[Federal Register Volume 59, Number 233 (Tuesday, December 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29905]
[[Page Unknown]]
[Federal Register: December 6, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35021; File No. SR-Phlx-94-50]
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.;
Order Approving a Proposed Rule Change Relating to Examination
Specifications for the General Securities Registered Representative
(Series 7) Examination, and the Corresponding Content Outline
November 29, 1994.
I. Introduction
On October 3, 1994, the Philadelphia Stock Exchange, Inc. (``Phlx''
or ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 thereunder,\2\
proposed rule change (File No. SR-Phlx-94-50) to revise the General
Securities Registered Representative (Series 7) Examination
Specifications and the corresponding Content Outline.
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\1\15 U.S.C. Sec. 78s(b)(1) (1988).
\2\17 CFR Sec. 240.19b-4 (1994).
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 34843 (October 14, 1994), 59 FR 53001 (October
20, 1994). No comments were received on the proposal. This order
approves the proposed rule change contingent upon the filing of the
revised Examination Specifications and Content Outline by other
appropriate self-regulatory organizations (``SROs''), and approval of
those filings by the Commission.
II. Description of the Proposal
The Phlx proposes to use the Series 7 as amended, as the
appropriate qualification examination for persons seeking registration
as general securities representatives. The Series 7 Examination was
created in 1974 as an industry-wide qualification examination for
persons seeking registration as general securities representatives. The
Series 7 Examination is generally required under SRO rules for persons
who are engaged in the solicitation, purchase, or sale of securities
for the accounts of customers. The purpose of the Series 7 Examination
is to ensure that registered representatives have the basic knowledge
necessary to perform their functions and responsibilities. The Series 7
Specifications detail the areas covered by the examination and break
down the number of examination questions culled from each area, while
the Content Outline details the subject coverage and question
allocation of the examination.
Revision of the Series 7 Examination, Specifications and Content
Outline was initiated in April 1993 by an industry committee of SROs
and representatives from broker-dealers in order to update the
examination in view of changes in the securities industry, including
changes in relevant rules and regulations, the development of new
securities products, and changes in the job of registered
representatives as firms offer an increasingly wide range of financial
services.\3\ The Examination Specifications and Content Outline for the
Series 7 have not been revised since 1986.
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\3\SROs on the committee include the New York, American and
Philadelphia Stock Exchanges, Chicago Board Options Exchange, the
Municipal Securities Rulemaking Board, and the National Association
of Securities Dealers. Broker-dealer representatives include branch
office managers, compliance officers, training personnel and
registered representatives.
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The industry committee updated the existing statements of the
critical functions of registered representatives to ensure current
relevance and appropriateness and drafted statements of tasks expected
to be performed by entry-level registered representatives and conformed
the existing Content Outline to the task statements. The Content
Outline reflects the revised content of the examination. Under the
proposed rule change, the total number of questions in the Series 7
Examination will remain at 250, and the revised examination will cover
all financial product areas covered on the present Series 7 Examination
as well as several new products, including collateralized mortgage
obligations (``CMOs''), long term equity anticipation securities
(``LEAPS'') and CAPS,\4\ with reduced emphasis on direct participation
programs.
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\4\OEX CAPS and SPX CAPS are new securities based on the S&P 100
(OEX) and the S&P 500 (SPX) that give investors the right to
participate to a predetermined level in upward or downward movements
in either index.
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The Commission anticipates that the other appropriate SRO
participants also will file the revised specifications for approval by
the Commission. The Phlx, and these other SROs, may use the revised
Examination, Specifications and Content Outline after the Commission
has approved the proposed rule changes of the other appropriate SRO
participants.
III. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange,
and in particular, with the requirements of Sections 6(b)(5) and
6(c)(3)(B) of the Act.\5\ Section 6(b)(5) requires, among other things,
that the rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. Section
6(c)(3)(B) provides that a national securities exchange may examine and
verify the qualifications of an applicant to become a person associated
with a member in accordance with procedures established by the rules of
the exchange, and may require any person associated with a member, or
any class of such persons, to be registered with the exchange in
accordance with procedures so established.
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\5\15 U.S.C. Sec. 78f(b)(5) and (c)(3)(B) (1988).
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The Commission also believes that the proposed rule change is
consistent with Section 15(b)(7) of the Act\6\ which stipulates that
prior to effecting any transaction in, or inducing the purchase or sale
of any security, a registered broker or dealer must meet certain
standards of operational capability, and that such broker or dealer
must meet certain standards of training, experience, competence, and
such other qualifications as the Commission finds necessary or
appropriate in the public interest or for the protection of investors.
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\6\15 U.S.C. Sec. 78o(b)(7) (1988).
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The Commission believes that revising the Series 7 Examination,
Specifications and Content Outline should help to ensure that only
those securities representatives with a comprehensive knowledge of
current Exchange rules, as well as an understanding of the Act, will be
able to solicit, purchase or sell securities for the accounts of
customers. The Commission believes that the revised areas covered by
the Examination, Specifications and Content Outline are appropriate
subject matters and include a sufficiently broad range of topics to
ensure an appropriate level of expertise by representatives.
Additionally, the revised examination tests relevant subject matters in
view of changes in applicable laws, rules, regulations, products, and
industry practices. By ensuring this requisite level of knowledge, the
Phlx can remain confident that securities representatives have
demonstrated an acceptable level of securities knowledge to carry out
their responsibilities.
The Commission has determined that the Content Outline for the
revised Series 7 Examination is sufficiently detailed and covers
appropriate information so as to provide an adequate basis for
studying the new topics covered on the revised examination. The
revised Content Outline should help ensure that those persons taking
the revised examination understand the full range of subject matters
included in the examination.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder.
IV. Conclusion
It is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (File No. SR-PHlx-94-50) is
approved contingent upon the filing of the Examination Specifications
and Content Outline by the other appropriate SROs and the approval of
these findings by the Commission.
\7\15 U.S.C. Sec. 78s(b)(2) (1988).
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For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\8\
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\8\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-29905 Filed 12-5-94; 8:45 am]
BILLING CODE 8010-01-M