[Federal Register Volume 59, Number 215 (Tuesday, November 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27563]


[[Page Unknown]]

[Federal Register: November 8, 1994]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34924; File No. SR-NYSE-94-31]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by New York Stock Exchange, Inc., Relating to Amendments to Rule 
325

November 1, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on 
September 13, 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.\1\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\On October 27, 1994, the NYSE filed an amendment clarifying 
the term ``tentative net capital.'' The amendment also referenced 
Rule 15c3-1 under the Act.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of this proposed rule change is to amend Rule 325 to 
require written notification to the Exchange within forty-eight hours 
of significant decreases in tentative net capital of members and member 
organizations. The text of the proposed rule follows (italics reflects 
proposed additions to the Rules):

Capital Requirements for Individual Members and Member Organizations
General Provisions

    Rule 325(a) Each member or member organization subject to Rule 
15c3-1 promulgated under the Securities Exchange Act of 1934 shall 
comply with the capital requirements prescribed therein and with the 
additional requirements of this Rule 325.
    (b)(1) Each member or member organization subject to this Rule 
shall forthwith notify the Exchange if his or its net capital after 
deduction of all capital withdrawals including maturities, if any 
scheduled during the next six months, falls below the pertinent 
percentage indicated below:
    1. If the net capital minimum dollar amount requirement is 
applicable--150 percent thereof or some greater percentage as may from 
time to time be designated by the Exchange, or
    2. If the ratio of aggregate indebtedness to net capital is 
applicable--10 percent of aggregate indebtedness, or
    3. If the alternative net capital requirement percentage is 
applicable, the greater of 5% of the aggregate debit items in the 
Formula for Determination of Reserve Requirements for Brokers and 
Dealers under SEC Rule 15c3-3, or, if registered as a Futures 
Commission Merchant, 7% of the funds required to be segregated pursuant 
to the Commodity Exchange Act and the regulations thereunder.
    (2) Each member or member organization shall within forty-eight 
hours notify the Exchange, in writing, whenever tentative net capital 
(net capital before application of haircuts and undue concentration 
charges), as computed under Securities Exchange Act Rule 15c3-1 has 
declined 20% or more from the amount reported in the most recent FOCUS 
Report with the Exchange.

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

1. Purpose
    The proposed rule change concerns an amendment to Rule 325 that 
requires members and member organizations to provide written 
notification to the Exchange within forty-eight hours if tentative net 
capital (net capital before application of haircuts and undue 
concentration charges) has declined 20% or more from the amount 
reported in the most recent FOCUS Report filed with the Exchange.
    Currently, some member organizations (e.g., broker-dealers that 
carry customer accounts) file financial reports on a monthly basis and 
other member organizations file on a quarterly basis. In both 
instances, the filing dates are several weeks after the date that the 
financial information in the reports is prepared.
    Consequently, the Exchange believes that there is a need for 
monitoring of significant changes in an organization's financial 
condition between the reporting dates through a requirement for more 
immediate notification of significant declines in tentative net 
capital.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b)(5) of the 
Securities Exchange Act of 1934 (``Act'') in that it protects investors 
and the public interest by ensuring that member organizations comply 
with certain prescribed minimum financial standards.
    The proposed change is also consistent with Section 6(c)(3)(A) of 
the Act which permits a national securities exchange to condition the 
membership of a broker or dealer that does not meet such standards of 
financial responsibility as are prescribed by the rules of the 
Exchange.

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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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, N.W., Washington, D.C. 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 Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such 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-94-31 and should be 
submitted by November 29, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-27563 Filed 11-7-94; 8:45 am]
BILLING CODE 8010-01-M