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Federal Register / Vol. 86, No. 168 / Thursday, September 2, 2021 / Notices
their associated persons from making false statements or misrepresentations to the Exchange. The Exchange believes that requiring that BSTX Participants comply with the proposed business conduct rules in the Rule 19000 Series would further the protection of investors and the public interest by promoting high standards of commercial honor and integrity. In addition, each of the rules in the proposed Rule 19000
Series Business Conduct is substantially similar to supervisory rules of other exchanges.115
Financial and Operational Rules for BSTX Participants Rule 20000 Series The Exchange proposes to adopt as its Rule 20000 Series Financial and Operational Rules, ten rules relating to financial and operational requirements for BSTX Participants that are substantially similar to financial and operational rules of other exchanges.116
The proposed Rule 20000 Series would specify financial and operational requirements with respect to: i Maintenance and furnishing of books and records; 117 ii financial reports; 118
iii net capital compliance; 119 iv early warning notifications pursuant to Rule 17a11 under the Exchange Act; 120 v authority of the Chief Regulatory Officer to impose certain restrictions; 121 vi 115 See
supra note 90.
Cboe BZX Chapter 6 rules and IEX
Chapter 5 rules.
117 Proposed Rule 20000 Maintenance, Retention and Furnishing of Books, Records and Other Information requires that BSTX Participants comply with current Exchange Rule 1000
Maintenance, Retention and Furnishing of Books, Records and Other Information and that BSTX
Participants shall submit to the Exchange order, market and transaction data as the Exchange may specify by Information Circular.
118 Proposed Rule 20010 Financial Reports provides that BSTX Participants shall comply with the requirements of current Exchange Rule 10020
Financial Reports.
119 Proposed Rule 20020 Capital Compliance provides that each BSTX Participant subject to Rule 15c31 under the Exchange Act 17 CFR 240.15c3
1 shall comply with such rule and other financial and operational rules contained in the proposed Rule 20000 series.
120 17 CFR 240.17a11. Proposed Rule 20030
Early Warning Notification provides that BSTX
Participants subject to the reporting or notifications requirements of Rule 17a11 under the Exchange Act 17 CFR 240.17a11 or similar early warning requirements imposed by other regulators shall provide the Exchange with certain reports and financial statements.
121 Proposed Rule 20040 Power of CRO to Impose Restrictions generally provides that the Exchanges Chief Regulatory Officer may impose restrictions and conditions on a BSTX Participant subject to the early warning notification requirements under certain circumstances.

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margin; 122 vii day-trading margin; 123
viii customer account information; 124
ix maintaining records of customer complaints; 125 and x disclosure of financial condition.126
The Exchange believes that the proposed Rule 20000 Financial and Operational Rules Series is consistent with Section 6b5 of the Exchange Act 127 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 subjecting BSTX
Participants to certain recordkeeping, 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.
122 Proposed Rule 20050 Margin sets forth the required margin amounts for certain securities held in a customers margin account.
123 Proposed Rule 20060 Day Trading Margin sets forth additional requirements with respect to customers that engage in day trading.
124 Proposed Rule 20070 Customer Account Information requires that BSTX Participants comply with FINRA Rule 4512 as if such rule were part of the Exchange Rules and further clarifies certain cross-references within FINRA Rule 4512.
125 Proposed Rule 20080 Record of Written Customer Complaints requires that BSTX
Participants comply with FINRA Rule 4513 as if such rule were part of the Exchange Rules.
126 Proposed Rule 20090 Disclosure of Financial Condition generally requires that BSTX
Participants make available certain information regarding the BSTX Participants financial condition upon request of a customer.
127 15 U.S.C. 78fb5.

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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.128 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; 129 ii designation of an individual to carry out written supervisory procedures; 130 iii maintenance and keeping of records carrying out the BSTX Participants written supervisory procedures; 131 iv review of activities of each of a BSTX
Participants offices, including periodic examination of customer accounts to detect and prevent irregularities or abuses; 132 v the prevention of the misuse of material non-public information; 133 and vi implementation of an anti-money laundering AML
compliance program.134 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 135 because these proposed rules are designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, and protect investors 128 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.
129 Proposed Rule 21000 Written Procedures.
130 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.
131 Proposed Rule 21020 Records.
132 Proposed Rule 21030 Review of Activities.
133 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.
134 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.
135 15 U.S.C. 78fb5.

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