[Federal Register Volume 76, Number 231 (Thursday, December 1, 2011)]
[Notices]
[Pages 74835-74837]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-30916]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65828; File No. SR-CBOE-2011-110]


Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Clarify the Limited Extension to the Compliance Deadline 
for Registration and Qualification Pursuant to Rule 3.6A

November 25, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ notice is hereby given that on November 16, 2011, the Chicago 
Board Options Exchange, Incorporated (``CBOE'' or the ``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 CBOE. The Exchange has designated the 
proposed rule change as constituting a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule pursuant to Section 19(b)(3)(A)(i) of 
the Act \2\ and Rule 19b-4(f)(1) thereunder,\3\ which renders the 
proposal effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(i).
    \3\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Pursuant to the provisions of Section 19(b)(1) of the Securities 
Exchange Act

[[Page 74836]]

of 1934 (the ``Act''),\4\ the Exchange proposes to clarify that the 
limited extension to the November 5, 2011 deadline to comply with its 
rules regarding registration and qualification of individual Trading 
Permit Holders and individual associated persons also applies to those 
individual Trading Permit Holders and/or individual associated persons 
that failed the required qualification examination(s) associated with 
their required categories of registration on November 5, 2011 (and 
thus, prior to the deadline). CBOE is not proposing any textual changes 
to the Rules of CBOE. The text of the proposed rule change is available 
on the Exchange's Web site (http://www.cboe.org/legal), at the 
Exchange's Office of the Secretary and at the Commission.
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    \4\ 15 U.S.C. 78s(b)(1).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, CBOE 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. 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
    Pursuant to Rule 15b7-1,\5\ promulgated under the Exchange Act,\6\ 
``No registered broker or dealer shall effect any transaction in * * * 
any security unless any natural person associated with such broker or 
dealer who effects or is involved in effecting such transaction is 
registered or approved in accordance with the standards of training, 
experience, competence, and other qualification standards * * * 
established by the rules of any national securities exchange * * *'' 
CBOE Rule 3.6A sets forth requirements for registration and 
qualification of individual Trading Permit Holders and individual 
associated persons. In response to a request by the Division of Trading 
and Markets at the Securities and Exchange Commission (the 
``Commission'' or ``SEC''), CBOE recently amended its rules to expand 
its registration and qualification requirements set forth in CBOE Rule 
3.6A to include individual Trading Permit Holders and individual 
associated persons that are engaged or to be engaged in the securities 
business of a Trading Permit Holder or TPH organization.\7\ CBOE Rule 
3.6A provides that these individuals must be registered with the 
Exchange in the category of registration appropriate to the function to 
be performed as prescribed by the Exchange. Further, Rule 3.6A 
requires, among other things, that an individual Trading Permit Holder 
or individual associated person submit an application for registration 
and pass the appropriate qualification examination before the 
registration can become effective. The revised requirements apply to 
both CBOE and CBOE Stock Exchange (``CBSX'') Trading Permit Holders and 
their associated persons.
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    \5\ 17 CFR 240.15b7-1.
    \6\ 15 U.S.C. 78a et seq.
    \7\ See Securities Exchange Act Release No. 63314 (November 12, 
2010), 75 FR 70957 (November 19, 2010) (SR-CBOE-2010-084).
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    In conjunction with the registration requirements established by 
SR-CBOE-2010-084, three new qualification examinations became available 
on June 20, 2011 in the Central Registration Depository system 
(``WebCRD''), which is operated by the Financial Industry Regulatory 
Authority, Incorporated (``FINRA''). These registration categories 
include the following (the required qualification examinations and 
prerequisites, as applicable, associated with each registration 
category are in parentheses): PT--Proprietary Trader (Series 56), CT--
Proprietary Trader Compliance Officer (Series 14, Series 56 
prerequisite) and TP--Proprietary Trader Principal (Series 24, Series 
56 prerequisite). In the Approval Order for SR-CBOE-2010-084, the SEC 
established a deadline of August 12, 2011 for CBOE and CBSX individual 
Trading Permit Holders and individual associated persons of CBOE and 
CBSX Trading Permit Holders to register for and pass the applicable 
qualification examination(s). This deadline was extended until November 
5, 2011.\8\
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    \8\ See Securities Exchange Act Release No. 65677 (November 3, 
2011), 76 FR 69786 (November 9, 2011) (SR-CBOE-2011-104).
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    CBOE recently submitted a rule filing providing a limited extension 
to the November 5, 2011 deadline for those individuals that have 
attempted to take the required qualification examination(s) prior to 
November 5, 2011 but have failed the examination (or prerequisite 
examination if multiple examinations are required).\9\ CBOE implemented 
this rule change to accommodate individuals that failed an examination 
prior to the deadline that were prevented from rescheduling an 
examination for at least thirty days following the initial failure of 
an exam.\10\ The rule change provided individuals with thirty days 
following the date that WebCRD permits an individual to reschedule the 
appropriate qualification examination (following the failure of an 
examination taken prior to November 5, 2011) to retake the examination.
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    \9\ See Securities Exchange Act Release No. 65732 (November 10, 
2011) (SR-CBOE-2010-106) [sic].
    \10\ WebCRD also imposes a thirty day delay for the failure of a 
qualification examination for the second time. In addition, an 
individual is prevented from re-registering for an examination for 
an additional one hundred eighty days upon the third failure of a 
qualification examination.
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    As individuals were able to take the examination on November 5, 
2011, CBOE is proposing to clarify that the limited extension also 
applies to individuals that failed a required examination on November 
5, 2011. CBOE believes this proposal provides a reasonable amount of 
time for individuals that have failed an examination to come into 
compliance with the rule while limiting the disruption to a Trading 
Permit Holder's business operation that may result from an exam 
failure.
    Thus, in order to qualify for the limited extension, the individual 
(or associated Trading Permit Holder) must demonstrate that (i) the 
individual failed the required qualification examination on or prior to 
November 5, 2011; and (ii) that the individual attempted to take the 
qualification examination again within thirty days following the date 
that WebCRD permits the individual to reschedule the examination after 
the initial failure.
(2) Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\11\ in general, and furthers the objectives of 
Section 6(b)(5) of the Act,\12\ which requires, among other things, 
that the Exchange's rules be designed to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and protect investors and the public interest. Specifically, 
CBOE believes this proposal provides Trading Permit Holders (and 
associated persons) that attempted to comply with the registration and 
qualification requirements by the deadline a reasonable amount of 
additional time to comply with these requirements, particularly as the 
individuals that are impacted by this rule are subject to a

[[Page 74837]]

system requirement that prevents the individual from complying with 
these requirements within the designated timeframe. Further, CBOE 
believes that this proposal will limit the disruption to a Trading 
Permit Holder's business operation and/or the marketplace, in the event 
an individual or firm withdraws from the marketplace following an exam 
failure. The Exchange also believes the proposed rule change furthers 
the objectives of Section 6(c)(3)\13\ of the Act, which authorizes CBOE 
to prescribe standards of training, experience and competence for 
persons associated with CBOE members, in that this filing is proposing 
to extend the deadline for compliance with the standards of training, 
experience and competence established by the Exchange.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(c)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    CBOE does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of purposes of the Act.

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 change.

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

    The foregoing proposed rule change will take effect upon filing 
with the Commission pursuant to Section 19(b)(3)(A)(i) of the Act \14\ 
and Rule 19b-4(f)(1) thereunder,\15\ because it constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(i).
    \15\ 17 CFR 240.19b-4(f)(1).
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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.

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-2011-110 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-CBOE-2011-110. 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 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of CBOE. 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 publicly available. All 
submissions should refer to File Number SR-CBOE-2011-110 and should be 
submitted on or before December 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30916 Filed 11-30-11; 8:45 am]
BILLING CODE 8011-01-P