
[Federal Register Volume 78, Number 163 (Thursday, August 22, 2013)]
[Notices]
[Pages 52224-52226]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20462]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70224; File No. SR-BOX-2013-41]


Self-Regulatory Organizations; BOX Options Exchange LLC; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
Continuing Education for Registered Persons

August 16, 2013.
    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 August 14, 2013, BOX Options Exchange LLC (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 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 2040 (Restrictions) 
regarding continuing education for registered persons. 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 is proposing to amend BOX Rule 2040 (Restrictions) to 
specify the different Continuing Education

[[Page 52225]]

(``CE'') requirements for registered persons based upon their 
registration with the Exchange. This change will authorize the Exchange 
to administer different CE programs to differently registered 
individuals while bringing clarity to Options Participants about what 
CE requirement they must fulfill. More specifically, the Exchange is 
proposing to: (1) Adopt the Series 501 Proprietary Trader Continuing 
Education Program, and (2) enumerate the required Regulatory Element 
programs.
Background
    Currently, Exchange Rule IM-2040-5(b) \3\ states that that ``each 
Representative or Principal registered with the Exchange shall complete 
the Regulatory Element of the Continuing Education requirement''.\4\ 
Exchange Rule IM-2040-5(b) further states that ``the content of the 
Regulatory Element shall be determined by the Exchange and shall be 
appropriate to either the registered representative or principal status 
of persons subject to this IM-2040-5''. The Regulatory Element is a 
computer-based education program administered by the Financial Industry 
Regulatory Authority (``FINRA'') to help ensure that registered persons 
are kept up to date on regulatory, compliance and sales practice 
matters in the industry. Currently, there are two Regulatory Element 
programs that BOX recognizes: the S201 Supervisor Program for 
registered principals and supervisors; and the S101 General Program for 
Series 7 and all other registered persons. The Exchange is proposing to 
enumerate these programs in the Exchange Rulebook along with adding the 
S501 Series 56 Proprietary Trader Continuing Education Program for 
Series 56 registered persons.
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    \3\ See Exchange Rule IM-2040-5(b).
    \4\ Id.
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Introduction of the Proprietary Trading Continuing Education Program

    The Exchange is proposing to introduce a new CE Program for 
Proprietary Traders registered with the Exchange who have successfully 
completed the Proprietary Traders Examination (``Series 56'') and who 
have no other registrations. Exchange Rule 2020(b)(2) outlines the 
registration and qualification requirements (including prerequisite 
examinations) for Limited Representatives--Proprietary Traders. Each 
person associated with a Participant who is included within the 
definition of Representative may register as a Limited Representative--
Proprietary Trader if his activities in the investment banking or 
securities business are limited solely to proprietary trading; and he 
passes the appropriate Qualification Examination for Limited 
Representative--Proprietary Trader, the Series 56; and he is an 
associated person of a proprietary trading firm.\5\
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    \5\ See Exchange Rule 2020(b)(2)(i). Under Exchange Rule 
2020(e)(2) a proprietary trading firm is a Participant that trades 
its own capital, that does not have customers, and that is not a 
member of the Financial Industry Regulatory Authority. In addition, 
to qualify for this definition, the funds used by a proprietary 
trading firm must be exclusively firm funds, all trading must be in 
the firm's accounts, and traders must be owners of, employees of, or 
contractors to the firm.
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    The Proprietary Trader Continuing Education Program (S501) is a 
computer-based education program developed by many of the self-
regulatory organizations (``Participating SROs'') \6\ to ensure that 
registered persons are kept current on regulatory, compliance and 
trading practice matters in the industry. Unlike the other offered CE 
Programs, the Proprietary Trader Continuing Education Program is not 
part of the Uniform Continuing Education Program, which is developed 
and maintained by the Securities Industry Regulatory Council on 
Continuing Education.
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    \6\ The Participating SROs that have assisted with the 
development of, and plan to administer, the Series 56 and S501 are 
the Exchange, Chicago Board Options Exchange, Incorporated 
(``CBOE''), C2 Options Exchange, Incorporated (``C2''), the Chicago 
Stock Exchange, Inc. (``CHX''), the New York Stock Exchange, LLC 
(``NYSE''), NYSE Arca, Inc. (``Arca''), NYSE Amex, LLC (``Amex''), 
the NASDAQ Stock Market LLC (``NASDAQ''), the National Stock 
Exchange, Inc. (``NSX''), NASDAQ OMX BX, Inc. (``BX''), NASDAQ OMX 
PHLX, LLC (``PHLX''), BATS Y-Exchange, Inc. (``BATS Y''), BATS 
Exchange, Inc. (``BATS''), EDGA Exchange, Inc. (``EDGA''), EDGX 
Exchange, Inc. (``EDGX''), Miami International Securities Exchange, 
LLC (``MIAX'') and International Securities Exchange, LLC (``ISE'').
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    The Proprietary Trader Continuing Education Program will 
logistically operate as the currently offered CE Programs do. 
Specifically, registered persons will be required, through CRD, to 
complete the Regulatory Element of the CE on the second anniversary of 
the base date and then every three years thereafter. While creating the 
S501, the Participating SROs believed that the current procedures of 
the other CE programs work well. The Securities Industry Regulatory 
Council on Continuing Education has tailored the process of the other 
CE Programs since its inception to a process that has been successful. 
Thus, as proposed, the S501 will work in the same manner. In addition, 
consistency between the different programs will avoid creating 
confusion amongst the registered persons and FINRA.
    The Proprietary Trader Continuing Education Program (S501) is 
required for those registrants who registered as Proprietary Traders by 
passing the Series 56 and do not maintain any other registration 
through CRD.\7\ Individuals that are registered under any other 
registration are required to maintain the CE obligations associated 
with those registrations.
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    \7\ Any registered person who receives a waiver of the Series 56 
under Exchange Rule IM-2040-2, and does not maintain any other 
registrations in CRD, will be required to complete the Proprietary 
Trader Continuing Education Program (S501).
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    For example, an individual that is registered as a Proprietary 
Trader with the Exchange yet continues to maintain a Series 7 
registration will be required to continue taking the Series 7 
Continuing Education Program (S101).\8\ Though such individual may be 
engaging in the same capacity as one registered as a Proprietary 
Trader, because the Series 7 Examination is a more comprehensive exam 
of topics not covered on the Series 56, the Exchange believes that this 
individual continuing to maintain a Series 7 registration should 
complete a CE that covers all aspects of his or her registration.
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    \8\ If a registered person has received a Series 56 waiver under 
Exchange Rule IM-2040-2 but continues to maintain a Series 7 
registration (that predates the introduction of the Series 56 on the 
Exchange) that registered individual will be required to continue 
taking the Series 7 CE Program (S101). Through CRD, FINRA will 
recognize the Series 56 as waived while still requiring the Series 7 
CE completion.
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    The introduction of the Proprietary Trader Continuing Education 
Program allows the Exchange to tailor its CE requirements more closely 
to those registered individuals who are registered as Series 56. More 
specifically, the Exchange believes allowing individuals engaging in 
proprietary trading and registered under the Series 56 to complete a 
separate CE Program than those maintaining a Series 7 registration is 
appropriate as all individuals have the option of taking either test. 
In comparison to the Series 7, the Series 56 Examination is more 
closely tailored to the practice of proprietary trading while the 
Series 7 is more comprehensive. As such, the Exchange believes a Series 
56 CE Program should be tailored as well. At the same time, if an 
individual would like to remain registered as a Series 7, the Exchange 
believes it is appropriate they continue to be required to complete the 
broader CE program. As stated above, though an individual maintaining a 
Series 7 registration may be engaging in the same capacity as one 
registered as a Proprietary Trader, because the Series 7 Examination is 
a

[[Page 52226]]

more comprehensive exam of topics not covered on the Series 56, the 
Exchange believes that such individual that continues to maintain a 
Series 7 registration should complete a CE that covers all aspects of 
his or her registration.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the 
requirements of Section 6(c) of the Act,\9\ in general, and furthers 
the objectives of Section 6(c)(3) of the Act,\10\ which authorizes the 
Exchange to prescribe standards of training, experience and competence 
for persons associated with the Exchange Options Participants, in that 
the proposed rule codifies the existing requirements for Exchange 
Options Participants and their Representatives. The proposed rule also 
introduces a new CE program for Series 56 registered persons. The 
Exchange believes the proposed changes are reasonable and set forth the 
appropriate CE requirements for an Options Participant's Representative 
or Principal who is required to register under Exchange Rule IM-2040-5.
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    \9\ 15 U.S.C. 78f(c).
    \10\ 15 U.S.C. 78f(c)(3).
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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. In this regard, the Exchange 
notes that the rule change is being proposed in response to a filing 
recently submitted by the CBOE.\11\ The Exchange does not believe that 
the administrative changes being made nor the introduction of the 
Proprietary Trader Continuing Education Program (S501) will affect 
intermarket competition as the Exchange believes all Exchanges offering 
the same CE requirements will file similar rules addressing those CE 
Programs. In addition, the Exchange does not believe the proposed 
changes will affect intramarket competition because all similarly 
situated registered persons, e.g. registered persons maintaining the 
same registrations, are required to complete the same CE requirements. 
For example, all individuals maintaining a Series 7 registration will 
be required to complete the Series 7 CE while all individuals 
maintaining a Series 56 registration (and no other registrations) will 
be required to complete the new Series 56 CE.
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    \11\ See Securities Exchange Act Release No. 70027 (July 23, 
2013), 78 FR 45584 (July 29, 2013) (SR-CBOE-2013-076) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change 
Relating to Continuing Education).
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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

    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, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\12\ and Rule 19b-4(f)(6) thereunder.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The rule change specifies that proprietary traders who 
have qualified by taking the Series 56 exam must take the S 501 
continuing education program. Waiver of the operative delay will enable 
those registered persons required to take the S 501 continuing 
education to do so as soon as the program becomes available, enabling 
them to comply with their continuing education requirements in a timely 
manner, and thus is consistent with the protection of investors and the 
public interest. Therefore, the Commission designates the proposal 
operative upon filing.\13\
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    \13\ For purposes only 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 this 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 will institute proceedings to 
determine whether the proposed rule change 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-2013-41 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-BOX-2013-41. 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 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-2013-41 and should be 
submitted on or before September 12, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-20462 Filed 8-21-13; 8:45 am]
BILLING CODE 8011-01-P


