[Federal Register Volume 59, Number 202 (Thursday, October 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26056]


[[Page Unknown]]

[Federal Register: October 20, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34842; File No. SR-Phlx-94-51]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to Revisions 
to the General Securities Sales Supervisor (Series 8) Examination, and 
the Corresponding Examination Specifications and Content Outline

October 14, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\ notice is hereby given that on October 3, 1994, the 
Philadelphia Stock Exchange, Inc. (``Phlx'' 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 Phlx. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\15 U.S.C. Sec. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx proposes, in conjunction with the other self-regulatory 
organizations (``SROs''), to adopt and use a revised version of the 
General Securities Sales Supervisor (``Series 8'') Examination, 
examination specifications and content outline.\2\ The Phlx proposes to 
incorporate references to this examination into its rules by adding 
paragraph (d) to rule 748, Supervision.
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    \2\For a detailed description of the revised Series 8 
examination, specifications and content outline, see Securities 
Exchange Act Release Nos. 34335 (July 8, 1994), 59 FR 35961 [File 
No. SR-NYSE-94-23] (notice of proposed rule change relating to the 
revision of the Series 8 examination content outline); and 34336 
(July 8, 1994) 59 FR 35962 [File No. SR-NYSE-94-24] (notice of 
proposed rule change relating to the revision of the Series 8 
examination and specifications).
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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 Phlx 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 Phlx 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

    The General Securities Sales Supervisor (``Series 8'') Examination 
is an industry-wide qualification examination for securities sales 
supervisors. The Series 8 examination is generally required under rules 
of the self-regulatory organizations (``SROs'') for persons who are 
engaged in the supervision of general securities branch offices (i.e., 
branch office managers) and of general securities registered 
representatives. The Series 8 examination tests a candidate's knowledge 
of securities industry rules and regulations and certain statutory 
provisions applicable to general securities sales supervision. The 
Series 8 examination specifications detail the areas covered by the 
examination and break down the number of examination questions culled 
from each area. The Series 8 content outline details the subject 
coverage and question allocation of the examination. The content 
outline reflects the revised content of the examination.
    Revision of the Series 8 examination, specifications and content 
outline was recently undertaken by an industry committee composed of 
representatives from SROs (the New York Stock Exchange, the American 
Stock Exchange, the Chicago Board Options Exchange, the Municipal 
Securities Rulemaking Board, the National Association of Securities 
Dealers and the Philadelphia Stock Exchange) and representatives from 
broker-dealers, including branch office managers, compliance personnel 
and corporate executives, in order to update the examination in view of 
changes in relevant laws, rules and regulations, the development of new 
products, and to reflect various changes in industry practices. The 
committee reviewed the examination specifications, content areas and 
item bank and developed new questions in new areas.
    The revised examination continues to cover the areas of knowledge 
required to supervise sales activities in securities, however, the 
focus of the content of the examination has been shifted to concentrate 
more closely on supervisory duties. Accordingly, certain questions have 
been deleted which deal with routine calculations and basic product 
knowledge and questions on new federal and SRO rules and regulations 
have been incorporated into the exam, as well as questions on new 
products, supervision and changes in industry practices. The revised 
examination and specifications include coverage of these new areas. The 
examination will remain a six-hour, two-part, 200 question examination.
    The Phlx also proposes to adopt a new paragraph to Phlx Rule 748, 
Supervision, to expressly incorporate a supervisory examination into 
Exchange rules. Specifically, persons delegated supervisory 
responsibility pursuant to Rule 748 (b) and (c) would be required by 
proposed paragraph (d) to meet the Exchanges' qualification 
requirements, including successful completion of a supervisory 
examination deemed acceptable by the Exchange. This requirement is 
substantially similar to existing provision of other exchanges.\3\ 
Currently, Rule 748 requires member or participant organizations to 
supervise all registered representatives and each office, department or 
business activity. In addition, a general partner or principal 
executive officer must be designated to assume overall responsibility 
for internal supervision of the organization and compliance with 
securities laws and regulations, including establishing written 
supervisory procedures delegating supervisory responsibilities and 
instituting a supervisory review procedure.
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    \3\See e.g., NYSE Rule 342(d) and Supplementary Material .13.
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    With respect to qualifications for supervisory personnel, Rule 748 
merely requires employees with delegated supervisory responsibility to 
be ``qualified,'' and persons responsible for any group of employees to 
``reasonably discharge'' those duties. The proposed new language is 
intended to bridge this gap by expressly requiring supervisory 
personnel to qualify with the Exchange by successfully completing the 
appropriate examination, which will be indicated in the Exchange's 
memorandum to its membership. The Exchange notes that although options 
activity and personnel, including foreign currency options, are also 
subject to Rule 748, additional supervisory requirements for option 
accounts apply.\4\
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    \4\See Phlx Rules 1024 and 1025.
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    The other SRO participants will also file the revised examination 
and specifications for approval by the SEC. The Exchange intends to 
implement the new Series 8 content outline and examination jointly with 
the other SROs after the Commission has approved the proposed rule 
changes of all the other SROs.
    The statutory basis for the Series 8 Examination lies in Section 
6(c)(3)(B) of the Act. Under that Section, it is the Exchange's 
responsibility to prescribe standards of training, experience and 
competence for persons associated with Exchange members and member 
organizations. Pursuant to this statutory obligation, the Exchange has 
developed examinations that are administered to establish that persons 
associated with Exchange members and member organizations have attained 
specific levels of competence and knowledge.
    The addition of new language to Phlx Rule 748 is also consistent 
with Section 6(b)(5) in that it is designed to promote just and 
equitable principles of trade, prevent fraudulent and manipulative acts 
and practices, and protect investors and the public interest by 
bolstering the Exchange's supervision rule through a qualification and 
examination requirement for supervisory personnel.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx 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. Sec. 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 principal office of the Phlx. All 
submissions should refer to File No. SR-Phlx-94-51 and should be 
submitted by November 10, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-26056 Filed 10-19-94; 8:45 am]
BILLING CODE 8010-01-M