[Federal Register Volume 63, Number 19 (Thursday, January 29, 1998)]
[Notices]
[Pages 4507-4509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2187]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39575; File No. SR-CBOE-97-68]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Changes by the Chicago Board Options Exchange, Inc. Relating to 
Continuing Education of Registered Persons

January 23, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on December 30, 1997, the Chicago 
Board Options Exchange, Inc. (``CBOE'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the CBOE. The Commission is publishing this notice to 
solicit comments on the proposed rule changes from interested 
persons.\2\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ The Commission is concurrently publishing notice of parallel 
proposed rule changes from other self-regulatory organizations 
relating to continuing education for registered persons. See 
Securities Exchange Act Releases Nos. 39574 (NASD); 39576 (MSRB); 
and 39577 (NYSE).

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[[Page 4508]]

I. Self Regulatory Organization's Statement of the Term of Substance of 
the Proposed Rule Change

    The CBOE, in support of the recommendations of The Securities 
Industry/Regulatory Council on Continuing Education (``Council''),\3\ 
proposes to amend CBOE 9.3A Continuing Education of Registered Persons, 
by strengthening the requirements applicable to registered persons and 
implementing a new program specifically designed for managers and 
supervisors.
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    \3\ The Council is comprised of 6 self-regulatory organizations 
(``SROs'') and 13 broker-dealer representatives to represent the 
interests and needs of wide cross-section of the industry. The SROs, 
in addition to the CBOE, are the American Stock Exchange; the 
Municipal Securities Rulemaking Board; the National Association of 
Securities Dealers; the New York Stock Exchange, and the 
Philadelphia Stock Exchange.
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    The text of the proposed rule change may be examined at the places 
specified in Item IV below.

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 CBOE included statements 
concerning the purpose of, and statutory 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 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, Proposed Rule Change

1. Purpose
    The proposed rule change is to revise the CBOE's continuing 
education requirements contained in Rule 9.3A. The continuing education 
program consists of two parts--a Regulatory Element and a Firm Element. 
The Regulatory Element requires registered persons to participate in an 
interactive computer-based training at specified intervals and 
encompasses regulatory and compliance issues, sales practice concerns 
and business ethics. The current Regulatory Element contains content 
common to all registered representatives, supervisory persons, as well 
as other registration categories. This proposed rule change is intended 
to strengthen the continuing education requirements for Registered 
Representatives by implementing a new program component specifically 
designed for managers and supervisors. In addition, it is contemplated 
that in the future, specific programs may be implemented for other 
registration categories.
    The CBOE also proposes, as recommended by the Council, to require 
ongoing participation in the Regulatory Element for the duration of a 
registered person's career in the industry, specifically, on the second 
registration anniversary and every three years thereafter (i.e., the 
fifth, eighth, eleventh, etc. anniversaries), with no graduation from 
the program. Under the current Rule 9.3A, after ten years an individual 
does not have to participate in the computer-based training, unless 
they have been subject to certain disciplinary action as enumerated in 
the Rule. The CBOE also proposes to amend the rule to clarify that a 
person's initial registration date shall establish the cycle of 
anniversary dates for purposes of the Rule.
    The proposed rule change will allow a one-time graduation from the 
Regulatory Element for persons who, as of the effective date of the 
rule amendments, have been registered for more than ten years and who 
have not been the subject of a disciplinary action. However, persons 
delegated supervisory responsibility or authority pursuant to Rule 9.8 
will have to have been registered for more than ten years and not been 
subject to any disciplinary action as enumerated in the Rule in order 
to be covered by this one-time provision for graduation. Therefore, 
those supervisors who have graduated from the program requirements 
based on their initial registration date but who have not completed ten 
years as a supervisor, will be required to re-enter the program.
    Finally, the CBOE is proposing an amendment to the Firm Element 
component of Rule 9.3A. The proposed rule change will require each 
member organization's required analysis of training needs to 
specifically focus on supervisory training needs. If it is determined 
that there is a specific need for supervisory training, it must then be 
addressed in the Firm Element training plan.
    These amendments, which will be adopted uniformly with rule changes 
of the other SRO Council members, will significantly enhance the 
continuing education program by requiring all registered persons to 
participate in the Regulatory Element on an ongoing basis.
2. Statutory Basis
    The CBOE believes that the proposed rule change is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and in particular, with 
Section 6(c)(3) of the Act.\4\ Under that Section, it is the CBOE's 
responsibility to prescribe standards of training, experience and 
competence for persons associated with Exchange members and member 
organizations. Pursuant to this statutory obligation, the CBOE has 
proposed this rule change in order to enhance the established 
continuing education program for registered persons.
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    \4\ 15 U.S.C. 78f(c)(3).
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    The proposed rule change is also consistent with the requirements 
of Section 6(b)(5) of the Act.\5\ Section 6(b)(5) requires, among other 
things, that the rules of an exchange be 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.
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    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule changes will 
impose any burden on competition.

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 changes.

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

    Within 35 days of the publication of this notice in the Federal 
Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange

[[Page 4509]]

Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 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 inspection and copying at the Commission's 
Public Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the CBOE. All 
submissions should refer to the file number SR-CBOE-97-68 and should be 
submitted by February 19, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-2187 Filed 1-28-98; 8:45 am]
BILLING CODE 8010-01-M