Document ID: SEC-2015-2168-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC,
Posted Date: 2015-12-29T05:00Z

[Federal Register Volume 80, Number 249 (Tuesday, December 29, 2015)]
[Notices]
[Pages 81390-81393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32648]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76732; File No. SR-BOX-2015-38]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change To 
Amend BOX Rule 2020 (Participant Eligibility and Registration) To 
Replace the Limited Representative--Proprietary Trader and Limited 
Principal--Proprietary Trader Registration Categories and Establish the 
Securities Trader and Securities Trader Principal Registration 
Categories

December 22, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 14, 2015, BOX Options Exchange LLC (the ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, of 
which Items I and II have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BOX Rule 2020 (Participant 
Eligibility and Registration) to replace the Limited

[[Page 81391]]

Representative--Proprietary Trader and Limited Principal--Proprietary 
Trader registration categories and establish the Securities Trader and 
Securities Trader Principal registration categories. The text of the 
proposed rule change is available from the principal office of the 
Exchange, at the Commission's Public Reference Room and also on the 
Exchange's Internet Web site at http://boxexchange.com.

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 self-regulatory organization 
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 self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend BOX Rule 2020 (Participant 
Eligibility and Registration) to replace the Limited Representative--
Proprietary Trader and Limited Principal--Proprietary Trader 
registration categories and establish the Securities Trader and 
Securities Trader Principal registration categories. The Exchange is 
also amending its rules to establish the Series 57 examination as the 
appropriate qualification examination for Securities Traders and 
eliminating the reference to the S501 continuing education program 
currently applicable to Proprietary Traders.\3\ This filing is, in all 
material respects, based upon SR-FINRA-2015-017, which was recently 
approved by the Securities and Exchange Commission (``SEC'' or 
``Commission'').\4\
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    \3\ Currently, in order to supervise, representatives must first 
pass the appropriate underlying qualification examination which is 
either the Series 7 qualification examination which would allow a 
representative to register as a General Securities Representative on 
BOX or the Series 56 qualification examination which would allow a 
representative to register as a Limited Representative--Proprietary 
Trader on BOX. In addition to passing the Series 7 or Series 56, 
representatives must also pass the Series 24 qualification 
examination and register as a General Securities Principal if they 
are registered as a General Securities Representative or as a 
Limited Principal--Proprietary Trader if they are registered as a 
Limited Representative--Proprietary Trader. After January 4, 2016, 
the Series 57 qualification examination would replace the Series 56 
qualification examination as the appropriate underlying 
qualification examination for a representative to take prior to 
taking the Series 24 qualification examination so that the 
Representative may supervise proprietary trading on BOX. 
Representatives would then register as a [sic] Securities Trader 
Principal in order to supervise proprietary trading on BOX.
    \4\ See Securities Exchange Act Release No. 75783 (August 28, 
2015), 80 FR 41119 (July 14, 2015) [sic] (Order Approving a Proposed 
Rule Change to Establish the Securities Trader and Securities Trader 
Principal Registration Categories) (SR-FINRA-2015-017).
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a. Securities Trader Registration Category
    BOX currently uses the Series 56 qualification examination for the 
Limited Representative--Proprietary Trader registration category 
referenced in BOX Rule 2020(b)(2).\5\ However, BOX allows 
representatives who have passed the Series 7 qualification examination 
and who are registered as a [sic] General Securities Representative on 
BOX to conduct proprietary trading without having to take the Series 56 
qualification examination and register as a Limited Representative--
Proprietary Trader. For representatives who are new to the industry or 
have not yet taken a qualification examination, BOX requires the 
representatives engaged in proprietary trading to take a qualification 
examination, either the Series 7 or the Series 56, and then register as 
a General Securities Representative or a Proprietary Trader on BOX. 
After the implementation of the Series 57 examination on or after 
January 4, 2016, BOX will no longer allow representatives with a 
General Securities Representative registration to engage in proprietary 
trading on BOX.\6\ Representatives who are not grandfathered prior to 
the implementation of the Series 57 qualification examination or who 
are new to the industry after implementation of the Series 57; [sic] 
and are engaged in proprietary trading will be required to take the 
Series 57 qualification examination and register as a Securities Trader 
on BOX.
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    \5\ See BOX Rule 2020(b)(2).
    \6\ BOX will grandfather in anyone registered with Limited 
Representative--Proprietary Trader registration prior to January 4, 
2016 with the new Securities Trader registration category in FINRA's 
Central Registration Depository (``Web CRD'') System.
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    BOX notes that the proposed rule change does not impose any 
additional examination burdens on persons who are already registered on 
BOX. A person registered as a Limited Representative--Proprietary 
Trader and Limited Principal--Proprietary Trader on the effective date 
of the proposed rule change will be grandfathered in as a Securities 
Trader or Securities Trader Principal, respectively, without having to 
take additional examinations or any other actions. In addition, 
individuals who were registered as either a Limited Representative--
Proprietary Trader or Limited Principal--Proprietary Trader prior to 
the effective date of the proposed rule change will be eligible to 
register as a Securities Trader or Securities Trader Principal without 
having to take any additional examinations, provided no more than two 
years have passed between the date they were last registered as a 
representative and the date they register as a Securities Trader or 
Securities Trader Principal.
    On January 22, 2015, FINRA entered into a Termination Agreement 
with the national securities exchanges that set forth the terms and 
conditions that will govern the winding down of the Series 56 
examination in advance of its replacement by the Series 57 examination 
and the integration of the S501 Program into the S101 Regulatory 
Element Continuing Education Program. The Series 57 qualification 
examination will be recognized by FINRA and the other national 
securities exchanges on January 4, 2016.
    FINRA has developed the Series 57 qualification examination and has 
filed the qualification examination with the Commission as part of a 
separate proposed rule change.\7\ According to FINRA, while the Series 
57 examination will include the core knowledge portion of the Series 7 
examination, the Series 57 examination will also be based on the 
current job functions of securities traders and include elements of the 
Series 55 and Series 56 examination programs. In addition, FINRA has 
filed a separate proposed rule change to establish the fee for the 
Series 57 examination.\8\
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    \7\ See Securities Exchange Act Release No. 76188 (October 19, 
2015), 80 FR 64456 (October 23, 2015) (SR-FINRA-2015-042).
    \8\ See Securities Exchange Act Release No. 76391 (November 9, 
2015), 80 FR 70862 (November 16, 2015) (SR-FINRA-2015-044). BOX will 
also file a separate rule filing in December 2015 to amend Section 
VI (Regulatory Fees) of its Fee Schedule to remove Part C 
(Registration and Continuing Education Fees) associated with Series 
56 qualification examination and the S501 continuing education.
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b. Securities Trader Principal Registration Category
    BOX current registration rules require a person seeking to register 
as a Limited Principal--Proprietary Trader to have passed the 
underlying qualification examination Series 56 and be registered 
pursuant to Exchange Rules as a Limited Representative--Proprietary 
Trader, and

[[Page 81392]]

have passed the Series 24 qualification examination.\9\ BOX proposes to 
amend its rule text to replace Limited Principal--Proprietary Trader 
registration category with a Securities Trader Principal registration 
category in addition to replacing the Series 56 underlying 
qualification examination with the Series 57 underlying qualification 
examination. The Exchange also proposes to add a statement to clarify 
that a person registered as a General Securities Principal under 
2020(c)(1) above shall not be qualified to function in a Principal 
capacity with responsibility over any area of business activity 
described in Rule 2020(c)(2).
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    \9\ See BOX Rule 2020(c)(2)(i)(A-C).
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(b) of the Securities Exchange Act of 1934 
(the ``Act''),\10\ in general, and Section 6(b)(5) of the Act,\11\ in 
particular, in that it is 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 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. In particular, BOX believes that the proposed rule 
change will streamline, and bring consistency and uniformity to, the 
qualification and registration requirements for individuals engaged in 
securities trading activities across different markets and for 
principals responsible for supervising such activities, which will, in 
turn, improve registration and compliance efforts.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    BOX does not believe that the proposed rule change will impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.
    BOX's proposed rule change to replace the Limited Representative--
Proprietary Trader registration category and qualification examination 
Series 56 with the Securities Trader registration category and Series 
57 qualification examination will reduce the burden on associated 
persons currently required to be registered as proprietary traders by 
harmonizing the registration requirements for representatives engaged 
in securities trading activities across different markets. Under the 
proposed rule change, associated persons would be eligible to engage in 
securities trading activities by registering as Securities Traders and 
passing a single comprehensive Securities Trader qualification 
examination which is consistent with the other national securities 
exchanges.
    BOX believes that the proposed rule change relating to Securities 
Trader Principals will harmonize the registration and qualification 
requirements for principals that supervise securities trading 
activities across different markets.
    Further, the proposed rule change does not impose any additional 
examination burdens on persons who are already registered. There is no 
obligation to take the proposed Series 57 examination in order to 
continue in their present duties, so the proposed rule change is not 
expected to disadvantage current registered persons relative to new 
entrants in this regard.

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

    The Exchange has neither solicited nor received comments on the 
proposed rule change.

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

    (a) This proposed rule change is filed pursuant to paragraph (A) of 
section 19(b)(3) of the Exchange Act \12\ and Rule 19b-4(f)(6) 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    (b) This proposed rule change does not significantly affect the 
protection of investors or the public interest, does not impose any 
significant burden on competition, and, by its terms, does not become 
operative for 30 days after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest. The Exchange has requested that 
the Commission waive the 30-day operative delay period for ``non-
controversial'' proposals and make the proposed rule change effective 
and operative upon filing \14\ because the proposal is related to the 
industry wide replacement of the proprietary trader registration 
categories and Series 56 qualification examination with the Securities 
Trader registration category and Series 57 qualification examination, 
which will become effective on January 4, 2015 [sic].
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    \14\ 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 Commission believes that waiving the thirty-day operative delay 
is consistent with the protection of investors and the public interest, 
because waiving the operative delay will enable BOX to have 
registration and qualification requirements that are consistent with 
those of the other national securities exchanges and FINRA. Therefore, 
the Commission hereby waives the thirty-day operative delay and 
designates the proposal operative as of January 4, 2016.\15\
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    \15\ For purposes 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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-BOX-2015-38 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-BOX-2015-38. 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

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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, on official business days between 
the hours of 10:00 a.m. and 3:00 p.m., located at 100 F Street NE., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-BOX-2015-38 and 
should be submitted on or before January 19, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
 Brent J. Fields,
Secretary.
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    \16\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-32648 Filed 12-28-15; 8:45 am]
 BILLING CODE 8011-01-P