Document ID: SEC-2011-1781-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc.
Posted Date: 2011-11-18T05:00Z

[Federal Register Volume 76, Number 223 (Friday, November 18, 2011)]
[Notices]
[Pages 71614-71616]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29746]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65732; File No. SR-CBOE-2011-106]

Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Provide a Limited Extension to the Compliance Deadline 
for Registration and Qualification Pursuant to Rule 3.6A

November 10, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on November 4, 2011, the Chicago 
Board Options Exchange, Incorporated (``CBOE'' or the ``Exchange'') 
filed with the Securities and Exchange Commission the proposed rule 
change as described in Items I, II and III below, which Items have been 
prepared by CBOE. The Exchange has designated the proposed rule change 
as constituting a stated policy, practice, or interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule pursuant to Section 19(b)(3)(A)(i) of the Act \2\ and Rule 19b-
4(f)(1) thereunder,\3\ which renders the proposal effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act''),\4\ the Exchange proposes to provide 
a limited extension to the November 5, 2011 deadline to comply with its 
rules regarding registration and qualification of individual Trading 
Permit Holders and individual associated persons for those individual 
Trading Permit Holders and/or individual associated persons that have 
failed the required qualification examination(s) associated with their 
required categories of registration. CBOE is not proposing any textual 
changes to the Rules of CBOE. The text of the proposed rule change is 
available on the Exchange's Web site (http://www.cboe.org/legal), at 
the Exchange's Office of the Secretary and at the Commission.
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    \4\ 15 U.S.C. 78s(b)(1).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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. CBOE 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
    Pursuant to Rule 15b7-1,\5\ promulgated under the Exchange Act,\6\ 
``No registered broker or dealer shall effect any transaction in * * * 
any security unless any natural person associated with such broker or 
dealer who effects or is involved in effecting such transaction is 
registered or approved in accordance with the standards of training, 
experience, competence, and other qualification standards * * * 
established by the rules of any national securities exchange * * *'' 
CBOE Rule 3.6A sets forth requirements for registration and 
qualification of individual Trading Permit Holders and individual 
associated persons. In response to a

[[Page 71615]]

request by the Division of Trading and Markets at the Securities and 
Exchange Commission (the ``Commission'' or ``SEC''), CBOE recently 
amended its rules to expand its registration and qualification 
requirements set forth in CBOE Rule 3.6A to include individual Trading 
Permit Holders and individual associated persons that are engaged or to 
be engaged in the securities business of a Trading Permit Holder or TPH 
organization.\7\ CBOE Rule 3.6A provides that these individuals must be 
registered with the Exchange in the category of registration 
appropriate to the function to be performed as prescribed by the 
Exchange. Further, Rule 3.6A requires, among other things, that an 
individual Trading Permit Holder or individual associated person submit 
an application for registration and pass the appropriate qualification 
examination before the registration can become effective. The revised 
requirements apply to both CBOE and CBOE Stock Exchange (``CBSX'') 
Trading Permit Holders and their associated persons.
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    \5\ 17 CFR 240.15b7-1.
    \6\ 15 U.S.C. 78a et seq.
    \7\ See Securities Exchange Act Release No. 63314 (November 12, 
2010), 75 FR 70957 (November 19, 2010) (SR-CBOE-2010-084).
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    In conjunction with the registration requirements established by 
SR-CBOE-2010-084, three new qualification examinations became available 
on June 20, 2011 in the Central Registration Depository system 
(``WebCRD''), which is operated by the Financial Industry Regulatory 
Authority, Incorporated (``FINRA''). These registration categories 
include the following (the required qualification examinations and 
prerequisites, as applicable, associated with each registration 
category are in parentheses): PT--Proprietary Trader (Series 56), CT--
Proprietary Trader Compliance Officer (Series 14, Series 56 
prerequisite) and TP--Proprietary Trader Principal (Series 24, Series 
56 prerequisite). In the Approval Order for SR-CBOE-2010-084, the SEC 
established a deadline of August 12, 2011 for CBOE and CBSX individual 
Trading Permit Holders and individual associated persons of CBOE and 
CBSX Trading Permit Holders to register for and pass the applicable 
qualification examination(s). CBOE recently submitted a rule filing 
extending the deadline until November 5, 2011.\8\
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    \8\ See SR-CBOE-2011-104.
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    CBOE respectfully requests a limited extension to the November 5, 
2011 deadline for those individuals that have attempted to take the 
required qualification examination(s) prior to November 5, 2011 but 
have failed the examination (or prerequisite examination if multiple 
examinations are required). If an individual fails a required 
examination, the individual is prevented from rescheduling an 
examination for at least thirty days following the initial failure of 
an exam.\9\ Therefore, CBOE is proposing to provide thirty days 
following the date that WebCRD permits an individual to reschedule the 
appropriate qualification examination (following the failure of an 
examination taken prior to November 5, 2011). CBOE believes this 
proposal provides a reasonable amount of time for individuals that have 
failed an examination to come into compliance with the rule while 
limiting the disruption to a Trading Permit Holder's business operation 
that may result from an exam failure.
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    \9\ WebCRD also imposes a thirty-day delay for the failure of a 
qualification examination for the second time. In addition, an 
individual is prevented from re-registering for an examination for 
an additional one hundred eighty days upon the third failure of a 
qualification examination.
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    In order to qualify for the limited extension, the individual (or 
associated Trading Permit Holder) must demonstrate that (i) the 
individual failed the required qualification examination prior to 
November 5, 2011; and (ii) that the individual attempted to take the 
qualification examination again within thirty days following the date 
that WebCRD permits the individual to reschedule the examination after 
the initial failure. For example, if an individual failed the Series 56 
on October 14, 2011, the individual must retake the examination no 
later than December 13, 2011.
    Similarly, if an individual fails an examination that is the 
prerequisite for a second exam and is compliant with the terms of the 
limited extension referenced above, CBOE is also proposing to provide 
an additional thirty (30) days following successful completion of the 
prerequisite examination to pass the second examination. For example, 
for an individual that is required to take the Series 56 and the Series 
24, if an individual fails the Series 56 on October 14, 2011, and the 
individual successfully takes the Series 56 on November 16, 2011, the 
individual must take the Series 24 no later than December 16, 2011.
(2) Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\10\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\11\ which requires, among other things, 
that the Exchange's rules be designed to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and protect investors and the public interest. Specifically, 
CBOE believes this proposal provides Trading Permit Holders (and 
associated persons) that attempted to comply with the registration and 
qualification requirements by the deadline a reasonable amount of 
additional time to comply with these requirements, particularly as the 
individuals that are impacted by this rule are subject to a system 
requirement that prevents the individual from complying with these 
requirements within the designated timeframe. Further, CBOE believes 
that this proposal will limit the disruption to a Trading Permit 
Holder's business operation and/or the marketplace, in the event an 
individual or firm withdraws from the marketplace following an exam 
failure. The Exchange also believes the proposed rule change furthers 
the objectives of Section 6(c)(3) \12\ of the Act, which authorizes 
CBOE to prescribe standards of training, experience and competence for 
persons associated with CBOE members, in that this filing is proposing 
to extend the deadline for compliance with the standards of training, 
experience and competence established by the Exchange.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(c)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of purposes of the Act.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission

    The foregoing proposed rule change will take effect upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(i) of the Act \13\ 
and Rule 19b-4(f)(1) thereunder,\14\ because it constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule.
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    \13\ 15 U.S.C. 78s(b)(3)(A)(i).
    \14\ 17 CFR 240.19b-4(f)(1).

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[[Page 71616]]

    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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CBOE-2011-106 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-106. 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 
a.m. and 3 p.m. Copies of this filing also will be available for 
inspection and copying at the principal office of CBOE. 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 publicly available. All 
submissions should refer to File Number SR-CBOE-2011-106 and should be 
submitted on or before December 9, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29746 Filed 11-17-11; 8:45 am]
BILLING CODE 8011-01-P