Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to Fingerprint-Based Background Checks of Exchange Directors, Officers, Employees and Others, 26671-26673 [2013-10799]
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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Notices
Number SR–EDGX–2013–14 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
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–EDGX–2013–14. 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 (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 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 the
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–EDGX–
2013–14 and should be submitted on or
before May 28, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–10704 Filed 5–6–13; 8:45 am]
tkelley on DSK3SPTVN1PROD with NOTICES
BILLING CODE 8011–01–P
[Release No. 34–69496; File No. SR–CBOE–
2013–044]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating to FingerprintBased Background Checks of
Exchange Directors, Officers,
Employees and Others
May 2, 2013.
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 18,
2013, Chicago Board Options Exchange,
Incorporated 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 Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Chicago Board Options Exchange,
Incorporated (the ‘‘Exchange’’ or
‘‘CBOE’’) proposes to adopt a rule
codifying CBOE’s current practice of
conducting fingerprint checks of
directors, officers, employees,
temporary personnel, independent
contractors, consultants, vendors and
service providers of the Exchange.
Under the proposed rule, CBOE would
conduct these fingerprint checks by
submitting the fingerprints taken to the
Attorney General of the United States or
his or her designee for identification
and processing. In conducting these
fingerprint checks, CBOE would receive
criminal history record information
from the Attorney General of the United
States or his or her designee for
evaluation and use, in accordance with
applicable law, in enhancing the
security of the Exchange’s facilities,
systems, data, and/or records
(collectively, ‘‘facilities and records’’).
The text of the proposed rule change
is available on the Exchange’s Web site
(https://www.cboe.com/AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
1 15
15 17
CFR 200.30–3(a)(12).
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2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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26671
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 Exchange proposes to adopt a
rule that would codify the Exchange’s
current practice of conducting
fingerprint-based criminal records
checks of (i) directors, officers and
employees of the Exchange, and (ii)
temporary personnel, independent
contractors, consultants, vendors and
service providers (collectively,
‘‘contractors’’) who have or are
anticipated to have access to facilities
and records. A number of securities
markets have filed with the Securities
and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’) rules to
obtain fingerprints from certain
enumerated parties.3 The rule proposed
by CBOE in this proposed rule change
is consistent with these rules.
Access to the Federal Bureau of
Investigation’s (‘‘FBI’’) database of
fingerprint based criminal records is
permitted only when authorized by law.
Numerous federal and state laws
authorize employers to conduct
fingerprint-based background checks
that make use of the FBI’s database.
Notably, Section 17(f)(2) of the
Securities Exchange Act of 1934, as
amended (‘‘Act’’), and SEC Rule 17f–2
require partners, directors, officers and
employees of members of national
securities exchanges, brokers, dealers,
transfer agents, and clearing agencies to
be fingerprinted and authorize SROs to
maintain facilities for processing and
storing fingerprint cards and criminal
3 See Rule 1408 of the International Securities
Exchange (‘‘ISE’’), Rule 28 of the New York Stock
Exchange (‘‘NYSE’’), Rule 0140 of the Nasdaq Stock
Market, Inc. (‘‘Nasdaq’’) and Securities Exchange
Act Release No. 50157 (August 5, 2004), 69 FR
49924 (August 12, 2004) (policy adopted by the
National Association of Securities Dealers, Inc.
(‘‘NASD’’) (now FINRA) to conduct fingerprintbased background checks of NASD employees and
independent contractors).
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record information received from the
FBI database with respect to such cards.
Section 17(f)(2) explicitly directs the
Attorney General of the United States
(i.e., the FBI) to provide SROs
designated by the Commission with
access to criminal history record
information. Section 17(f)(2) was
amended by the Dodd-Frank Wall Street
Reform and Consumer Protection Act of
2010 (‘‘Dodd-Frank Act’’) to also require
partners, directors, officers and
employees of registered securities
information processors, national
securities exchanges and national
securities associations to be
fingerprinted.4 The Exchange believes,
therefore, that a proposed rule change
for a fingerprinting program for
directors, officers, employees and
contractors is a necessary component of
the Exchange’s business plan.
CBOE believes that fingerprint-based
background checks of Exchange
directors, officers, employees and
contractors will promote the objectives
of investor protection, business
continuity and workplace safety and its
other responsibilities under the Act by
providing CBOE with an effective tool
for identifying and excluding persons
with felony or misdemeanor conviction
records that may pose a threat to the
safety of Exchange personnel or the
security of facilities and records. The
proposed rule would permit CBOE to
conduct fingerprint-based background
checks of all Exchange directors,
officers, employees and contractors. All
Exchange directors, officers, employees
and contractors would be subject to
fingerprinting at any time. Fingerprintbased background checks of contractors
would be performed prior to providing
a contractor with access to facilities and
records. The Exchange would also
conduct fingerprint-based background
checks of Exchange director candidates
that are not already serving on the
Exchange’s Board before they are
formally nominated and of employee
candidates after an offer of employment
has been made by the Exchange.
Any employee who refuses to submit
to fingerprinting would be subject to
progressive discipline up to and
including the termination of
employment. Any person who is given
an offer of employment with the
Exchange who refuses to submit to
fingerprinting would have the offer
withdrawn. A contractor who refuses to
submit to fingerprinting would be
denied access to facilities and records.
The Exchange may choose to not obtain
fingerprints from, or to seek fingerprintbased information with respect to, any
4 See
Section 929S of the Dodd-Frank Act.
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15:24 May 06, 2013
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contractor due to that contractor’s
limited, supervised, or restricted access
to facilities and records, or the nature or
location of his or her work or services,
or if the contractor’s employer conducts
fingerprint based criminal records
checks of its personnel.
Through access to state-of-the-art
information systems administered and
maintained by the FBI and its Criminal
Justice Information Services Division,
CBOE would receive centrallymaintained ‘‘criminal history record
information,’’ which is arrest-based data
and derivative information, and may
include personal descriptive data; FBI
number; conviction status; sentencing,
probation and parole information; and
such other information as the FBI may
now or hereafter make available to
CBOE. This information is supplied to
the FBI by various local, state, federal
and/or international criminal justice
agencies. Thus, the information
obtained through fingerprint-based
background checks provides a profile of
a candidate’s criminal record and
facilitates risk assessment with respect
to the candidate.
Access to the FBI’s nationwide
database is particularly crucial with
respect to the screening of contractors,
who are not employees of the Exchange
and who therefore are not subject to the
pre-hire review that the Exchange
conducts with respect to employees but
whose work frequently requires the
same or similar access to facilities and
records as that provided to employees of
the Exchange. In furtherance of its
commitment to utilize and improve
technology and systems applications to
better serve investors, disseminate
market information, and ensure reliable
order handling and execution for all
market participants, CBOE regularly
retains outside vendors whose
specialized expertise is required for the
development, installation and servicing
of this technology. Such vendors
complement the work of CBOE systems
staff in providing the investment
community with an efficient and
technologically advanced marketplace.
Examples of persons from whom
fingerprints may be obtained under the
proposed rule change include the
following (the plan does not include the
fingerprinting of SEC staff), all of whom
are anticipated to need CBOE-issued
photo badges or other identification
permitting them access to facilities and
records for more than one day:
personnel providing temporary services
to CBOE but who are employed and
provided by a staffing service and nonemployee technicians whose work with
CBOE software and equipment,
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Frm 00062
Fmt 4703
Sfmt 4703
although temporary, necessitates broad
access to CBOE facilities.
The proposed access to criminal
history information is consistent with
federal law. Section 17(f)(2) of the Act
and Rule 17f–2 thereunder require,
subject to certain exemptions, a variety
of securities industry personnel to be
fingerprinted, including partners,
directors, officers and employees of
every member of a national securities
exchange, brokers, dealers, transfer
agents, and clearing agencies. As noted
above, Section 17(f)(2) was amended by
the Dodd-Frank Act to also require
partners, directors, officers and
employees of registered securities
information processors, national
securities exchanges and national
securities associations to be
fingerprinted. Although Section 17(f)(2)
does not require CBOE or other SROs to
fingerprint contractors, the statute
specifically permits SROs designated by
the SEC to have access to ‘‘all criminal
history record information.’’
The proposed access to criminal
history information is consistent with
rules of other SROs 5 and is also
consistent with New York’s General
Business Law, which, among other
things, requires SROs in New York to
fingerprint their employees and those
non-employee service providers whose
access to facilities or records places the
self-regulatory organization at risk.
CBOE will comply with all applicable
laws relating to the use and
dissemination of criminal history record
information obtained from the FBI.
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.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 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 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.
In particular, the Exchange believes
fingerprint-based background checks of
Exchange directors, officers, employees
and contractors is consistent with the
5 Supra
Footnote 3.
U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
6 15
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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Notices
foregoing requirements of Section
6(b)(5) in that they would help CBOE
identify and exclude persons with
felony or misdemeanor conviction
records that may pose a threat to the
safety of Exchange personnel or the
security of facilities and records,
thereby enhancing business continuity,
workplace safety and the security of the
Exchange’s operations and helping to
protect investors and the public interest.
The proposed rule is substantially
similar to fingerprinting rules of other
SROs and would conform the
Exchange’s fingerprinting practices with
recent amendments to Section 17(f)(2) of
the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE 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 would enhance
the security of the Exchange’s facilities
and records without adding any burden
on market participants. The proposed
rule change would conform the
Exchange’s fingerprinting rules with
Section 17(f)(2) of the Act as amended
by the Dodd-Frank Act. As discussed
below, the Exchange notes the proposed
rule change is based on fingerprinting
rules of other SROs.
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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 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 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 if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 8 and Rule 19b–4(f)(6)(iii)
thereunder.9
8 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). As required under
Rule 19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
9 17
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15:24 May 06, 2013
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A proposed rule change filed under
Rule 19b–4(f)(6) 10 normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii) 11 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.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest,
because it will conform CBOE’s
fingerprinting practices with Section
17(f)(2) of the Act, as amended by the
Dodd-Frank Act, which requires
national securities exchanges, among
other entities, to fingerprint their
officers, directors, and employees, and
to submit such fingerprints to the
Attorney General of the United States
for identification and processing. For
this reason, the Commission designates
the proposed rule change to be operative
upon filing.12
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 rulecomments@sec.gov. Please include File
No. SR–CBOE–2013–044 on the subject
line.
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
10 17 CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6)(iii).
12 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
PO 00000
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Fmt 4703
Sfmt 9990
26673
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 No.
SR–CBOE–2013–044. 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
Web site (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 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 No. SR–CBOE–
2013–044 and should be submitted on
or before May 28, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–10799 Filed 5–6–13; 8:45 am]
BILLING CODE 8011–01–P
13 17
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]]>Agencies
[Federal Register Volume 78, Number 88 (Tuesday, May 7, 2013)]
[Notices]
[Pages 26671-26673]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-10799]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69496; File No. SR-CBOE-2013-044]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to Fingerprint-Based Background Checks of
Exchange Directors, Officers, Employees and Others
May 2, 2013.
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 18, 2013, Chicago Board Options Exchange, Incorporated
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 Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Chicago Board Options Exchange, Incorporated (the ``Exchange'' or
``CBOE'') proposes to adopt a rule codifying CBOE's current practice of
conducting fingerprint checks of directors, officers, employees,
temporary personnel, independent contractors, consultants, vendors and
service providers of the Exchange. Under the proposed rule, CBOE would
conduct these fingerprint checks by submitting the fingerprints taken
to the Attorney General of the United States or his or her designee for
identification and processing. In conducting these fingerprint checks,
CBOE would receive criminal history record information from the
Attorney General of the United States or his or her designee for
evaluation and use, in accordance with applicable law, in enhancing the
security of the Exchange's facilities, systems, data, and/or records
(collectively, ``facilities and records'').
The text of the proposed rule change is available on the Exchange's
Web site (https://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx),
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 Exchange proposes to adopt a rule that would codify the
Exchange's current practice of conducting fingerprint-based criminal
records checks of (i) directors, officers and employees of the
Exchange, and (ii) temporary personnel, independent contractors,
consultants, vendors and service providers (collectively,
``contractors'') who have or are anticipated to have access to
facilities and records. A number of securities markets have filed with
the Securities and Exchange Commission (``Commission'' or ``SEC'')
rules to obtain fingerprints from certain enumerated parties.\3\ The
rule proposed by CBOE in this proposed rule change is consistent with
these rules.
---------------------------------------------------------------------------
\3\ See Rule 1408 of the International Securities Exchange
(``ISE''), Rule 28 of the New York Stock Exchange (``NYSE''), Rule
0140 of the Nasdaq Stock Market, Inc. (``Nasdaq'') and Securities
Exchange Act Release No. 50157 (August 5, 2004), 69 FR 49924 (August
12, 2004) (policy adopted by the National Association of Securities
Dealers, Inc. (``NASD'') (now FINRA) to conduct fingerprint-based
background checks of NASD employees and independent contractors).
---------------------------------------------------------------------------
Access to the Federal Bureau of Investigation's (``FBI'') database
of fingerprint based criminal records is permitted only when authorized
by law. Numerous federal and state laws authorize employers to conduct
fingerprint-based background checks that make use of the FBI's
database. Notably, Section 17(f)(2) of the Securities Exchange Act of
1934, as amended (``Act''), and SEC Rule 17f-2 require partners,
directors, officers and employees of members of national securities
exchanges, brokers, dealers, transfer agents, and clearing agencies to
be fingerprinted and authorize SROs to maintain facilities for
processing and storing fingerprint cards and criminal
[[Page 26672]]
record information received from the FBI database with respect to such
cards. Section 17(f)(2) explicitly directs the Attorney General of the
United States (i.e., the FBI) to provide SROs designated by the
Commission with access to criminal history record information. Section
17(f)(2) was amended by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (``Dodd-Frank Act'') to also require partners,
directors, officers and employees of registered securities information
processors, national securities exchanges and national securities
associations to be fingerprinted.\4\ The Exchange believes, therefore,
that a proposed rule change for a fingerprinting program for directors,
officers, employees and contractors is a necessary component of the
Exchange's business plan.
---------------------------------------------------------------------------
\4\ See Section 929S of the Dodd-Frank Act.
---------------------------------------------------------------------------
CBOE believes that fingerprint-based background checks of Exchange
directors, officers, employees and contractors will promote the
objectives of investor protection, business continuity and workplace
safety and its other responsibilities under the Act by providing CBOE
with an effective tool for identifying and excluding persons with
felony or misdemeanor conviction records that may pose a threat to the
safety of Exchange personnel or the security of facilities and records.
The proposed rule would permit CBOE to conduct fingerprint-based
background checks of all Exchange directors, officers, employees and
contractors. All Exchange directors, officers, employees and
contractors would be subject to fingerprinting at any time.
Fingerprint-based background checks of contractors would be performed
prior to providing a contractor with access to facilities and records.
The Exchange would also conduct fingerprint-based background checks of
Exchange director candidates that are not already serving on the
Exchange's Board before they are formally nominated and of employee
candidates after an offer of employment has been made by the Exchange.
Any employee who refuses to submit to fingerprinting would be
subject to progressive discipline up to and including the termination
of employment. Any person who is given an offer of employment with the
Exchange who refuses to submit to fingerprinting would have the offer
withdrawn. A contractor who refuses to submit to fingerprinting would
be denied access to facilities and records. The Exchange may choose to
not obtain fingerprints from, or to seek fingerprint-based information
with respect to, any contractor due to that contractor's limited,
supervised, or restricted access to facilities and records, or the
nature or location of his or her work or services, or if the
contractor's employer conducts fingerprint based criminal records
checks of its personnel.
Through access to state-of-the-art information systems administered
and maintained by the FBI and its Criminal Justice Information Services
Division, CBOE would receive centrally-maintained ``criminal history
record information,'' which is arrest-based data and derivative
information, and may include personal descriptive data; FBI number;
conviction status; sentencing, probation and parole information; and
such other information as the FBI may now or hereafter make available
to CBOE. This information is supplied to the FBI by various local,
state, federal and/or international criminal justice agencies. Thus,
the information obtained through fingerprint-based background checks
provides a profile of a candidate's criminal record and facilitates
risk assessment with respect to the candidate.
Access to the FBI's nationwide database is particularly crucial
with respect to the screening of contractors, who are not employees of
the Exchange and who therefore are not subject to the pre-hire review
that the Exchange conducts with respect to employees but whose work
frequently requires the same or similar access to facilities and
records as that provided to employees of the Exchange. In furtherance
of its commitment to utilize and improve technology and systems
applications to better serve investors, disseminate market information,
and ensure reliable order handling and execution for all market
participants, CBOE regularly retains outside vendors whose specialized
expertise is required for the development, installation and servicing
of this technology. Such vendors complement the work of CBOE systems
staff in providing the investment community with an efficient and
technologically advanced marketplace. Examples of persons from whom
fingerprints may be obtained under the proposed rule change include the
following (the plan does not include the fingerprinting of SEC staff),
all of whom are anticipated to need CBOE-issued photo badges or other
identification permitting them access to facilities and records for
more than one day: personnel providing temporary services to CBOE but
who are employed and provided by a staffing service and non-employee
technicians whose work with CBOE software and equipment, although
temporary, necessitates broad access to CBOE facilities.
The proposed access to criminal history information is consistent
with federal law. Section 17(f)(2) of the Act and Rule 17f-2 thereunder
require, subject to certain exemptions, a variety of securities
industry personnel to be fingerprinted, including partners, directors,
officers and employees of every member of a national securities
exchange, brokers, dealers, transfer agents, and clearing agencies. As
noted above, Section 17(f)(2) was amended by the Dodd-Frank Act to also
require partners, directors, officers and employees of registered
securities information processors, national securities exchanges and
national securities associations to be fingerprinted. Although Section
17(f)(2) does not require CBOE or other SROs to fingerprint
contractors, the statute specifically permits SROs designated by the
SEC to have access to ``all criminal history record information.''
The proposed access to criminal history information is consistent
with rules of other SROs \5\ and is also consistent with New York's
General Business Law, which, among other things, requires SROs in New
York to fingerprint their employees and those non-employee service
providers whose access to facilities or records places the self-
regulatory organization at risk.
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\5\ Supra Footnote 3.
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CBOE will comply with all applicable laws relating to the use and
dissemination of criminal history record information obtained from the
FBI.
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.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ 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 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes fingerprint-based background
checks of Exchange directors, officers, employees and contractors is
consistent with the
[[Page 26673]]
foregoing requirements of Section 6(b)(5) in that they would help CBOE
identify and exclude persons with felony or misdemeanor conviction
records that may pose a threat to the safety of Exchange personnel or
the security of facilities and records, thereby enhancing business
continuity, workplace safety and the security of the Exchange's
operations and helping to protect investors and the public interest.
The proposed rule is substantially similar to fingerprinting rules of
other SROs and would conform the Exchange's fingerprinting practices
with recent amendments to Section 17(f)(2) of the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE 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 would
enhance the security of the Exchange's facilities and records without
adding any burden on market participants. The proposed rule change
would conform the Exchange's fingerprinting rules with Section 17(f)(2)
of the Act as amended by the Dodd-Frank Act. As discussed below, the
Exchange notes the proposed rule change is based on fingerprinting
rules of other SROs.
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 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 if consistent with the protection of investors
and the public interest, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6)(iii) thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the 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.
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A proposed rule change filed under Rule 19b-4(f)(6) \10\ normally
does not become operative for 30 days after the date of filing.
However, pursuant to Rule 19b-4(f)(6)(iii) \11\ 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.
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\10\ 17 CFR 240.19b-4(f)(6).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest,
because it will conform CBOE's fingerprinting practices with Section
17(f)(2) of the Act, as amended by the Dodd-Frank Act, which requires
national securities exchanges, among other entities, to fingerprint
their officers, directors, and employees, and to submit such
fingerprints to the Attorney General of the United States for
identification and processing. For this reason, the Commission
designates the proposed rule change to be operative upon filing.\12\
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\12\ For purposes only of waiving the 30-day operative delay,
the Commission has also 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 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 rule-comments@sec.gov. Please include
File No. SR-CBOE-2013-044 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 No. SR-CBOE-2013-044. 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 Web site (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 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 No. SR-CBOE-2013-044 and should be
submitted on or before May 28, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-10799 Filed 5-6-13; 8:45 am]
BILLING CODE 8011-01-P
