Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Notices 70957 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 62977 

(September 22, 2010), 75 FR 59773 (‘‘Notice’’). 

4See letter from Frank Vivirito, Chief Compliance 

Officer, XR Securities LLC, to Elizabeth M. Murphy, 

Secretary, Commission, dated October 14, 2010 

(‘‘XR Securities Letter’’) and letter from J. Micah 

Glick, Chief Compliance Officer, Cutler Group LP, 

to Elizabeth M. Murphy, Secretary, Commission, 

dated October 22, 2010 (‘‘Cutler Letter’’). 

5Section 1.1 of CBOE’s By-Laws provides: ‘‘The 

term ‘Trading Permit Holder’ means any individual, 

corporation, partnership, limited liability company 

or other entity authorized by the rules that holds 

a Trading Permit. If a Trading Permit Holder is an 

individual, the Trading Permit Holder may also be 

referred to as an ‘individual Trading Permit Holder.’ 

If a Trading Permit Holder is not an individual, the 

Trading Permit Holder may also be referred to as 

a ‘TPH organization.’ A Trading Permit Holder is a 

‘member’ solely for purposes of the Act; however, 

one’s status as a Trading Permit Holder does not 

confer on that Person any ownership interest in the 

Exchange.’’ See Section 3(a)(3)(A) of the Act which 

defines member of an exchange. 

6Before CBOE demutualized, Rule 3.1(a) required 

every individual member or member organization to 

have as the principal purpose of its membership the 

conduct of a public securities business. 

at 202–789–6873 or via electronic mail 

at prc-webmaster@prc.gov. 

The appeal and all related documents 

are also available for public inspection 

in the Commission’s docket section. 

Docket section hours are 8 a.m. to 

4:30 p.m., Monday through Friday, 

except on Federal government holidays. 

Docket section personnel may be 

contacted via electronic mail at prcdockets@prc.gov or via telephone at 

202–789–6846. 

Filing of documents. All filings of 

documents in this case shall be made 

using the Internet (Filing Online) 

pursuant to Commission rules 9(a) and 

10(a) at the Commission’s Web site, 

http://www.prc.gov, unless a waiver is 

obtained. 39 CFR 3001.9(a) and 10(a). 

Instructions for obtaining an account to 

file documents online may be found on 

the Commission’s Web site, 

http://www.prc.gov, or by contacting the 

Commission’s docket section at prcdockets@prc.gov or via telephone at 

202–789–6846. 

Intervention. Those, other than the 

Petitioner and respondent, wishing to be 

heard in this matter are directed to file 

a notice of intervention. See 39 CFR 

3001.111. Notices of intervention in this 

case are to be filed on or before 

December 10, 2010. A notice of 

intervention shall be filed using the 

Internet (Filing Online) at the 

Commission’s Web site, 

http://www.prc.gov, unless a waiver is 

obtained for hardcopy filing. See 39 CFR 

3001.9(a) and 10(a). 

Further procedures. By statute, the 

Commission is required to issue its 

decision within 120 days from the date 

it receives the appeal. See 39 U.S.C. 

404(d)(5). A procedural schedule has 

been developed to accommodate this 

statutory deadline. In the interest of 

expedition, in light of the 120-day 

decision schedule, the Commission may 

request the Postal Service or other 

participants to submit information or 

memoranda of law on any appropriate 

issue. As required by the Commission 

rules, if any motions are filed, responses 

are due 7 days after any such motion is 

filed. 39 CFR 3001.21. 

It is ordered: 

1. The Postal Service shall file the 

administrative record in this appeal, or 

otherwise file a responsive pleading to 

the appeal, by November 23, 2010. 

2. The procedural schedule listed 

below is hereby adopted. 

3. Pursuant to 39 U.S.C. 505, 

Cassandra L. Hicks is designated officer 

of the Commission (Public 

Representative) to represent the 

interests of the general public. 

4. The Secretary shall arrange for 

publication of this notice and order and 

procedural schedule in the Federal 

Register. 

PROCEDURAL SCHEDULE

November 8, 2010 .............................................. Filing of Appeal. 

November 23, 2010 ............................................ Deadline for Postal Service to file administrative record in this appeal or responsive pleading. 

December 10, 2010 ............................................ Deadline for petitions to intervene (see 39 CFR 3001.111(b)). 

December 13, 2010 ............................................ Deadline for Petitioner’s Form 61 or initial brief in support of petition (see 39 CFR 3001.115(a), 

(b) and (e)). 

January 3, 2011 .................................................. Deadline for answering brief in support of Postal Service (see 39 CFR 3001.115(c)). 

January 18, 2011 ................................................ Deadline for reply briefs in response to answering briefs (see 39 CFR 3001.115(d)). 

January 25, 2011 ................................................ Deadline for motions requesting oral argument; the Commission will schedule oral argument 

only when it is a necessary addition to the written filings (see 39 CFR 3001.116). 

March 4, 2011 ..................................................... Expiration of the Commission 120-day decisional schedule (see 39 U.S.C. 404(d)(5)). 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2010–29204 Filed 11–18–10; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63314; File No. SR–CBOE– 

2010–084] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Approving 

Proposed Rule Change Regarding 

Registration and Qualification 

Requirements for Associated Persons 

November 12, 2010. 

I. Introduction 

On September 10, 2010, the Chicago 

Board Options Exchange, Incorporated 

(‘‘Exchange’’ or ‘‘CBOE’’) filed with the 

Securities and Exchange Commission 

(‘‘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 

apply its registration and qualification 

requirements to all of its members. The 

proposed rule change was published for 

comment in the Federal Register on 

September 28, 2010.3 The Commission 

received two comment letters on the 

proposal.4 This order approves the 

proposed rule change. 

II. Background 

Currently, registration, examination, 

and continuing education requirements 

for associated persons of trading permit 

holder 5 organizations (‘‘TPH 

organizations’’) that conduct a public 

customer business are in Chapter IX, 

Doing Business with the Public, of 

CBOE’s rules.6 The associated persons 

of TPH organizations register with the 

Exchange via the Uniform Application 

for Securities Industry Registration or 

Transfer (‘‘Form U4’’) through the 

Financial Industry Regulatory 

Authority’s (‘‘FINRA’’) Central 

Registration Depository System 

(‘‘WebCRD’’), and must pass the General 

Securities Representative examination 

(‘‘Series 7’’) to function as 

representatives; if acting as options 

principals engaged in the supervision of 

options sales practices, they must also 

pass the Registered Options Principal 


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7The Exchange is proposing to apply the existing 

FINOP requirement in Rule 3.6A to all TPH 

organizations. 

8CBOE has represented that CBOE Stock 

Exchange (‘‘CBSX’’) firms solely engage in 

proprietary trading. Chapter IX of CBOE’s Rulebook 

pertains toTPHs that conduct a public customer 

business and is not included in Appendix A, 

Applicability of Rules of the Exchange, to the CBSX 

rules, which lists the CBOE rules that apply to 

CBSX TPHs. However, it is the Commission’s 

understanding that it is CBOE’s intent to apply the 

rules of Chapter IX that are referenced in Rule 3.6A 

to CBSX TPHs. 

9Section 3(a)(18) of the Act defines an associated 

person of a broker or dealer as ‘‘any partner, officer, 

director, or branch manager of such broker or dealer 

(or any person occupying a similar status or 

performing similar functions), any person directly 

or indirectly controlling, controlled by, or under 

common control with such broker or dealer, or any 

employee of such broker or dealer, except that any 

person associated with a broker or dealer whose 

functions are solely clerical or ministerial shall not 

be included in the meaning of such term for 

purposes of section 15(b).’’ 15 U.S.C. 78c(a)(18). 

10 It is the Commission’s understanding that, with 

these changes to CBOE’s rules, all associated 

persons involved in the securities business of a firm 

that does business on the CBOE will have to 

register, pass a qualification examination and 

comply with continuing education requirements. 

11Associated persons of CBOE TPHs include both 

individuals and non-natural persons. 

12CBOE has represented that it is developing a 

principal examination tailored to sole proprietors, 

officers, partners, and directors, individual TPHs or 

individual associated persons who are engaged in 

the supervision or monitoring of proprietary 

trading, market-making, or brokerage activities, 

and/or anyone who is engaged in the supervision 

or training of those engaged in proprietary trading, 

market-making or brokerage activities. Until this 

examination is complete and filed with the 

Commission, these associated persons must pass 

the General Securities Principal examination 

(‘‘Series 24’’). 

13CBOE indicated that it did not want to use the 

term ‘‘principal’’ in Rule 3.6A to denote associated 

persons of a member who are actively engaged in 

the management of the member’s investment 

banking or securities business, including 

supervision, solicitation, conduct of business or the 

training of persons associated with a member for 

any of these functions. 

Under CBOE’s proposed rules anyone functioning 

as a principal must register as such with the 

Exchange via a Form U4 through FINRA’s WebCRD. 

CBOE did not want to use the term principal in 

Rule 3.6A to refer to these associated persons 

because it wanted to avoid creating confusion for 

its TPHs that have Registered Options Principals. 

Through this filing, CBOE is essentially extending 

the Registered Options Principal category and 

requirements (though not the same examinations) to 

those associated persons in a supervisory function 

whose firms do not conduct business with the 

public. Ultimately, the Commission expects CBOE 

to eliminate the distinction in its rules relating to 

doing business with the public. Hereinafter, the 

Commission will refer to such persons as 

principals. 

14See NASD Rule 1022(a)(1)(c). 

15See proposed Rule 3.6A(c). 

16The Commission understands that this will be 

either an appropriate examination developed by 

CBOE and filed with the Commission or the Series 

24. 

17The Commission expects this waiver to be used 

in very limited circumstances. 

18 Interpretations and Policies .07 to Rule 3.6A 

defines proprietary trading. 

19See proposed Interpretations and Policies .07 to 

Rule 3.6A. The Commission understands that this 

examination will be the Series 24 until CBOE has 

completed and filed with the Commission its own 

examination for principals of proprietary trading 

firms. This requirement is substantially similar to 

NASDAQ Rule 1021(e)(1). 

examination (‘‘Series 4’’) or the General 

Securities Sales Supervisor examination 

(‘‘Series 9/10’’). 

Rule 3.6A, Qualification and 

Registration of Certain Associated 

Persons, sets forth the requirement for 

each individual TPH or TPH 

organization subject to Rule 15c3–1 

under the Act to have a FINOP (Limited 

Principal—Financial and Operations).7

Rule 3.6A also references the 

registration requirements set forth in 

Chapter IX of CBOE’s Rulebook for 

associated persons of TPH organizations 

that conduct a public customer 

business.8

Rule 9.3A, Continuing Education for 

Registered Persons, applies to registered 

persons of TPHs and TPH organizations 

that conduct business with the public 

and sets out CBOE’s continuing 

education requirements. 

III. Description of the Proposal 

CBOE proposes to amend its rules and 

the rules of the CBSX regarding 

registration, qualification, and 

continuing education requirements for 

individual TPHs and associated 

persons 9 of TPHs. CBOE is amending its 

rules to make them substantially similar 

to the registration, examination and 

continuing education requirements of 

FINRA. Specifically, CBOE proposes to 

require all individual TPHs and TPH 

associated persons, regardless of 

whether they conduct a public customer 

or proprietary securities business, to 

register, qualify and comply with 

continuing education requirements.10

CBOE and CBSX will require all 

individual TPHs and individual 

associated persons 11 not already 

registered in WebCRD to register under 

Rule 3.6A within 60 days of the date of 

this Order (January 11, 2011) and to 

pass a qualification examination. CBOE 

is developing an alternative to the Series 

7 examination that is specifically 

tailored toward individual TPHs and 

associated persons of TPHs that are 

engaged in proprietary trading. CBOE 

has represented that within six months 

of the date of this Order it will have 

completed the development of this 

qualification examination 12 and will 

file the examination with the 

Commission. All individual TPHs and 

individual associated persons must take 

and pass the new examination, as 

applicable, no later than August 12, 

2011. 

Rule 3.6A(c) will require that each 

TPH and TPH organization designate on 

Schedule A of Form BD a Chief 

Compliance Officer (‘‘CCO’’) 13 who must 

register with CBOE using Form U4 and 

pass the Compliance Official 

examination (‘‘Series 14’’).14 CBOE has 

represented to the Commission that it 

has asked FINRA to enable this category 

of registration for CBOE and to make the 

Series 14 examination available to CCOs 

of CBOE and CBSX TPHs. CBOE is also 

proposing to allow a limited exemption 

from the requirement to pass the Series 

14.15

Furthermore, the Exchange is 

proposing to add Interpretations and 

Policies .07 to Rule 3.6A requiring the 

registration and the successful 

completion of a heightened qualification 

examination by every individual acting 

in any of the following capacities: (i) 

Officer; (ii) partner; (iii) director; (iv) 

supervisor of proprietary trading, 

market-making or brokerage activities; 

and/or (v) supervisor of those engaged 

in proprietary trading, market-making or 

brokerage activities with respect to 

those activities. Thus, all individuals 

who engage in supervisory functions at 

the TPH organization’s securities 

business, or who oversee associated 

persons of TPHs, must register and pass 

the relevant principal examination.16

The rule also requires each TPH 

organization to have at least two of the 

above listed individuals registered as 

principals and subject to the relevant 

principal examination requirement. The 

Exchange may waive the requirement to 

have two principals registered if a TPH 

organization conclusively demonstrates 

that only one principal should be 

required to register (such as a single 

member liability company).17

A TPH organization that is involved 

solely in proprietary trading 18 and has 

25 or fewer associated persons would 

only be required to have one principal 

registered and subject to a heightened 

qualification examination under this 

section.19

Rule 3.6A(a)(1) provides that a TPH or 

TPH organization shall not maintain a 

registration with the Exchange for any 

person: (1) Who is no longer active in 

the TPH or TPH organization’s 

securities business; (2) who is no longer 

functioning in the registered capacity; or 

(3) where the sole purpose is to avoid 

an examination requirement. A TPH or 

TPH organization cannot register any 

person where there is no intent to 

employ that person in the TPH or TPH 

organization’s securities business. 

However, a TPH or TPH organization 

may maintain or make application for 


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Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Notices 70959 

20This rule is substantially similar to NASD Rule 

1021(a). 

21This rule is substantially similar to NASD Rule 

1060. 

22This rule is substantially similar to NASD rules 

1021(c) and 1031(c) regarding lapses. 

23This rule is substantially similar to NASD Rule 

1070 regarding waivers. 

24See Notice at pp. 8–9. 

25See supra note 8. 

26 Interpretations and Policies .01 to Rule 9.3A 

currently excludes these persons from the 

continuing education requirements set forth in Rule 

9.3A. Proposed Interpretations and Policies .04 to 

Rule 3.6A states that all persons required to register 

are subject to CBOE’s continuing education 

requirements. 

27See supra note 4. 

28Brokers and dealers are required to supervise 

the activities of their associated persons. See 15 

U.S.C. 78o(b)(4)(E). 

29Section 6(b)(1) requires exchanges to have the 

ability to enforce compliance by their members and 

associated persons with the federal securities laws 

and with their own rules. 15 U.S.C. 78f(b)(1). 

the registration of an individual who 

performs legal, compliance, internal 

audit, back-office-operations, or similar 

responsibilities for the TPH or TPH 

organization, or a person who performs 

administrative support functions for 

registered personnel, or a person 

engaged in the securities business of a 

foreign securities affiliate or subsidiary 

of the TPH or TPH organization.20

The Exchange is also proposing to add 

Rule 3.6A(a)(2) to identify several 

categories of individual TPHs and 

individual associated persons who are 

exempt from the new registration 

requirements. The categories are: (i) 

Individual associated persons 

functioning solely and exclusively in a 

clerical or ministerial capacity; (ii) 

individual TPHs and individual 

associated persons who are not actively 

engaged in the securities business, (iii) 

individual TPHs and individual 

associated persons functioning solely 

and exclusively to meet a TPH or TPH 

organization’s need for nominal 

corporate officers or for capital 

participation; and (iv) individual 

associated persons whose functions are 

solely and exclusively related to 

transactions in commodities, 

transactions in security futures and/or 

effecting transactions on the floor of 

another national securities exchange 

and who are registered as floor members 

with such exchange. 21

Rule 3.6A(e) addresses lapses in 

registration 22 and Interpretation and 

Policies .05 thereto would permit CBOE 

to waive the examination requirement 

in limited circumstances.23 In addition, 

the Exchange is making certain 

technical and non-substantive changes 

to its rules.24

The Exchange states that individual 

associated persons, including Registered 

Options Principals and Registered 

Representatives, continue to be subject 

to the registration, examination and 

continuing education requirements of 

Chapter IX of CBOE’s rules, which 

apply to firms conducting a public 

customer business.25 Additionally, any 

TPH or TPH organization that ends the 

employment of an individual required 

to register under Rule 3.6A must comply 

with the requirements in Chapter IX of 

CBOE’s rules. 

The Exchange proposes to require 

individual TPHs and individual 

associated persons whose activities are 

limited solely to the transaction of 

business on the floor with TPHs or 

registered broker-dealers to fulfill 

continuing education requirements.26

IV. Comment Letters 

The Commission received two 

comment letters on the proposed rule 

change.27 One commenter, XR 

Securities, stated that the examination 

proposed to be developed by CBOE for 

associated persons was redundant for 

associated persons currently registered 

with another exchange who have passed 

the Series 7. The commenter stated that 

the new examination would impose an 

unfair burden on firms registered at 

CBOE and elsewhere, and argued that it 

would be better to allow associated 

persons registered at more than one 

exchange to take the Series 7 instead of 

the proposed CBOE examination. The 

commenter also stated that the Series 24 

is generally accepted by all exchanges as 

the CCO examination, whereas the 

Series 14 is available for FINRA/NYSE 

members to elect to take instead of the 

Series 24. The commenter believes that 

requiring a CCO who currently is Series 

24 registered to pass the Series 14 

would be unreasonable. 

The second commenter, Cutler, is 

supportive of the proposed rule change 

requiring all traders to register with 

CBOE and pass a relevant trading 

examination; however, it also expressed 

concern over the proposed examination 

requirements and timeframe for 

completing a required examination. In 

short, Cutler believes no new 

examination requirement should be 

imposed on traders currently properly 

registered with CBOE. It suggested 

creating a new continuing education 

module for CBOE traders, to the extent 

the existing examinations do not cover 

relevant material that would be 

included in the new examination. For 

persons to be qualified on CBOE in the 

near future, Cutler supports CBOE’s 

plan to create an examination specific 

and relevant to professional traders in 

lieu of the Series 7, which it considers 

too broad. Cutler echoed XR Securities’ 

concerns regarding the Series 14 

examination for CCOs, stating that the 

Series 24 is the accepted examination 

for CCOs and should be adopted by 

CBOE instead, and, similarly, 

encouraged CBOE to create an exam to 

succeed the Series 24 for supervisors 

whose functions are limited to the 

supervision of traders. 

V. Discussion 

The Commission is sympathetic to the 

concerns raised by the two commenters 

regarding associated persons who are 

currently Series 7 qualified who do not 

want to have to take the proposed CBOE 

proprietary trading exam, as well as 

associated persons who have already 

qualified as CCOs. The Commission 

expects that such persons may be 

eligible for a waiver of the exam 

requirement if they are able to 

demonstrate to the CBOE’s satisfaction 

that they are appropriately qualified to 

do business on the CBOE. However, the 

Commission believes that this proposed 

rule change is an important step 

towards harmonizing the registration, 

qualification and continuing education 

requirements across the SROs. In order 

to meet its obligations under Section 

6(b)(1) of the Act to enforce compliance 

by member firms 28 and their associated 

persons with the Act, the rules 

thereunder, and the exchange’s own 

rules,29 an exchange must have baseline 

registration and qualification 

requirements for all persons conducting 

business on an exchange, as well as for 

those supervising such activity. Further 

to those provisions, the Commission 

believes an exchange should require 

continuing education for registered 

persons to help ensure that members 

and persons associated with members 

are up to date on changes to exchange 

rules and the securities laws, rules, and 

regulations that govern their activities. 

In addition, an exchange must know if 

an associated person of a member firm 

is subject to a statutory disqualification. 

This information is elicited by the Form 

U4, which is used by most exchanges 

and FINRA to register associated 

persons. The Commission believes that 

it is important to ensure that 

information, such as whether an 

associated person is subject to a 

statutory disqualification, is available to 

exchanges and other regulators, 

including the Commission and the state 

securities regulators, through WebCRD, 

as well as members of the public 


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30See Section 6(c)(2) of the Act, 15 U.S.C. 

78f(c)(2); and Rule 19h–1 under the Act, 17 CFR 

240.19h–1. 

31 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

32 15 U.S.C. 78f(b)(5). 

33 15 U.S.C. 78f(c)(3)(B). 

34CBOE’s proposed rule change expands its 

continuing education requirements to associated 

persons whose activities are limited to the 

transaction of business on CBOE’s floor. 

35See Notice, p. 6; 75 FR 59775. Such persons 

must comply with Section 15(b)(8) of the Act. 

36See, e.g., FINRA Rule 1070(d) and NASDAQ 

Rule 1070(d) regarding the examination waiver. 

through BrokerCheck, which derives its 

information from WebCRD.30

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,31 and, in particular with 

Section 6(b)(5) of the Act,32 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 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 believes that the proposed 

rule change is also consistent with 

Section 6(c)(3)(B) of the Act,33 which 

authorizes exchanges to prescribe 

standards of training, experience and 

competence for persons associated with 

exchange members, and gives exchanges 

the authority to bar a natural person 

from becoming a member or a person 

associated with a member, if the person 

does not meet the standards of training, 

experience and competence prescribed 

in the rules of the exchange. 

CBOE’s proposed rule change requires 

all associated persons of TPHs engaged 

in a securities business on CBOE or on 

CBSX, as well as those who supervise, 

train or otherwise oversee those who do, 

to register with the Exchange via the 

Form U4, qualify by passing an 

appropriate examination, and be subject 

to continuing education requirements.34

The Commission believes the 

restrictions on registration that bar a 

TPH from maintaining a registration 

with CBOE for (1) persons no longer 

active in the TPH’s securities business, 

(2) persons no longer functioning in the 

registered capacity, or (3) for avoidance 

of an examination requirement, are 

appropriate. These limitations should 

help ensure that only persons qualified 

for their category of registration who are 

engaged in a securities business are able 

to transact business on CBOE and CBSX. 

The Commission notes that CBOE has 

exempted several categories of 

associated persons from the new 

registration requirements. These persons 

fall outside of CBOE’s proposed 

definition of ‘‘engaged in a securities 

business.’’ CBOE explained that the 

people excluded would not be 

considered to be actively engaged in a 

securities business unless they are 

registered on the floor of another 

exchange, in which case they would not 

have to register with CBOE.35 The 

Commission understands that CBOE’s 

proposed rule change applies to all 

associated persons conducting a 

securities business, on a proprietary or 

agency basis, on CBOE and CBSX. 

The Commission expects that CBOE, 

consistent with its representation, will 

have developed and filed with the 

Commission the appropriate 

examination for its representatives 

engaged in a proprietary securities 

business no later than May 12, 2011. If 

CBOE fails to do so, the Commission 

expects CBOE to require all associated 

persons engaged in the securities 

business of a TPH to promptly take and 

pass an appropriate existing 

examination. 

The Commission believes that the 

requirement that all persons functioning 

in certain supervisory capacities be 

registered through WebCRD and be 

subject to higher qualification standards 

appropriately reflects the enhanced 

responsibility of their roles and is 

consistent with the Act. The general 

requirement that TPHs must have a 

minimum of two principals responsible 

for oversight of member organization 

activity on CBOE, who must be 

registered as such and pass a principal 

exam, should help CBOE strengthen the 

regulation of its member firms, and 

prepare those individuals for their 

responsibilities. The nature of the firm, 

however, may dictate that more than 

two principals are needed to provide 

appropriate supervision. 

The requirement for each TPH 

organization to have a CCO who must 

register and pass the Series 14 and a 

FINOP who must register and pass the 

Series 27 is appropriate based on the 

heightened level of accountability 

inherent in the duty of overseeing 

compliance by an Exchange member, 

and in the oversight and preparation of 

financial reports, and the oversight of 

those employed in financial and 

operational capacities at each firm. 

The Commission believes CBOE’s 

proposed provision requiring any 

person whose registration has been 

revoked by the Exchange as a 

disciplinary sanction, or whose most 

recent registration as a principal or 

representative has been terminated for a 

period of two or more years 

immediately preceding the date of 

receipt by the Exchange of a new 

application, to pass the qualification 

examination appropriate to such 

person’s category of registration is 

appropriate. This requirement should 

help to ensure that an associated 

person’s qualifications are current. 

The Commission also believes CBOE’s 

proposed exceptions from the abovediscussed general requirements are 

appropriate. Any TPH seeking an 

exception from the two principal 

minimum must provide evidence that 

conclusively indicates to the Exchange 

that only one principal is necessary. The 

Commission expects this authority to be 

used sparingly, because such persons 

oversee the operations of member firms 

and provide the first line of defense in 

ensuring that member firms are 

complying with the rules of an exchange 

as well as the federal securities laws. In 

addition, CBOE may waive the 

qualification examination requirement 

in exceptional cases where the applicant 

has demonstrated that good cause exists. 

The Commission expects this authority 

to be used sparingly. Finally, the 

Commission notes that these exceptions 

are substantively the same as exceptions 

provided in similar rules at other 

SROs.36

The Commission believes that the 

proposal will enhance CBOE’s ability to 

ensure an effective supervisory structure 

for those conducting business on CBOE. 

The requirements apply broadly and are 

intended to help close a regulatory gap 

which has resulted in varying 

registration, qualification, and 

supervision requirements across 

markets. The Commission believes that 

the changes proposed by CBOE to its 

rules will strengthen the regulatory 

structure of the Exchange and should 

enhance the ability of its individual 

TPHs and TPH organizations to comply 

with the Exchange’s rules as well as 

with the federal securities laws. 

Additionally, the Commission 

believes that the proposed rule change 

is consistent with the principles of 

Section 11A(a)(1)(22) of the Act in that 

it seeks to assure fair competition 

among brokers and dealers and among 

exchange markets. The Commission 

believes that the proposed rule will 

promote uniformity of regulation across 

markets, thus reducing opportunities for 

regulatory arbitrage. CBOE’s proposed 

rule change helps ensure that all 

persons conducting a securities business 

through CBOE are appropriately 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 223 / Friday, November 19, 2010 / Notices 70961 

37 15 U.S.C. 78s(b)(2). 

38 17 CFR 200.30–3(a)(12). 

supervised, as the Commission expects 

of all SROs. 

VI. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,37 that the 

proposed rule change (SR–CBOE–2010– 

084), be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.38

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–29160 Filed 11–18–10; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 7232 ] 

30-Day Notice of Proposed Information 

Collection: Voluntary Disclosures 

ACTION: Notice of request for public 

comment and submission to OMB of 

proposed information collection. 

SUMMARY: The Department of State has 

submitted the following information 

collection request to the Office of 

Management and Budget (OMB) for 

approval in accordance with the 

Paperwork Reduction Act of 1995. 

• Title of Information Collection: 

Voluntary Disclosures. 

• OMB Control Number: 1405–0179. 

• Type of Request: Extension of 

Currently Approved Collection. 

• Originating Office: Bureau of 

Political-Military Affairs, Directorate of 

Defense Trade Controls, PM/DDTC. 

• Form Number: None. 

• Respondents: Business and 

Nonprofit Organizations. 

• Estimated Number of Respondents: 

750. 

• Estimated Number of Responses: 

1,000. 

• Average Hours Per Response: 10 

hours. 

• Total Estimated Burden: 10,000 

hours. 

• Frequency: On Occasion. 

• Obligation to Respond: Voluntary. 

DATES: The Department will accept 

comments from the public up to 30 days 

from November 19, 2010. 

ADDRESSES: Direct comments to the 

Department of State Desk Officer in the 

Office of Information and Regulatory 

Affairs at the Office of Management and 

Budget (OMB). You may submit 

comments by the following methods: 

• E-mail: 

oira_submission@omb.eop.gov. You 

must include the DS form number, 

information collection title, and OMB 

control number in the subject line of 

your message. 

• Fax: 202–395–5806. Attention: Desk 

Officer for Department of State. 

FOR FURTHER INFORMATION CONTACT: 

Direct requests for additional 

information regarding the collection 

listed in this notice, including requests 

for copies of the information collection 

and supporting documents, to Nicholas 

Memos, PM/DDTC, SA–1, 12th Floor, 

Directorate of Defense Trade Controls, 

Bureau of Political-Military Affairs, U.S. 

Department of State, Washington, DC 

20522–0112, who may be reached via 

phone at (202) 663–2804, or via e-mail 

at memosni@state.gov. 

SUPPLEMENTARY INFORMATION: 

We are soliciting public comments to 

permit the Department to: 

• Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of our 

functions. 

• Evaluate the accuracy of our 

estimate of the burden of the proposed 

collection, including the validity of the 

methodology and assumptions used. 

• Enhance the quality, utility, and 

clarity of the information to be 

collected. 

• Minimize the reporting burden on 

those who are to respond, including the 

use of automated collection techniques 

or other forms of technology. 

Abstract of proposed collection: The 

export, temporary import, temporary 

export and brokering of defense articles, 

defense services and related technical 

data are licensed by the Directorate of 

Defense Trade Controls (DDTC) in 

accordance with the International 

Traffic in Arms Regulations (‘‘ITAR,’’ 22 

CFR parts 120–130) and Section 38 of 

the Arms Export Control Act (AECA). 

Those who manufacture or export 

defense articles, defense services, and 

related technical data, or the brokering 

thereof, must register with the 

Department of State. Persons desiring to 

engage in export, temporary import, and 

brokering activities must submit an 

application or written request to 

conduct the transaction to the 

Department to obtain a decision 

whether it is in the interests of U.S. 

foreign policy and national security to 

approve the transaction. Also, registered 

brokers must submit annual reports 

regarding all brokering activity that was 

transacted, and registered manufacturers 

and exporters must maintain records of 

defense trade activities for five years. 

Section 127.12 of the ITAR encourages 

the disclosure of information to DDTC 

by persons who believe they may have 

violated any provision of the AECA, 

ITAR, or any order, license, or other 

authorization issued under the AECA. 

The violation is analyzed by DDTC to 

determine whether to take 

administrative action under part 128 of 

the ITAR and whether to refer the 

matter to the Department of Justice to 

consider criminal prosecution. 

Methodology: These forms/ 

information collections may be sent to 

the Directorate of Defense Trade 

Controls via the following methods: 

electronically, mail, personal delivery, 

and/or fax. 

Dated: November 10, 2010. 

Robert S. Kovac, 

Managing Director of Defense Trade Controls, 

Bureau of Political-Military Affairs, U.S. 

Department of State. 

[FR Doc. 2010–29230 Filed 11–18–10; 8:45 am] 

BILLING CODE 4710–27–P 

DEPARTMENT OF STATE 

[Public Notice: 7233] 

Notice of Meeting of the Advisory 

Committee on International Law 

A meeting of the Advisory Committee 

on International Law will take place on 

Thursday, December 9, 2010, from 

9:30 a.m. to approximately 5:30 p.m., at 

the George Washington University Law 

School (Michael K. Young Faculty 

Conference Center, 5th Floor), 2000 H 

St., NW., Washington, DC. The meeting 

will be chaired by the Legal Adviser of 

the Department of State, Harold Hongju 

Koh, and will be open to the public up 

to the capacity of the meeting room. It 

is anticipated that the agenda of the 

meeting will cover a range of current 

international legal topics, including 

international piracy; sovereign 

immunity of foreign government 

officials; U.N. resolutions and 

fundamental rights under European 

Union law; contemporary issues in the 

law of armed conflict; transnational 

environmental issues; and corporate 

social responsibility. Members of the 

public will have an opportunity to 

participate in the discussion. 

Members of the public who wish to 

attend the session should, by Friday, 

December 3, 2010, notify the Office of 

the Legal Adviser (telephone: 202–776– 

8451) of their name, professional 

affiliation, address, and telephone 

number. A valid photo ID is required for 

admittance. A member of the public 

who needs reasonable accommodation 

should make his or her request by 

December 2, 2010; requests made after 

that time will be considered but might 

not be possible to accommodate. 


srobinson on DSKHWCL6B1PROD with NOTICES