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Federal Register / Vol. 86, No. 104 / Wednesday, June 2, 2021 / Notices
disclosure, and related requirements designed to ensure that BSTX
Participants conduct themselves in a financially responsible manner. For example, proposed Rule 20000 would require BSTX Participants to comply with existing Exchange Rule 1000, which sets forth certain recordkeeping responsibilities and the obligation to furnish these to the Exchange upon request so that the Exchange can appropriately monitor the financial condition of a BSTX Participant and its compliance with applicable regulatory requirements. Similarly, proposed Rule 20050 would set forth the margin requirements that BSTX Participants must retain with respect to customers trading in a margin account to ensure that BSTX Participants are not extending credit to customers in a manner that might put the financial condition of the BSTX Participant in jeopardy. Each of the proposed rules in the Rule 20000 Series Financial and Operational Rules is substantially similar to existing rules of other exchanges or incorporates an existing rule of the Exchange or another selfregulatory organization SRO by reference.

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Supervision Rule 21000 Series The Exchange proposes to adopt as its Rule 21000 Series Supervision, six rules relating to certain supervisory requirements for BSTX Participants that are substantially similar to supervisory rules of other exchanges.142 The Proposed Rule 21000 Series would specify supervisory requirements with respect to: i Enforcing written procedures to appropriately supervise the BSTX Participants conduct and compliance with applicable regulatory requirements; 143 ii designation of an individual to carry out written supervisory procedures; 144 iii maintenance and keeping of records carrying out the BSTX Participants written supervisory procedures; 145 iv review of activities of each of a BSTX
Participants offices, including periodic examination of customer accounts to detect and prevent irregularities or abuses; 146 v the prevention of the misuse of material non-public 142 See Cboe BZX Chapter 5 rules. See also IEX
Rule 5.150 with respect to proposed Rule 21040
Prevention of the Misuse of Material, Non-Public Information.
143 Proposed Rule 21000 Written Procedures.
144 Proposed Rule 21010 Responsibility of BSTX
Participants would also require that a copy of a BSTXs written supervisory procedures be kept in each office and makes clear that final responsibility for proper supervision rests with the BSTX
Participant.
145 Proposed Rule 21020 Records.
146 Proposed Rule 21030 Review of Activities.

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information; 147 and vi implementation of an anti-money laundering AML
compliance program.148 These rules are designed to ensure that BSTX
Participants are able to appropriately supervise their business activities, review and maintain records with respect to such supervision, and enforce specific procedures relating insidertrading and AML.
The Exchange believes that the proposed Rule 21000 Supervision Series is consistent with Section 6b5
of the Exchange Act 149 because these proposed rules are designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, and protect investors and the public interest by ensuring that BSTX Participants have appropriate supervisory controls in place to carry out their business activities in compliance with applicable regulatory requirements. For example, proposed Rule 21000 Written Procedures would require BSTX Participants to enforce written procedures which enable them to supervise the activities of their associated persons and proposed Rule 21010 Responsibility of BSTX
Participants would require a BSTX
Participant to designate a person in each office to carry out written supervisory procedures. Requiring appropriate supervision of a BSTX Participants business activities and associated persons would promote compliance with the federal securities laws and other applicable regulatory requirements in furtherance of the protection of investors and the public interest.150 In addition, each of the rules in the proposed Rule 21000 Series Supervision is substantially similar to supervisory rules of other exchanges.151
Miscellaneous Provisions Rule 22000
Series The Exchange proposes to adopt as its Rule 22000 Series Miscellaneous Provisions, six rules relating to a variety of miscellaneous requirements applicable to BSTX Participants that are 147 Proposed Rule 21040 Prevention of the Misuse of Material, Non-Public Information generally requires BSTX Participants to enforce written procedures designed to prevent misuse of material non-public information and sets forth examples of conduct that would constitute a misuse of material, non-public information.
148 Proposed Rule 21050 Anti-Money Laundering Compliance Program. The Exchange already has rules with respect to Exchange Participants enforcing an AML compliance program set forth in Exchange Rule 10070 Anti-Money Laundering Compliance Program, so proposed Rule 21050
specifies that BSTX Participants shall comply with the requirements of that pre-existing rule.
149 15 U.S.C. 78fb5.
150 Id.
151 See supra note 142.

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substantially similar to rules of other exchanges.152 These miscellaneous provisions relate to: i Comparison and settlement requirements; 153 ii failures to deliver and failures to receive; 154 iii forwarding of proxy and other issuerrelated materials; 155 iv commissions; 156 v regulatory services agreements; 157 and vi transactions involving Exchange employees.158
These rules are designed to capture additional regulatory requirements applicable to BSTX Participants, such as setting forth their obligation to deliver proxy materials at the request of an issuer and to incorporate by reference Rule 200203 of Regulation SHO.159
The Exchange believes that the proposed Rule 22000 Miscellaneous Provisions Series is consistent with Section 6b5 of the Exchange Act 160
because these proposed rules are designed to prevent fraudulent and manipulative acts and practices, 152 See Cboe BZX Chapter 13 rules. See also IEX
Rule 6.180 with respect to proposed Rule 22050
Transactions Involving BOX Employees.
153 Proposed Rule 22000 Comparison and Settlement Requirements provides that a BSTX
Participant that is a member of a registered clearing agency shall implement comparison and settlement procedures as may be required under the rules of such entity. The proposed rule would further provide that, notwithstanding this general provision, the Board may extend or postpone the time of delivery of a BSTX transaction whenever the Board determines that it is called for by the public interest, just and equitable principles of trade or to address unusual conditions. In such a case, delivery will occur as directed by the Board.
154 Proposed Rule 22010 Failure to Deliver and Failure to Receive provides that borrowing and deliveries must be effected in accordance with Rule 203 of Regulation SHO 17 CFR 242.203 and incorporates Rules 200203 of Regulation SHO by reference into the rule 17 CFR 242.200 through .203.
155 Proposed Rule 22020 Forwarding of Proxy and Other Information; Proxy Voting generally provides that BSTX Participants shall forward proxy materials when requested by an issuer and sets forth certain conditions and limitations for BSTX Participants to give a proxy to vote stock that is registered in its name.
156 Proposed Rule 22030 Commissions provides that the Exchange Rules or practices shall not be construed to allow a BSTX Participant or its associated persons to agree or arrange for the charging of fixed rates commissions for transactions on the Exchange.
157 Proposed Rule 22040 Regulatory Service Agreement provides that the Exchange may enter into regulatory services agreements with other SROs to assist in carrying out regulatory functions, but the Exchange shall retain ultimate legal responsibility for, and control of, its SRO
responsibilities.
158 Proposed Rule 22040 Transactions Involving Exchange Employees sets forth conditions and limitations on a BSTX Participant providing loans or supporting the account of an Exchange employee e.g., promptly obtaining and implementing an instruction from the employee to provide duplicate account statement to the Exchange in order to mitigate any potential conflicts of interest that might arise from such a relationship.
159 17 CFR 242.200 through .203.
160 15 U.S.C. 78fb5.

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