80 FR 66605 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Qualification and Registration of Trading Permit Holders and Associated Persons
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 209 (October 29, 2015)
Federal Register Volume 80, Issue 209 (October 29, 2015)
| Page Range | 66605-66608 | |
| FR Document | 2015-27517 |
[Federal Register Volume 80, Number 209 (Thursday, October 29, 2015)] [Notices] [Pages 66605-66608] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-27517] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76247; File No. SR-CBOE-2015-094] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Qualification and Registration of Trading Permit Holders and Associated Persons October 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 October 9, 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, which Items have been prepared by the Exchange. The Exchange filed the 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\ 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 Interpretation and Policy .08 to Rule 3.6A (Qualifications and Registration of Trading Permit Holders and Associated Persons) regarding the categories of registration and respective qualification examinations required for Trading Permit Holders (``TPHs'') and associated persons that engage in trading activities on the Exchange. Specifically, the Exchange proposes to replace the Proprietary Trader registration category and the Series 56 Proprietary Trader registration qualification examination for Proprietary Traders with the Securities Trader category of registration and the Series 57 Securities Trader [[Page 66606]] registration qualification examination for Securities Traders respectively. 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 proposes to amend Interpretation and Policy .08 to Rule 3.6A (Qualification and Registration of Trading Permit Holders and Associated Persons) to replace the Proprietary Trader (PT) registration category and qualification examination (Series 56) with the Securities Trader (TD) registration category and qualification examination (Series 57). In addition, the Exchange proposes to replace the Proprietary Trader Principal (TP) registration category with a Securities Trader Principal (TP) registration category for individual TPHs or associated person [sic] who either: (i) Supervise or monitor proprietary trading, market-making and/or brokerage activities for broker-dealers; (ii) supervise or train those engaged in proprietary trading, market-making and/or effecting transactions on behalf of a broker-dealer, with respect to those activities; and/or (iii) are officers, partners or directors of a TPH or TPH organization, as described in paragraph (a)(2)(i) of current Interpretation and Policy .08 to Rule 3.6A. The Exchange also proposes to replace the Proprietary Trader Compliance Officer (CT) registration category with the Securities Trader Compliance Officer (CT) registration category for Chief Compliance Officers (or individuals performing similar functions) of a TPH or TPH organization. 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'').\5\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 75783 (August 28, 2015) (Order Approving a Proposed Rule Change to Establish the Securities Trader and Securities Trader Principal Registration Categories) (SR-FINRA-2015-017). --------------------------------------------------------------------------- Rule 3.6A sets forth various qualification and registration requirements that individual TPHs and associated persons must satisfy in order to transact business on the Exchange. Among the qualification and registration requirements set forth in Rule 3.6A, Interpretation and Policy .08 provides that individual TPHs and associated persons that engage in proprietary trading, market-making, or effect transactions on behalf of a broker-dealer must register and qualify as a Proprietary Trader in WebCRD.\6\ To qualify as a Proprietary Trader, individual TPHs and associated persons must either pass the Series 56 Proprietary Trader qualification examination \7\ or Series 7 General Securities Representative qualification examination.\8\ Several exchanges, including CBOE currently use the Series 56 examination as a qualification standard.\9\ --------------------------------------------------------------------------- \6\ WebCRD is a secure registration and licensing system operated by FINRA and is the central licensing and registration system for the U.S. securities industry and its regulators. The system contains the registration records of more than 6,500 registered broker-dealers, and the qualification, employment and disclosure histories of more than 650,000 active registered individuals. In addition, Web CRD facilitates the processing and payment of FINRA registration-related fees such as form filings, fingerprint submissions, qualification exams and continuing education sessions. \7\ The Series 56 Proprietary Trader Examination is a two hour and thirty minute exam, consisting of 100 scored multiple-choice questions. The Series 56 examination is administered by FINRA, but is not recognized by FINRA as an acceptable qualification examination for associated persons engaged in securities trading. Under FINRA rules, associated persons of FINRA members that engage in over-the-counter securities trading are required to pass the Series 55 Equity Trader Exam. Nevertheless, as FINRA has recognized, because the Series 55 and Series 56 are intended to test the core knowledge required of individuals engaged in trading activities as well as self-regulatory organization (``SRO'') rules, including trading rules that are common across all SROs, there is significant overlap in the content of the Series 55 and Series 56 qualification examinations. \8\ See Interpretation and Policy .08 to Rule 3.6A. \9\ See, e.g., BATS Exchange, Inc. (``BATS'') Interpretation and Policy .01 to Rule 2.5 (Proficiency Examinations); Miami International Securities Exchange, LLC (``MIAX'') Rule 1302 (Registration of Representatives). See also Interpretation and Policy .08 to Rule 3.6A. --------------------------------------------------------------------------- Interpretation and Policy .08 to Rule 3.6A further requires that individual TPHs and associated persons with supervisory responsibility over proprietary trading activities and officers, partners, and directors of a TPH or TPH organization qualify and register as a Proprietary Trader Principal. Specifically, under paragraph (a)(2) of Interpretation and Policy .08 to Rule 3.6A, an individual TPH or associated person who either: (i) Supervises or monitors proprietary trading, market-making and/or brokerage activities for broker-dealers; (ii) supervises or trains those engaged in proprietary trading, market- making and/or effecting transactions on behalf of a broker-dealer, with respect to those activities; and/or (iii) is an officer, partner or director of a TPH or TPH organization must register and qualify as a Proprietary Trader Principal in WebCRD and satisfy prerequisite [sic] registration and qualification requirements, including, but not limited to passing the Series 24 General Securities Principal Examination or an acceptable alternative qualification examination.\10\ An individual TPH or associated person who is a Chief Compliance Officer (or performs similar functions) for a TPH or TPH organization that engages in proprietary trading, market-making, or effecting transactions on behalf of a broker-dealer is also required to register and qualify as a Proprietary Trader Compliance Officer in WebCRD and satisfy the prerequisite [sic] registration and qualification requirements, including, but not limited to passing the Series 14 Compliance Official Examination.\11\ --------------------------------------------------------------------------- \10\ Under current Interpretation and Policy .08 to Rule 3.6A, the Series 9 and 10 General Securities Sales Supervisor Examination and Series 23 General Securities Principal Exam--Sales Supervisor Module are acceptable alternative qualification examinations to the Series 24 General Securities Principal Examination. Because the Series 23 is not available in WebCRD, however, each applicant that chooses to take the Series 23 module as an alternative to the Series 24 qualification examination must provide documentation of a valid Series 23 license to the Registration Services Department upon request for proof of licensure. \11\ Under current Interpretation and Policy .08 to Rule 3.6A, the Series 24 General Securities Principal Examination is considered an acceptable alternative qualification examination for the Series 14 Compliance Official Examination and registered General Securities Principals may register as Proprietary Trader Compliance Officers subject to applicable provisions under the Rules. See Interpretation and Policy .08(b) to Rule 3.6A. --------------------------------------------------------------------------- The Exchange proposes to replace the Series 56 qualification examination with the Series 57 qualification examination for those registration categories where the Series 56 is currently an acceptable qualification standard.\12\ Specifically, with respect to the Proprietary Trader registration categories identified in Interpretation and Policy .08 to Rule 3.6A, the Exchange proposes to replace [[Page 66607]] the Proprietary Trader (PT) registration category with the Securities Trader (TD) registration category as well as eliminate the current Series 56 Proprietary Trader Exam prerequisite [sic] and, instead, include a Series 57 Securities Trader qualification examination in its place.\13\ The Proprietary Trader Principal and Proprietary Trader Compliance Officer registration categories would be replaced with the renamed registration categories of Securities Trader Principal and Securities Trader Compliance Officer respectively.\14\ --------------------------------------------------------------------------- \12\ See Interpretation and Policy .08 to Rule 3.6A. \13\ Neither the Exchange's current Rules nor the proposed rule would require that a Proprietary Trader or Securities Trader work at, or be associated with, a ``proprietary trading firm.'' Rather, both the current Rules and the proposed rule would require that individual TPHs and associated persons that engage in proprietary trading, market-making, or effect transactions on behalf of a broker-dealer register to qualify and register as a Proprietary Trader (or Securities Trader) in WebCRD. Whereas the current rule allows individual TPHs and associated persons to qualify as a Proprietary Trader by either passing the Series 56 Proprietary Trader qualification examination or Series 7 General Securities Representative qualification examination, the proposed rule would require individual TPHs and associated persons to pass the Series 57 Securities Trader qualification examination in order to qualify as a Securities Trader after the effective date of the proposed rule change. \14\ As is the case under the current Rules, under the proposed rule, only individuals qualified and registered as a Proprietary Trader Principal (Securities Trader Principal) would be permitted to supervise a Proprietary Trader (Securities Trader). --------------------------------------------------------------------------- The Exchange will announce the effective date of the proposed rule change in a Regulatory Circular. Currently, the Exchange intends for the effective date to be January 4, 2016. Under the proposed rule, individual TPHs and associated persons who have passed the Proprietary Trader (Series 56) qualification examination and who have registered as Proprietary Trader (PT) [sic] in WebCRD on or before the effective date of the proposed rule change and individual TPHs and associated persons who have passed the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change would be grandfathered as Securities Traders (TDs) without having to take any additional examinations and without having to take any other action), provided that the individual TPH's or associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the individual TPH or associated person last registered as a Proprietary Trader (PT) and the effective date. After the effective date, an individual TPH or associated person would need to pass the new Series 57 Securities Trader qualification examination and register as a Securities Trader in WebCRD. In addition, individual TPHs and associated persons who have either passed the Proprietary Trader (PT) qualification examination or the General Securities Representative (Series 7) qualification examination and who have registered as Proprietary Traders (PT) in WebCRD on or before the effective date of the proposed rule change and who have also passed the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications requirements as defined in current Interpretation and Policy .08(b) to Rule 3.6A) and who have also registered as Proprietary Trader Principals (TP) in WebCRD on or before the effective date of the proposed rule change would be eligible to register as Securities Trader Principals (TPs), provided that the individual TPH's or associated person's registration has not been revoked by the Exchange as a disciplinary sanction and no more than two years have passed between the date that the individual TPH or associated person last registered as a Proprietary Trader Principal (TP) and the date they register as a Securities Trader Principal (TP).\15\ After the effective date, a Securities Trader Principal would need to pass the Securities Trader (Series 57) qualification examination and the General Securities Principal (Series 24) qualification examination (or have completed any of the alternative acceptable qualifications as defined in current Interpretation and Policy .08(b) to Rule 3.6A) and be registered as such in order to register as a Securities Trader Principal (TP).\16\ --------------------------------------------------------------------------- \15\ See Rule 3.6A(e) (Requirement for Examination on Lapse of Registration). \16\ The Exchange also proposes to add text to Interpretation and Policy .08(b) to Rule 3.6A regarding the supervisory responsibilities of the Securities Trader Principals, which would limit Securities Trader Principals' supervisory responsibilities to supervision of the securities trading functions of TPHs as described in paragraph (a)(2)(i) of Interpretation and Policy .08 to Rule 3.6A, and the activities of officers, partners, and directors of TPHs or TPH organizations. --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.\17\ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \18\ 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) \19\ requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78f(b). \18\ 15 U.S.C. 78f(b)(5). \19\ Id. --------------------------------------------------------------------------- In particular, the Exchange believes that adoption of the Securities Trader registration category and Series 57 Securities Trader qualification examination registration requirement is consistent with the Act. FINRA has indicated that the Series 57 qualification examination is being developed in an effort to adopt a more tailored examination. The Exchange believes that a more tailored qualification examination for individual TPHs and associated persons engaged in trading activities is a measure designed to help ensure professionalism among market participants, prevent fraudulent and manipulative practices, and promote just and equitable principles of trade. The Exchange also believes that it is in the interests of investors and the general public to develop a more tailored qualification examination for proprietary traders and that a more uniform qualification standard may help ensure fair and orderly markets. Furthermore, the Exchange believes that it is in the interests of all market participants to provide consistent qualification and registration requirements across markets. The Exchange believes that harmonizing the Exchange's qualification and registration requirements with those of FINRA and the other national securities exchanges would further such interests. 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 Exchange believes that the proposed rule change relating to Securities Traders, which is, in all material respects, based upon and substantially similar to, recent rule changes adopted [[Page 66608]] by FINRA and which is being filed in conjunction with similar filings by the other national securities exchanges, will reduce the regulatory burden placed on market participants engaged in trading activities across different markets. The Exchange believes that the harmonization of these registration requirements across the various markets will reduce burdens on competition by removing impediments to participation in the national market system and promoting competition among participants across the multiple national securities exchanges. 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 written 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: A. Significantly affect the protection of investors or the public interest; B. impose any significant burden on competition; and C. 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 \20\ and Rule 19b-4(f)(6) \21\ 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. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- 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 CommentsUse 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-2015-094 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-2015-094. 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-2015-094 and should be submitted on or before November 19, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ Robert W. Errett, Deputy Secretary. --------------------------------------------------------------------------- \22\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- [FR Doc. 2015-27517 Filed 10-28-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 209 / Thursday, October 29, 2015 / Notices 66605
facilitate appropriate liquidity during a Commission shall institute proceedings For the Commission, by the Division of
Limit State or Straddle State. to determine whether the proposed rule Trading and Markets, pursuant to delegated
should be approved or disapproved. authority.14
C. Self-Regulatory Organization’s Robert W. Errett,
Statement on Comments on the IV. Solicitation of Comments Deputy Secretary.
Proposed Rule Change Received From Interested persons are invited to [FR Doc. 2015–27516 Filed 10–28–15; 8:45 am]
Members, Participants, or Others submit written data, views, and BILLING CODE 8011–01–P
No written comments were solicited arguments concerning the foregoing,
or received with respect to the proposed including whether the proposed rule
rule change. change is consistent with the Act. SECURITIES AND EXCHANGE
Comments may be submitted by any of COMMISSION
III. Date of Effectiveness of the the following methods:
Proposed Rule Change and Timing for [Release No. 34–76247; File No. SR–CBOE–
Commission Action Electronic Comments 2015–094]
Because the proposed rule change • Use the Commission’s Internet
comment form (http://www.sec.gov/ Self-Regulatory Organizations;
does not (i) significantly affect the Chicago Board Options Exchange,
protection of investors or the public rules/sro.shtml); or
• Send an email to rule-comments@ Incorporated; Notice of Filing and
interest; (ii) impose any significant Immediate Effectiveness of a Proposed
burden on competition; and (iii) become sec.gov. Please include File Number SR–
NYSEArca–2015–101 on the subject Rule Change Relating To Qualification
operative for 30 days from the date on and Registration of Trading Permit
which it was filed, or such shorter time line.
Holders and Associated Persons
as the Commission may designate if Paper Comments
consistent with the protection of October 23, 2015.
• Send paper comments in triplicate
investors and the public interest, the Pursuant to Section 19(b)(1) of the
to Brent J. Fields, Secretary, Securities
proposed rule change has become Securities Exchange Act of 1934 (the
and Exchange Commission, 100 F Street
effective pursuant to Section 19(b)(3)(A) ‘‘Act’’),1 and Rule 19b–4 thereunder,2
NE., Washington, DC 20549–1090.
of the Act 11 and Rule 19b–4(f)(6)(iii) notice is hereby given that on October
thereunder.12 All submissions should refer to File 9, 2015, Chicago Board Options
The Exchange has asked the Number SR–NYSEArca–2015–101. This Exchange, Incorporated (the ‘‘Exchange’’
Commission to waive the 30-day file number should be included on the
or ‘‘CBOE’’) filed with the Securities
operative delay so that the proposal may subject line if email is used. To help the
and Exchange Commission (the
become operative immediately upon Commission process and review your
‘‘Commission’’) the proposed rule
filing. The Commission believes that comments more efficiently, please use
change as described in Items I, II, and
waiving the 30-day operative delay is only one method. The Commission will
III below, which Items have been
consistent with the protection of post all comments on the Commission’s
prepared by the Exchange. The
investors and the public interest, as it Internet Web site (http://www.sec.gov/
Exchange filed the proposal as a ‘‘non-
will allow the obvious error pilot rules/sro.shtml). Copies of the
controversial’’ proposed rule change
program to continue uninterrupted submission, all subsequent
pursuant to Section 19(b)(3)(A)(iii) of
while the industry gains further amendments, all written statements
the Act 3 and Rule 19b–4(f)(6)
experience operating under the Plan, with respect to the proposed rule
thereunder.4 The Commission is
and avoid any investor confusion that change that are filed with the
publishing this notice to solicit
could result from a temporary Commission, and all written
comments on the proposed rule change
interruption in the pilot program. For communications relating to the
from interested persons.
this reason, the Commission designates proposed rule change between the
Commission and any person, other than I. Self-Regulatory Organization’s
the proposed rule change to be operative
those that may be withheld from the Statement of the Terms of Substance of
upon filing.13
At any time within 60 days of the public in accordance with the the Proposed Rule Change
filing of the proposed rule change, the provisions of 5 U.S.C. 552, will be The Exchange proposes to amend
Commission summarily may available for Web site viewing and Interpretation and Policy .08 to Rule
temporarily suspend such rule change if printing in the Commission’s Public 3.6A (Qualifications and Registration of
it appears to the Commission that such Reference Room, 100 F Street NE., Trading Permit Holders and Associated
action is necessary or appropriate in the Washington, DC 20549 on official Persons) regarding the categories of
public interest, for the protection of business days between the hours of registration and respective qualification
investors, or otherwise in furtherance of 10:00 a.m. and 3:00 p.m. Copies of such examinations required for Trading
the purposes of the Act. If the filing also will be available for Permit Holders (‘‘TPHs’’) and associated
Commission takes such action, the inspection and copying at the principal persons that engage in trading activities
office of the Exchange. All comments on the Exchange. Specifically, the
11 15 U.S.C. 78s(b)(3)(A). received will be posted without change; Exchange proposes to replace the
12 17 CFR 240.19b–4(f)(6)(iii). As required under the Commission does not edit personal Proprietary Trader registration category
Rule 19b–4(f)(6)(iii), the Exchange provided the identifying information from and the Series 56 Proprietary Trader
Commission with written notice of its intent to file submissions. You should submit only
asabaliauskas on DSK5VPTVN1PROD with NOTICES
the proposed rule change, along with a brief registration qualification examination
description and the text of the proposed rule
information that you wish to make for Proprietary Traders with the
change, at least five business days prior to the date available publicly. All submissions Securities Trader category of registration
of filing of the proposed rule change, or such should refer to File Number SR– and the Series 57 Securities Trader
shorter time as designated by the Commission. NYSEArca–2015–101, and should be
13 For purposes only of waiving the 30-day
submitted on or before November 19, 1 15 U.S.C. 78s(b)(1).
operative delay, the Commission has also
considered the proposed rule’s impact on 2015. 2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(6).
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![66606 Federal Register / Vol. 80, No. 209 / Thursday, October 29, 2015 / Notices
registration qualification examination material respects, based upon SR– officers, partners, and directors of a TPH
for Securities Traders respectively. The FINRA–2015–017, which was recently or TPH organization qualify and register
text of the proposed rule change is approved by the Securities and as a Proprietary Trader Principal.
available on the Exchange’s Web site Exchange Commission (‘‘SEC’’ or Specifically, under paragraph (a)(2) of
(http://www.cboe.com/AboutCBOE/ ‘‘Commission’’).5 Interpretation and Policy .08 to Rule
CBOELegalRegulatoryHome.aspx), at Rule 3.6A sets forth various 3.6A, an individual TPH or associated
the Exchange’s Office of the Secretary, qualification and registration person who either: (i) Supervises or
and at the Commission’s Public requirements that individual TPHs and monitors proprietary trading, market-
Reference Room. associated persons must satisfy in order making and/or brokerage activities for
to transact business on the Exchange. broker-dealers; (ii) supervises or trains
II. Self-Regulatory Organization’s Among the qualification and registration those engaged in proprietary trading,
Statement of the Purpose of, and requirements set forth in Rule 3.6A, market-making and/or effecting
Statutory Basis for, the Proposed Rule Interpretation and Policy .08 provides transactions on behalf of a broker-
Change that individual TPHs and associated dealer, with respect to those activities;
In its filing with the Commission, the persons that engage in proprietary and/or (iii) is an officer, partner or
Exchange included statements trading, market-making, or effect director of a TPH or TPH organization
concerning the purpose of and basis for transactions on behalf of a broker-dealer must register and qualify as a
the proposed rule change and discussed must register and qualify as a Proprietary Trader Principal in WebCRD
any comments it received on the Proprietary Trader in WebCRD.6 To and satisfy prerequisite [sic] registration
proposed rule change. The text of these qualify as a Proprietary Trader, and qualification requirements,
statements may be examined at the individual TPHs and associated persons including, but not limited to passing the
places specified in Item IV below. The must either pass the Series 56 Series 24 General Securities Principal
Exchange has prepared summaries, set Proprietary Trader qualification Examination or an acceptable
forth in sections A, B, and C below, of examination 7 or Series 7 General alternative qualification examination.10
the most significant aspects of such Securities Representative qualification An individual TPH or associated person
statements. examination.8 Several exchanges, who is a Chief Compliance Officer (or
including CBOE currently use the Series performs similar functions) for a TPH or
A. Self-Regulatory Organization’s 56 examination as a qualification TPH organization that engages in
Statement of the Purpose of, and standard.9 proprietary trading, market-making, or
Statutory Basis for, the Proposed Rule Interpretation and Policy .08 to Rule effecting transactions on behalf of a
Change 3.6A further requires that individual broker-dealer is also required to register
1. Purpose TPHs and associated persons with and qualify as a Proprietary Trader
supervisory responsibility over Compliance Officer in WebCRD and
The Exchange proposes to amend proprietary trading activities and satisfy the prerequisite [sic] registration
Interpretation and Policy .08 to Rule
and qualification requirements,
3.6A (Qualification and Registration of 5 See Securities Exchange Act Release No. 75783
including, but not limited to passing the
Trading Permit Holders and Associated (August 28, 2015) (Order Approving a Proposed
Rule Change to Establish the Securities Trader and Series 14 Compliance Official
Persons) to replace the Proprietary
Securities Trader Principal Registration Categories) Examination.11
Trader (PT) registration category and (SR–FINRA–2015–017). The Exchange proposes to replace the
qualification examination (Series 56) 6 WebCRD is a secure registration and licensing
Series 56 qualification examination with
with the Securities Trader (TD) system operated by FINRA and is the central
licensing and registration system for the U.S.
the Series 57 qualification examination
registration category and qualification
securities industry and its regulators. The system for those registration categories where
examination (Series 57). In addition, the contains the registration records of more than 6,500 the Series 56 is currently an acceptable
Exchange proposes to replace the registered broker-dealers, and the qualification, qualification standard.12 Specifically,
Proprietary Trader Principal (TP) employment and disclosure histories of more than
650,000 active registered individuals. In addition, with respect to the Proprietary Trader
registration category with a Securities
Web CRD facilitates the processing and payment of registration categories identified in
Trader Principal (TP) registration FINRA registration-related fees such as form filings, Interpretation and Policy .08 to Rule
category for individual TPHs or fingerprint submissions, qualification exams and 3.6A, the Exchange proposes to replace
associated person [sic] who either: (i) continuing education sessions.
7 The Series 56 Proprietary Trader Examination is
Supervise or monitor proprietary 10 Under current Interpretation and Policy .08 to
a two hour and thirty minute exam, consisting of
trading, market-making and/or 100 scored multiple-choice questions. The Series 56 Rule 3.6A, the Series 9 and 10 General Securities
brokerage activities for broker-dealers; examination is administered by FINRA, but is not Sales Supervisor Examination and Series 23
(ii) supervise or train those engaged in recognized by FINRA as an acceptable qualification General Securities Principal Exam—Sales
examination for associated persons engaged in Supervisor Module are acceptable alternative
proprietary trading, market-making and/ qualification examinations to the Series 24 General
securities trading. Under FINRA rules, associated
or effecting transactions on behalf of a persons of FINRA members that engage in over-the- Securities Principal Examination. Because the
broker-dealer, with respect to those counter securities trading are required to pass the Series 23 is not available in WebCRD, however,
activities; and/or (iii) are officers, Series 55 Equity Trader Exam. Nevertheless, as each applicant that chooses to take the Series 23
FINRA has recognized, because the Series 55 and module as an alternative to the Series 24
partners or directors of a TPH or TPH qualification examination must provide
Series 56 are intended to test the core knowledge
organization, as described in paragraph required of individuals engaged in trading activities documentation of a valid Series 23 license to the
(a)(2)(i) of current Interpretation and as well as self-regulatory organization (‘‘SRO’’) Registration Services Department upon request for
Policy .08 to Rule 3.6A. The Exchange rules, including trading rules that are common proof of licensure.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
also proposes to replace the Proprietary across all SROs, there is significant overlap in the 11 Under current Interpretation and Policy .08 to
content of the Series 55 and Series 56 qualification Rule 3.6A, the Series 24 General Securities
Trader Compliance Officer (CT) examinations. Principal Examination is considered an acceptable
registration category with the Securities 8 See Interpretation and Policy .08 to Rule 3.6A. alternative qualification examination for the Series
Trader Compliance Officer (CT) 9 See, e.g., BATS Exchange, Inc. (‘‘BATS’’) 14 Compliance Official Examination and registered
registration category for Chief Interpretation and Policy .01 to Rule 2.5 General Securities Principals may register as
(Proficiency Examinations); Miami International Proprietary Trader Compliance Officers subject to
Compliance Officers (or individuals Securities Exchange, LLC (‘‘MIAX’’) Rule 1302 applicable provisions under the Rules. See
performing similar functions) of a TPH (Registration of Representatives). See also Interpretation and Policy .08(b) to Rule 3.6A.
or TPH organization. This filing is, in all Interpretation and Policy .08 to Rule 3.6A. 12 See Interpretation and Policy .08 to Rule 3.6A.
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![Federal Register / Vol. 80, No. 209 / Thursday, October 29, 2015 / Notices 66607
the Proprietary Trader (PT) registration the new Series 57 Securities Trader an exchange be designed to prevent
category with the Securities Trader (TD) qualification examination and register fraudulent and manipulative acts and
registration category as well as eliminate as a Securities Trader in WebCRD. practices, to promote just and equitable
the current Series 56 Proprietary Trader In addition, individual TPHs and principles of trade, to foster cooperation
Exam prerequisite [sic] and, instead, associated persons who have either and coordination with persons engaged
include a Series 57 Securities Trader passed the Proprietary Trader (PT) in regulating, clearing, settling,
qualification examination in its place.13 qualification examination or the General processing information with respect to,
The Proprietary Trader Principal and Securities Representative (Series 7) and facilitating transactions in
Proprietary Trader Compliance Officer qualification examination and who have securities, to remove impediments to
registration categories would be registered as Proprietary Traders (PT) in and perfect the mechanism of a free and
replaced with the renamed registration WebCRD on or before the effective date open market and a national market
categories of Securities Trader Principal of the proposed rule change and who system, and, in general, to protect
and Securities Trader Compliance have also passed the General Securities investors and the public interest.
Officer respectively.14 Principal (Series 24) qualification Additionally, the Exchange believes the
The Exchange will announce the examination (or have completed any of proposed rule change is consistent with
effective date of the proposed rule the alternative acceptable qualifications the Section 6(b)(5) 19 requirement that
change in a Regulatory Circular. requirements as defined in current the rules of an exchange not be designed
Currently, the Exchange intends for the Interpretation and Policy .08(b) to Rule to permit unfair discrimination between
effective date to be January 4, 2016. 3.6A) and who have also registered as customers, issuers, brokers, or dealers.
Under the proposed rule, individual Proprietary Trader Principals (TP) in In particular, the Exchange believes
TPHs and associated persons who have WebCRD on or before the effective date that adoption of the Securities Trader
passed the Proprietary Trader (Series of the proposed rule change would be registration category and Series 57
56) qualification examination and who eligible to register as Securities Trader Securities Trader qualification
have registered as Proprietary Trader Principals (TPs), provided that the examination registration requirement is
(PT) [sic] in WebCRD on or before the individual TPH’s or associated person’s consistent with the Act. FINRA has
effective date of the proposed rule registration has not been revoked by the indicated that the Series 57 qualification
change and individual TPHs and Exchange as a disciplinary sanction and examination is being developed in an
associated persons who have passed the no more than two years have passed effort to adopt a more tailored
General Securities Representative between the date that the individual examination. The Exchange believes
(Series 7) qualification examination and TPH or associated person last registered that a more tailored qualification
who have registered as Proprietary as a Proprietary Trader Principal (TP) examination for individual TPHs and
Traders (PT) in WebCRD on or before and the date they register as a Securities associated persons engaged in trading
the effective date of the proposed rule Trader Principal (TP).15 After the activities is a measure designed to help
change would be grandfathered as effective date, a Securities Trader ensure professionalism among market
Securities Traders (TDs) without having Principal would need to pass the participants, prevent fraudulent and
to take any additional examinations and Securities Trader (Series 57) manipulative practices, and promote
without having to take any other action), qualification examination and the just and equitable principles of trade.
provided that the individual TPH’s or General Securities Principal (Series 24) The Exchange also believes that it is in
associated person’s registration has not qualification examination (or have the interests of investors and the general
completed any of the alternative public to develop a more tailored
been revoked by the Exchange as a
acceptable qualifications as defined in qualification examination for
disciplinary sanction and no more than
current Interpretation and Policy .08(b) proprietary traders and that a more
two years have passed between the date
to Rule 3.6A) and be registered as such uniform qualification standard may help
that the individual TPH or associated
in order to register as a Securities Trader ensure fair and orderly markets.
person last registered as a Proprietary
Principal (TP).16 Furthermore, the Exchange believes that
Trader (PT) and the effective date. After
it is in the interests of all market
the effective date, an individual TPH or 2. Statutory Basis participants to provide consistent
associated person would need to pass
The Exchange believes the proposed qualification and registration
13 Neither the Exchange’s current Rules nor the rule change is consistent with the Act requirements across markets. The
proposed rule would require that a Proprietary and the rules and regulations Exchange believes that harmonizing the
Trader or Securities Trader work at, or be associated thereunder applicable to the Exchange Exchange’s qualification and
with, a ‘‘proprietary trading firm.’’ Rather, both the and, in particular, the requirements of registration requirements with those of
current Rules and the proposed rule would require
that individual TPHs and associated persons that Section 6(b) of the Act.17 Specifically, FINRA and the other national securities
engage in proprietary trading, market-making, or the Exchange believes the proposed rule exchanges would further such interests.
effect transactions on behalf of a broker-dealer change is consistent with the Section B. Self-Regulatory Organization’s
register to qualify and register as a Proprietary 6(b)(5) 18 requirements that the rules of
Trader (or Securities Trader) in WebCRD. Whereas Statement on Burden on Competition
the current rule allows individual TPHs and
associated persons to qualify as a Proprietary Trader
15 See Rule 3.6A(e) (Requirement for Examination The Exchange does not believe that
by either passing the Series 56 Proprietary Trader on Lapse of Registration). the proposed rule change will impose
qualification examination or Series 7 General 16 The Exchange also proposes to add text to
any burden on competition that is not
Securities Representative qualification examination, Interpretation and Policy .08(b) to Rule 3.6A necessary or appropriate in furtherance
asabaliauskas on DSK5VPTVN1PROD with NOTICES
the proposed rule would require individual TPHs regarding the supervisory responsibilities of the
and associated persons to pass the Series 57 Securities Trader Principals, which would limit of the purposes of the Act. The
Securities Trader qualification examination in order Securities Trader Principals’ supervisory Exchange believes that the proposed
to qualify as a Securities Trader after the effective responsibilities to supervision of the securities rule change relating to Securities
date of the proposed rule change. trading functions of TPHs as described in paragraph Traders, which is, in all material
14 As is the case under the current Rules, under (a)(2)(i) of Interpretation and Policy .08 to Rule
3.6A, and the activities of officers, partners, and respects, based upon and substantially
the proposed rule, only individuals qualified and
registered as a Proprietary Trader Principal directors of TPHs or TPH organizations. similar to, recent rule changes adopted
17 15 U.S.C. 78f(b).
(Securities Trader Principal) would be permitted to
supervise a Proprietary Trader (Securities Trader). 18 15 U.S.C. 78f(b)(5). 19 Id.
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![66608 Federal Register / Vol. 80, No. 209 / Thursday, October 29, 2015 / Notices
by FINRA and which is being filed in • Send an email to rule-comments@ SECURITIES AND EXCHANGE
conjunction with similar filings by the sec.gov Please include File Number SR– COMMISSION
other national securities exchanges, will CBOE–2015–094 on the subject line..
reduce the regulatory burden placed on [Release No. 34–76251; File No. SR–CBOE–
market participants engaged in trading Paper Comments
2015–026]
activities across different markets. The • Send paper comments in triplicate
Exchange believes that the Self-Regulatory Organizations;
to Secretary, Securities and Exchange
harmonization of these registration Chicago Board Options Exchange,
Commission, 100 F Street NE.,
requirements across the various markets Incorporated; Notice of Withdrawal of
will reduce burdens on competition by Washington, DC 20549–1090.
a Proposed Rule Change Relating to
removing impediments to participation All submissions should refer to File Rules 6.74A and 6.74B
in the national market system and Number SR–CBOE-2015–094. This file
promoting competition among number should be included on the October 23, 2015.
participants across the multiple national subject line if email is used. To help the On March 6, 2015, the Chicago Board
securities exchanges. Commission process and review your Options Exchange, Incorporated (the
C. Self-Regulatory Organization’s comments more efficiently, please use ‘‘Exchange’’ or ‘‘CBOE’’) filed with the
Statement on Comments on the only one method. The Commission will Securities and Exchange Commission
Proposed Rule Change Received From post all comments on the Commission’s (‘‘Commission’’), pursuant to Section
Members, Participants, or Others Internet Web site (http://www.sec.gov/ 19(b)(1) of the Securities Exchange Act
The Exchange neither solicited nor rules/sro.shtml). Copies of the of 1934 1 and Rule 19b–4 thereunder,2 a
received written comments on the submission, all subsequent proposed rule change to amend its rules
proposed rule change. amendments, all written statements regarding the solicitation of Market-
with respect to the proposed rule Makers as the contra party to an agency
III. Date of Effectiveness of the
change that are filed with the order entered into the Exchange’s
Proposed Rule Change and Timing for
Commission, and all written Automated Improvement Mechanism
Commission Action
communications relating to the and Solicitation Auction Mechanism
Because the foregoing proposed rule proposed rule change between the auctions. The proposed rule change was
change does not: Commission and any person, other than published for comment in the Federal
A. Significantly affect the protection those that may be withheld from the Register on March 23, 2015.3 On May 4,
of investors or the public interest; 2015, the Commission extended the
B. impose any significant burden on public in accordance with the
provisions of 5 U.S.C. 552, will be time period within which to approve
competition; and
C. become operative for 30 days from available for Web site viewing and the proposed rule change, disapprove
the date on which it was filed, or such printing in the Commission’s Public the proposed rule change, or institute
shorter time as the Commission may Reference Room, 100 F Street NE., proceedings to determine whether to
designate, it has become effective Washington, DC 20549 on official disapprove the proposed rule change, to
pursuant to Section 19(b)(3)(A) of the business days between the hours of June 21, 2015.4 On June 18, 2015, the
Act 20 and Rule 19b–4(f)(6) 21 10:00 a.m. and 3:00 p.m. Copies of the Commission instituted proceedings to
thereunder. At any time within 60 days filing also will be available for determine whether to approve or
of the filing of the proposed rule change, inspection and copying at the principal disapprove the proposed rule change.5
the Commission summarily may office of the Exchange. All comments On July 21, 2015, the Commission
temporarily suspend such rule change if received will be posted without change; received a letter from the Exchange
it appears to the Commission that such the Commission does not edit personal responding to the Order Instituting
action is necessary or appropriate in the identifying information from Proceedings.6 Subsequently, the
public interest, for the protection of submissions. You should submit only Commission received two other
investors, or otherwise in furtherance of information that you wish to make comment letters on the proposed rule
the purposes of the Act. If the change.7 On September 14, 2015, the
available publicly. All submissions
Commission takes such action, the Commission issued a notice of
should refer to File Number SR–CBOE–
Commission will institute proceedings designation of a longer period for
to determine whether the proposed rule 2015–094 and should be submitted on
Commission action on proceedings to
change should be approved or or before November 19, 2015.
determine whether to approve or
disapproved. For the Commission, by the Division of
Trading and Markets, pursuant to delegated 1 15 U.S.C. 78s(b)(1).
IV. Solicitation of Comments
authority.22 2 17 CFR 240.19b–4.
Interested persons are invited to Robert W. Errett, 3 See Securities Exchange Act Release No. 74519
submit written data, views, and (March 17, 2015), 80 FR 15264.
Deputy Secretary.
arguments concerning the foregoing, 4 See Securities Exchange Act Release No. 74862
[FR Doc. 2015–27517 Filed 10–28–15; 8:45 am] (May 4, 2015), 80 FR 26599 (May 8, 2015).
including whether the proposed rule
5 See Securities Exchange Act Release No. 75245
change is consistent with the Act. BILLING CODE 8011–01–P
(June 18, 2015), 80 FR 36386 (June 24, 2015)
Comments may be submitted by any of (‘‘Order Instituting Proceedings’’).
asabaliauskas on DSK5VPTVN1PROD with NOTICES
the following methods: 6 See Letter to Brent J. Fields, Secretary,
Commission, from Kyle Edwards, Attorney, CBOE,
Electronic Comments dated July 21, 2015.
• Use the Commission’s Internet 7 See Letter to Brent J. Fields, Secretary,
comment form (http://www.sec.gov/ Commission, from Gavin Rowe, Senior Director,
Dash Financial LLC, dated August 11, 2015; Letter
rules/sro.shtml); or to Brent J. Fields, Secretary, Commission, from
Benjamin Londergan, Executive Managing Director,
20 15 U.S.C. 78s(b)(3)(A). Convergex Execution Solutions, dated September
21 17 CFR 240.19b–4(f)(6). 22 17 CFR 200.30–3(a)(12). 15, 2015.
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Document Created: 2015-12-14 15:21:46
Document Modified: 2015-12-14 15:21:46
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 66605 |
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