Notice2023-09447
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Cboe Options Rule 3.34
Primary source
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Published
May 4, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 86 (Thursday, May 4, 2023)</title>
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[Federal Register Volume 88, Number 86 (Thursday, May 4, 2023)]
[Notices]
[Pages 28639-28641]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-09447]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97404; File No. SR-CBOE-2023-021]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Cboe Options Rule 3.34
April 28, 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 April 20, 2023, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') 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 Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Cboe Options Rule 3.34. The text of the proposed rule change
is provided in error 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx">http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx</a>), 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 Cboe Options Rule 3.34.
Specifically, the Exchange proposes to amend Cboe Options Rule 3.34 to
reinsert requirements related to filing of an electronic Uniform
Termination Notice for Securities Industry Registration (``Form U5'').
In 2021, following the approval of Financial Industry Regulatory
Authority, Inc. (``FINRA'') rule changes, which, among other things,
consolidated FINRA registration rules,\5\ the Exchange amended,
reorganized, and enhanced its rules regarding registration,
qualification examinations, and continuing education, in order to
conform the Exchange's rules more closely to those of its affiliated
exchanges and non-affiliated exchanges in the interest of uniformity
and to facilitate compliance with membership, registration and
qualification regulatory requirements by members of multiple
exchanges.\6\
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\5\ See Exchange Act Release No. 81098 (July 7, 2017), 82 FR
32419 (July 13, 2017) (Order Approving File No. SR-FINRA-2017-007).
See also FINRA Regulatory Notice 17-30 (SEC Approves Consolidated
FINRA Registration Rules, Restructured Representative-Level
Qualification Examinations and Changes to Continuing Education
Requirements) (October 2017).
\6\ See Exchange Act Release 34-91576 (April 15, 2021), 86 FR
20760 (April 21, 2021) (SR-CBOE-2021-022).
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As part of the rule change, the Exchange adopted new Cboe Options
Rule 3.34, Electronic Filing Requirements for Uniform Forms, which,
among other things, consolidated various Form U5 electronic filing
requirements in a single location and also imposed certain new
requirements. In consolidating the electronic filing requirements, the
Exchange inadvertently removed requirements for the submission of Form
U5 and related amendments, previously contained in Cboe Options Rule
3.37. Specifically, Cboe Options Rule 3.37(b) previously contained a
requirement that a Form U5 must be electronically submitted by a
Trading Permit Holder (``TPH'') organization immediately following the
date of termination of any registered person, but in no event later
than 30 days following termination. Further, the Exchange inadvertently
removed the requirement for a copy of the Form U5 to be provided
concurrently to the person whose association has been terminated, also
previously contained in Cboe Options Rule 3.37(b). Finally, the
Exchange inadvertently removed the requirement, previously set forth in
Cboe Options Rule 3.37(c), that a TPH submit an amendment to the Form
U5 in the event that the TPH learns of facts or circumstances causing
any information set forth in the Form U5 to become inaccurate or
incomplete, and that such amendment shall be provided concurrently to
the person whose association has been terminated no later than 30 days
after the TPH learns of the facts or circumstances giving rise to the
need for the amendment.
The Exchange now proposes to amend Cboe Options Rule 3.34(e) to
insert these provisions that were previously inadvertently deleted from
Cboe Options Rule 3.37. Specifically, the Exchange proposes to amend
Cboe Options Rule 3.34(e) to state that a Form U5 is required to be
electronically submitted by a TPH organization immediately following
the date of termination, but in no event later than 30 days following
termination, and to state that a copy of the Form U4 [sic] shall be
provided concurrently to the person whose association has been
terminated. Further, the Exchange proposes to amend Cboe Options
3.34(e) to state that a TPH shall submit an amendment to the Form U5,
in the event that the TPH organization learns of facts or circumstances
causing any information set forth in the Form U5 to become inaccurate
or incomplete, and that such amendment shall be provided concurrently
to the person whose association has been terminated no later than 30
days after the TPH organization learns of the facts or circumstances
giving rise to the need for the amendment.
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.\7\ Specifically, the
Exchange believes the proposed rule change is consistent with the
section 6(b)(5) \8\ 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,
[[Page 28640]]
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) \9\ requirement that the rules of an exchange not be designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
\9\ Id.
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In particular, the Exchange believes the proposed rule change will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, will protect
investors and the public interest by correcting errors and clarifying
text within the Cboe Options Rules. Specifically, by adding language
that was inadvertently removed regarding requirements for Form U5
submissions and amendments, the proposed rule change is designed to
make the Rulebook more accurate and add clarity to the Cboe Options
Rules, thereby mitigating any potential confusion for TPHs,
particularly those who are also FINRA members. The Exchange believes
the amendments reduce the possibility of a significant regulatory gap
between Exchange and FINRA rules, providing more uniform standards
across the securities industry. Further, the Exchange believes that the
alignment of rules regarding Form U5 submissions and amendments
immediately and expeditiously would serve to avoid potential confusion
for those members registered at both the Exchange and FINRA, prevent
unnecessary regulatory burdens, and promote the efficient
administration of the rules.
The proposed rule change will have no impact on trading on the
Exchange. As the Exchange did not intend to delete these requirements
and did not provide specific notice to TPHs of any changes specifically
regarding such requirements following the inadvertent deletion, the
Exchange believes the proposed clarifying rule amendments will not
result in any practical changes to the Form U5 submission and amendment
process from an Exchange or TPH standpoint. The proposed requirements
are merely being added back to the Rulebook for purposes of clarity and
accuracy.
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 proposed rule change
merely reinserts language that was inadvertently removed regarding
requirements for Form U5 submissions and related amendments. As the
Exchange did not intend to delete these requirements and did not
provide notice to TPHs of any changes specifically regarding such
requirements following the inadvertent deletion, the Exchange believes
the proposed clarifying rule amendments will not result in any
practical changes to the Form U5 submission and amendment process from
an Exchange or TPH standpoint. Further, other Self-Regulatory
Organizations (``SROs''), including FINRA, have continued to maintain
these requirements for the submission of Form U5 and related amendments
in their rules.\10\
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\10\ See FINRA By-Laws, Article V, Section 3.
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The proposed rule change makes no substantive changes to the Cboe
Options Rules, and thus will have no impact on trading on the Exchange.
The proposed rule change is not intended to have any impact on
competition.
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
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, it has become
effective pursuant to section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), 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 this proposed
rule change may become operative immediately upon filing.\13\
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\13\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its
intent to file a proposed rule change under that subsection at least
five business days prior to the date of filing, or such shorter time
as designated by the Commission. 17 CFR 240.19b-4(f)(6)(iii). The
Exchange has provided such notice.
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Waiver of the 30-day operative delay would allow the Exchange to
reinsert language that the Exchange states was inadvertently removed
regarding requirements for Form U5 submissions and related amendments.
As the Exchange states it did not intend to delete these requirements,
did not provide notice to TPHs of any changes specifically regarding
such requirements following the inadvertent deletion, and the other
SROs, including FINRA, still have continued to maintain these
requirements for the submission of Form U5 and related amendments in
their rules, allowing a waiver will eliminating the regulatory gap
between the FINRA and Exchange rules, providing more uniform standards
across the securities industry, and helping to avoid confusion for
registered persons of the Exchange that are also FINRA members. For
this reason, 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.\14\
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\14\ 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 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
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<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4b393e272e66282426262e253f380b382e28652c243d"><span class="__cf_email__" data-cfemail="582a2d343d753b3735353d362c2b182b3d3b763f372e">[email protected]</span></a>. Please include
File Number SR-CBOE-2023-021 on the subject line.
Paper Comments
<bullet> 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-CBOE-2023-021. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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
10:00 a.m. and 3:00 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-CBOE-2023-021 and should
be submitted on or before May 25, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-09447 Filed 5-3-23; 8:45 am]
BILLING CODE 8011-01-P
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