)(i). Further, it requires that a Trading Permit Holder, prior to acting as agent for a customer, must be able to provide information regarding the customer and the customer's trading activities to the Exchange in response to a regulatory request for information. To the extent that an individual or organization is required by an applicable, law, rule, or regulation to obtain written consent from a customer to permit the provision of this information to the Exchange, the applicant must obtain such consent. See CBOE Rule 3.4A(a)(iii). \21\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission believes that the factors enumerated in CBOE Rule 3.4A(a)(i) for determining whether to approve a jurisdiction are objective and reasonably designed to achieve the purposes discussed above. Further, the Commission notes that the Exchange represents that it will consider all of the factors for all of the jurisdictions in the same manner and that such consideration will include reviews of the applicable laws, rules, and regulations of a jurisdiction to determine whether the factors enumerated in the Rule can be satisfied.\22\ In addition, while the Rule allows the Exchange to limit approval to specified categories of Trading Permit Holders or activities in a jurisdiction or impose other specified conditions, this provision provides CBOE with limited discretion as any such conditions must be imposed on all applicants from a given jurisdiction and only to the extent that such limits or conditions are necessary to satisfy the factors of CBOE Rule 3.4A(a)(i)(A)-(D). For example, the Exchange notes that a foreign jurisdiction may permit only certain activities on the Exchange by market participants in that jurisdiction.\23\ This provision would allow the Exchange to permit Trading Permit Holders from such a jurisdiction, subject to certain conditions that enable the Exchange to comply with the laws, rules, or regulations of such jurisdiction. The Commission also notes that the Exchange represents that it will determine in the same manner for all jurisdictions whether to impose any such limits or conditions on Trading Permit Holders.\24\ The Commission therefore believes that the proposed rule is not designed to permit CBOE to apply the new requirements in an arbitrary or discriminatory manner and similarly situated applicants should therefore be treated consistently. --------------------------------------------------------------------------- \22\ See Notice, supra note 3, at 29133. \23\ See id. \24\ See id. --------------------------------------------------------------------------- Further, the Commission notes that the Exchange will publish a list of approved jurisdictions in a Regulatory Circular and on a dedicated Web site. Making the jurisdictional determinations available publicly will provide transparency to CBOE's determinations under the proposed Rule, as well as provide notice to market participants and prospective Trading Permit Holders of the approved jurisdictions. Finally, the Commission believes that the requirement in CBOE Rule 3.4A(a)(ii) that an applicant be subject to the jurisdiction of the federal courts of the United States and the courts of the state of Illinois is reasonable. Among other things, this provision could be useful to a U.S. person involved in a dispute with a Trading Permit Holder or Sponsored User as it may provide a forum in which such aggrieved party could pursue any available legal or equitable remedies against such party. IV. Conclusion It is therefore ordered pursuant to Section 19(b)(2) of the Act,\25\ that the proposed rule change (SR-CBOE-2015-012) be, and it hereby is, approved. --------------------------------------------------------------------------- \25\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17290 Filed 7-13-15; 8:45 am] BILLING CODE 8011-01-P
![41112 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
SECURITIES AND EXCHANGE SECURITIES AND EXCHANGE Trading Permit Holder Requirements
COMMISSION COMMISSION The Exchange proposes to add
additional requirements that will be
[Release No. 34–75396; File No. SR–ICC– [Release No. 34–75317; File No. SR–CBOE– applicable to all Trading Permit Holders
2015–006] 2015–012] through new proposed CBOE Rule 3.4A.
Currently, CBOE Rules 3.2
Self-Regulatory Organizations; ICE Self-Regulatory Organizations; (Qualifications of Individual Trading
Clear Credit LLC; Notice of Withdrawal Chicago Board Options Exchange, Permit Holders) and 3.3 (Qualifications
of Proposed Rule Change to Provide Incorporated; Order Granting Approval of TPH Organizations) set forth the
for the Clearance of an Additional of Proposed Rule Change Relating to requirements for individuals and
Standard Emerging Market Sovereign Trading Permit Holder Qualifications organizations, respectively, to become
Single Name and remain Trading Permit Holders. For
June 26, 2015. an individual to become and remain a
July 8, 2015. Trading Permit Holder, CBOE Rule 3.2
I. Introduction
On March 27, 2015, ICE Clear Credit requires the individual to (i) to be at
LLC (‘‘ICC’’) filed with the Securities On May 4, 2015, Chicago Board least 21 years of age, (ii) be registered as
Options Exchange Incorporated (the a broker or dealer pursuant to Section
and Exchange Commission
‘‘Exchange’’ or ‘‘CBOE’’) filed with the 15 of the Act, or be associated with a
(‘‘Commission’’) the proposed rule
Securities and Exchange Commission Trading Permit Holder organization that
change SR–ICC–2015–006 pursuant to is registered as a broker or dealer
Section 19(b)(1) of the Securities (the ‘‘Commission’’), pursuant to
Section 19(b)(1) of the Securities pursuant to Section 15 of the Act, and
Exchange Act of 1934 (‘‘Act’’) 1 and Rule (iii) meet the qualification requirements
19b–4 thereunder,2 to amend Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule to be a Trading Permit Holder under the
Subchapter 26D of its rules to provide Exchange’s bylaws and rules. Similarly,
change to amend its rules related to
for the clearance of an additional for an organization to become and
Trading Permit Holder requirements
Standard Emerging Market Sovereign remain a Trading Permit Holder, CBOE
and direct access to the Exchange’s
CDS contract, namely Ukraine. Notice of Rule 3.3 requires the organization to (i)
Hybrid Trading System (‘‘System’’). The
the proposed rule change was published be a corporation, partnership, or limited
proposed rule change was published for
for comment in the Federal Register on liability company, (ii) be registered as a
comment in the Federal Register on
April 15, 2015.3 On May 22, 2015, ICC broker or dealer pursuant to Section 15
May 20, 2015.3 The Commission
extended the time period for the of the Act, and (iii) meet the
received no comments on the proposed qualification requirements to be a
Commission to approve, disapprove, or rule change. This order approves the
institute proceedings to determine Trading Permit Holder under the
proposed rule change. Exchange’s bylaws and rules.
whether to disapprove the proposed
rule change to July 14, 2015. The II. Description of Proposed Rule Change Further, CBOE Rule 3.4 imposes
Commission received no comment additional qualifications on Trading
The Exchange proposes to amend its Permit Holders that do not maintain an
letters regarding the proposed rule
rules by (i) adopting new CBOE Rule office in the United States that prepares
change.
3.4A (Additional Trading Permit Holder and maintains financial and other
On July 1, 2015, ICC withdrew the Qualifications)to add additional reports required to be filed with the
proposed rule change (File No. SR–ICC– qualification requirements for persons Commission and the Exchange. These
2015–006). seeking to become and remain Trading foreign Trading Permit Holders must (i)
For the Commission, by the Division of Permit Holders, (ii) adding a prepare all such reports, and maintain a
Trading and Markets, pursuant to delegated requirement regarding access by general ledger chart of account and any
authority.4 Sponsored Users in CBOE Rule 6.20A description thereof, in English and U.S.
(Sponsored Users), (iii) adding a Dollars, (ii) reimburse the Exchange for
Brent J. Fields,
requirement regarding access to the any expense incurred in connection
Secretary. with examinations of the Trading Permit
System in CBOE Rule 6.23A (Trading
[FR Doc. 2015–17174 Filed 7–13–15; 8:45 am] Holder to the extent that such expenses
Permit Holder Connectivity), and (iv)
BILLING CODE 8011–01–P making nonsubstantive changes to exceed the cost of examining a Trading
renumber the paragraphs in CBOE Rule Permit Holder located within the United
3.4 (Foreign Trading Permit Holders). States, and (iii) ensure the availability of
The Exchange states that the proposed an individual fluent in English
rule change is intended to accommodate knowledgeable in securities and
the potential interest of non-U.S. financial matters to assist the
persons or organizations in becoming representatives of the Exchange during
Trading Permit Holders or accessing the examinations.5
Proposed CBOE Rule 3.4A(a) provides
System from foreign jurisdictions
that, in addition to the requirements set
following the launch of Extended
forth in CBOE Rules 3.2 through 3.4, a
Trading Hours on the Exchange.4
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Trading Permit Holder applicant must
satisfy several new requirements. First,
1 15
U.S.C. 78s(b)(1).
2 17
proposed CBOE Rule 3.4A(a)(i) provides
1 15 U.S.C. 78s(b)(1). CFR 240.19b–4.
3 See Securities Exchange Act Release No. 74963
that a Trading Permit Holder applicant
2 17 CFR 240.19b–4.
(May 14, 2015), 80 FR 29131 (May 20, 2015) must be domiciled in (with respect to
3 Securities Exchange Act Release No. 34–74688
(‘‘Notice’’).
(Apr. 9, 2015), 80 FR 20280 (Apr. 15, 2015) (SR– 4 See Securities Exchange Act Release No. 73704 5 The proposed rule change makes nonsubstantive
ICC–2015–006). (November 28, 2014), 79 FR 72044 (December 4, formatting changes to CBOE Rule 3.4 to revise the
4 17 CFR 200.30–3(a)(12). 2014). numbering of the paragraphs.
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![41114 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices
information with respect to, and the same level of information from each Exchange represents that it will
facilitating transactions in securities, to member, without regard to whether determine in the same manner for all
remove impediments to, and perfect the such members are located within or jurisdictions whether to impose any
mechanism of, a free and open market outside the U.S., the proposal is such limits or conditions on Trading
and a national market system and, in designed to support CBOE’s ability to Permit Holders.24 The Commission
general, to protect investors and the fulfil its regulatory mandate to prevent therefore believes that the proposed rule
public interest. The Commission also fraudulent and manipulative acts and is not designed to permit CBOE to apply
finds that the proposal is designed to practices, promote just and equitable the new requirements in an arbitrary or
not permit unfair discrimination principles of trade, and protect investors discriminatory manner and similarly
between customers, issuers, brokers, or and the public interest, consistent with situated applicants should therefore be
dealers pursuant to Section 6(b)(5) of Section 6(b)(5) of the Act.21 treated consistently.
the Act.18 Further, the Commission The Commission believes that the Further, the Commission notes that
finds that the proposed rule change is factors enumerated in CBOE Rule the Exchange will publish a list of
consistent with Section 6(b)(1) of the 3.4A(a)(i) for determining whether to approved jurisdictions in a Regulatory
Act,19 which provides that an exchange approve a jurisdiction are objective and Circular and on a dedicated Web site.
must be so organized and have the reasonably designed to achieve the Making the jurisdictional
capacity to be able to carry out the purposes discussed above. Further, the determinations available publicly will
purposes of this Act and to comply, and Commission notes that the Exchange provide transparency to CBOE’s
to enforce compliance by its members represents that it will consider all of the determinations under the proposed
and persons associated with its factors for all of the jurisdictions in the Rule, as well as provide notice to market
members, with the Act, the rules and same manner and that such participants and prospective Trading
regulations thereunder, and the rules of consideration will include reviews of Permit Holders of the approved
the exchange. the applicable laws, rules, and jurisdictions.
The Commission believes that the regulations of a jurisdiction to Finally, the Commission believes that
additional requirements prescribed by determine whether the factors the requirement in CBOE Rule
CBOE Rules 3.4A, 6.20A, and 6.23A are enumerated in the Rule can be 3.4A(a)(ii) that an applicant be subject
reasonably designed to assure the satisfied.22 In addition, while the Rule to the jurisdiction of the federal courts
Exchange that it will be able to obtain allows the Exchange to limit approval to of the United States and the courts of
the information necessary to perform its specified categories of Trading Permit the state of Illinois is reasonable. Among
self-regulatory obligations. In this Holders or activities in a jurisdiction or other things, this provision could be
regard, the Commission notes that impose other specified conditions, this useful to a U.S. person involved in a
certain foreign jurisdictions may have provision provides CBOE with limited dispute with a Trading Permit Holder or
laws, rules, or regulations that prohibit discretion as any such conditions must Sponsored User as it may provide a
or restrict the sharing of certain be imposed on all applicants from a forum in which such aggrieved party
information that would be necessary for given jurisdiction and only to the extent could pursue any available legal or
the Exchange to adequately oversee the that such limits or conditions are equitable remedies against such party.
trading activity of Trading Permit necessary to satisfy the factors of CBOE
Rule 3.4A(a)(i)(A)–(D). For example, the IV. Conclusion
Holders from such jurisdictions.
Accordingly, the Commission believes Exchange notes that a foreign It is therefore ordered pursuant to
that it is appropriate and consistent jurisdiction may permit only certain Section 19(b)(2) of the Act,25 that the
with the Act for the Exchange to require activities on the Exchange by market proposed rule change (SR–CBOE–2015–
Trading Permit Holders to be domiciled participants in that jurisdiction.23 This 012) be, and it hereby is, approved.
in, or only directly access the System provision would allow the Exchange to For the Commission, by the Division of
from, jurisdictions that would not permit Trading Permit Holders from Trading and Markets, pursuant to delegated
such a jurisdiction, subject to certain authority.26
impede the Exchange’s ability to carry
conditions that enable the Exchange to Robert W. Errett,
out its regulatory responsibilities, and
comply with the laws, rules, or Deputy Secretary.
that Trading Permit Holders are
regulations of such jurisdiction. The
otherwise able to provide to CBOE [FR Doc. 2015–17290 Filed 7–13–15; 8:45 am]
Commission also notes that the
pertinent information regarding their BILLING CODE 8011–01–P
customers and their customers’ trading consider whether: The applicant will be able to
activities in response to a regulatory supply the Exchange with such information with
request. respect to its dealings on the Exchange, the SECURITIES AND EXCHANGE
The Commission believes that these Exchange will be able to examine the applicant’s COMMISSION
new CBOE requirements will help books and records to verify the accuracy of any
information so supplied, and other factors that the [Release No. 34–75392; File No. SR–BX–
facilitate the Exchange’s surveillance, Exchange reasonably and objectively determines 2015–036]
examinations, and inspections of may impact the applicant’s ability to comply with
Trading Permit Holders by helping to the Exchange’s rules and the Act. See CBOE Rule Self-Regulatory Organizations; Notice
3.4A(a)(i). Further, it requires that a Trading Permit of Filing and Immediate Effectiveness
ensure that the Exchange has access to Holder, prior to acting as agent for a customer, must
information necessary for it to enforce be able to provide information regarding the of Proposed Rule Change by NASDAQ
compliance by all Trading Permit customer and the customer’s trading activities to OMX BX, Inc. Relating to the Volume-
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Holders with CBOE’s rules and the the Exchange in response to a regulatory request for Based and Multi-Trigger Threshold
information. To the extent that an individual or
federal securities laws, consistent with organization is required by an applicable, law, rule, July 8, 2015.
the Act.20 With unencumbered access to or regulation to obtain written consent from a
customer to permit the provision of this information
Pursuant to Section 19(b)(1) of the
18 Id. to the Exchange, the applicant must obtain such Securities Exchange Act of 1934
19 15 U.S.C. 78f(b)(1). consent. See CBOE Rule 3.4A(a)(iii).
20 15 21 15 U.S.C. 78f(b)(5). 24 See id.
U.S.C. 78f(b). In this regard, as noted above,
22 See Notice, supra note 3, at 29133. 25 15 U.S.C. 78s(b)(2).
the Rule provides that in approving a given
jurisdiction, among other things, the Exchange will 23 See id. 26 17 CFR 200.30–3(a)(12).
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Document Created: 2018-02-23 09:19:12
Document Modified: 2018-02-23 09:19:12
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
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