[Federal Register Volume 59, Number 93 (Monday, May 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11797]


[[Page Unknown]]

[Federal Register: May 16, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34033; File No. SR-NYSE-94-13]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to Interpretation 
to Rule 345 Establishing a New Category of Limited Registration for 
Floor Clerks of Members and the Content Outline for the Examination 
Module for Floor Clerks of Members Engaged in Public Business With 
Professional Customers (Series 7B)

May 10, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ and Rule 19b-4 thereunder\2\ notice is hereby given that 
on March 28, 1994, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the self-
regulatory organization (``SRO''). The Commission is publishing this 
notice to solicit comments on the propose rule change from interested 
persons.
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1993).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange has filed a proposed interpretation to Rule 345 
establishing a new category of limited registration for floor clerks of 
members engaged in public business with professional customers and the 
Content Outline for the Examination Module for Floor Clerks of Members 
Engaged in Public Business with Professional Customers (Series B). The 
Exchange also seeks approval of the Series 7B examination module.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

(a) Purpose
    Recently, the Exchange established a new category of registration 
and developed a qualification examination module (Qualification 
Examination for Floor Members Engaged in Public Business with 
Professional Customers--Series 7A) for floor members who conduct a 
public business limited to accepting orders from professional customers 
for execution on the trading floor.\3\ This Series 7A examination 
module, developed as a subset of the General Securities Registered 
Representative Examination (``Series 7''), was created because the 
level of knowledge required to perform the activities engaged in by 
members who conduct a professional public business limited to 
transactions in listed securities on the Exchange floor is narrower in 
content and scope than that needed to conduct an overall general 
securities business with retail customers.
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    \3\The Exchange stated that the term ``professional customer'' 
is derived from the term ``designated account'' as used in NYSE Rule 
431. As used in this proposal, the Exchange defines ``professional 
customer'' to include a bank, trust company, insurance company, 
investment trust, state or political subdivision thereof, charitable 
or nonprofit educational institution regulated under the laws of the 
United States or any state, or political subdivision thereof, or any 
person who has, or has under management, net tangible assets of at 
least sixteen million dollars. For purposes of the definition of 
``professional customer,'' the term ``person'' shall mean the same 
as that term is defined in NYSE Rule 2, except that it shall not 
include natural persons. NYSE Rule 2 defines ``person'' as a natural 
person, corporation, partnership, association, joint stock company, 
trust, fund or any organized group of persons whether incorporated 
or not.
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    Currently, floor clerks associated with members and who take orders 
from public customers must become registered representatives and pass 
the Series 7 examination. Floor members who conduct a public business 
limited to dealing with professional customers (who may satisfy the 
Series 7A exam requirements in lieu of the Series 7) have requested 
that their floor clerks who take orders solely from professional 
customers also be allowed to take a qualifying examination more 
appropriate to the level of knowledge required to serve professional 
customers.
    The Exchange will continue to require the successful completion of 
the Series 7 examination for any floor clerk seeking to become a 
registered representative dealing with other than professional 
customers. In addition, any person who has successfully completed the 
Series 7 examination will not be required to complete the Series 7B 
examination.
    Since the Series 7A exam was developed for members, it assumes the 
member's level of qualification (i.e., completion of new member 
orientation program and/or having passed the floor member qualification 
examination--Series 15). Consequently, the Series 7B examination module 
has been developed to test the knowledge of floor clerks who accept 
orders only from professional customers on behalf of members qualified 
to conduct business with these professional customers by complementing 
the Series 7A examination module with questions on basic information 
required to perform floor functions.
    A committee of floor member representatives in conjunction with the 
Exchange staff developed the content outline, which details the 
coverage of the examination module, as well as the actual examination. 
The committee and staff identified the knowledge areas associated with 
the job tasks, determined the relative emphasis to be given across the 
knowledge areas, reviewed examination questions and forms, and 
determined the passing score.
    The proposed interpretation to rule 345.15 establishes a new 
category of registration, limited registration for floor clerks, and 
requires that those who conduct a public business limited to accepting 
orders directly from professional customers for execution on the 
trading floor, successfully complete the Series 7B examination.
(b) Statutory Basis
    The statutory basis for the Series 7B Exam lies in section 
6(c)(3)(B) of the Act. Under that section, the Exchange may bar a 
natural person from becoming a member or person associated with a 
member, if such natural person does not meet such standards of 
training, experience and competence as are prescribed by the rules of 
the Exchange. Pursuant to this statutory obligation, the Exchange has 
developed examinations that are administered to establish that Exchange 
floor members and persons associated with such members performing 
specific functions have attained specific levels of competence and 
knowledge.

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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the publication of this notice in the Federal 
Register or within such other period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. 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 inspection and copying at the 
Commission's Public Reference Room, 450 Fifth Street NW., Washington, 
DC 20549. Copies of the filing will also be available for inspection 
and copying at the Commission's Public Reference Room, 450 Fifth Street 
NW., Washington, DC 20549. Copies of the filing will also be available 
for inspection and copying at the principal office of the NYSE. All 
submissions should refer to File No. SR-NYSE-94-13 and should be 
submitted by June 6, 1994.


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-11797 Filed 5-13-94; 8:45 am]
BILLING CODE 8010-01-M