[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]
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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.
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\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.
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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