
[Federal Register Volume 88, Number 214 (Tuesday, November 7, 2023)]
[Notices]
[Pages 76882-76885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24519]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98835; File No. SR-CboeBZX-2023-085]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Its Rules Relating to the Continuing Education for Registered Persons

November 1, 2023.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 19, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been substantially prepared by the Exchange. 
The Exchange filed the proposal as a ``non-controversial'' proposed 
rule change pursuant to section 19(b)(3)(A)(iii) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder.\4\ 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
amend its rules relating to the Continuing Education for Registered 
Persons as provided under Exchange Rule 2.16.01. The text of the 
proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
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 Exchange 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 Exchange 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 proposed rule change amends Exchange Rule 2.16.01 to provide 
eligible individuals another opportunity to elect to participate in the 
Maintaining Qualifications Program (``MQP'').
    In 2021, the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') implemented rule changes, which amended FINRA's Continuing 
Education (``CE'') Program requirements to, among other things, provide 
eligible individuals who terminate any of their representative or 
principal registration categories the option of maintaining their 
qualification for any terminated registration categories by completing 
annual continuing education through a new program, the MQP.\5\ Under 
FINRA Rule 1240.01, the MQP designated a look-back provision that, 
subject to specified conditions, extended the option to participate in 
the MQP to individuals who: (1) were registered as a representative or 
principal within two years immediately prior to March 15, 2022 (the 
implementation date of the MQP); and (2) individuals who were 
participating in the Financial Services Affiliate Waiver Program 
(``FSAWP'') \6\ under FINRA Rule 1210.09 (Waiver of Examinations for 
Individuals Working for a Financial Services Industry Affiliate of a 
Member) immediately prior to March 15, 2022 (collectively, ``Look-Back 
Individuals'').
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    \5\ See Securities Exchange Act Release No. 93097 (September 21, 
2021), 86 FR 53358 (September 27, 2021) (Order Approving File No. 
SR-FINRA-2021-015). Other exchanges, including BZX, subsequently 
filed copycat rule filings to align their continuing education rules 
with those of FINRA. See Securities Exchange Act Release No. 94528 
(March 28, 2022), 87 FR 19146 (April 1, 2022), (SR-CboeBZX-2022-
022).
    \6\ The FSAWP is a waiver program for eligible individuals who 
have left a member firm to work for a foreign or domestic financial 
services affiliate of a member firm. FINRA stopped accepting new 
participants for the FSAWP beginning on March 15, 2022; however, 
individuals who were already participating in the FSAWP prior to 
that date had the option of continuing in the FSAWP.
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    In response to FINRA's rule changes and to facilitate compliance 
with the Exchange's CE Program requirements by members of multiple 
exchanges, the Exchange implemented rule changes to align with FINRA's 
CE Program and adopted, among other rule changes, Exchange Rules 
2.16(c), 2.16.01, and 2.16.02. Such rules, among other things, provide 
eligible individuals who terminate any of their representative or 
principal registrations the option of maintaining their qualification 
for any of the terminated registrations by completing continuing 
education through the MQP. Further, Exchange Rule 2.16.01 includes a 
look-back provision that, subject to specified conditions, extends the 
option for maintaining qualifications following a registration category 
termination to (i) individuals who have been registered as a 
representative or principal within two years immediately preceding 
March 15, 2022, and (ii) individuals who have been participants of the 
FSAWP immediately preceding March 15, 2022 implementation (i.e., Look-
Back Individuals). With respect to the FSAWP, the Exchange made the 
look-back provision available to individuals who are participants in 
the FSA waiver programs of Exchange's affiliates, Cboe Exchange, Inc. 
(``Cboe Options'') and Cboe C2 Exchange, Inc. (``C2 Options''), and/or 
FINRA immediately preceding March 15, 2022. Look-Back Individuals who 
elected to participate in the new

[[Page 76883]]

MQP were required to make such election by March 15, 2022 (the 
implementation date of the MQP).\7\
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    \7\ See Rule 2.16.01. If such individuals elect to participate, 
they would be required to complete their initial annual content by 
the end of 2022 (i.e., by the end of the calendar year in which the 
proposed rule change is implemented). In addition, if such 
individuals elect to participate, their initial participation period 
would be adjusted based on the date that their registration was 
terminated.
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    FINRA recently submitted a proposal related to its CE Program (the 
``FINRA Rule Change'').\8\ The proposal set forth changes to FINRA Rule 
1240.01, which provide Look-Back Individuals a second opportunity to 
elect to participate in the MQP (the ``Second Enrollment Period'').\9\ 
In addition, the proposed rule change requires that Look-Back 
Individuals who elect to participate in the MQP during the Second 
Enrollment Period complete any prescribed 2022 and 2023 MQP content by 
March 31, 2024. In the FINRA Rule Change, FINRA noted that in 
Regulatory Notice 21-41 (November 17, 2021), it announced that Look-
Back Individuals who wanted to take part in the MQP were required to 
make their election between January 31, 2022, and March 15, 2022 (the 
``First Enrollment Period''). In addition to the announcement in 
Regulatory Notice 21-41, FINRA notified the Look-Back Individuals about 
the MQP and the First Enrollment Period via two separate mailings of 
postcards to their home addresses and communications through their 
FINRA Financial Professional Gateway (``FinPro'') accounts.\10\
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    \8\ See Securities Exchange Act Release No. 97184 (March 22, 
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005).
    \9\ To reflect the availability of the Second Enrollment Period, 
FINRA Rule 1240.01 clarifies that for all Look-Back Individuals who 
elect to participate in the MQP, their participation period would 
also be for a period of five years following the termination of 
their registration categories, as with other MQP participants.
    \10\ Look-Back Individuals were able to notify FINRA of their 
election to participate in the MQP through their FinPro accounts.
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    In the FINRA Rule Change, FINRA further noted that shortly after 
the First Enrollment Period had ended, a number of Look-Back 
Individuals contacted FINRA and indicated that they had only recently 
become aware of the MQP. FINRA noted that it also received anecdotal 
information that a number of these individuals may not have learned of 
the MQP, or the First Enrollment Period, in a timely manner, or at all, 
due to communication and operational issues.\11\ In addition, the 
original six-week enrollment period may not have provided Look-Back 
Individuals with sufficient time to evaluate whether they should 
participate in the MQP. For these reasons, FINRA recently amended its 
rules to provide Look-Back Individuals a second opportunity to elect to 
participate in the MQP.
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    \11\ According to FINRA, this may have been a result of the 
timing of FINRA's announcements relating to the MQP, which coincided 
with the holiday season and the transition to the New Year. Further, 
given that Look-Back Individuals were out of the industry at the 
time of these announcements, it was unlikely that they would have 
learned of the MQP, or the First Enrollment Period, through informal 
communication channels.
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    For similar reasons and to facilitate compliance with the 
Exchange's CE Program requirements by members of multiple exchanges, 
the Exchange is also proposing to amend its rules (i.e., Exchange Rule 
2.16.01) to provide Look-Back Individuals with a Second Enrollment 
Period. The Exchange also understands that other exchanges have or will 
propose similar amendments based on FINRA's rule changes. The Second 
Enrollment Period will be between the effective date of this filing, 
and December 31, 2023.\12\ In addition, the proposed rule change 
requires that Look-Back Individuals who elect to participate in the MQP 
during the Second Enrollment Period complete any prescribed 2022 and 
2023 MQP content by March 31, 2024.\13\
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    \12\ The current rule text also provides that if Look-Back 
Individuals elect to participate in the MQP, the Exchange shall 
adjust their participation period by deducting from that period the 
amount of time that has lapsed between the date that such persons 
terminated their registration categories and March 15, 2022. To 
reflect the availability of the Second Enrollment Period, the 
proposed rule change clarifies that for all Look-Back Individuals 
who elect to participate in the MQP, their participation period 
would also be for a period of five years following the termination 
of their registration categories, as with other MQP participants. 
See supra note 9.
    \13\ Look-Back Individuals who elect to enroll in the MQP during 
the Second Enrollment Period would also need to pay the annual 
program fee of $100 for both 2022 and 2023 at the time of their 
enrollment.
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    The Exchange proposes to revise Exchange Rule 2.16.01 to state that 
persons eligible under Exchange Rule 2.16.01 shall make their election 
to participate in the continuing education program under Exchange Rule 
2.16(c) by either (1) March 15, 2022; or (2) between the effective date 
of this filing, and December 31, 2023.
    The Exchange also proposes to amend Exchange Rule 2.16.01 to state 
that eligible persons who elect to participate in the continuing 
education program between the effective date of this filing, and 
December 31, 2023, must complete any prescribed 2022 and 2023 
continuing education content by March 31, 2024.
    Finally, the Exchange proposes to amend Exchange Rule 2.16.01 to 
remove reference to Exchange Rule 2.5.08. This Exchange Rule references 
the FSA waiver programs of Cboe Options Rule 3.30.09, C2 Options 
Chapter 3, Section B and/or FINRA Rule 1210.09.\14\ As there were no 
participants in the FSA waiver programs of the Exchange's affiliates, 
Cboe Options or C2 Options, immediately preceding March 15, 2022, the 
Exchange proposes to amend Exchange Rule 2.16.01 to refer specifically 
to FINRA Rule 1210.09 and clarify that anyone participating in the 
FINRA FSAWP immediately preceding March 15, 2022 would still be 
eligible to participate in the MQP, provided conditions in Exchange 
Rule 2.16(c) are met.\15\
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    \14\ The Exchange notes that the text proposed for deletion 
includes an incorrect rule reference to Rule 2.5.08; the FSA Waiver 
Program is described in Rule 2.5.07. The Exchange further notes 
that, as described herein, while the Exchange's affiliates, Cboe 
Options or C2 Options, maintained FSA waiver programs, there were no 
participants in their FSA waiver programs immediately preceding 
March 15, 2022.
    \15\ The Exchange also proposes a non-substantive change to 
Exchange Rule 2.5.07, to correct the referenced FINRA Rule from Rule 
2110.09 to Rule 1210.09.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of section 6(b) of the Act.\16\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
section 6(b)(5) \17\ requirements that the rules of an exchange be 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, 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) \18\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ Id.
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    The Exchange believes that providing Look-Back Individuals a second 
opportunity to elect to participate in the MQP is warranted because 
participation in the MQP would reduce unnecessary impediments to 
requalification for these individuals without diminishing investor 
protection. In addition, the

[[Page 76884]]

proposed rule change is consistent with other goals, such as the 
promotion of diversity and inclusion in the securities industry by 
attracting and retaining a broader and diverse group of professionals. 
The MQP also allows the industry to retain expertise from skilled 
individuals, providing investors with the advantage of greater 
experience among the individuals working in the industry. The Exchange 
believes that providing Look-Back Individuals a second opportunity to 
elect to participate in the MQP will further these goals and 
objectives.
    Further, the Exchange believes the proposed amendments reduce the 
possibility of a significant regulatory gap between Exchange and FINRA 
rules, providing more uniform standards across the securities industry. 
The Exchange believes that the proposed rule change will bring 
consistency and uniformity with FINRA's recently amended CE Program, 
which will, in turn, assist Members and their associated persons in 
complying with these rules and improve regulatory efficiency. The 
proposed rule changes make ministerial changes to the Exchange's 
continuing education rules to align them with the continuing education 
rules of FINRA and other exchanges as discussed above, in order to 
prevent unnecessary regulatory burdens and to promote efficient 
administration of the rules.
    Finally, the Exchange believes the proposed amendments to remove 
reference to Exchange Rule 2.5.08, which references the FSA waiver 
programs under Cboe Options Rule 3.30.09, C2 Options Chapter 3, Section 
B and/or FINRA Rule 1210.09, and to amend Exchange Rule 2.16.01 to 
refer specifically to FINRA Rule 1210.09 will add clarity to the 
Exchange Rules, as there were no participants in the FSA waiver 
programs of the Exchange's affiliates, Cboe Options or C2 Options, 
immediately preceding March 15, 2022. Further, the Exchange believes 
that the amendments to clarify that anyone participating in the FINRA 
FSAWP immediately preceding March 15, 2022 would still be eligible to 
participate in the MQP, provided conditions in Exchange Rule 2.16(c) 
are met, ensures consistency and uniformity with FINRA's recently 
amended CE Program, which, as noted above, will in turn assist Members 
and their associated persons in complying with these rules and improve 
regulatory efficiency.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Act. The Exchange believes that 
the proposed rule changes which are, in all material respects, based 
upon and substantially similar to, recent rule changes adopted by 
FINRA, will reduce the regulatory burden placed on market participants 
engaged in trading activities across different markets. The Exchange 
believes that the harmonization of the CE Program requirements across 
the various markets will reduce burdens on competition by removing 
impediments to participation in the national market system and 
promoting competition among participants across the multiple national 
securities exchanges.

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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    BZX has filed the proposed rule change pursuant to section 
19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\ 
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 after the date of the filing, or such shorter time as the 
Commission may designate, it has become effective pursuant to 
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.\21\
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 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 under Rule 19b-4(f)(6) \22\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\23\ the Commission 
may 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 immediately upon filing. BZX has indicated that 
the immediate operation of the proposed rule change is appropriate 
because it would allow the Exchange to implement the proposed changes 
to its continuing education rules without delay, thereby eliminating 
the possibility of a significant regulatory gap between the FINRA rules 
and the Exchange rules, providing more uniform standards across the 
securities industry, and helping to avoid confusion for Exchange 
members that are also FINRA members. BZX also noted that FINRA plans to 
conduct additional public outreach efforts to promote awareness of the 
MQP and the availability of the Second Enrollment Period among Look-
Back Individuals. Therefore, BZX indicated that the immediate operation 
of the proposed rule change is also appropriate because it would help 
to further notify Look-Back Individuals of their options and provide 
additional time for them to consider whether they wish to participate 
in the MQP before the December 31, 2023 deadline. For these reasons, 
the Commission believes that waiver of the 30-day operative delay for 
this proposal is consistent with the protection of investors and the 
public interest. Accordingly, the Commission hereby waives the 30-day 
operative delay and designates the proposal operative upon filing.\24\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-085 on the subject line.

[[Page 76885]]

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 number SR-CboeBZX-2023-085. 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 website (https://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 website 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 the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-085 and should 
be submitted on or before November 28, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-24519 Filed 11-6-23; 8:45 am]
BILLING CODE 8011-01-P


