Document ID: SEC-2023-0984-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe Exchange, Inc.
Posted Date: 2023-09-11T04:00Z

[Federal Register Volume 88, Number 174 (Monday, September 11, 2023)]
[Notices]
[Pages 62413-62416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19471]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98288; File No. SR-CBOE-2023-042]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Rules Relating to the Continuing Education for Registered Persons 
as Provided Under Exchange Rule 3.33.01

September 5, 2023.
    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 August 23, 2023, Cboe Exchange, Inc. (the ``Exchange,'' ``Cboe 
Options,'' or ``Cboe'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I and II 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.
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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)(iii).
    \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

    Cboe Exchange, Inc. proposes to amend its rules relating to the 
Continuing Education for Registered Persons as provided under Exchange 
Rule 3.33.01. The text of the proposed rule change is provided in 
Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The proposed rule change amends Exchange Rule 3.33.01 to provide 
eligible individuals another opportunity to elect to participate in the 
Maintaining Qualifications Program (``MQP'').
    In 2021, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') implemented rule changes, which amended FINRA's Continuing 
Education (``CE'') Program requirements to, among other things, provide 
eligible individuals who terminate any of their representative or 
principal registration categories the option of maintaining their 
qualification for any terminated registration categories by completing 
annual continuing education through a new program, the MQP.\5\ Under 
FINRA Rule 1240.01, the MQP designated a look-back provision that, 
subject to specified conditions, extended the option to participate in 
the MQP to individuals who: (1) were registered as a representative or 
principal within two years immediately prior to March 15, 2022 (the 
implementation date of the MQP); and (2) individuals who were 
participating in the Financial Services Affiliate Waiver Program 
(``FSAWP'') \6\ under FINRA Rule 1210.09 (Waiver of Examinations for 
Individuals Working for a Financial Services Industry Affiliate of a 
Member) immediately prior to March 15, 2022 (collectively, ``Look-Back 
Individuals'').
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    \5\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No. 
SR-FINRA-2021-015). Other exchanges, including Cboe, subsequently 
filed copycat rule filings to align their continuing education rules 
with those of FINRA. See Securities Exchange Act Release No. 94513 
(March 24, 2022), 87 FR 18446 (March 30, 2022), (SR-CBOE-2022-012).
    \6\ The FSAWP is a waiver program for eligible individuals who 
have left a member firm to work for a foreign or domestic financial 
services affiliate of a member firm. FINRA stopped accepting new 
participants for the FSAWP beginning on March 15, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
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    In response to FINRA's rule changes and to facilitate compliance 
with the Exchange's CE Program requirements by members of multiple 
exchanges, the Exchange implemented rule changes to align with FINRA's 
CE Program and adopted Exchange Rules 3.33(c), 3.33.01, and 3.33.02. 
Such rules, among other things, provide eligible individuals who 
terminate any of their representative or principal registrations the 
option of maintaining their qualification for any of the terminated 
registrations by completing continuing education through the MQP. 
Further, Exchange Rule 3.33.01 includes a look-back provision that, 
subject to specified conditions, extends the option for maintaining 
qualifications following a registration category termination to (i) 
individuals who have been registered as a representative or principal 
within two years immediately preceding March 15, 2022, and (ii) 
individuals who have been participants of the FSAWP immediately 
preceding March 15, 2022 implementation (i.e., Look-Back Individuals). 
With respect to the FSAWP, the Exchange made the look-back provision 
available to individuals who are participants in the Exchange's FSAWP 
or the FSA waiver programs of Exchange's affiliate, Cboe C2 Exchange, 
Inc. (``C2 Options''), and/or FINRA immediately preceding March 15, 
2022. Look-Back Individuals who elected to participate in the new MQP 
were required to make such election by March 15, 2022 (the 
implementation date of the MQP).\7\
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    \7\ See Rule 3.33.01. If such individuals elect to participate, 
they would be required to complete their initial annual content by 
the end of 2022 (i.e., by the end of the calendar year in which the 
proposed rule change is implemented). In addition, if such 
individuals elect to participate, their initial participation period 
would be adjusted based on the date that their registration was 
terminated.
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    FINRA recently submitted a proposal related to its CE Program (the 
``FINRA Rule Change'').\8\ The proposal set forth changes to FINRA Rule 
1240.01, which provide Look-Back Individuals a second opportunity to 
elect to participate in the MQP (the ``Second Enrollment Period'').\9\ 
In addition, the proposed rule

[[Page 62414]]

change requires that Look-Back Individuals who elect to participate in 
the MQP during the Second Enrollment Period complete any prescribed 
2022 and 2023 MQP content by March 31, 2024. In the FINRA Rule Change, 
FINRA noted that in Regulatory Notice 21-41 (November 17, 2021), it 
announced that Look-Back Individuals who wanted to take part in the MQP 
were required to make their election between January 31, 2022, and 
March 15, 2022 (the ``First Enrollment Period''). In addition to the 
announcement in Regulatory Notice 21-41, FINRA notified the Look-Back 
Individuals about the MQP and the First Enrollment Period via two 
separate mailings of postcards to their home addresses and 
communications through their FINRA Financial Professional Gateway 
(``FinPro'') accounts.\10\
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    \8\ See Securities Exchange Act Release No. 97184 (March 22, 
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005).
    \9\ To reflect the availability of the Second Enrollment Period, 
FINRA Rule 1240.01 clarifies that for all Look-Back Individuals who 
elect to participate in the MQP, their participation period would 
also be for a period of five years following the termination of 
their registration categories, as with other MQP participants.
    \10\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
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    In the FINRA Rule Change, FINRA further noted that shortly after 
the First Enrollment Period had ended, a number of Look-Back 
Individuals contacted FINRA and indicated that they had only recently 
become aware of the MQP. FINRA noted that it also received anecdotal 
information that a number of these individuals may not have learned of 
the MQP, or the First Enrollment Period, in a timely manner, or at all, 
due to communication and operational issues.\11\ In addition, the 
original six-week enrollment period may not have provided Look-Back 
Individuals with sufficient time to evaluate whether they should 
participate in the MQP. For these reasons, FINRA recently amended its 
rules to provide Look-Back Individuals a second opportunity to elect to 
participate in the MQP.
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    \11\ According to FINRA, this may have been a result of the 
timing of FINRA's announcements relating to the MQP, which coincided 
with the holiday season and the transition to the New Year. Further, 
given that Look-Back Individuals were out of the industry at the 
time of these announcements, it was unlikely that they would have 
learned of the MQP, or the First Enrollment Period, through informal 
communication channels.
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    For similar reasons and to facilitate compliance with the 
Exchange's CE Program requirements by members of multiple exchanges, 
the Exchange is also proposing to amend its rules (i.e., Exchange Rule 
3.33.01) to provide Look-Back Individuals with a Second Enrollment 
Period. The Exchange also understands that other exchanges have or will 
propose similar amendments based on FINRA's rule changes. The Second 
Enrollment Period will be between the effective date of this filing, 
and December 31, 2023.\12\ In addition, the proposed rule change 
requires that Look-Back Individuals who elect to participate in the MQP 
during the Second Enrollment Period complete any prescribed 2022 and 
2023 MQP content by March 31, 2024.\13\
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    \12\ The current rule text also provides that if Look-Back 
Individuals elect to participate in the MQP, the Exchange shall 
adjust their participation period by deducting from that period the 
amount of time that has lapsed between the date that such persons 
terminated their registration categories and March 15, 2022. To 
reflect the availability of the Second Enrollment Period, the 
proposed rule change clarifies that for all Look-Back Individuals 
who elect to participate in the MQP, their participation period 
would also be for a period of five years following the termination 
of their registration categories, as with other MQP participants. 
See supra note 9.
    \13\ Look-Back Individuals who elect to enroll in the MQP during 
the Second Enrollment Period would also need to pay the annual 
program fee of $100 for both 2022 and 2023 at the time of their 
enrollment.
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    The Exchange proposes to revise Exchange Rule 3.33.01 to state that 
persons eligible under Exchange Rule 3.33.01 shall make their election 
to participate in the continuing education program under Exchange Rule 
3.33(c) by either (1) March 15, 2022; or (2) between the effective date 
of this filing, and December 31, 2023.
    The Exchange also proposes to amend Exchange Rule 3.33.01 to state 
that eligible persons who elect to participate in the continuing 
education program between the effective date of this filing, and 
December 31, 2023, must complete any prescribed 2022 and 2023 
continuing education content by March 31, 2024.
    Finally, the Exchange proposes to amend Exchange Rule 3.33.01 to 
remove reference to waivers relied upon under Exchange Rule 3.30.09 or 
C2 Options Chapter 3, Section B, as there were no participants in the 
Exchange's FSAWP or the FSA waiver programs of Exchange's affiliate, C2 
Options, immediately preceding March 15, 2022. The Exchange proposes to 
amend Exchange Rule 3.33.01 to clarify that anyone participating in the 
FINRA FSAWP immediately preceding March 15, 2022 would still be 
eligible to participate in the MQP, provided conditions in Exchange 
Rule 3.33(c) are met.

2. Statutory Basis

    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of section 6(b) of the Act.\14\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \15\ 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) \16\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ Id.
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    The Exchange believes that providing Look-Back Individuals a second 
opportunity to elect to participate in the MQP is warranted because 
participation in the MQP would reduce unnecessary impediments to 
requalification for these individuals without diminishing investor 
protection. In addition, the proposed rule change is consistent with 
other goals, such as the promotion of diversity and inclusion in the 
securities industry by attracting and retaining a broader and diverse 
group of professionals. The MQP also allows the industry to retain 
expertise from skilled individuals, providing investors with the 
advantage of greater experience among the individuals working in the 
industry. The Exchange believes that providing Look-Back Individuals a 
second opportunity to elect to participate in the MQP will further 
these goals and objectives.
    Further, the Exchange believes the proposed amendments reduce the 
possibility of a significant regulatory gap between Exchange and FINRA 
rules, providing more uniform standards across the securities industry. 
The Exchange believes that the proposed rule change will bring 
consistency and uniformity with FINRA's recently amended CE Program, 
which will, in turn, assist TPHs and their associated persons in 
complying with these rules and improve regulatory efficiency. The 
proposed rule changes make ministerial changes to the Exchange's 
continuing education rules to align them with the continuing education 
rules of FINRA and other exchanges as discussed above, in order to 
prevent unnecessary regulatory burdens and to promote efficient 
administration of the rules.
    Finally, the Exchange believes the proposed amendments to remove

[[Page 62415]]

reference to waivers relied upon under Exchange Rule 3.30.09 or C2 
Options Chapter 3, Section B will add clarity to the Cboe Options Rules 
and remove redundant language, as there were no participants in the 
Exchange's FSAWP or the FSA waiver programs of Exchange's affiliate, C2 
Options, immediately preceding March 15, 2022. Further, the Exchange 
believes that the amendments to clarify that anyone participating in 
the FINRA FSAWP immediately preceding March 15, 2022 would still be 
eligible to participate in the MQP, provided conditions in Exchange 
Rule 3.33(c) are met, ensures consistency and uniformity with FINRA's 
recently amended CE Program, which, as noted above, will in turn assist 
TPHs and their associated persons in complying with these rules and 
improve regulatory efficiency.

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 changes which are, in all material respects, based 
upon and substantially similar to, recent rule changes adopted by 
FINRA, will reduce the regulatory burden placed on market participants 
engaged in trading activities across different markets. The Exchange 
believes that the harmonization of the CE Program 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 comments on the 
proposed rule change.

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

    Cboe has filed the proposed rule change pursuant to section 
19(b)(3)(A) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\ 
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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\19\
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    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. Cboe has indicated that 
the immediate operation of the proposed rule change is appropriate 
because it would allow the Exchange to implement the proposed changes 
to its continuing education rules without delay, thereby eliminating 
the possibility of a significant regulatory gap between the FINRA rules 
and the Exchange rules, providing more uniform standards across the 
securities industry, and helping to avoid confusion for Exchange 
members that are also FINRA members. Cboe also noted that FINRA plans 
to conduct additional public outreach efforts to promote awareness of 
the MQP and the availability of the Second Enrollment Period among 
Look-Back Individuals. Therefore, Cboe indicated that the immediate 
operation of the proposed rule change is also appropriate because it 
would help to further notify Look-Back Individuals of their options and 
provide additional time for them to consider whether they wish to 
participate in the MQP before the December 31, 2023 deadline. For these 
reasons, the Commission believes that waiver of the 30-day operative 
delay for this proposal is consistent with the protection of investors 
and the public interest. Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\22\
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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 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 [email protected]. Please include 
File Number SR-CBOE-2023-042 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-2023-042. 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 website (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 website 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 such filing

[[Page 62416]]

also will be available for inspection and copying at the principal 
office of the Exchange. Do not include personal identifiable 
information in submissions; you should submit only information that you 
wish to make available publicly. We may redact in part or withhold 
entirely from publication submitted material that is obscene or subject 
to copyright protection.
    All submissions should refer to File Number SR-CBOE-2023-042 and 
should be submitted on or before October 2, 2023.

    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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19471 Filed 9-8-23; 8:45 am]
BILLING CODE 8011-01-P