Document ID: SEC-2016-1359-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Chicago Stock Exchange, Inc.
Posted Date: 2016-08-04T04:00Z

[Federal Register Volume 81, Number 150 (Thursday, August 4, 2016)]
[Notices]
[Pages 51530-51532]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18473]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78446; File No. SR-CHX-2016-12]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Provide Web-Based Delivery of the Continuing Education Program

July 29, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4\2\ thereunder, notice is hereby given 
that on July 20, 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 the Exchange. 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.
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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 
provide for web-based delivery of the continuing education (``CE'') 
program (``CE Online System'').\3\
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    \3\ The proposed rule change is based on a recent FINRA filing 
adopting web-based delivery of the CE Regulatory Element program. 
See Securities Exchange Act Release No. 75581 (July 31, 2015), 80 FR 
47018 (August 6, 2015) (Order Approving a Proposed Rule Change to 
Provide a Web-based Delivery Method for Completing the Regulatory 
Element of the Continuing Education Requirements) (SR-FINRA-2015-
015).
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    CHX has designated this proposed rule change as non-controversial 
pursuant to section 19(b)(3)(A) \4\ of the Act and Rule 19b-4(f)(6) \5\ 
thereunder and has provided the Commission with the notice required by 
Rule 19b-4(f)(6)(iii).\6\
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    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ 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 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the CHX included statements 
concerning the purpose of and basis for the proposed rule changes 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The CE requirement under current Article 6, Rule 11 consists of a 
Regulatory Element \7\ and a Firm Element.\8\ The Regulatory Element 
applies to all registered persons and consists of periodic computer-
based training on regulatory, compliance, ethical, and supervisory 
subjects and sales practice standards, which must be completed with 
prescribed timeframes.\9\ Current Article 6, Rule 11(a)(3) provides 
that the Exchange offers the following Regulatory Elements for Exchange 
registered persons: The S201 Supervisor Program for registered 
principals and supervisors; The S501 Series 56 Proprietary Trader 
Continuing Education Program for Series 56 registered persons; \10\ and 
the S101 General Program for Series 7 and all other registered persons.
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    \7\ See CHX Article 6, Rule 11(a).
    \8\ See CHX Article 6, Rule 11(b).
    \9\ See to CHX Article 6, Rule 11(a)
    \10\ The Exchange intends on filing a proposed rule change to, 
among other things, replace the Proprietary Trader registration 
category and the corresponding Series 56 exam and the S501 
Proprietary Trader Continuing Education Program for Series 56 
registered persons with the Securities Trader registration category 
and the corresponding Series 57 exam and require such Series 57 
registered persons to take the S101 General Program to fulfill the 
Regulatory Element requirement, as the Series 56 was replaced with 
the Series 57 exam by FINRA, effective January 4, 2016. See 
Securities Exchange Act Release No. 75783 (August 28, 2015), 80 FR 
53369 (September 3, 2015) (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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    Given that test center delivery is no longer available for 
individuals other than those individuals that require accommodations 
due to a disability,\11\ the Exchange proposes to adopt Article 6, Rule 
11(a)(4), which states that the continuing education Regulatory Element 
will be administered through Web-based delivery or such other 
technological manner and format as specified by the Exchange.\12\ 
Should the Exchange determine to administer the Regulatory Element 
through a delivery mechanism other than as described under this 
proposed rule change, the Exchange would notify the Commission and 
would need to file a further rule change with the Commission.
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    \11\ As of July 1, 2016, FINRA required all participants to 
complete their Regulatory Element session using the CE Online 
System; provided that certain participants who, pursuant to the 
Americans with Disabilities Act, that [sic] need accommodations in 
completing their session due to a disability may apply for an 
accommodation and complete their session at a test center. See 
Securities Exchange Act Release No. 78281 (July 11, 2016), 81 FR 
46133 (July 15, 2016) (SR-FINRA-2016-025); see also Americans with 
Disabilities Act of 1990, Public Law 101-336, 104 Stat. 328 (1990).
    \12\ The Exchange intends on filing a proposed rule change to 
amend its fee schedule to reduce the cost of the Regulatory Element 
from $100 to $55 to be consistent with Section 4(f) of the Schedule 
A to the FINRA By-Laws.
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    Before commencing a Web-based session, each candidate will be 
required to agree to the Rules of Conduct for Web-based delivery. Among 
other things, the Rules of Conduct will require each candidate to 
attest that he or she is in fact the person who is taking the Web-based 
session. The Rules of Conduct will also require that each candidate 
agree that the Regulatory Element content is intellectual property and 
that the content cannot be copied or redistributed by any means. If the 
Exchange discovers that a candidate has violated the Rules of Conduct, 
the candidate will forfeit the results of the Web-based session and may 
be subject to disciplinary action by the Exchange. Violation of the 
Rules of Conduct will

[[Page 51531]]

be considered conduct inconsistent with just and equitable principles 
of trade, in violation of Article 9, Rule 2. The Exchange is not 
proposing any changes to the Firm Element requirements under Article 6, 
Rule 11(b).
2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act \13\ in general, and furthers the objectives of section 
6(b)(5) of the Act \14\ in particular, in that it is designed 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. Additionally, the Exchange believes the proposed rule change 
is consistent with the section 6(b)(5) requirement that the rules of an 
exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers and section 6(c)(3) \15\ of the 
Act, which authorizes the Exchange to, among other things, prescribe 
standards of financial responsibility or operational capability and 
standards of training, experience and competence for its members and 
persons associated with members.
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    \13\ 15 U.S.C. 78(f)(b).
    \14\ 15 U.S.C. 78(f)(b)(5).
    \15\ 15 U.S.C. 78(f)(b)[sic](3).
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    In particular, the Exchange believes that the proposed rule change 
will improve Participants' compliance efforts and will allow registered 
persons to spend a greater amount of time on the review of CE materials 
and potentially achieve better learning outcomes, which will in turn 
enhance investor protection. Further, while the proposed rule change 
will provide more flexibility to members and registered persons, it 
will maintain the integrity of the Regulatory Element program and the 
CE program in general.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. Specifically, the Exchange 
believes that the harmonization of the Regulatory Element delivery 
requirements across the various markets will reduce burdens on 
competition by removing impediments to participation in the national 
market system.

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

    No written comments were either solicited or received.

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

    Because the foregoing 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, it has become 
effective pursuant to section 19(b)(3)(A) \16\ of the Act and Rule 19b-
4(f)(6) thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
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 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. The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \18\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \19\ permits the 
Commission to 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 upon filing. According to the 
Exchange, test-center delivery of the CE Regulatory Element is no 
longer available for all individuals other than those who qualify for 
special accommodations.\20\ The Exchange wishes to amend its rules to 
reflect this change as soon as practicable. Based on the foregoing, the 
Commission believes the waiver of the operative delay is consistent 
with the protection of investors and the public interest. Therefore, 
the Commission hereby waives the operative delay and designates the 
proposal operative upon filing.\21\
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
    \20\ See supra note 11.
    \21\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 No. SR-CHX-2016-12 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-2016-12. 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 
10:00 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-

[[Page 51532]]

12 and should be submitted on or before August 25, 2016.
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    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18473 Filed 8-3-16; 8:45 am]
 BILLING CODE 8011-01-P