Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rules Relating to Registration and Qualification Examinations Required for Participants That Engage in Trading Activities on the Exchange, 50705-50708 [2018-21787]
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50705
Federal Register / Vol. 83, No. 195 / Tuesday, October 9, 2018 / Notices
In order to calculate and provide
payments, the Railroad Retirement
Board (RRB) must collect and maintain
records of separation allowances and
severance payments which were subject
to Tier II taxation from railroad
employers. The RRB uses Form BA–9,
Report of Separation Allowance or
Severance Pay, to obtain information
from railroad employers concerning the
separation allowances and severance
payments made to railroad employees
and/or the survivors of railroad
employees. Employers currently have
the option of submitting their reports on
paper Form BA–9, (or in like format) on
a CD–ROM, or by File Transfer Protocol
(FTP), or Secure Email. Completion is
mandatory. One response is requested of
each respondent. The Previous Requests
for Comments: The RRB has already
published the initial 60-day notice (83
FR 35032 on July 24, 2018) required by
44 U.S.C. 3506(c)(2). That request
elicited no comments.
Information Collection Request (ICR)
Title: Railroad Separation Allowance
or Severance Pay Report.
OMB Control Number: 3220–0173.
Form(s) submitted: BA–9.
Type of request: Extension without
change of a currently approved
collection.
Affected public: Private Sector;
Businesses or other for profits.
Annual
responses
Form No.
BA–9
BA–9
BA–9
BA–9
Time
(minutes)
Burden
(hours)
(Paper) ...............................................................................................................................
(CD–ROM) .........................................................................................................................
(Secure Email) ...................................................................................................................
(FTP) ..................................................................................................................................
100
40
60
160
76
76
76
76
127
51
76
203
Total ......................................................................................................................................
360
........................
457
Additional Information or Comments:
Copies of the forms and supporting
documents can be obtained from Dana
Hickman at (312) 751–4981 or
Dana.Hickman@RRB.GOV.
Comments regarding the information
collection should be addressed to Brian
Foster, Railroad Retirement Board, 844
North Rush Street, Chicago, Illinois
60611–1275 or Brian.Foster@rrb.gov and
to the OMB Desk Officer for the RRB,
Fax: 202–395–6974, Email address:
OIRA_Submission@omb.eop.gov.
Brian Foster,
Clearance Officer.
[FR Doc. 2018–21835 Filed 10–5–18; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84338; File No. SR–BOX–
2018–32]
amozie on DSK3GDR082PROD with NOTICES1
Abstract: Section 6 of the Railroad
Retirement Act provides for a lump-sum
payment to an employee or the
employee’s survivor equal to the Tier II
taxes paid by the employee on a
separation allowance or severance
payment for which the employee did
not receive credits toward retirement.
The collection obtains information
concerning the separation allowances
and severance payments paid from
railroad employers.
Changes proposed: The RRB proposes
no changes to Form BA–9.
The burden estimate for the ICR is as
follows:
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Rules Relating
to Registration and Qualification
Examinations Required for
Participants That Engage in Trading
Activities on the Exchange
October 2, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
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19:13 Oct 05, 2018
Jkt 247001
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 27, 2018, BOX Exchange LLC
(the ‘‘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.
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
rules relating to registration and
respective qualification examinations
required for Participants that engage in
trading activities on the Exchange. 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 https://
boxoptions.com.
1. Purpose
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
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Frm 00075
Fmt 4703
The SEC recently approved a
proposed rule change to restructure the
FINRA representative-level qualification
examination program.3 The rule change,
which will become effective on October
1, 2018, restructures the examination
program into a more efficient format
whereby all new representative-level
applicants will be required to take a
general knowledge examination (the
Securities Industry Essentials
Examination (‘‘SIE’’)) and a tailored,
specialized knowledge examination (a
revised representative-level
qualification examination) for their
particular registered role. Individuals
are not required to be associated with an
Exchange or any other self-regulatory
organization (‘‘SRO’’) member to be
eligible to take the SIE. However,
passing the SIE alone will not qualify an
individual for registration with the
3 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
Approving File No. SR–FINRA–2017–007).
1 15
PO 00000
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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Exchange. To be eligible for registration,
an individual must also be associated
with a firm, pass an appropriate
qualification examination for a
representative or principal and satisfy
the other requirements relating to the
registration process.
The SIE would assess basic product
knowledge; the structure and function
of the securities industry markets,
regulatory agencies and their functions;
and regulated and prohibited practices.
In particular, the SIE will cover four
major areas. The first, ‘‘Knowledge of
Capital Markets,’’ focuses on topics such
as types of markets and offerings,
broker-dealers and depositories, and
economic cycles. The second,
‘‘Understanding Products and Their
Risks,’’ covers securities products at a
high level as well as associated
investment risks. The third,
‘‘Understanding Trading, Customer
Accounts and Prohibited Activities,’’
focuses on accounts, orders, settlement
and prohibited activities. The final area,
‘‘Overview of the Regulatory
Framework,’’ encompasses topics such
as SROs, registration requirements and
specified conduct rules. It’s anticipated
that the SIE would include 75 scored
questions plus an additional 10
unscored pretest questions. The passing
score would be determined through
methodologies compliant with testing
industry standards used to develop
examinations and set passing standards.
The restructured program eliminates
duplicative testing of general securities
knowledge on the current
representative-level qualification
examinations by moving such content
into the SIE. The SIE will test
fundamental securities related
knowledge, including knowledge of
basic products, the structure and
function of the securities industry, the
regulatory agencies and their functions
and regulated and prohibited practices,
whereas the revised representative-level
qualification examinations will test
knowledge relevant to day-to-day
activities, responsibilities and job
functions of representatives. The SIE
was developed in consultation with a
committee of industry representatives
and representatives of several other
SROs. Each of the current
representative-level examinations
covers general securities knowledge,
with the exception of the Research
Analyst (Series 86 and 87)
examinations.
The Exchange proposes to require that
effective October 1, 2018, new
applicants seeking to register in a
representative capacity with the
Exchange must pass the SIE before their
registrations can become effective. The
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Exchange proposes to make the
requirement operative on October 1,
2018 to coincide with the effective date
of FINRA’s requirement.
The Exchange notes that individuals
who are registered as of October 1, 2018
are eligible to maintain their
registrations without being subject to
any additional requirements.
Individuals who had been registered
within the past two years prior to
October 1, 2018, would also be eligible
to maintain those registrations without
being subject to any additional
requirements, provided they register
within two years from the date of their
last registration. However, with respect
to an individual who is not registered
on the effective date of the proposed
rule change but was registered within
the past two years prior to the effective
date of the proposed rule change, the
individual’s SIE status in the CRD
system would be administratively
terminated if such individual does not
register with the Exchange within four
years from the date of the individual’s
last registration. The Exchange also
notes that consistent with IM–2040–2,
the Exchange will consider waivers of
the SIE alone or the SIE and the
representative or principal-level
examination(s) for Participants who are
seeking registration in a representativeor principal-level registration category.4
Lastly, the Exchange proposes to
eliminate references in its rules to
alternative foreign examination
modules. Particularly, the Exchange
notes that FINRA recently announced it
was eliminating the United Kingdom
Securities Representative and the
Canadian Securities Representative
registration categories, along with the
respective associated exams (i.e., Series
17, Series 37 and Series 38).5 FINRA
also stated that it intended to provide
individuals who are associated persons
of firms and who hold foreign
registrations an alternative, more
flexible, process to obtain an Exchange
representative-level registration.6 The
Exchange believes that there is
sufficient overlap between the SIE and
foreign qualification requirements to
permit them to act as exemptions to the
SIE. As such, the Exchange proposes to
provide that individuals who are in
good standing as representatives with
the Financial Conduct Authority in the
United Kingdom or with a Canadian
4 Pursuant to a Regulatory Services Agreement
between FINRA and BOX, FINRA provides BOX
certain exam waiver services in responding to exam
waiver requests from BOX Participants.
5 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
Approving File No. SR–FINRA–2017–007).
6 Id.
PO 00000
Frm 00076
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stock exchange or securities regulator
would be exempt from the requirement
to pass the SIE, and thus would be
required only to pass a specialized
knowledge examination to register with
the Exchange as a representative. The
proposed approach would provide
individuals with a United Kingdom or
Canadian qualification more flexibility
to obtain an Exchange representativelevel registration. The Exchange notes
that FINRA has adopted a similar rule.7
The Exchange also proposes to
remove the last sentence from Rule
2020(b)(1) and also remove Rule
2020(b)(3) and Rule 2020(c)(5) in their
entirety. The Exchange is making these
changes in order to conform to FINRA’s
rules regarding registration
requirements.
The Exchange proposes to make a
non-substantive conforming changes to
the term ‘‘Form U–4’’ and ‘‘Form U–5’’
throughout the BOX Rulebook.
Specifically, BOX proposes to change
the term ‘‘Form U–4’’ to ‘‘Form U4’’ and
‘‘Form U–5’’ to ‘‘Form U5’’ in order to
conform to both the BOX Rules and
FINRA rules.8 Lastly, the Exchange is
proposing to amend BOX Rule
2020(d)(1) regarding Principal Status.
Currently, the rule states that a
representative whose duties are changed
as to require registration as a Principal
shall be allowed a period of 90 calendar
days following such change to pass the
appropriate qualification examination.
The Exchange proposes to change the
number of calendar days from 90 to 120
in order to conform to FINRA’s rules.
Similarly, the Exchange proposes to
change the number of calendar days
from 90 to 120 in Rule 2020(d)(2) as
well.
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.9 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 10 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,
7 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
Approving File No. SR–FINRA–2017–007).
8 See FINRA Rule 1010(c).
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(5).
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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) 11 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange believes that the
proposed rule change will improve the
efficiency of the Exchange’s
examination requirements, without
compromising the qualification
standards, by eliminating duplicative
testing of general securities knowledge
on examinations. FINRA has indicated
that the SIE was developed in an effort
to adopt an examination that would
assess basic product knowledge; the
structure and function of the securities
industry markets, regulatory agencies
and their functions; and regulated and
prohibited practices. The Exchange also
notes that the introduction of the SIE
and expansion of the pool of individuals
who are eligible to take the SIE, has the
potential of enhancing the pool of
prospective securities industry
professionals by introducing them to
securities laws, rules and regulations
and appropriate conduct before they
join the industry in a registered
capacity. Lastly, the Exchange notes
adopting the SIE requirement is
consistent with the requirement recently
adopted by FINRA.12
The Exchange believes that the
changes to the term ‘‘Form U4’’ and
‘‘Form U5’’ are reasonable as the
changes will conform to FINRA’s rules
and reduce investor confusion. The
Exchange also believes that removing
and amending certain language from
Rule 2020(b)(1), Rule 2020(b)(3), Rule
2020(c)(5) and Rule 2020(d)(1) is
reasonable as the changes conform to
FINRA’s rules regarding registration
requirements and will reduce investor
confusion.
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 change, which harmonizes its rules
with recent rule changes adopted by
FINRA and which is being filed in
conjunction with similar filings by the
other national securities exchanges, will
reduce the regulatory burden placed on
market participants engaged in trading
activities across different markets. The
Exchange believes that the
harmonization of these registration
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 has 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 13 and Rule 19b–
4(f)(6) thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days from the
date of filing. However, Rule 19b–
4(f)(6)(iii) 14 permits the Commission to
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 on
October 1, 2018 to coincide with the
effective date of FINRA’s proposed rule
change on which the proposal is
based.15 The waiver of the operative
delay would make the Exchange’s
qualification requirements consistent
with those of FINRA, as of October 1,
2018. Therefore, the Commission
believes that the waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest and hereby waives the 30-day
operative delay and designates the
proposal operative on October 1, 2018.16
13 15
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.
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 Number SR–
BOX–2018–32 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BOX–2018–32. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 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.
Persons submitting comments are
cautioned that we do not redact or edit
14 17
11 Id.
12 See Securities Exchange Act Release No. 81098
(July 7, 2017), 82 FR 32419 (July 13, 2017) (Order
Approving File No. SR–FINRA–2017–007).
VerDate Sep<11>2014
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii).
15 See supra note 3.
16 For purposes only of waiving the 30-day
operative delay, the Commission has also
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considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Federal Register / Vol. 83, No. 195 / Tuesday, October 9, 2018 / Notices
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BOX–2018–32 and should
be submitted on or before October 30,
2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–21787 Filed 10–5–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
amozie on DSK3GDR082PROD with NOTICES1
Extension:
Form N–8B–2; SEC File No. 270–186, OMB
Control No. 3235–0186
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Form N–8B–2 (17 CFR 274.12) is the
form used by unit investment trusts
(‘‘UITs’’) other than separate accounts
that are currently issuing securities,
including UITs that are issuers of
periodic payment plan certificates and
UITs of which a management
investment company is the sponsor or
depositor, to comply with the filing and
disclosure requirements imposed by
section 8(b) of the Investment Company
Act of 1940 (15 U.S.C. 80a–8(b)). Form
N–8B–2 requires disclosure about the
organization of a UIT, its securities, the
personnel and affiliated persons of the
depositor, the distribution and
redemption of securities, the trustee or
custodian, and financial statements. The
Commission uses the information
provided in the collection of
information to determine compliance
with section 8(b) of the Investment
Company Act.
Each registrant subject to the Form N–
8B–2 filing requirement files Form N–
8B–2 for its initial filing and does not
file post-effective amendments on Form
17 17
CFR 200.30–3(a)(12).
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19:13 Oct 05, 2018
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N–8B–2.1 The Commission staff
estimates that approximately one
respondent files one Form N–8B–2
filing annually with the Commission.2
Staff estimates that the burden for
compliance with Form N–8B–2 is
approximately 10 hours per filing. The
total hour burden for the Form N–8B–
2 filing requirement therefore is 10
hours in the aggregate (1 respondent ×
one filing per respondent × 10 hours per
filing).
Estimates of the burden hours are
made solely for the purposes of the PRA
and are not derived from a
comprehensive or even a representative
survey or study of the costs of SEC rules
and forms. The information provided on
Form N–8B–2 is mandatory. The
information provided on Form N–8B–2
will not be kept confidential. An agency
may not conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid OMB control
number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to: Shagufta_
Ahmed@omb.eop.gov; and (ii) Charles
Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov. Comments must be
submitted to OMB within 30 days of
this notice.
Dated: October 3, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–21830 Filed 10–5–18; 8:45 am]
BILLING CODE 8011–01–P
1 Post-effective amendments are filed with the
Commission on the UIT’s Form S–6. Hence,
respondents only file Form N–8B–2 for their initial
registration statement and not for post-effective
amendments.
2 In 2015 the Commission received 3 filings,
while in 2016 and 2017, the Commission received
0 filings, respectively. The cumulative 3-year
average is, therefore, 1 filing per year.
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84341; File No. SR–MSRB–
2018–07]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed
Rule Change To Amend MSRB Rule G–
3, on Professional Qualification
Requirements, To Require Municipal
Advisor Principals To Become
Appropriately Qualified by Passing the
Municipal Advisor Principal
Qualification Examination
October 2, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule
19b–4 thereunder,2 notice is hereby
given that on September 19, 2018 the
Municipal Securities Rulemaking Board
(the ‘‘MSRB’’ or ‘‘Board’’) filed with the
Securities and Exchange Commission
(the ‘‘SEC’’ or ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the MSRB. 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
The MSRB filed with the Commission
a proposed rule change to amend Rule
G–3, on professional qualification
requirements, to (i) require persons who
meet the definition of a municipal
advisor principal, as defined under Rule
G–3(e)(i), to pass the Municipal Advisor
Principal Qualification Examination
(‘‘Series 54 examination’’) in order to
become appropriately qualified as a
municipal advisor principal; (ii) specify
that such persons who cease to be
associated with a municipal advisor for
two or more years at any time after
having qualified as a municipal advisor
principal must requalify by examination
unless a waiver is granted; (iii) add the
Series 54 examination to the list of
qualification examinations for which a
waiver can be sought; (iv) provide that
municipal advisor representatives may
function as a principal for 120 calendar
days without being qualified with the
Series 54 examination; and (v) make a
technical amendment to Rule G–3(e) to
clarify that a municipal advisor
principal must pass the Municipal
Advisor Representative Qualification
Examination (‘‘Series 50 examination’’)
as a prerequisite to becoming qualified
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
09OCN1
]]>Agencies
[Federal Register Volume 83, Number 195 (Tuesday, October 9, 2018)]
[Notices]
[Pages 50705-50708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-21787]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84338; File No. SR-BOX-2018-32]
Self-Regulatory Organizations; BOX Exchange LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend Rules
Relating to Registration and Qualification Examinations Required for
Participants That Engage in Trading Activities on the Exchange
October 2, 2018.
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 September 27, 2018, BOX Exchange LLC (the ``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 amend its rules relating to registration
and respective qualification examinations required for Participants
that engage in trading activities on the Exchange. 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 https://boxoptions.com.
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 SEC recently approved a proposed rule change to restructure the
FINRA representative-level qualification examination program.\3\ The
rule change, which will become effective on October 1, 2018,
restructures the examination program into a more efficient format
whereby all new representative-level applicants will be required to
take a general knowledge examination (the Securities Industry
Essentials Examination (``SIE'')) and a tailored, specialized knowledge
examination (a revised representative-level qualification examination)
for their particular registered role. Individuals are not required to
be associated with an Exchange or any other self-regulatory
organization (``SRO'') member to be eligible to take the SIE. However,
passing the SIE alone will not qualify an individual for registration
with the
[[Page 50706]]
Exchange. To be eligible for registration, an individual must also be
associated with a firm, pass an appropriate qualification examination
for a representative or principal and satisfy the other requirements
relating to the registration process.
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\3\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007).
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The SIE would assess basic product knowledge; the structure and
function of the securities industry markets, regulatory agencies and
their functions; and regulated and prohibited practices. In particular,
the SIE will cover four major areas. The first, ``Knowledge of Capital
Markets,'' focuses on topics such as types of markets and offerings,
broker-dealers and depositories, and economic cycles. The second,
``Understanding Products and Their Risks,'' covers securities products
at a high level as well as associated investment risks. The third,
``Understanding Trading, Customer Accounts and Prohibited Activities,''
focuses on accounts, orders, settlement and prohibited activities. The
final area, ``Overview of the Regulatory Framework,'' encompasses
topics such as SROs, registration requirements and specified conduct
rules. It's anticipated that the SIE would include 75 scored questions
plus an additional 10 unscored pretest questions. The passing score
would be determined through methodologies compliant with testing
industry standards used to develop examinations and set passing
standards.
The restructured program eliminates duplicative testing of general
securities knowledge on the current representative-level qualification
examinations by moving such content into the SIE. The SIE will test
fundamental securities related knowledge, including knowledge of basic
products, the structure and function of the securities industry, the
regulatory agencies and their functions and regulated and prohibited
practices, whereas the revised representative-level qualification
examinations will test knowledge relevant to day-to-day activities,
responsibilities and job functions of representatives. The SIE was
developed in consultation with a committee of industry representatives
and representatives of several other SROs. Each of the current
representative-level examinations covers general securities knowledge,
with the exception of the Research Analyst (Series 86 and 87)
examinations.
The Exchange proposes to require that effective October 1, 2018,
new applicants seeking to register in a representative capacity with
the Exchange must pass the SIE before their registrations can become
effective. The Exchange proposes to make the requirement operative on
October 1, 2018 to coincide with the effective date of FINRA's
requirement.
The Exchange notes that individuals who are registered as of
October 1, 2018 are eligible to maintain their registrations without
being subject to any additional requirements. Individuals who had been
registered within the past two years prior to October 1, 2018, would
also be eligible to maintain those registrations without being subject
to any additional requirements, provided they register within two years
from the date of their last registration. However, with respect to an
individual who is not registered on the effective date of the proposed
rule change but was registered within the past two years prior to the
effective date of the proposed rule change, the individual's SIE status
in the CRD system would be administratively terminated if such
individual does not register with the Exchange within four years from
the date of the individual's last registration. The Exchange also notes
that consistent with IM-2040-2, the Exchange will consider waivers of
the SIE alone or the SIE and the representative or principal-level
examination(s) for Participants who are seeking registration in a
representative-or principal-level registration category.\4\
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\4\ Pursuant to a Regulatory Services Agreement between FINRA
and BOX, FINRA provides BOX certain exam waiver services in
responding to exam waiver requests from BOX Participants.
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Lastly, the Exchange proposes to eliminate references in its rules
to alternative foreign examination modules. Particularly, the Exchange
notes that FINRA recently announced it was eliminating the United
Kingdom Securities Representative and the Canadian Securities
Representative registration categories, along with the respective
associated exams (i.e., Series 17, Series 37 and Series 38).\5\ FINRA
also stated that it intended to provide individuals who are associated
persons of firms and who hold foreign registrations an alternative,
more flexible, process to obtain an Exchange representative-level
registration.\6\ The Exchange believes that there is sufficient overlap
between the SIE and foreign qualification requirements to permit them
to act as exemptions to the SIE. As such, the Exchange proposes to
provide that individuals who are in good standing as representatives
with the Financial Conduct Authority in the United Kingdom or with a
Canadian stock exchange or securities regulator would be exempt from
the requirement to pass the SIE, and thus would be required only to
pass a specialized knowledge examination to register with the Exchange
as a representative. The proposed approach would provide individuals
with a United Kingdom or Canadian qualification more flexibility to
obtain an Exchange representative-level registration. The Exchange
notes that FINRA has adopted a similar rule.\7\
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\5\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007).
\6\ Id.
\7\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007).
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The Exchange also proposes to remove the last sentence from Rule
2020(b)(1) and also remove Rule 2020(b)(3) and Rule 2020(c)(5) in their
entirety. The Exchange is making these changes in order to conform to
FINRA's rules regarding registration requirements.
The Exchange proposes to make a non-substantive conforming changes
to the term ``Form U-4'' and ``Form U-5'' throughout the BOX Rulebook.
Specifically, BOX proposes to change the term ``Form U-4'' to ``Form
U4'' and ``Form U-5'' to ``Form U5'' in order to conform to both the
BOX Rules and FINRA rules.\8\ Lastly, the Exchange is proposing to
amend BOX Rule 2020(d)(1) regarding Principal Status. Currently, the
rule states that a representative whose duties are changed as to
require registration as a Principal shall be allowed a period of 90
calendar days following such change to pass the appropriate
qualification examination. The Exchange proposes to change the number
of calendar days from 90 to 120 in order to conform to FINRA's rules.
Similarly, the Exchange proposes to change the number of calendar days
from 90 to 120 in Rule 2020(d)(2) as well.
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\8\ See FINRA Rule 1010(c).
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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.\9\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ 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,
[[Page 50707]]
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) \11\ requirement that the rules
of an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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The Exchange believes that the proposed rule change will improve
the efficiency of the Exchange's examination requirements, without
compromising the qualification standards, by eliminating duplicative
testing of general securities knowledge on examinations. FINRA has
indicated that the SIE was developed in an effort to adopt an
examination that would assess basic product knowledge; the structure
and function of the securities industry markets, regulatory agencies
and their functions; and regulated and prohibited practices. The
Exchange also notes that the introduction of the SIE and expansion of
the pool of individuals who are eligible to take the SIE, has the
potential of enhancing the pool of prospective securities industry
professionals by introducing them to securities laws, rules and
regulations and appropriate conduct before they join the industry in a
registered capacity. Lastly, the Exchange notes adopting the SIE
requirement is consistent with the requirement recently adopted by
FINRA.\12\
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\12\ See Securities Exchange Act Release No. 81098 (July 7,
2017), 82 FR 32419 (July 13, 2017) (Order Approving File No. SR-
FINRA-2017-007).
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The Exchange believes that the changes to the term ``Form U4'' and
``Form U5'' are reasonable as the changes will conform to FINRA's rules
and reduce investor confusion. The Exchange also believes that removing
and amending certain language from Rule 2020(b)(1), Rule 2020(b)(3),
Rule 2020(c)(5) and Rule 2020(d)(1) is reasonable as the changes
conform to FINRA's rules regarding registration requirements and will
reduce investor confusion.
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 change, which harmonizes its rules with recent rule
changes adopted by FINRA and which is being filed in conjunction with
similar filings by the other national securities exchanges, will reduce
the regulatory burden placed on market participants engaged in trading
activities across different markets. The Exchange believes that the
harmonization of these registration 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 has 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 \13\ and Rule 19b-
4(f)(6) thereunder.
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\13\ 15 U.S.C. 78s(b)(3)(A).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days from the date of filing. However, Rule
19b-4(f)(6)(iii) \14\ permits the Commission to 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 on
October 1, 2018 to coincide with the effective date of FINRA's proposed
rule change on which the proposal is based.\15\ The waiver of the
operative delay would make the Exchange's qualification requirements
consistent with those of FINRA, as of October 1, 2018. Therefore, the
Commission believes that the waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest and
hereby waives the 30-day operative delay and designates the proposal
operative on October 1, 2018.\16\
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ See supra note 3.
\16\ 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-BOX-2018-32 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-BOX-2018-32. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 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. Persons submitting comments are
cautioned that we do not redact or edit
[[Page 50708]]
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BOX-2018-32 and should be
submitted on or before October 30, 2018.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-21787 Filed 10-5-18; 8:45 am]
BILLING CODE 8011-01-P
