Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Rules Relating to the Continuing Education for Registered Persons as Provided Under Exchange Rule 3.33 and To Amend Related Registration Requirements as Provided Under Rule 3.30, 18446-18451 [2022-06635]
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18446
Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
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 NSCC and on DTCC’s website
(https://dtcc.com/legal/sec-rulefilings.aspx). All comments received
will be posted without change. Persons
submitting comments are cautioned that
we do not redact or edit 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–NSCC–
2021–016 and should be submitted on
or before April 20, 2022. Rebuttal
comments should be submitted by May
4, 2022.
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
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.
[FR Doc. 2022–06512 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94513; File No. SR–CBOE–
2022–012]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend Its Rules
Relating to the Continuing Education
for Registered Persons as Provided
Under Exchange Rule 3.33 and To
Amend Related Registration
Requirements as Provided Under Rule
3.30
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March 24, 2022.
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 March 15,
2022, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
CFR 200.30–3(a)(31).
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
The Exchange proposes to amend its
rules relating to the Continuing
Education for Registered Persons as
provided under Exchange Rule 3.33 and
to amend related Registration
Requirements as provided under Rule
3.30. The text of the proposed rule
change is provided in Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/
CBOELegalRegulatoryHome.aspx), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
(i) Background
The continuing education program for
registered persons of broker-dealers
(‘‘CE Program’’) currently requires
registered persons to complete
continuing education consisting of a
Regulatory Element and a Firm Element.
The Regulatory Element is delivered
through a web-based delivery method
called ‘‘CE Online,’’ which is
administered through the Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) online continuing education
system, and focuses on regulatory
requirements and industry standards,
while the Firm Element is provided by
each firm and focuses on securities
19 17
1 15
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U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
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products, services and strategies the
firm offers, firm policies and industry
trends. The CE Program for registered
persons is codified under Exchange
Rule 3.33.
The Securities and Exchange
Commission (the ‘‘SEC’’ or the
‘‘Commission’’) recently approved a
proposal submitted by FINRA relating to
its CE Program.5 The Exchange
understands that other exchanges have
or will propose similar amendments
based on FINRA’s rule changes.
Therefore, the Exchange proposes to
amend and enhance its own CE Program
as provided under Rule 3.33 and its
related Registration Requirements as
provided under Rule 3.30 in response to
FINRA’s amended CE Program and to
facilitate compliance with the
Exchange’s CE Program requirements by
members of multiple exchanges. The
Exchange proposes to implement the
proposed rule changes to align with
FINRA’s CE Program implementation
dates.6 Specifically, the proposed
implementation dates are as follows:
Changes relating to proposed Rule
3.33(c) (Continuing Education Program
for Persons Maintaining Their
Qualification Following the
Termination of a Registration Category)
will become effective March 15, 2022;
changes relating to Rule 3.30.09 (Waiver
of Examination for Individuals Working
for a Financial Services Industry
Affiliate of a TPH) 7 (referred to as the
‘‘FSA waiver program’’ or ‘‘FSAWP’’)
will become effective March 15, 2022;
and all other changes, including
changes to Rules 3.33(a) (Regulatory
Element) 8 and 3.33(b) (Firm Element)
will become effective January 1, 2023.
a. Regulatory Element
Exchange Rule 3.33(a) currently
requires a registered person to complete
the applicable Regulatory Element
initially within 120 days after the
person’s second registration anniversary
date and, thereafter, within 120 days
after every third registration anniversary
date.9 The Exchange may extend these
5 See Securities and Exchange Act No. 93097
(September 21, 2021), 86 FR 53358 (September 27,
2021) (SR–FINRA–2021–015) (Order Approving a
Proposed Rule Change To Amend FINRA Rules
1210 (Registration Requirements) and 1240
(Continuing Education Requirements)).
6 See FINRA Regulatory Notice 21–41 (November
17, 2021).
7 ‘‘TPH’’ refers to Trading Permit Holder. See Rule
1.1.
8 An individual’s initial annual Regulatory
Element due date will be December 31, 2023.
9 See Rule 3.33(a). An individual’s registration
anniversary date is generally the date they initially
registered in the Central Registration Depository
(‘‘CRD®’’) system. However, an individual’s
registration anniversary date would be reset if the
individual has been out of the industry for two or
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time frames for good cause shown.10
Unless otherwise determined, any
registered persons who have not
completed the Regulatory Element of
the program within the prescribed time
frames will have their registration(s)
deemed inactive and will be designated
as ‘‘CE inactive’’ in the CRD system
until the requirements of the Regulatory
Element have been satisfied.11 A CE
inactive person is prohibited from
performing, or being compensated for,
any activities requiring registration,
including supervision. Moreover, if
registered persons remain CE inactive
for two consecutive years, they must
requalify by retaking required
examinations (or obtain a waiver of the
applicable qualification
examinations).12
The Regulatory Element currently
consists of a subprogram for registered
persons generally, and a subprogram for
principals and supervisors.13 While
some of the current Regulatory Element
content is unique to particular
registration categories, most of the
more years and is required to requalify by
examination, or obtain an examination waiver, in
order to reregister. An individual’s registration
anniversary date would also be reset if the
individual obtains a conditional examination
waiver that requires them to complete the
Regulatory Element by a specified date. Nonregistered individuals who are participating in the
waiver program under Rule 3.30.09 (Waiver of
Examinations for Individuals Working for a
Financial Services Industry Affiliate of a TPH)
(‘‘FSAWP participants’’) are also subject to the
Regulatory Element. See also proposed Rule
3.33(a)(5) (Definition of Covered Person). The
Regulatory Element for FSAWP participants
correlates to their most recent registration(s), and it
must be completed based on the same cycle had
they remained registered. FSAWP participants are
eligible for a single, fixed seven-year waiver period
from the date of their initial designation, subject to
specified conditions. Registered persons who
become subject to a significant disciplinary action,
as specified in Rule 3.33(a)(2) (Disciplinary
Actions), may be required to retake the Regulatory
Element within 120 days of the effective date of the
disciplinary action, if they remain registered.
Further, their cycle for participation in the
Regulatory Element may be adjusted to reflect the
effective date of the disciplinary action rather than
their registration anniversary date.
10 See Rule 3.33(a)(1).
11 Supra note 9. Individuals must complete the
entire Regulatory Element session to be considered
to have ‘‘completed’’ the Regulatory Element;
partial completion is the same as non-completion.
12 See Rule 3.33(g). This CE inactive two-year
period is calculated from the date such persons
become CE inactive, and it continues to run
regardless of whether they terminate their
registrations before the end of the two-year period.
Therefore, if registered persons terminate their
registrations while in a CE inactive status, they
must satisfy all outstanding Regulatory Element
prior to the end of the CE inactive two-year period
in order to reregister with a member without having
to requalify by examination or having to obtain an
examination waiver.
13 The S101 (General Program for Registered
Persons) and the S201 (Registered Principals and
Supervisors).
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content has broad application to both
representatives and principals.14 The
Regulatory Element was originally
designed at a time when most
individuals had to complete the
Regulatory Element at a test center, and
its design was shaped by the limitations
of the test center-based delivery model.
In 2015, the delivery of the Regulatory
Element was transitioned to an online
platform, referred to above as CE
Online, which allows individuals to
complete the content online at a
location of their choosing, including
their private residence. This online
delivery provides for much greater
flexibility in updating content in a
timelier fashion, developing content
tailored to each registration category
and presenting the material in an
optimal learning format.
b. Firm Element
Rule 3.33(c) (Firm Element) currently
requires each firm to develop and
administer an annual Firm Element
training program for covered registered
persons.15 The rule requires firms to
conduct an annual needs analysis to
determine the appropriate training.16
Currently, at a minimum, the Firm
Element must cover training in ethics
and professional responsibility as well
as the following items concerning
securities products, services and
strategies offered by the member: (1)
General investment features and
associated risk factors; (2) suitability
and sales practice considerations; and
(3) applicable regulatory
requirements.17 A firm, consistent with
its needs analysis, may determine to
apply toward the Firm Element other
required training. The current rule does
not expressly recognize other required
training, such as training relating to the
anti-money laundering (‘‘AML’’)
compliance program and training
relating to the annual compliance
meeting, for purposes of satisfying Firm
Element training.18
c. Termination of a Registration
Currently, individuals whose
registrations as representatives or
14 The current content is presented in a single
format leading individuals through a case that
provides a story depicting situations that they may
encounter in the course of their work.
15 The rule defines ‘‘covered registered persons’’
as any registered person or any associated person
who has direct contact with customers in the
conduct of a Trading Permit Holder’s or TPH
organization’s securities sales, trading or
investment banking activities, and the immediate
supervisors of any such persons. See Rule 3.33(c)(1)
(Persons Subject to the Firm Element).
16 See Rule 3.33(c)(2) (Standards).
17 Id.
18 See, e.g. Rules 8.12 and 8.16(g).
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18447
principals have been terminated for two
or more years may reregister as
representatives or principals only if they
requalify by retaking and passing the
applicable representative- or principallevel examination or if they obtain a
waiver of such examination(s) (the
‘‘two-year qualification period’’).19 The
two-year qualification period was
adopted prior to the creation of the CE
Program and was intended to ensure
that individuals who reregister are
relatively current on their regulatory
and securities knowledge.
(ii) Proposed Rule Change
After extensive work with the
Securities Industry/Regulatory Council
on Continuing Education (‘‘CE
Council’’), FINRA, other Self-Regulatory
Organizations and industry participants,
the Exchange proposes the following
changes under Rules 3.30 and 3.33 to
align with FINRA’s Rule 1240.
a. Transition to Annual Regulatory
Element for Each Registration Category
As noted above, currently, the
Regulatory Element generally must be
completed every three years, and the
content is broad in nature. Based on
changes in technology and learning
theory, the Regulatory Element content
can be updated and delivered in a
timelier fashion and tailored to each
registration category, which would
further the goals of the Regulatory
Element.20 Therefore, to provide
19 See Rule 3.33(g). The two-year qualification
period is calculated from the date individuals
terminate their registration and the date the
Exchange receives a new application for
registration. The two-year qualification period does
not apply to individuals who terminate a limited
registration category that is a subset of a broader
registration category for which they remain
qualified. Such individuals have the option of
reregistering in the more limited registration
category without having to requalify by
examination or obtain an examination waiver so
long as they continue to remain qualified for the
broader registration category. Further, the two-year
qualification period only applies to the
representative- and principal-level examinations; it
does not extend to the Securities Industry Essentials
(‘‘SIE’’) examination. The SIE examination is valid
for four years, but having a valid SIE examination
alone does not qualify an individual for registration
as a representative or principal. Individuals whose
registrations as representatives or principals have
been revoked pursuant to Exchange Rule 13.11
(Judgment and Sanction) may only requalify by
retaking the applicable representative- or principallevel examination in order to reregister as
representatives or principals, in addition to
satisfying the eligibility conditions for association
with a firm. Waivers are granted either on a caseby-case basis under Rule 3.30.03 (Qualification
Examinations and Waivers of Examinations) or as
part of the FSA waiver program under Rule 3.30.09
(Waiver of Examination for Individuals Working for
a Financial Services Industry Affiliate of a TPH).
20 When the CE Program was originally adopted
in 1995, registered persons were required to
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registered persons with more timely and
relevant training on significant
regulatory developments, the Exchange
proposes amending Rule 3.33(a) to
require registered persons to complete
the Regulatory Element annually by
December 31.21 The proposed
amendment would also require
registered persons to complete
Regulatory Element content for each
representative or principal registration
category that they hold, which would
also further the goals of the Regulatory
Element.22
Under the proposed rule change,
TPHs and TPH organizations would
have the flexibility to require their
registered persons to complete the
Regulatory Element sooner than
December 31, which would allow TPHs
and TPH organizations to coordinate the
timing of the Regulatory Element with
other training requirements, including
the Firm Element.23 For example, a TPH
or TPH organization could require its
registered persons to complete both
their Regulatory Element and Firm
Element by October 1 of each year.
Individuals who would be registering
as a representative or principal for the
first time on or after the implementation
date of the proposed rule change would
be required to complete their initial
Regulatory Element for that registration
category in the next calendar year
following their registration.24 In
addition, subject to specified
conditions, individuals who would be
reregistering as a representative or
principal on or after the implementation
date of the proposed rule change would
also be required to complete their initial
Regulatory Element for that registration
category in the next calendar year
following their reregistration.25
Consistent with current requirements,
individuals who fail to complete their
Regulatory Element within the
prescribed period would be
automatically designated as CE
complete the Regulatory Element on their second,
fifth and 10th registration anniversary dates. See
Securities Exchange Act Release No. 35341
(February 8, 1995), 60 FR 8426 (February 14, 1995)
(Order Approving File Nos. SR–AMEX–94–59; SR–
CBOE–94–49; SR–CHX–94–27; SR–MSRB–94–17;
SR–NASD–94–72; SR–NYSE–94–43; SR–PSE–94–
35; and SR–PHLX–94–52). The change to the
current three-year cycle was made in 1998 to
provide registered persons more timely and
effective training, consistent with the overall
purpose of the Regulatory Element. See Securities
Exchange Act Release No. 39712 (March 3, 1998),
63 FR 11939 (March 11, 1998) (Order Approving
File Nos. SR–CBOE–97–68; SR–MSRB–98–02; SR–
NASD–98–03; and SR–NYSE–97–33).
21 See proposed Rules 3.33(a)(1) and (a)(4).
22 See proposed Rules 3.30.07 and 3.33(a)(1).
23 See proposed Rules 3.33(a)(1) and (a)(4).
24 See proposed Rule 3.33(a)(1).
25 See proposed Rule 3.33(a)(4).
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inactive.26 However, the proposed rule
change preserves the Exchange’s ability
to extend the time by which a registered
person must complete the Regulatory
Element for good cause shown.27
The Exchange also proposes
amending Rule 3.33(a) to provide that:
(1) Individuals who are designated as
CE inactive would be required to
complete all of their pending and
upcoming annual Regulatory Element,
including any annual Regulatory
Element that becomes due during their
CE inactive period, to return to active
status; 28 (2) the two-year CE inactive
period is calculated from the date
individuals become CE inactive, and it
continues to run regardless of whether
individuals terminate their
registrations; 29 (3) individuals who
become subject to a significant
disciplinary action may be required to
complete assigned continuing education
content as prescribed by the
Exchange; 30 (4) individuals who have
not completed any Regulatory Element
content for a registration category in the
calendar year(s) prior to reregistering
would not be approved for registration
for that category until they complete
that Regulatory Element content, pass
an examination for that registration
category or obtain an unconditional
examination waiver for that registration
category, whichever is applicable; 31 and
(5) the Regulatory Element requirements
apply to individuals who are registered,
or in the process of registering, as a
representative or principal.32 In
addition, the Exchange proposes making
conforming amendments to Rule
3.30.07.
Under the proposed rule change, the
amount of content that registered
persons would be required to complete
in a three-year, annual cycle for a
particular registration category is
expected to be comparable to what most
registered persons are currently
completing every three years. In some
years, there may be more required
content for some registration categories
depending on the volume of rule
changes and regulatory issues. In
addition, an individual who holds
multiple registrations may be required
to complete additional content
compared to an individual who holds a
single registration because, as noted
26 See
proposed Rule 3.33(a)(2).
The proposed rule change clarifies that the
request for an extension of time must be in writing
and include supporting documentation, which is
consistent with current practice.
28 Id.
29 Id.
30 Id.
31 See proposed Rule 3.33(a)(4).
32 See proposed Rule 3.33(a)(5).
27 Id.
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above, individuals would be required to
complete content specific to each
registration category that they hold.
However, individuals with multiple
registrations would not be subject to
duplicative regulatory content in any
given year. The more common
registration combinations would likely
share much of their relevant regulatory
content each year. For example,
individuals registered as General
Securities Representatives and General
Securities Principals would receive the
same content as individuals solely
registered as General Securities
Representatives, supplemented with a
likely smaller amount of supervisoryspecific content on the same topics. The
less common registration combinations
may result in less topic overlap and
more content overall.
b. Recognition of Other Training
Requirements for Firm Element and
Application of Firm Element to Covered
Registered Persons
To better align the Firm Element
requirement with other required
training, the Exchange proposes to
revise/adopt proposed Rule 3.33(b) to
expressly allow TPHs and TPH
organizations to consider training
relating to the AML compliance
program and the annual compliance
meeting toward satisfying an
individual’s annual Firm Element
requirement.33 The Exchange also
proposes amending the definition of
‘‘covered registered persons’’ who are
subject to the Firm Element requirement
to any person registered with a TPH,
including any person who maintains
solely a permissive registration
consistent with Rule 3.30.02 (Permissive
Registrations), thereby further aligning
the description of ‘‘covered registered
persons’’ in the Firm Element
requirement with the description of
‘‘covered persons’’ in the Regulatory
Element requirement.34 In conjunction
with this proposed change, the
Exchange proposes modifying the
current minimum training criteria under
Rule 3.33(b) to instead provide that the
training must cover topics related to the
role, activities, or responsibilities of the
registered person and to professional
responsibility.
33 See
proposed Rule 3.33(b)(2)(D).
group of persons who may be considered
a ‘‘covered registered person’’ under the Firm
Element provisions in proposed Rule 3.33(b)(1) is
a subset of the group of persons who may be
considered a ‘‘covered person’’ under the
Regulatory Element provisions in proposed Rule
3.33(a)(5). See also note 15, supra, and surrounding
discussion for comparison on the current definition
of ‘‘covered registered person.’’
34 The
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c. Maintenance of Qualification After
Termination of Registration
The Exchange proposes to adopt
Rules 3.33(c), 3.33.01, and 3.33.02 to
provide eligible individuals who
terminate any of their representative or
principal registrations the option of
maintaining their qualification for any
of the terminated registrations by
completing continuing education. The
proposed rule change would not
eliminate the two-year qualification
period. Rather, it would provide such
individuals an alternative means of
staying current on their regulatory and
securities knowledge following the
termination of a registration(s). Eligible
individuals who elect not to participate
in the proposed continuing education
program would continue to be subject to
the current two-year qualification
period. The proposed rule change is
generally aligned with other
professional continuing education
programs that allow individuals to
maintain their qualification to work in
their respective fields during a period of
absence from their careers (including an
absence of more than two years) by
satisfying continuing education
requirements for their credential.
The proposed rule change would
impose the following conditions and
limitations:
• Individuals would be required to be
registered in the terminated registration
category for at least one year
immediately prior to the termination of
that category; 35
• individuals could elect to
participate when they terminate a
registration or within two years from the
termination of a registration; 36
• individuals would be required to
complete annually all prescribed
continuing education; 37
• individuals would have a maximum
of five years in which to reregister; 38
• individuals who have been CE
inactive for two consecutive years, or
who become CE inactive for two
consecutive years during their
participation, would not be eligible to
participate or continue; 39 and
• individuals who are subject to a
statutory disqualification, or who
become subject to a statutory
35 See
proposed Rule 3.33(c)(1).
proposed Rule 3.33(c)(2).
37 See proposed Rule 3.33(c)(3). However, upon a
participant’s request and for good cause shown, the
Exchange would have the ability to grant an
extension of time for the participant to complete the
prescribed continuing education. A participant who
is also a registered person must directly request an
extension of the prescribed continuing education
from the Exchange.
38 See proposed Rule 3.33(c).
39 See proposed Rule 3.33(c)(4) and (c)(5).
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36 See
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disqualification following the
termination of their registration or
during their participation, would not be
eligible to participate or continue.40
The proposed rule change also
includes a look-back provision that
would, subject to specified conditions,
extend the proposed option for
maintaining qualifications following a
registration category termination to (i)
individuals who have been registered as
a representative or principal within two
years immediately prior to the planned
March 15, 2022 implementation date of
the proposed rule change, and (ii)
individuals who have been FSAWP
participants immediately prior to the
planned March 15, 2022
implementation date of the proposed
rule change.41 With respect to the
FSAWP, the Exchange proposes to make
the look-back provision available to
individuals who are participants in the
Exchange’s FSAWP or the FSA waiver
programs of Exchange’s affiliate, Cboe
C2 Exchange, Inc. (‘‘C2 Options’’), and/
or FINRA immediately preceding March
15, 2022. In addition, effective March
15, 2022, the Exchange proposes to not
accept any new initial designations for
individuals under the Exchange’s
40 See proposed Rules 3.33(c)(1) and (c)(6).
Individuals who are subject to a statutory
disqualification would not be eligible to enter the
proposed continuing education program.
Individuals who become subject to a statutory
disqualification while participating in the proposed
continuing education program would not be eligible
to continue in the program. Further, any content
completed by such participants would be
retroactively nullified upon disclosure of the
statutory disqualification. The following example
illustrates the application of the proposed rule
change to individuals who become subject to a
statutory disqualification while participating in the
proposed continuing education program. Individual
A participates in the proposed continuing
education program for four years and completes the
prescribed content for each of those years. During
year five of his participation, he becomes subject to
a statutory disqualification resulting from a foreign
regulatory action. In that same year, the Exchange
receives a Form U4 submitted by a member on
behalf of Individual A requesting registration with
the Exchange. The Form U4 discloses the statutory
disqualification event. the Exchange would then
retroactively nullify any content that Individual A
completed while participating in the proposed
continuing education program. Therefore, in this
example, in order to become registered with the
Exchange, he would be required to requalify by
examination. This would be in addition to
satisfying the eligibility conditions for association
with an Exchange TPH or TPH Organization. See
also Exchange Act Sections 3(a)(39) and 15(b)(4).
41 See proposed Rule 3.33.01. Such individuals
would be required to elect whether to participate
by the March 15, 2022 implementation date of the
proposed rule change. If such individuals elect to
participate, they would be required to complete
their initial annual content by the end of 2022 (i.e.,
by the end of the calendar year in which the
proposed rule change is implemented). In addition,
if such individuals elect to participate, their initial
participation period would be adjusted based on the
date that their registration was terminated.
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FSAWP. Effectively, upon
implementation, the FSAWP would not
be available for new participants and
what remains of the program would
only be applicable to pre-existing
participants. Ultimately, the FSAWP
will expire in favor of the new proposed
maintenance of qualification
requirements.42
In addition, the proposed rule change
includes a re-eligibility provision that
would allow individuals to regain
eligibility to participate each time they
reregister with a TPH or TPH
Organization for a period of at least one
year and subsequently terminate their
registration, provided that they satisfy
the other participation conditions and
limitations.43 Finally, the Exchange
proposes making conforming
amendments to Rule 3.30, including
making ministerial changes and adding
references to proposed Rules 3.33(a) and
(c) under Rule 3.30.08. The proposed
rule change will have several important
benefits. It will provide individuals
with flexibility to address life and career
events and necessary absences from
registered functions without having to
requalify each time. It will also
incentivize them to stay current on their
respective securities industry
knowledge following the termination of
any of their registrations. The
continuing education under the
proposed option will be as rigorous as
the continuing education of registered
persons, which promotes investor
protection. Further, the proposed rule
change will enhance diversity and
inclusion in the securities industry by
attracting and retaining a broader and
diverse group of professionals.
Significantly, the proposed rule
change will be of particular value to
women, who continue to be the primary
caregivers for children and aging family
members and, as a result, are likely to
be absent from the industry for longer
periods.44 In addition, the proposed rule
change will provide longer-term relief
for women, individuals with low
incomes and other populations,
including older workers, who are at a
higher risk of a job loss during certain
economic downturns and who are likely
to remain unemployed for longer
periods.45
42 See
proposed changes to Rule 3.30.09.
proposed Rule 3.33.02.
44 See The Female Face of Family Caregiving
(November 2018), available at https://www.national
partnership.org/our-work/resources/economicjustice/femaleface-family-caregiving.pdf.
45 See The COVID–19 Recession is the Most
Unequal in Modern U.S. History (September 30,
2020), available at https://www.washingtonpost.
com/graphics/2020/business/coronavirus43 See
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
d. Other Changes to Rule 3.33
The Exchange proposes to restructure
and modify the rule text of Rule 3.33 to
align with FINRA Rule 1240 numbering,
provisions and rule text.
khammond on DSKJM1Z7X2PROD with NOTICES
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.46 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 47 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 48 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
proposal to move to an annual
Regulatory Element training with
content tailored to an individual’s
representative or principal registration
categories is designed to protect
investors and is in the public interest.
As noted in the order approving the
similar changes to the FINRA CE
Program,49 the Commission found that
‘‘the rule is reasonably designed to
minimize the potential adverse impact
on firms and their registered persons.
Furthermore, increasing the timeliness
of registered persons’ training, as well as
the relevance of the training’s content
by tailoring it to each registration
category that they hold, would enhance
their education and compliance with
their regulatory obligations.’’
The Exchange believes that the
proposed changes to the Regulatory
Element and Firm Element portions of
its CE Program will ensure that all
recessionequality/ and Unemployment’s Toll on
Older Workers Is Worst in Half a Century (October
21, 2020), available at https://www.aarp.org/work/
working-at-50-plus/info-2020/pandemicunemployment-older-workers/.
46 15 U.S.C. 78f(b).
47 15 U.S.C. 78f(b)(5).
48 Id.
49 Supra note 5.
VerDate Sep<11>2014
17:14 Mar 29, 2022
Jkt 256001
registered persons receive timely and
relevant training, which will, in turn,
enhance compliance and investor
protection. Further, the Exchange
believes that establishing a path for
individuals to maintain their
qualification following the termination
of a registration will reduce unnecessary
impediments to requalification and
promote greater diversity and inclusion
in the securities industry without
diminishing investor protection.
The Exchange also believes that the
proposed rule change will bring
consistency and uniformity with
FINRA’s recently amended CE Program,
which will, in turn, assist TPHs and
their associated persons in complying
with these rules and improve regulatory
efficiency. The proposed rule changes
makes ministerial changes to the
Exchange’s continuing education rules
to align them with registration and
qualification rules of FINRA and other
exchanges as discussed above, in order
to prevent unnecessary regulatory
burdens and to promote efficient
administration of the rules. The change
also makes minor updates and
corrections to the Exchange’s rules
which improve readability.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
Exchange believes that the proposed
rule changes which are, in all material
respects, based upon and substantially
similar to, recent rule changes adopted
by FINRA, will reduce the regulatory
burden placed on market participants
engaged in trading activities across
different markets. The Exchange
believes that the harmonization of the
CE Program requirements across the
various markets will reduce burdens on
competition by removing impediments
to participation in the national market
system and promoting competition
among participants across the multiple
national securities exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
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 50 and Rule 19b–
4(f)(6) thereunder.51
A proposed rule change filed under
Rule 19b–4(f)(6) normally does not
become operative for 30 days after the
date of filing. However, pursuant to
Rule 19b–4(f)(6)(iii), the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. The
Exchange has asked the Commission to
waive the 30-day operative delay so that
this proposed rule change may become
operative immediately upon filing. In
addition, Rule 19b–4(f)(6)(iii) 52 requires
a self-regulatory organization to give the
Commission written notice of its intent
to file a proposed rule change under that
subsection at least five business days
prior to the date of filing, or such
shorter time as designated by the
Commission. The Exchange has
provided such notice.
Waiver of the 30-day operative delay
would allow the Exchange to implement
proposed changes to its Continuing
Education Rules by March 15, 2022 to
coincide with one of FINRA’s
announced implementation dates,
thereby eliminating the possibility of a
significant regulatory gap between the
FINRA and Exchange rules, providing
more uniform standards across the
securities industry, and helping to avoid
confusion for registered persons of the
Exchange that are also FINRA members.
For this reason, the Commission
believes that waiver of the 30-day
operative delay for this proposal is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission hereby
waives the 30-day operative delay and
designates the proposal operative upon
filing.53
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
50 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
52 17 CFR 240.19b–4(f)(6)(iii).
53 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. See 15 U.S.C.
78c(f).
51 17
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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Notices
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
CBOE–2022–012 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–CBOE–2022–012. 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
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–CBOE–2022–012 and
should be submitted on or before April
20, 2022.
VerDate Sep<11>2014
17:14 Mar 29, 2022
Jkt 256001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.54
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06635 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94503; File No. SR–OCC–
2022–001]
Self-Regulatory Organizations; the
Options Clearing Corporation; Notice
of Designation of Longer Period for
Commission Action on Proposed Rule
Change Concerning the Options
Clearing Corporation’s Margin
Methodology for Incorporating
Variations in Implied Volatility
March 24, 2022.
On January 24, 2022, the Options
Clearing Corporation (‘‘OCC’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–OCC–2022–
001 (‘‘Proposed Rule Change’’) pursuant
to Section 19(b) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 2 thereunder to
change quantitative models related to
certain volatility products.3 The
Proposed Rule Change was published
for public comment in the Federal
Register on February 11, 2022.4 The
Commission received a comment
regarding the Proposed Rule Change.5
Section 19(b)(2)(i) of the Exchange
Act 6 provides that, within 45 days of
the publication of notice of the filing of
a proposed rule change, the Commission
shall either approve the proposed rule
change, disapprove the proposed rule
change, or institute proceedings to
determine whether the proposed rule
54 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Notice of Filing infra note 4, at 87 FR 8072.
4 Securities Exchange Act Release No. 94165 (Feb.
7, 2022), 87 FR 8072 (Feb. 11, 2022) (File No. SR–
OCC–2022–001) (‘‘Notice of Filing’’). OCC also filed
a related advance notice (SR–OCC–2022–801)
(‘‘Advance Notice’’) with the Commission pursuant
to Section 806(e)(1) of Title VIII of the Dodd-Frank
Wall Street Reform and Consumer Protection Act,
entitled the Payment, Clearing, and Settlement
Supervision Act of 2010 and Rule 19b–4(n)(1)(i)
under the Exchange Act. 12 U.S.C. 5465(e)(1). 15
U.S.C. 78s(b)(1) and 17 CFR 240.19b–4,
respectively. The Advance Notice was published in
the Federal Register on February 11, 2022.
Securities Exchange Act Release No. 94166 (Feb. 7,
2022), 87 FR 8063 (Feb. 11, 2022) (File No. SR–
OCC–2022–801).
5 The comment on the Proposed Rule Change is
available at https://www.sec.gov/comments/sr-occ2022-001/srocc2022001.htm.
6 15 U.S.C. 78s(b)(2)(i).
1 15
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
18451
change should be disapproved unless
the Commission extends the period
within which it must act as provided in
Section 19(b)(2)(ii) of the Exchange
Act.7 Section 19(b)(2)(ii) of the
Exchange Act allows the Commission to
designate a longer period for review (up
to 90 days from the publication of notice
of the filing of a proposed rule change)
if the Commission finds such longer
period to be appropriate and publishes
its reasons for so finding, or as to which
the self-regulatory organization
consents.8
The 45th day after publication of the
Notice of Filing is March 28, 2022. In
order to provide the Commission with
sufficient time to consider the Proposed
Rule Change, the Commission finds that
it is appropriate to designate a longer
period within which to take action on
the Proposed Rule Change and therefore
is extending this 45-day time period.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the
Exchange Act,9 designates May 12, 2022
as the date by which the Commission
shall either approve, disapprove, or
institute proceedings to determine
whether to disapprove proposed rule
change SR–OCC–2022–001.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06626 Filed 3–29–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94495; File No. SR–DTC–
2021–017]
Self-Regulatory Organizations; The
Depository Trust Company; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change To Enhance
Capital Requirements and Make Other
Changes
March 23, 2022.
I. Introduction
On December 13, 2021, The
Depository Trust Company (‘‘DTC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–DTC–2021–017 (the
‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
7 15
U.S.C. 78 s(b)(2)(ii).
8 Id.
9 Id.
10 17
E:\FR\FM\30MRN1.SGM
CFR 200.30–3(a)(31).
30MRN1
]]>Agencies
[Federal Register Volume 87, Number 61 (Wednesday, March 30, 2022)]
[Notices]
[Pages 18446-18451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06635]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94513; File No. SR-CBOE-2022-012]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Rules Relating to the Continuing Education for Registered Persons
as Provided Under Exchange Rule 3.33 and To Amend Related Registration
Requirements as Provided Under Rule 3.30
March 24, 2022.
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 March 15, 2022, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
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 the Continuing
Education for Registered Persons as provided under Exchange Rule 3.33
and to amend related Registration Requirements as provided under Rule
3.30. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (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
(i) Background
The continuing education program for registered persons of broker-
dealers (``CE Program'') currently requires registered persons to
complete continuing education consisting of a Regulatory Element and a
Firm Element. The Regulatory Element is delivered through a web-based
delivery method called ``CE Online,'' which is administered through the
Financial Industry Regulatory Authority, Inc. (``FINRA'') online
continuing education system, and focuses on regulatory requirements and
industry standards, while the Firm Element is provided by each firm and
focuses on securities products, services and strategies the firm
offers, firm policies and industry trends. The CE Program for
registered persons is codified under Exchange Rule 3.33.
The Securities and Exchange Commission (the ``SEC'' or the
``Commission'') recently approved a proposal submitted by FINRA
relating to its CE Program.\5\ The Exchange understands that other
exchanges have or will propose similar amendments based on FINRA's rule
changes. Therefore, the Exchange proposes to amend and enhance its own
CE Program as provided under Rule 3.33 and its related Registration
Requirements as provided under Rule 3.30 in response to FINRA's amended
CE Program and to facilitate compliance with the Exchange's CE Program
requirements by members of multiple exchanges. The Exchange proposes to
implement the proposed rule changes to align with FINRA's CE Program
implementation dates.\6\ Specifically, the proposed implementation
dates are as follows: Changes relating to proposed Rule 3.33(c)
(Continuing Education Program for Persons Maintaining Their
Qualification Following the Termination of a Registration Category)
will become effective March 15, 2022; changes relating to Rule 3.30.09
(Waiver of Examination for Individuals Working for a Financial Services
Industry Affiliate of a TPH) \7\ (referred to as the ``FSA waiver
program'' or ``FSAWP'') will become effective March 15, 2022; and all
other changes, including changes to Rules 3.33(a) (Regulatory Element)
\8\ and 3.33(b) (Firm Element) will become effective January 1, 2023.
---------------------------------------------------------------------------
\5\ See Securities and Exchange Act No. 93097 (September 21,
2021), 86 FR 53358 (September 27, 2021) (SR-FINRA-2021-015) (Order
Approving a Proposed Rule Change To Amend FINRA Rules 1210
(Registration Requirements) and 1240 (Continuing Education
Requirements)).
\6\ See FINRA Regulatory Notice 21-41 (November 17, 2021).
\7\ ``TPH'' refers to Trading Permit Holder. See Rule 1.1.
\8\ An individual's initial annual Regulatory Element due date
will be December 31, 2023.
---------------------------------------------------------------------------
a. Regulatory Element
Exchange Rule 3.33(a) currently requires a registered person to
complete the applicable Regulatory Element initially within 120 days
after the person's second registration anniversary date and,
thereafter, within 120 days after every third registration anniversary
date.\9\ The Exchange may extend these
[[Page 18447]]
time frames for good cause shown.\10\ Unless otherwise determined, any
registered persons who have not completed the Regulatory Element of the
program within the prescribed time frames will have their
registration(s) deemed inactive and will be designated as ``CE
inactive'' in the CRD system until the requirements of the Regulatory
Element have been satisfied.\11\ A CE inactive person is prohibited
from performing, or being compensated for, any activities requiring
registration, including supervision. Moreover, if registered persons
remain CE inactive for two consecutive years, they must requalify by
retaking required examinations (or obtain a waiver of the applicable
qualification examinations).\12\
---------------------------------------------------------------------------
\9\ See Rule 3.33(a). An individual's registration anniversary
date is generally the date they initially registered in the Central
Registration Depository (``CRD[supreg]'') system. However, an
individual's registration anniversary date would be reset if the
individual has been out of the industry for two or more years and is
required to requalify by examination, or obtain an examination
waiver, in order to reregister. An individual's registration
anniversary date would also be reset if the individual obtains a
conditional examination waiver that requires them to complete the
Regulatory Element by a specified date. Non-registered individuals
who are participating in the waiver program under Rule 3.30.09
(Waiver of Examinations for Individuals Working for a Financial
Services Industry Affiliate of a TPH) (``FSAWP participants'') are
also subject to the Regulatory Element. See also proposed Rule
3.33(a)(5) (Definition of Covered Person). The Regulatory Element
for FSAWP participants correlates to their most recent
registration(s), and it must be completed based on the same cycle
had they remained registered. FSAWP participants are eligible for a
single, fixed seven-year waiver period from the date of their
initial designation, subject to specified conditions. Registered
persons who become subject to a significant disciplinary action, as
specified in Rule 3.33(a)(2) (Disciplinary Actions), may be required
to retake the Regulatory Element within 120 days of the effective
date of the disciplinary action, if they remain registered. Further,
their cycle for participation in the Regulatory Element may be
adjusted to reflect the effective date of the disciplinary action
rather than their registration anniversary date.
\10\ See Rule 3.33(a)(1).
\11\ Supra note 9. Individuals must complete the entire
Regulatory Element session to be considered to have ``completed''
the Regulatory Element; partial completion is the same as non-
completion.
\12\ See Rule 3.33(g). This CE inactive two-year period is
calculated from the date such persons become CE inactive, and it
continues to run regardless of whether they terminate their
registrations before the end of the two-year period. Therefore, if
registered persons terminate their registrations while in a CE
inactive status, they must satisfy all outstanding Regulatory
Element prior to the end of the CE inactive two-year period in order
to reregister with a member without having to requalify by
examination or having to obtain an examination waiver.
---------------------------------------------------------------------------
The Regulatory Element currently consists of a subprogram for
registered persons generally, and a subprogram for principals and
supervisors.\13\ While some of the current Regulatory Element content
is unique to particular registration categories, most of the content
has broad application to both representatives and principals.\14\ The
Regulatory Element was originally designed at a time when most
individuals had to complete the Regulatory Element at a test center,
and its design was shaped by the limitations of the test center-based
delivery model. In 2015, the delivery of the Regulatory Element was
transitioned to an online platform, referred to above as CE Online,
which allows individuals to complete the content online at a location
of their choosing, including their private residence. This online
delivery provides for much greater flexibility in updating content in a
timelier fashion, developing content tailored to each registration
category and presenting the material in an optimal learning format.
---------------------------------------------------------------------------
\13\ The S101 (General Program for Registered Persons) and the
S201 (Registered Principals and Supervisors).
\14\ The current content is presented in a single format leading
individuals through a case that provides a story depicting
situations that they may encounter in the course of their work.
---------------------------------------------------------------------------
b. Firm Element
Rule 3.33(c) (Firm Element) currently requires each firm to develop
and administer an annual Firm Element training program for covered
registered persons.\15\ The rule requires firms to conduct an annual
needs analysis to determine the appropriate training.\16\ Currently, at
a minimum, the Firm Element must cover training in ethics and
professional responsibility as well as the following items concerning
securities products, services and strategies offered by the member: (1)
General investment features and associated risk factors; (2)
suitability and sales practice considerations; and (3) applicable
regulatory requirements.\17\ A firm, consistent with its needs
analysis, may determine to apply toward the Firm Element other required
training. The current rule does not expressly recognize other required
training, such as training relating to the anti-money laundering
(``AML'') compliance program and training relating to the annual
compliance meeting, for purposes of satisfying Firm Element
training.\18\
---------------------------------------------------------------------------
\15\ The rule defines ``covered registered persons'' as any
registered person or any associated person who has direct contact
with customers in the conduct of a Trading Permit Holder's or TPH
organization's securities sales, trading or investment banking
activities, and the immediate supervisors of any such persons. See
Rule 3.33(c)(1) (Persons Subject to the Firm Element).
\16\ See Rule 3.33(c)(2) (Standards).
\17\ Id.
\18\ See, e.g. Rules 8.12 and 8.16(g).
---------------------------------------------------------------------------
c. Termination of a Registration
Currently, individuals whose registrations as representatives or
principals have been terminated for two or more years may reregister as
representatives or principals only if they requalify by retaking and
passing the applicable representative- or principal-level examination
or if they obtain a waiver of such examination(s) (the ``two-year
qualification period'').\19\ The two-year qualification period was
adopted prior to the creation of the CE Program and was intended to
ensure that individuals who reregister are relatively current on their
regulatory and securities knowledge.
---------------------------------------------------------------------------
\19\ See Rule 3.33(g). The two-year qualification period is
calculated from the date individuals terminate their registration
and the date the Exchange receives a new application for
registration. The two-year qualification period does not apply to
individuals who terminate a limited registration category that is a
subset of a broader registration category for which they remain
qualified. Such individuals have the option of reregistering in the
more limited registration category without having to requalify by
examination or obtain an examination waiver so long as they continue
to remain qualified for the broader registration category. Further,
the two-year qualification period only applies to the
representative- and principal-level examinations; it does not extend
to the Securities Industry Essentials (``SIE'') examination. The SIE
examination is valid for four years, but having a valid SIE
examination alone does not qualify an individual for registration as
a representative or principal. Individuals whose registrations as
representatives or principals have been revoked pursuant to Exchange
Rule 13.11 (Judgment and Sanction) may only requalify by retaking
the applicable representative- or principal-level examination in
order to reregister as representatives or principals, in addition to
satisfying the eligibility conditions for association with a firm.
Waivers are granted either on a case-by-case basis under Rule
3.30.03 (Qualification Examinations and Waivers of Examinations) or
as part of the FSA waiver program under Rule 3.30.09 (Waiver of
Examination for Individuals Working for a Financial Services
Industry Affiliate of a TPH).
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(ii) Proposed Rule Change
After extensive work with the Securities Industry/Regulatory
Council on Continuing Education (``CE Council''), FINRA, other Self-
Regulatory Organizations and industry participants, the Exchange
proposes the following changes under Rules 3.30 and 3.33 to align with
FINRA's Rule 1240.
a. Transition to Annual Regulatory Element for Each Registration
Category
As noted above, currently, the Regulatory Element generally must be
completed every three years, and the content is broad in nature. Based
on changes in technology and learning theory, the Regulatory Element
content can be updated and delivered in a timelier fashion and tailored
to each registration category, which would further the goals of the
Regulatory Element.\20\ Therefore, to provide
[[Page 18448]]
registered persons with more timely and relevant training on
significant regulatory developments, the Exchange proposes amending
Rule 3.33(a) to require registered persons to complete the Regulatory
Element annually by December 31.\21\ The proposed amendment would also
require registered persons to complete Regulatory Element content for
each representative or principal registration category that they hold,
which would also further the goals of the Regulatory Element.\22\
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\20\ When the CE Program was originally adopted in 1995,
registered persons were required to complete the Regulatory Element
on their second, fifth and 10th registration anniversary dates. See
Securities Exchange Act Release No. 35341 (February 8, 1995), 60 FR
8426 (February 14, 1995) (Order Approving File Nos. SR-AMEX-94-59;
SR-CBOE-94-49; SR-CHX-94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-
94-43; SR-PSE-94-35; and SR-PHLX-94-52). The change to the current
three-year cycle was made in 1998 to provide registered persons more
timely and effective training, consistent with the overall purpose
of the Regulatory Element. See Securities Exchange Act Release No.
39712 (March 3, 1998), 63 FR 11939 (March 11, 1998) (Order Approving
File Nos. SR-CBOE-97-68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-
97-33).
\21\ See proposed Rules 3.33(a)(1) and (a)(4).
\22\ See proposed Rules 3.30.07 and 3.33(a)(1).
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Under the proposed rule change, TPHs and TPH organizations would
have the flexibility to require their registered persons to complete
the Regulatory Element sooner than December 31, which would allow TPHs
and TPH organizations to coordinate the timing of the Regulatory
Element with other training requirements, including the Firm
Element.\23\ For example, a TPH or TPH organization could require its
registered persons to complete both their Regulatory Element and Firm
Element by October 1 of each year.
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\23\ See proposed Rules 3.33(a)(1) and (a)(4).
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Individuals who would be registering as a representative or
principal for the first time on or after the implementation date of the
proposed rule change would be required to complete their initial
Regulatory Element for that registration category in the next calendar
year following their registration.\24\ In addition, subject to
specified conditions, individuals who would be reregistering as a
representative or principal on or after the implementation date of the
proposed rule change would also be required to complete their initial
Regulatory Element for that registration category in the next calendar
year following their reregistration.\25\
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\24\ See proposed Rule 3.33(a)(1).
\25\ See proposed Rule 3.33(a)(4).
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Consistent with current requirements, individuals who fail to
complete their Regulatory Element within the prescribed period would be
automatically designated as CE inactive.\26\ However, the proposed rule
change preserves the Exchange's ability to extend the time by which a
registered person must complete the Regulatory Element for good cause
shown.\27\
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\26\ See proposed Rule 3.33(a)(2).
\27\ Id. The proposed rule change clarifies that the request for
an extension of time must be in writing and include supporting
documentation, which is consistent with current practice.
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The Exchange also proposes amending Rule 3.33(a) to provide that:
(1) Individuals who are designated as CE inactive would be required to
complete all of their pending and upcoming annual Regulatory Element,
including any annual Regulatory Element that becomes due during their
CE inactive period, to return to active status; \28\ (2) the two-year
CE inactive period is calculated from the date individuals become CE
inactive, and it continues to run regardless of whether individuals
terminate their registrations; \29\ (3) individuals who become subject
to a significant disciplinary action may be required to complete
assigned continuing education content as prescribed by the Exchange;
\30\ (4) individuals who have not completed any Regulatory Element
content for a registration category in the calendar year(s) prior to
reregistering would not be approved for registration for that category
until they complete that Regulatory Element content, pass an
examination for that registration category or obtain an unconditional
examination waiver for that registration category, whichever is
applicable; \31\ and (5) the Regulatory Element requirements apply to
individuals who are registered, or in the process of registering, as a
representative or principal.\32\ In addition, the Exchange proposes
making conforming amendments to Rule 3.30.07.
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\28\ Id.
\29\ Id.
\30\ Id.
\31\ See proposed Rule 3.33(a)(4).
\32\ See proposed Rule 3.33(a)(5).
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Under the proposed rule change, the amount of content that
registered persons would be required to complete in a three-year,
annual cycle for a particular registration category is expected to be
comparable to what most registered persons are currently completing
every three years. In some years, there may be more required content
for some registration categories depending on the volume of rule
changes and regulatory issues. In addition, an individual who holds
multiple registrations may be required to complete additional content
compared to an individual who holds a single registration because, as
noted above, individuals would be required to complete content specific
to each registration category that they hold. However, individuals with
multiple registrations would not be subject to duplicative regulatory
content in any given year. The more common registration combinations
would likely share much of their relevant regulatory content each year.
For example, individuals registered as General Securities
Representatives and General Securities Principals would receive the
same content as individuals solely registered as General Securities
Representatives, supplemented with a likely smaller amount of
supervisory-specific content on the same topics. The less common
registration combinations may result in less topic overlap and more
content overall.
b. Recognition of Other Training Requirements for Firm Element and
Application of Firm Element to Covered Registered Persons
To better align the Firm Element requirement with other required
training, the Exchange proposes to revise/adopt proposed Rule 3.33(b)
to expressly allow TPHs and TPH organizations to consider training
relating to the AML compliance program and the annual compliance
meeting toward satisfying an individual's annual Firm Element
requirement.\33\ The Exchange also proposes amending the definition of
``covered registered persons'' who are subject to the Firm Element
requirement to any person registered with a TPH, including any person
who maintains solely a permissive registration consistent with Rule
3.30.02 (Permissive Registrations), thereby further aligning the
description of ``covered registered persons'' in the Firm Element
requirement with the description of ``covered persons'' in the
Regulatory Element requirement.\34\ In conjunction with this proposed
change, the Exchange proposes modifying the current minimum training
criteria under Rule 3.33(b) to instead provide that the training must
cover topics related to the role, activities, or responsibilities of
the registered person and to professional responsibility.
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\33\ See proposed Rule 3.33(b)(2)(D).
\34\ The group of persons who may be considered a ``covered
registered person'' under the Firm Element provisions in proposed
Rule 3.33(b)(1) is a subset of the group of persons who may be
considered a ``covered person'' under the Regulatory Element
provisions in proposed Rule 3.33(a)(5). See also note 15, supra, and
surrounding discussion for comparison on the current definition of
``covered registered person.''
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[[Page 18449]]
c. Maintenance of Qualification After Termination of Registration
The Exchange proposes to adopt Rules 3.33(c), 3.33.01, and 3.33.02
to provide eligible individuals who terminate any of their
representative or principal registrations the option of maintaining
their qualification for any of the terminated registrations by
completing continuing education. The proposed rule change would not
eliminate the two-year qualification period. Rather, it would provide
such individuals an alternative means of staying current on their
regulatory and securities knowledge following the termination of a
registration(s). Eligible individuals who elect not to participate in
the proposed continuing education program would continue to be subject
to the current two-year qualification period. The proposed rule change
is generally aligned with other professional continuing education
programs that allow individuals to maintain their qualification to work
in their respective fields during a period of absence from their
careers (including an absence of more than two years) by satisfying
continuing education requirements for their credential.
The proposed rule change would impose the following conditions and
limitations:
Individuals would be required to be registered in the
terminated registration category for at least one year immediately
prior to the termination of that category; \35\
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\35\ See proposed Rule 3.33(c)(1).
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individuals could elect to participate when they terminate
a registration or within two years from the termination of a
registration; \36\
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\36\ See proposed Rule 3.33(c)(2).
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individuals would be required to complete annually all
prescribed continuing education; \37\
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\37\ See proposed Rule 3.33(c)(3). However, upon a participant's
request and for good cause shown, the Exchange would have the
ability to grant an extension of time for the participant to
complete the prescribed continuing education. A participant who is
also a registered person must directly request an extension of the
prescribed continuing education from the Exchange.
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individuals would have a maximum of five years in which to
reregister; \38\
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\38\ See proposed Rule 3.33(c).
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individuals who have been CE inactive for two consecutive
years, or who become CE inactive for two consecutive years during their
participation, would not be eligible to participate or continue; \39\
and
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\39\ See proposed Rule 3.33(c)(4) and (c)(5).
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individuals who are subject to a statutory
disqualification, or who become subject to a statutory disqualification
following the termination of their registration or during their
participation, would not be eligible to participate or continue.\40\
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\40\ See proposed Rules 3.33(c)(1) and (c)(6). Individuals who
are subject to a statutory disqualification would not be eligible to
enter the proposed continuing education program. Individuals who
become subject to a statutory disqualification while participating
in the proposed continuing education program would not be eligible
to continue in the program. Further, any content completed by such
participants would be retroactively nullified upon disclosure of the
statutory disqualification. The following example illustrates the
application of the proposed rule change to individuals who become
subject to a statutory disqualification while participating in the
proposed continuing education program. Individual A participates in
the proposed continuing education program for four years and
completes the prescribed content for each of those years. During
year five of his participation, he becomes subject to a statutory
disqualification resulting from a foreign regulatory action. In that
same year, the Exchange receives a Form U4 submitted by a member on
behalf of Individual A requesting registration with the Exchange.
The Form U4 discloses the statutory disqualification event. the
Exchange would then retroactively nullify any content that
Individual A completed while participating in the proposed
continuing education program. Therefore, in this example, in order
to become registered with the Exchange, he would be required to
requalify by examination. This would be in addition to satisfying
the eligibility conditions for association with an Exchange TPH or
TPH Organization. See also Exchange Act Sections 3(a)(39) and
15(b)(4).
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The proposed rule change also includes a look-back provision that
would, subject to specified conditions, extend the proposed option for
maintaining qualifications following a registration category
termination to (i) individuals who have been registered as a
representative or principal within two years immediately prior to the
planned March 15, 2022 implementation date of the proposed rule change,
and (ii) individuals who have been FSAWP participants immediately prior
to the planned March 15, 2022 implementation date of the proposed rule
change.\41\ With respect to the FSAWP, the Exchange proposes to make
the look-back provision available to individuals who are participants
in the Exchange's FSAWP or the FSA waiver programs of Exchange's
affiliate, Cboe C2 Exchange, Inc. (``C2 Options''), and/or FINRA
immediately preceding March 15, 2022. In addition, effective March 15,
2022, the Exchange proposes to not accept any new initial designations
for individuals under the Exchange's FSAWP. Effectively, upon
implementation, the FSAWP would not be available for new participants
and what remains of the program would only be applicable to pre-
existing participants. Ultimately, the FSAWP will expire in favor of
the new proposed maintenance of qualification requirements.\42\
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\41\ See proposed Rule 3.33.01. Such individuals would be
required to elect whether to participate by the March 15, 2022
implementation date of the proposed rule change. If such individuals
elect to participate, they would be required to complete their
initial annual content by the end of 2022 (i.e., by the end of the
calendar year in which the proposed rule change is implemented). In
addition, if such individuals elect to participate, their initial
participation period would be adjusted based on the date that their
registration was terminated.
\42\ See proposed changes to Rule 3.30.09.
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In addition, the proposed rule change includes a re-eligibility
provision that would allow individuals to regain eligibility to
participate each time they reregister with a TPH or TPH Organization
for a period of at least one year and subsequently terminate their
registration, provided that they satisfy the other participation
conditions and limitations.\43\ Finally, the Exchange proposes making
conforming amendments to Rule 3.30, including making ministerial
changes and adding references to proposed Rules 3.33(a) and (c) under
Rule 3.30.08. The proposed rule change will have several important
benefits. It will provide individuals with flexibility to address life
and career events and necessary absences from registered functions
without having to requalify each time. It will also incentivize them to
stay current on their respective securities industry knowledge
following the termination of any of their registrations. The continuing
education under the proposed option will be as rigorous as the
continuing education of registered persons, which promotes investor
protection. Further, the proposed rule change will enhance diversity
and inclusion in the securities industry by attracting and retaining a
broader and diverse group of professionals.
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\43\ See proposed Rule 3.33.02.
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Significantly, the proposed rule change will be of particular value
to women, who continue to be the primary caregivers for children and
aging family members and, as a result, are likely to be absent from the
industry for longer periods.\44\ In addition, the proposed rule change
will provide longer-term relief for women, individuals with low incomes
and other populations, including older workers, who are at a higher
risk of a job loss during certain economic downturns and who are likely
to remain unemployed for longer periods.\45\
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\44\ See The Female Face of Family Caregiving (November 2018),
available at https://www.nationalpartnership.org/our-work/resources/economic-justice/femaleface-family-caregiving.pdf.
\45\ See The COVID-19 Recession is the Most Unequal in Modern
U.S. History (September 30, 2020), available at https://www.washingtonpost.com/graphics/2020/business/coronavirus-recessionequality/ and Unemployment's Toll on Older Workers Is Worst
in Half a Century (October 21, 2020), available at https://www.aarp.org/work/working-at-50-plus/info-2020/pandemic-unemployment-older-workers/.
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[[Page 18450]]
d. Other Changes to Rule 3.33
The Exchange proposes to restructure and modify the rule text of
Rule 3.33 to align with FINRA Rule 1240 numbering, provisions and rule
text.
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.\46\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \47\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \48\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\46\ 15 U.S.C. 78f(b).
\47\ 15 U.S.C. 78f(b)(5).
\48\ Id.
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The Exchange believes that the proposal to move to an annual
Regulatory Element training with content tailored to an individual's
representative or principal registration categories is designed to
protect investors and is in the public interest. As noted in the order
approving the similar changes to the FINRA CE Program,\49\ the
Commission found that ``the rule is reasonably designed to minimize the
potential adverse impact on firms and their registered persons.
Furthermore, increasing the timeliness of registered persons' training,
as well as the relevance of the training's content by tailoring it to
each registration category that they hold, would enhance their
education and compliance with their regulatory obligations.''
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\49\ Supra note 5.
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The Exchange believes that the proposed changes to the Regulatory
Element and Firm Element portions of its CE Program will ensure that
all registered persons receive timely and relevant training, which
will, in turn, enhance compliance and investor protection. Further, the
Exchange believes that establishing a path for individuals to maintain
their qualification following the termination of a registration will
reduce unnecessary impediments to requalification and promote greater
diversity and inclusion in the securities industry without diminishing
investor protection.
The Exchange also believes that the proposed rule change will bring
consistency and uniformity with FINRA's recently amended CE Program,
which will, in turn, assist TPHs and their associated persons in
complying with these rules and improve regulatory efficiency. The
proposed rule changes makes ministerial changes to the Exchange's
continuing education rules to align them with registration and
qualification rules of FINRA and other exchanges as discussed above, in
order to prevent unnecessary regulatory burdens and to promote
efficient administration of the rules. The change also makes minor
updates and corrections to the Exchange's rules which improve
readability.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed rule changes which are, in all material respects, based
upon and substantially similar to, recent rule changes adopted by
FINRA, will reduce the regulatory burden placed on market participants
engaged in trading activities across different markets. The Exchange
believes that the harmonization of the CE Program requirements across
the various markets will reduce burdens on competition by removing
impediments to participation in the national market system and
promoting competition among participants across the multiple national
securities exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \50\ and Rule 19b-
4(f)(6) thereunder.\51\
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\50\ 15 U.S.C. 78s(b)(3)(A)(iii).
\51\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) normally does
not become operative for 30 days after the date of filing. However,
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a
shorter time if such action is consistent with the protection of
investors and the public interest. The Exchange has asked the
Commission to waive the 30-day operative delay so that this proposed
rule change may become operative immediately upon filing. In addition,
Rule 19b-4(f)(6)(iii) \52\ requires a self-regulatory organization to
give the Commission written notice of its intent to file a proposed
rule change under that subsection at least five business days prior to
the date of filing, or such shorter time as designated by the
Commission. The Exchange has provided such notice.
---------------------------------------------------------------------------
\52\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
Waiver of the 30-day operative delay would allow the Exchange to
implement proposed changes to its Continuing Education Rules by March
15, 2022 to coincide with one of FINRA's announced implementation
dates, thereby eliminating the possibility of a significant regulatory
gap between the FINRA and Exchange rules, providing more uniform
standards across the securities industry, and helping to avoid
confusion for registered persons of the Exchange that are also FINRA
members. For this reason, the Commission believes that waiver of the
30-day operative delay for this proposal is consistent with the
protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\53\
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\53\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the
[[Page 18451]]
Commission takes such action, the Commission shall institute
proceedings to determine whether the proposed rule change should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
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-CBOE-2022-012 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-CBOE-2022-012. 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 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-CBOE-2022-012
and should be submitted on or before April 20, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\54\
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\54\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06635 Filed 3-29-22; 8:45 am]
BILLING CODE 8011-01-P
