Document ID: SEC-2016-1088-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2016-06-27T04:00Z

[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)]
[Notices]
[Pages 41641-41643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15073]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78109; File No. SR-CHX-2016-08]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding Fingerprinting

June 21, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice 
is hereby given that on June 9, 2016, the Chicago Stock Exchange, Inc. 
(``CHX'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by CHX. The 
Exchange filed the proposal as a ``non-controversial'' proposed rule 
change pursuant to section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) \4\ thereunder. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    CHX proposes to amend the Rules of the Exchange (``CHX Rules'') to 
update provisions regarding the fingerprinting of securities industry 
personnel associated with Participants.\5\
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    \5\ A ``Participant'' is a ``member'' of the Exchange for 
purposes of the Act. See CHX Article 1, Rule 1(s).
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    CHX has designated this proposed rule change as non-controversial 
pursuant to section 19(b)(3)(A) \6\ of the Act and Rule 19b-4(f)(6) \7\ 
thereunder and has provided the Commission with the notice required by 
Rule 19b-4(f)(6)(iii).\8\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of this proposed rule change is available on the 
Exchange's Web site at (www.chx.com) and in the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
StatutoryBasis for, the Proposed Rule Change

    In its filing with the Commission, the CHX included statements 
concerning the purpose of and basis for the

[[Page 41642]]

proposed rule changes [sic] 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 CHX 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 
StatutoryBasis for, the Proposed Rule Changes

1. Purpose
    The Exchange proposes to amend Article 6, Rule 10 regarding the 
fingerprinting of security industry personnel. Current Article 6, Rule 
10 provides that each Participant and Participant Firm is responsible 
for ensuring compliance with section 17(f) of the Exchange Act \9\ and 
SEC Rule 17f-2 \10\ regarding the fingerprinting of securities industry 
personnel. Thereunder, paragraph .01 of the Interpretations and 
Policies of Article 6, Rule 10 provides that Participants may submit 
fingerprint cards to the Exchange for processing.\11\ Paragraph .02 of 
the Interpretations and Policies of Article 6, Rule 10 provides that 
the Exchange shall submit fingerprint cards obtained pursuant to this 
rule to the Attorney General of the United States or his or her 
designee for identification and processing and that the Exchange shall 
maintain the security of fingerprint cards and information received 
from the Attorney General or his or her designee.
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    \9\ 15 U.S.C. 78q(f).
    \10\ 17 CFR 240.17f-2.
    \11\ While the Exchange is currently permitted to require 
Participants to submit fingerprints to either the Exchange or to the 
Financial Industry Regulatory Authority (``FINRA'') Web Central 
Registration Depository (``Web CRD''), in 2011, the Exchange 
eliminated, among other things, fees for fingerprint processing by 
the Exchange and noted that the Exchange no longer provided 
fingerprint processing services. See Exchange Act Release No. 64953 
(July 25, 2011), 76 FR 45626 (July 29, 2011) (SR-CHX-2011-19) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Change to Clarify the Application of the Fee Schedule to Certain 
Transactions of, and Services to, CHX Participants and Make Certain 
Rate Changes); see also Exchange Act Release No. 57587 (March 31, 
2008), 73 FR 18598 (April 4, 2008) (Order Granting Approval of 
Proposed Rule Change, as Modified by Amendment No. 1, to Amend Rules 
Relating to Registration Requirements); see also Exchange Act 
Release No. 57363 (February 20, 2008), 73 FR 10846 (February 28, 
2008) (SR-CHX-2007-21) (Notice of Filing of Proposed Rule Change, as 
Modified by Amendment No. 1, to Amend Rules Relating to Registration 
Requirements).
    The CRD is the central licensing and registration system for the 
U.S. securities industry. The CRD system enables individuals and 
firms seeking registration with multiple states and self-regulatory 
organizations to do so by submitting a single form, fingerprint card 
and a combined payment of fees to FINRA. Through the CRD system, 
FINRA maintains the qualification, employment and disciplinary 
histories of registered associated persons of broker dealers.
    For those Participants that are not FINRA members, the Exchange 
collects the appropriate Web CRD fees from such Participants on 
behalf of FINRA. See CHX Fee Schedule Section J.5. Participants that 
are also FINRA members are subject to the relevant fingerprint 
processing fees under the FINRA Registration/Exam Fee Schedule.
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    The Exchange proposes to eliminate the reference to ``Participant 
Firm,'' as the definition of ``Participant'' includes Participant Firms 
\12\ and replace the reference to ``SEC Rule 17f-2'' with ``Rule 17f-2 
under the Exchange Act,'' which is stylistically consistent with other 
citations to various rules under the Exchange Act throughout the CHX 
Rules.\13\
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    \12\ See supra note 5.
    \13\ See e.g., CHX Article 7, Rule 8(a); see also e.g., CHX 
Article 12, Rule 8(a).
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    Moreover, as the Exchange no longer permits Participants to submit 
fingerprints to the Exchange directly,\14\ the Exchange proposes to 
delete paragraphs .01 and .02 of the Interpretations and Policies of 
Article 6, Rule 10 and adopt language under amended Article 6, Rule 10 
that provides that each Participant shall submit the fingerprints of 
its associated persons to the FINRA Web CRD prior to such personnel 
performing the functions listed under Rule 17f-2 under the Exchange 
Act. Thus, the proposed rule change serves to clean up provisions that 
should have been amended at the time the Exchange filed SR-CHX-2011-
19.\15\
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    \14\ See supra note 11.
    \15\ See supra note 11.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \16\ in general and furthers the 
objectives of sections 6(b)(1) \17\ in particular, in that it further 
enables the Exchange to be so organized as to have the capacity to be 
able to carry out the purposes of the Act and to comply, and to enforce 
compliance by its Participants and persons associated with its 
Participants, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the Exchange, in furtherance of the 
objectives of section 6(b)(1). Specifically, the Exchange believes that 
the proposed rule change serves to clean up provisions that should have 
been amended at the time the Exchange filed SR-CHX-2011-19,\18\ which 
furthers the objectives of section 6(b)(1).
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(1).
    \18\ See supra note 11.
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B. Self-Regulatory Organization's Statement of 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, as the proposed rule change 
serves to clarify that the Exchange no longer accepts fingerprint 
submissions from Participants, which does not implicate competitive 
issues.

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

    No written comments were either solicited or received.

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6) 
thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative upon filing. The 
Exchange states that the proposed change cleans up provisions that 
should have been amended at the time the Exchange filed SR-CHX-2011-
19.\21\ The Commission believes that waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
The rule change removes outdated rule text regarding the Exchange 
submitting fingerprint cards and amends Rule 10 to state that 
fingerprints must be submitted via Web CRD. Waiver of the operative 
delay will permit CHX to implement the change, which aligns its rules 
with its practice, without delay. Therefore, the Commission designates 
the proposed rule change to be operative upon filing.\22\
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    \21\ See supra note 11.
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).

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[[Page 41643]]

    At any time within 60 days of the filing of such 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 shall institute proceedings under 
section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal 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 No. SR-CHX-2016-08 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 No. SR-CHX-2016-08. 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 changes 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 CHX. 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 No. SR-CHX-2016-08 and should be 
submitted on or before July 18, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-15073 Filed 6-24-16; 8:45 am]
 BILLING CODE 8011-01-P