Notice2024-14213
Self-Regulatory Organizations; Cboe BYX 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 as Provided Under Exchange Rule 2.16.01
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 28, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 125 (Friday, June 28, 2024)</title>
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[Federal Register Volume 89, Number 125 (Friday, June 28, 2024)]
[Notices]
[Pages 54093-54096]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-14213]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100411; File No. SR-CboeBYX-2024-016]
Self-Regulatory Organizations; Cboe BYX 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
as Provided Under Exchange Rule 2.16.01
June 24, 2024.
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 June 12, 2024, Cboe BYX Exchange, Inc. (the ``Exchange'' or
``BYX'') 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 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
[[Page 54094]]
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 BYX, Inc. (the ``Exchange'' or ``BYX'') 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 (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/byx/">http://markets.cboe.com/us/equities/regulation/rule_filings/byx/</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 Exchange Rule 2.16.01 to reopen the
period by which certain participants in the Maintaining Qualifications
Program (``MQP'') will be able to complete their prescribed 2022 and
2023 continuing education content.
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 CE 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 BYX, subsequently
filed copycat rule filings to align their continuing education rules
with those of FINRA. See Securities Exchange Act Release No. 94532
(March 28, 2022), 87 FR 19159 (April 1, 2022), (SR-CboeBYX-2022-
006).
\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 2023, FINRA amended FINRA Rule 1240.01, to provide Look-Back
Individuals a second opportunity to elect to participate in the MQP
(the ``FINRA Second Enrollment Period'').\7\ The proposed rule change
required that Look-Back Individuals who elect to participate in the MQP
during the FINRA Second Enrollment Period complete any prescribed 2022
and 2023 MQP content by March 31, 2024. Look-Back Individuals who are
enrolled in the MQP, similar to other MQP participants, are able to
complete any prescribed CE and renew their annual MQP participation
through their FINRA Financial Professional Gateway (``FinPro'')
accounts.
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\7\ See Securities Exchange Act Release No. 97184 (March 22,
2023), 88 FR 18359 (March 28, 2023) (SR-FINRA-2023-005).
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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.\8\ 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 CE 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). Exchange Rule 2.16.01
also provided Look-Back Individuals with a second enrollment period,
between October 19, 2023, and December 31, 2023 (the ``Exchange Second
Enrollment Period''). Exchange Rule 2.16.01 requires that Look-Back
Individuals who elect to participate in the MQP during the Exchange
Second Enrollment Period complete any prescribed 2022 and 2023 MQP
content by March 31, 2024.\9\
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\8\ See Rules 2.16(c), 2.16.01, and 2.16.02.
\9\ The Exchange determined to treat the individuals who
enrolled during the first period (between January 31, 2022, and
March 15, 2022) the same as those who enrolled during the second
period (between October 19, 2023, and December 31, 2023) for
purposes of the March 31, 2024, deadline for completion of
prescribed 2022 and 2023 CE content. This is because those who had
enrolled in the MQP during the first period satisfied all of the
eligibility criteria for enrollment during the second period and
would have been able to complete their prescribed CE content by
March 31, 2024, had they chosen to enroll during the second period
instead of enrolling during the first period.
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FINRA recently submitted a proposal related to its CE Program (the
``FINRA Rule Change'').\10\ The proposal set forth changes to FINRA
Rule 1240.01, to provide Look-Back Individuals enrolled in the MQP in
both 2022 and 2023 who did not complete their prescribed 2022 and 2023
CE content as of March 31, 2024, the opportunity to complete such
content between May 22, 2024, and July 1, 2024, to be eligible to
continue their participation in the MQP.\11\ In addition, the proposed
rule change provides that any such individuals who will have completed
their prescribed 2022 and 2023 CE content between March 31, 2024, and
May 22, 2024, will be deemed to have completed such content by July 1,
2024, for purposes of the rule.
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\10\ See Securities Exchange Act Release No. 100067 (May 6,
2024), 89 FR 40520 (May 10, 2024) (SR-FINRA-2024-006).
\11\ This would include any Look-Back Individuals who were still
in the process of completing their prescribed CE content as of March
31, 2024.
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In the FINRA Rule Change, FINRA noted that FINRA sent multiple
reminders, including a March 16, 2024 email, to Look-Back Individuals
who had enrolled in the MQP but had not completed their prescribed CE
to remind them of the March 31, 2024 deadline. In the FINRA Rule
Change, FINRA further noted that in the week leading up to the
deadline, FINRA noticed that several thousand of those individuals were
renewing their
[[Page 54095]]
participation in the MQP for 2024 instead of completing their
prescribed CE.\12\ Per the FINRA Rule Change, FINRA believes that some
of those individuals may have been confused by the layout of their
FinPro accounts. Specifically, if they selected the 2024 renewal
banner, which was prominently displayed on their FinPro accounts, and
completed the renewal process, they would not have been automatically
redirected to complete any prescribed CE. Therefore, individuals may
have inadvertently assumed that completion of the renewal process alone
would have satisfied all of the necessary requirements to continue
their participation in the MQP.\13\
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\12\ Look-Back Individuals who enrolled in the MQP have until
December 31, 2024, to renew their participation in the MQP for 2024,
provided that they complete their prescribed CE by the stated
deadline.
\13\ According to FINRA, a number of these individuals contacted
FINRA to confirm whether they were required to satisfy any
additional requirements other than completing the 2024 renewal. To
provide FINRA with additional time to assess the situation, FINRA
temporarily changed the March 31, 2024, due date for CE completion
in its systems. This may have compounded the confusion because any
Look-Back Individual who may have logged into their FinPro account
during this time would have seen an interim CE completion date and
would have been able to complete their prescribed CE content based
on that interim CE completion date.
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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 enrolled in the MQP in both
2022 and 2023 who did not complete their prescribed 2022 and 2023 CE
content as of March 31, 2024, the opportunity to complete such content
between the effective date of this filing, and July 1, 2024, to be
eligible to continue their participation in the MQP.\14\ In addition,
the proposed rule change provides that any such individuals who will
have completed their prescribed 2022 and 2023 CE content between March
31, 2024, and the effective date of this filing, will be deemed to have
completed such content by July 1, 2024, for purposes of the rule.
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\14\ This would include any Look-Back Individuals who were still
in the process of completing their prescribed CE content as of March
31, 2024.
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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.\15\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
\17\ Id.
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The Exchange believes that reopening the period by which Look-Back
Individuals will be able to complete their prescribed 2022 and 2023 CE
content is appropriate under the circumstances. As FINRA noted in the
FINRA Rule Change, Look-Back Individuals who had enrolled in the MQP in
2022 and 2023 but had not completed their prescribed 2022 and 2023 CE
content by the March 31, 2024 deadline may have been confused, as
described above. The Exchange believes that participation in the MQP
reduces unnecessary impediments to requalification for these
individuals without diminishing investor protection. In addition, the
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 reopening the CE completion period, as proposed, will
further these goals and objectives.
Further, the Exchange believes the proposed amendments reduce the
possibility of a 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 CE rules to align
them with the CE rules of FINRA, in order to prevent unnecessary
regulatory burdens and to promote efficient administration of the
rules.
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
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 \18\ and Rule 19b-
4(f)(6) thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
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) \20\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant
[[Page 54096]]
to Rule 19b4(f)(6)(iii),\21\ 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 proposed rule change may become
operative upon filing. The Exchange, like FINRA, requests that the
proposed rule change become operative as quickly as possible so FINRA,
on behalf of the Exchange, can communicate the rule change to impacted
individuals in a timely manner. Waiver of the operative delay would
allow the Exchange to implement the proposed changes to its CE rules
without delay, thereby eliminating the possibility of a significant
regulatory gap between the FINRA 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. For these
reasons, the Commission believes that waiving the 30-day operative
delay is consistent with the protection of investors and the public
interest. Therefore, the Commission hereby waives the operative delay
and designates the proposal operative upon filing.\22\
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\20\ 17 CFR 240.19b-4(f)(6).
\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ 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 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 under
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\23\ 15 U.S.C. 78s(b)(2)(B).
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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
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f183849d94dc929e9c9c949f8582b1829492df969e87"><span class="__cf_email__" data-cfemail="92e0e7fef7bff1fdfffff7fce6e1d2e1f7f1bcf5fde4">[email protected]</span></a>. Please include
file number SR-CboeBYX-2024-016 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-CboeBYX-2024-016. 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
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-CboeBYX-2024-016 and
should be submitted on or before July 19, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-14213 Filed 6-27-24; 8:45 am]
BILLING CODE 8011-01-P
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