[Federal Register: August 18, 2005 (Volume 70, Number 159)]
[Notices]
[Page 48608-48610]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18au05-81]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52242; File No. SR-CHX-2005-16]
Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
and Amendment Nos. 1 and 2 Thereto To Amend Exchange Article VI, Rule 9
Relating to Continuing Education for Registered Persons
August 11, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 20, 2005, the Chicago Stock Exchange, Inc. (``CHX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. On July
18, 2005, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ On August 5, 2005, the Exchange filed Amendment No. 2 to the
proposed rule change.\4\ The CHX has filed the proposal as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act
\5\ and Rule 19b-4(f)(6) thereunder,\6\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change, as
amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange amended the proposed rule
change to incorporate the new ``base date'' term used by other self-
regulatory organizations and to make other minor changes to the rule
text.
\4\ In Amendment No. 2, the Exchange withdrew its request for
accelerated effectiveness and made minor edits to the rule text.
\5\ 15 U.S.C. 78s(b)(3)(A).
\6\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The CHX proposes to eliminate the current exemptions from the
Exchange's continuing education requirements that apply to persons who
have been continuously registered for more than 10 years. Below is the
text of the proposed rule change. Proposed new language is in italics.
Deletions are in [brackets].
ARTICLE VI
Restrictions and Requirements
* * * * *
Continuing Education for Registered Persons
RULE 9. (a) Regulatory Element--No member or member organization
shall permit any registered person to continue to, and no registered
person shall continue to, perform duties as a registered person, unless
such person has complied with the continuing education requirements of
Section (a) of this Rule.
Each registered person shall complete the Regulatory Element of the
continuing education program on the occurrence of their second
registration anniversary date and every three years thereafter, or as
otherwise prescribed by the Exchange. On each of the occasions, the
Regulatory Element must be completed within one hundred twenty days
after the person's registration anniversary date. A person's initial
registration date, also known as the ``base date,'' shall establish the
cycle of anniversary dates for purposes of this rule. The content of
the Regulatory Element of the program shall be determined by the
Exchange for each registration category of persons subject to the rule.
[(1) Registered persons who have been continuously registered for more
than ten years as of March 1, 2000 shall be exempt from participation
in the Regulatory Element of the continuing education program, provided
such persons have not been subject to any disciplinary action within
the last ten years as enumerated in subsection (a)(3)(i)-(ii) of this
Rule. However, persons delegated supervisory responsibility or
authority and are registered in such capacity are exempt from
participation in the Regulatory Element under this provision only if
they have been continuously registered in a supervisory capacity for
more than ten years as of March 1, 2000 and provided that such
supervisory person has not been subject to any disciplinary action
under subsection (a)(3)(i)-(ii) of this Rule.]
[Persons who have been currently registered for ten years or less as of
March 1, 2000 shall participate in the Regulatory Element of the
continuing education program within one hundred twenty days after the
occurrence of their next registration anniversary date and every three
years thereafter.]
([2]1) Failure to complete--Unless otherwise determined by the
Exchange, any registered persons who have not completed the Regulatory
Element of the program within the prescribed time frames will have
their registration deemed inactive until such time as the requirements
of the program have been satisfied. Any person whose registration has
been deemed inactive under this Rule shall cease all activities as a
registered person and is prohibited from performing any duties and
functioning in any capacity requiring registration.
The Exchange may, upon application and a showing of good cause,
allow for additional time for a registered person to satisfy the
program requirements.
([3]2) [Re-entry into program] Disciplinary Actions--Unless
otherwise determined by the Exchange, a registered person will be
required to [re-enter] re-take the Regulatory Element and satisfy all
of its requirements if such person:
(i) Becomes subject to any statutory disqualification as defined in
Section 3(a)(39) of the Securities Exchange Act of 1934;
(ii) becomes subject to suspension or to the imposition of a fine
of $5,000 or more for violation of any provision of any securities law
or regulation, or any agreement with or rule or standard of conduct of
any securities governmental agency, securities self-regulatory
organization, or as imposed by any such regulatory or self-regulatory
organization in connection with a disciplinary proceeding; or
(iii) is ordered as a sanction in a disciplinary proceeding to [re-
enter] re-take the continuing education program by any securities
governmental agency or any securities self-regulatory organization.
The re-taking of the Regulatory Element [Re-entry] shall commence
with [initial] participation within 120 days of the registered person
becoming subject to the statutory disqualification, in the case of (i)
above, or the disciplinary action becoming final, in the case of (ii)
or (iii) above.
* * * * *
[[Page 48609]]
* * * Interpretations and Policies
* * * * *
.03 A registered person, [who has been continuously registered for
more than ten years as of March 1, 2000 ]who becomes subject to a
disciplinary action as enumerated in subsections (a)(3)(i)-(ii) of the
Rule, will be required to satisfy the requirements of the Regulatory
Element of the continuing education program with [as if ]the date the
disciplinary action becomes final as [is] the person's [initial
registration anniversary] new base date.
* * * * *
.06 A registered person who is a member of the Exchange and of
another self-regulatory organization (``SRO'') shall be subject to the
other SRO's implementation date for the elimination of exceptions to
the Regulatory Element section of the continuing education program, if
that date is earlier than October 1, 2005.
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, as
amended, 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 CHX has prepared summaries, set forth
in Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange's continuing education rules generally require
registered persons to complete the regulatory element of the continuing
education program on their second registration anniversary dates and
every three years thereafter, or as otherwise prescribed by the
Exchange.\7\ The rules currently provide an exception for two groups of
persons: (1) Registered persons who have been continuously registered
for more than ten years as of March 1, 2000 and (2) persons who have
been continuously registered in a supervisory capacity for more than
ten years as of March 1, 2000.\8\ These exceptions are available so
long as the registered persons have not been subject to specific types
of disciplinary actions within the last ten years.\9\
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\7\ See CHX Article VI, Rule 9(a).
\8\ See CHX Article VI, Rule 9(a)(1).
\9\ See CHX Article VI, Rule 9(a)(1). A registered person does
not qualify for the exception if he or she (i) becomes subject to
any statutory disqualification as defined in Section 3(a)(39) of the
Securities Exchange Act of 1934; (ii) becomes subject to suspension
or to the imposition of a fine of $5,000 or more for violation of
any provision of any securities law or regulation, or any agreement
with or rule or standard of conduct of any securities governmental
agency, securities self-regulatory organization, or as imposed by
any such regulatory or self-regulatory organization in connection
with a disciplinary proceeding; or (ii) is ordered as a sanction in
a disciplinary proceeding to re-enter (or as proposed, to re-take)
the continuing education program by any securities governmental
agency or any securities self-regulatory organization. See CHX
Article VI, Rule 9(a)(3), which is being redesignated as CHX Article
VI, Rule 9(a)(2) in this proposed rule change.
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At its December 2003 meeting, the Securities Industry/Regulatory
Council on Continuing Education (the ``Council'') agreed to recommend
that self-regulatory organizations (``SROs'') eliminate, from their
continuing education rules, the two exceptions described above. The
Council made that recommendation to ensure that all registered market
participants receive the full benefits of continuing education
programs, including a new module that focuses on ethical issues.
After considering the issue, the Exchange believes that it is
appropriate to eliminate the two exceptions, so that all of its
registered participants--regardless of the length of time of their
registrations--will participate in the regulatory element of the
required continuing education programs. The Exchange proposes that this
rule change take effect on October 1, 2005.\10\
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\10\ To eliminate any confusion, the Exchange has confirmed in
the proposed rule that an Exchange participant who is also a member
of another SRO must comply with the rules of the other SRO which
eliminated these exceptions as of an earlier date. See Securities
Exchange Act Release Nos. 50404 (September 16, 2004), 69 FR 57126
(September 23, 2004); 50456 (September 27, 2004), 69 FR 59285
(October 4, 2004); 50630 (November 3, 2004), 69 FR 65232 (November
10, 2004); 50651 (November 10, 2004) 69 FR 67374 (November 17,
2004).
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2. Statutory Basis
The CHX believes the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder that are applicable to a national securities
exchange, and, in particular, with the requirements of Section
6(b).\11\ In particular, the CHX believes the proposal is consistent
with Section 6(b)(5) of the Act \12\ in that it is designed to
facilitate transactions in securities, promote just and equitable
principles of trade, to remove impediments, and to perfect the
mechanism of, a free and open market and a national market system, and,
in general, to protect investors and the public interest by requiring
all registered Exchange participants to participate in the regulatory
element of continuing education programs.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change, as
amended, will impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) does not become operative for 30 days after the date of filing,
or such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, the proposed rule
change, as amended, has become effective pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6) also requires that
the Exchange give the Commission written notice of its intent to
file the proposed rule change along with a brief description and
text of the propose rule change, at least five business days prior
to the date of filing of the proposed rule change. The Commission
notes that the Exchange satisfied the pre-filing five-day notice
requirement.
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate 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.\15\
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\15\ For purposes of calculating the 60-day abrogation period,
the Commission considers the proposal to have been filed on August
5, 2005, the date the Exchange filed Amendment No. 2.
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with
[[Page 48610]]
the Act. Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-CHX-2005-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-CHX-2005-16. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change, as
amended, 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 inspection and copying in the Commission's Public
Reference Room.
Copies of the filing also will be available for inspection and
copying at the principal offices of the Exchange. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CHX-2005-16 and should be submitted on
or before September 8, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4507 Filed 8-17-05; 8:45 am]
BILLING CODE 8010-01-P