

[Federal Register: December 14, 2005 (Volume 70, Number 239)]
[Notices]               
[Page 74067-74068]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de05-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52914; File No. SR-CBOE-2005-98]

 
Self-Regulatory Organizations; Chicago Board Options Exchange, 
Incorporated; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Revisions to the Series 9/10 Examination 
Program

December 7, 2005.
    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 November 16, 2005, the Pacific Exchange, Inc. (``CBOE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the CBOE. 
CBOE 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 of the self-
regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 
\3\ and Rule 19b-4(f)(1) thereunder,\4\ 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\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 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

    CBOE is filing revisions to the study outline and selection 
specifications for the Limited Principal--General Securities Sales 
Supervisor (Series 9/10) examination program. The proposed revisions 
update the material to reflect changes to the laws, rules, and 
regulations covered by the examination, as well as modify the content 
of the examination program to track more closely the functional 
workflow of a Series 9/10 limited principal. CBOE is not proposing any 
textual changes to the Constitution or Rules of CBOE.
    The revised study outline is attached as Exhibit 3a. However, CBOE 
has omitted the Series 9/10 selection specifications from this filing 
and has submitted the specifications under separate cover to the 
Commission with a request for confidential treatment pursuant to the 
Commission's confidential treatment procedures under the Freedom of 
Information Act.\5\ The text of the proposed rule change is available 
on the Exchange's Web site (http://www.cboe.com), at the Exchange's 

Office of the Secretary, and at the Commission.
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    \5\ 17 C.F.R. 200.83.
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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, the Proposed Rule Change

1. Purpose
    CBOE Rule 9.2 states that no member organization shall be approved 
to transact options business with the public until those persons 
associated with it who are designated as Options Principals have been 
approved by and registered with the Exchange. CBOE Rule 9.2 further 
requires successful completion of an examination prescribed by the 
Exchange in order to qualify for registration as an Options Principal. 
The Series 9/10 examination, an industry-wide examination, has been 
designed for this purpose. The Series 9/10 examination tests a 
candidate's knowledge of securities industry rules and regulations and 
certain statutory provisions pertinent to the supervision of sales 
activities.
    The Series 9/10 examination program is shared by CBOE and the 
following SROs: The American Stock Exchange LLC, the National 
Association of Securities Dealers, Inc. (``NASD''), the Municipal 
Securities Rule Making Board (``MSRB''), the New York Stock Exchange, 
Inc. (``NYSE''), the Pacific Exchange, Inc., and the Philadelphia Stock 
Exchange, Inc.
    A committee of industry representatives, together with the staff of 
CBOE and the other SROs, recently undertook a periodic review of the 
Series 9/10 examination program. As a result of this review, CBOE is 
proposing to update the content of the examination to cover Regulation 
S-P,\6\ MSRB Rules G-37/G-38, SRO research analyst and anti-money 
laundering rules, municipal fund securities (e.g., 529 college savings 
plans), and exchange traded funds. CBOE is further proposing revisions 
to the study outline to reflect the SEC short sale requirements. In 
addition, as part of an ongoing effort to align the examination more 
closely to the supervisory duties of a Series 9/10 limited principal, 
CBOE is proposing to modify the content of the examination to track the 
functional workflow of a Series 9/10 limited principal. Also, CBOE is 
proposing to include questions related to parallel rules of NASD, the 
options exchanges, the MSRB and the NYSE in the same section of the 
exam.
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    \6\ 17 CFR 248.1-18; 17 CFR 248.30; and 17 CFR 248, Appendix A.
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    As a result of the revisions, CBOE is proposing to modify the main 
section headings and the number of questions on each section of the 
Series 9/10 study outline as follows: Section 1--Hiring, 
Qualifications, and Continuing Education, 9 questions; Section 2--
Supervision of Accounts and Sales Activities, 94 questions; Section 3--
Conduct of Associated Persons, 14 questions; Section 4--Recordkeeping 
Requirements, 8 questions; Section 5--Municipal Securities Regulation, 
20 questions; Section 6--Options Regulation, 55 questions. Sections 1 
through 5 constitute the Series 10 portion of the examination. Section 
6 constitutes the Series 9 portion of the examination. Series 10 covers 
general securities and municipal securities, and Series 9 covers 
options. The revised examination continues to cover the areas of 
knowledge required for the supervision of sales activities.
    CBOE is proposing these changes to the entire content of the Series 
9/10 examination, including the selection specifications and question 
bank. The number of questions on the Series 9/10 examination will 
remain at 200, and candidates will continue to have 4 hours to complete 
the Series 10 portion and 1\1/2\ hours to complete the Series 9 
portion. Also, each question will continue to count one point, and each 
candidate must correctly answer 70 percent of the questions on each 
series, 9 and 10, to receive a passing grade.

[[Page 74068]]

    CBOE understands that the other SROs also will file with the 
Commission similar revisions to the Series 9/10 examination program.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(1) \8\ of the Act in particular, in that it 
is designed to enforce compliance by Exchange members and persons 
associated with its members with the rules of the Exchange. The 
Exchange also believes the proposed rule change furthers the objectives 
of Section 6(c)(3) \9\ of the Act, which authorizes CBOE to prescribe 
standards of training, experience and competence for persons associated 
with CBOE members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(1).
    \9\ 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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \10\ and Rule 19b-4(f)(1) thereunder,\11\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
CBOE will announce the implementation date in a Regulatory Circular to 
be published no later than 60 days after SEC Notice of this filing.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 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 may summarily abrogate 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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-CBOE-2005-98 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-CBOE-2005-98. This 
file number should be included on the subject line if e-mail 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 inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the 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 available publicly. All submissions should refer to 
File Number SR-CBOE-2005-98 submitted on or before January 4, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
Jonathan G. Katz,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E5-7337 Filed 12-13-05; 8:45 am]

BILLING CODE 8010-01-P
