Notice2025-10369
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Change Its Procedure for Processing Fingerprints Under Exchange Rule 10080 (Fingerprint Based Background Checks of Exchange Employees and Independent Contractors and Other Service Providers)
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 9, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 109 (Monday, June 9, 2025)</title>
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[Federal Register Volume 90, Number 109 (Monday, June 9, 2025)]
[Notices]
[Pages 24308-24310]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-10369]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103175; File No. SR-BOX-2025-16]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Change Its
Procedure for Processing Fingerprints Under Exchange Rule 10080
(Fingerprint Based Background Checks of Exchange Employees and
Independent Contractors and Other Service Providers)
June 3, 2025.
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 May 22, 2025, BOX Exchange LLC (``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 change its procedure for processing
fingerprints under its existing Rule 10080 (Fingerprint Based
Background Checks of Exchange Employees and Independent Contractors and
Other Service Providers). 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
website at <a href="https://rules.boxexchange.com/rulefilings">https://rules.boxexchange.com/rulefilings</a>.
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 proposes to change the procedure under its existing
Rule 10080 (Fingerprint Based Background Checks of Exchange Employees
and Independent Contractors and Other Service Providers) regarding its
current practice of conducting fingerprint-based criminal records check
of (i) all BOX \3\ and Exchange employees, including temporary
employees who have or are anticipated to have access to BOX or Exchange
facilities for at least ten (10) days, and (ii) all independent
contractors and other service providers who have access to BOX or
Exchange facilities, records, systems, data or other information which
places the security of BOX or the Exchange at risk. The Exchange's
proposal to change its procedure under its Rule 10080 from utilizing
manual fingerprinting via fingerprint cards to also utilizing a Live-
Scan \4\ electronic system for the taking of fingerprints is consistent
with these rules. Additionally, the proposed changes are consistent
with the requirements of other options exchanges.\5\
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\3\ ``BOX'' means BOX Options Market LLC, an options trading
facility of the Exchange under 3(a)(2) of the Exchange Act. See Rule
100(a)(7).
\4\ Live-Scan refers to the process of capturing fingerprints
directly into a digitized format as opposed to traditional ink and
paper methods. Live-Scan technology captures and transfers images to
a central location and/or interface for identification processing.
\5\ See Securities Exchange Act Release No. 88394 (March 16,
2020), 85 FR 16170 (March 20, 2020) (SR-LTSE-2020-05); see also
Securities Exchange Act Release No. 76492 (November 20, 2015), 80 FR
74153 (November 27, 2015) (SR-NYSEArca-2015-92); see also Securities
Exchange Act Release No. 72600 (July 11, 2014), 79 FR 41717 (July
17, 2014) (SR-MIAX-2014-38); see also Securities Exchange Act
Release No. 71066 (December 12, 2013), 78 FR 76667 (December 18,
2013) (SR-ISE-2013-66).
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[[Page 24309]]
Background and Proposal
Section 17(f)(2) of the Act, as amended by the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank
Act''),\6\ provides that every member of a national securities
exchange, broker, dealer, registered transfer agent, registered
clearing agency, registered securities information processors, national
securities exchanges and national securities associations shall require
each of its partners, directors, officers, and employees to be
fingerprinted and submit those fingerprints (or cause the fingerprints
to be submitted) to the Attorney General of the United States
(``Attorney General'') for identification. Section 17(f)(2) explicitly
directs the Attorney General to provide self-regulatory organizations
(``SROs'') designated by the Commission with access to criminal history
record information. Further, SEC Rule 17f-2 authorizes SROs to store
criminal record information received from the FBI, which maintains on
behalf of the Attorney General a database of fingerprint-based criminal
history records.\7\
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\6\ See 15 U.S.C. 78q(f)(2); Dodd-Frank Act, Public Law 111-203,
929S, 124 Stat. 1376, 1867 (2010).
\7\ See 17 CFR 240.17f-2(d).
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Consistent with the practice at other national securities
exchanges, the Exchange intends to utilize a Live-Scan electronic
system as an option to capture and transmit fingerprints directly to
the FBI. The capture and transmittal function, and corresponding
receipt of criminal history information from the FBI, would be handled
directly by Exchange personnel and/or an FBI-approved Channel Partner''
\8\ who would maintain and operate, on behalf of the Exchange, a Live-
Scan and/or other electronic system(s) for the submission of
fingerprints to the FBI; receive and maintain criminal history record
information from the FBI; and disseminate such information, through
secure systems, to a limited set of approved reviewing officials within
the Exchange. The Exchange believes that Rule 10080 allows the
retention of a Channel Partner for these purposes.
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\8\ FBI-approved Channel Partners receive the fingerprint
submission and relevant data, collect the associated fee(s),
electronically forward the fingerprint submission with the necessary
information to the FBI Criminal Justice Information Services
Division (``CJIS'') for a national Criminal History Summary check,
and receive the electronic summary check result for dissemination to
the authorized employer entity. See Securities Exchange Act Release
No. 71066 (December 12, 2013), 78 FR 76667 (December 18, 2013) (SR-
ISE-2013-66). The Exchange would retain ultimate legal
responsibility for the fulfillment of its statutory and self-
regulatory obligations under the Act, including compliance with
Section 17(f)(2) of the Act as amended by the Dodd-Frank Act.
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The Exchange believes that the foregoing interpretation is
consistent with the Exchange's authority under Section 17(f)(2) of the
Act, as amended by the Dodd-Frank Act,\9\ which requires, inter alia,
that employees of exchanges be fingerprinted and that exchanges ``shall
submit such fingerprints, or cause the same to be submitted, to the
Attorney General of the United States for identification and
appropriate processing.''
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\9\ See 15 U.S.C. 78(q)(f)(2); Dodd-Frank Act, Pub. L. 111-203,
929S, 124 Stat. 1376, 1867 (2010).
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The Exchange accordingly believes that under Rule 10080 (and
applicable statutes), the Exchange has the authority to engage an FBI-
approved Channel Partner for some or all of the fingerprinting
processes described in the Rule. The procedural change that the
Exchange is proposing under its existing rule is concerned solely with
the administration of the self-regulatory organization and the Exchange
believes that it is therefore eligible to be filed pursuant to section
19(b)(3)(A)(i) of the Act \10\ and Rule 19b-4(f)(3) \11\ thereunder.
The Exchange believes that this proposed procedural change under the
existing rule is necessary in order to ensure the Exchange's continued
compliance with its Rules and applicable federal law.\12\
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\10\ 15 U.S.C. 78s(b)(3)(A)(iii).
\11\ 17 CFR 240.19b-4(f)(3).
\12\ Access to the FBI's fingerprint-based database of criminal
records is permitted only when authorized by law. Section 17(f)(2)
of the Act explicitly directs the Attorney General to provide SROs
designated by the Commission (e.g., the Exchange) with access to
such criminal history record information. Further, as amended by the
Dodd-Frank Act, Section 17(f)(2) specifically requires, inter alia,
that employees of national securities exchanges be fingerprinted.
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2. Statutory Basis
The Exchange believes that the proposed procedural change under
Rule 10080 is consistent with the requirements of Section 6(b) of the
Act,\13\ in general, and Section 6(b)(5) of the Act,\14\ in particular,
in that it is designed to prevent fraudulent and manipulative acts and
practices, promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, to remove impediments to and perfect the
mechanisms of a free and open market and a national market system and,
in general, to protect investors and the public interest.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
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Specifically, the Exchange believes that fingerprint-based
background checks via a Live-Scan system for employees, temporary
employees, independent contractors, and other service providers, that
meet the criteria in Rule 10080, is consistent with the foregoing
requirements of Section 6(b)(5) in that it is compliant with the
requirements of Rule 10080 and applicable federal law.\15\ Running
fingerprint-based background checks is imperative for the Exchange, as
this process helps to identify persons with criminal history records
who may pose a threat to the safety of Exchange personnel and/or the
security of Exchange facilities and records. This identification and
screening process thus enhances business continuity, workplace safety,
and the security of the Exchange's operations. The use of an FBI-
approved Channel Partner in some or all phases of this process is
consistent with Rule 10080 and applicable federal law, and in
furtherance of the important objectives described herein. Additionally,
the use of a Channel Partner is consistent with the fingerprinting
method currently employed by other SROs.\16\ For all these reasons, the
proposal is also designed to protect investors as well as the public
interest.
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\15\ See supra note 6 .
\16\ See supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed procedural change
under the rule will impose any burden on competition that is not
necessary or appropriate in the furtherance of the purposes of the Act.
The proposed procedural change under the rule would enhance the
security of the Exchange's facilities and records without adding any
burden on market participants and allow the Exchange continued
compliance with its fingerprinting rules and with Section 17(f)(2) of
the Act as amended by the Dodd-Frank Act.\17\ The proposed change is
not intended to address competitive issues but rather update its
existing fingerprint process.
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\17\ See Section 929S of the Dodd-Frank Act.
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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.
[[Page 24310]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \18\ and paragraph (f)(3) of Rule 19b-4
thereunder.\19\ 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.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(3).
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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#9eecebf2fbb3fdf1f3f3fbf0eaeddeedfbfdb0f9f1e8"><span class="__cf_email__" data-cfemail="0775726b622a64686a6a626973744774626429606871">[email protected]</span></a>. Please include
file number SR-BOX-2025-16 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-BOX-2025-16. 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-BOX-2025-16 and should be
submitted on or before June 30, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2025-10369 Filed 6-6-25; 8:45 am]
BILLING CODE 8011-01-P
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