[Federal Register Volume 60, Number 30 (Tuesday, February 14, 1995)]
[Notices]
[Pages 8426-8430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3569]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-35341; File Nos. SR-AMEX-94-59; SR-CBOE-94-49; SR-CHX-
94-27; SR-MSRB-94-17; SR-NASD-94-72; SR-NYSE-94-43; SR-PSE-94-35; and 
SR-PHLX-94-52]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Changes by the American Stock Exchange, Inc., Chicago Board Options 
Exchange, Inc., Chicago Stock Exchange, Inc., Municipal Securities 
Rulemaking Board, National Association of Securities Dealers, Inc., New 
York Stock Exchange, Inc., Pacific Stock Exchange Inc., and 
Philadelphia Stock Exchange, Inc., Relating to a Continuing Education 
Requirement for Registered Persons

February 8, 1995.

I. Introduction

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ on November 30 and December 
1, 5, 7, 12, 13, and 14, 1994, the Chicago Stock Exchange, Incorporated 
(``CHX''), the Chicago Board Options Exchange, Incorporated (``CBOE''), 
the New York Stock Exchange, Inc. (``NYSE''), the National Association 
of Securities Dealers, Inc. (``NASD''), the Municipal Securities 
Rulemaking Board (``MSRB'') and the Pacific Stock Exchange Incorporated 
(``PSE''), the American Stock Exchange, Inc. (``AMEX''), and the 
Philadelphia Stock Exchange, Inc. (``PHLX''), respectively (``Self-
Regulatory Organizations'' or ``SROs''), submitted to the Securities 
and Exchange Commission (``Commission'' or ``SEC'') proposed rule 
changes to establish a formal, two-part continuing education program 
for securities industry professionals. This program includes a 
Regulatory Element requiring uniform, periodic training in regulatory 
matters, and a Firm Element requiring members\3\ to maintain ongoing 
programs to keep their registered persons\4\ up-to-date on job and 
product related subjects.

    \1\15 U.S.C. Sec. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1994).
    \3\As used herein, the term ``members'' refers to: members and 
member organizations when used with reference to the AMEX, CBOE, 
CHX, NYSE, and PSE; members, member organizations, participants, and 
participant organizations when used with reference to the PHLX; 
brokers, dealers, and municipal securities dealers when used with 
reference to the MSRB; and members when used with reference to the 
NASD.
    \4\For purposes of the proposed rules, the term ``registered 
person'' means any person required to be registered under the rules 
of the applicable SRO, including members and registered 
representatives, but does not include any person whose activities 
are limited solely to the transaction of business on the floor of a 
national securities exchange with members or registered broker-
dealers. When used with reference to the MSRB, however, the term 
``registered person'' means any person registered with the 
appropriate enforcement authority as a municipal securities 
representative, municipal securities principal, municipal securities 
sales principal, or financial and operations principal pursuant to 
MSRB rule G-3. [[Page 8427]] 
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    The SROs' proposals were published for comment in the Federal 
Register on December 20, 1994.\5\ Two comments were received, and are 
discussed below. On January 30, and 31 and February 1, and 2, 1995, the 
NASD, CHX, CBOE, MSRB, PSE, AMEX, NYSE, and PHLX each filed Amendment 
No. 1 to their respective proposals.\6\ These amendments made a variety 
of non-substantive, clarifying changes to the proposals and are 
incorporated into the discussion below.\7\ This order approves the 
SROs' proposals, including all amendments made thereto.

    \5\Securities Exchange Act Release No. 35102 (December 15, 
1994), 59 FR 65563 (December 20, 1994).
    \6\See letters from Craig L. Landauer, Associate General 
Counsel, NASD, to Mark P. Barraccca, Branch Chief, Division of 
Market Regulation (``Division''), SEC, dated January 19, 1995, and 
Francois Mazur, Attorney, Division, SEC, dated January 30, 1995 
(``NASD Amendment No. 1''); letter from David T. Rusoff, Foley & 
Lardner, to Francois Mazur, Attorney, Division, SEC, dated January 
30, 1995 (``CHX Amendment No. 1''); letter from Arthur B. Reinstein, 
Senior Attorney, CBOE, to Holly Smith, Associate Director, Division, 
SEC, dated January 31, 1995 (``CBOE Amendment No. 1''); letter from 
Ronald W. Smith, Legal Associate, MSRB, to Francois Mazur, Attorney, 
Division, SEC, dated February 1, 1995 (``MSRB Amendment No. 1''); 
letter from Michael D. Pierson, Senior Attorney, PSE, to Francois 
Mazur, Attorney, Division, SEC, dated February 1, 1995 (``PSE 
Amendment No. 1''); letter from Claire P. McGrath, Managing Director 
and Special Counsel, Derivative Securities, AMEX,to Glen Barrentine, 
Team Leader, Division, SEC, dated February 1, 1995 (``AMEX Amendment 
No. 1''); letter from James E. Buck, Senior Vice President and 
Secretary, NYSE, to Francois Mazur, Attorney, Division, SEC, dated 
February 1, 1995 (``NYSE Amendment No. 1''); and letter from Gerald 
D. O'Connell, First Vice President, Market Regulation and Trading 
Operations, PHLX, to Glen Barrentine, Team Leader, Division, SEC, 
dated February 2, 1995 (``PHLX Amendment No. 1'').
    \7\Among other things, the SROs' Amendments No. 1 made 
conforming changes to clarify the wording of the re-entry provisions 
of the rule proposals.
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II. Description of Proposals

    The proposed rule changes adopt uniform enabling rules for the 
implementation of a continuing education program for the securities 
industry.

A. Background

    In May 1993, a self-regulatory organization task force (``Task 
Force'') was formed by the AMEX, CBOE, MSRB, NASD, NYSE, and PHLX, 
which also included 12 representatives from a wide range of broker-
dealer firms, to study the continuing education needs of the securities 
industry. In September 1993, the Task Force issued a report 
recommending a formal two-part continuing education program that would 
require uniform, industry-wide, periodic training for registered 
persons in regulatory matters and ongoing training programs conducted 
by firms to keep their employees updated on job and product-related 
subjects. The Task Force also recommended that a permanent Council on 
Continuing Education, composed of broker-dealer and SRO 
representatives, be formed to develop the content and provide ongoing 
maintenance of the continuing education program. Pursuant to this 
recommendation, the Securities Industry/Regulatory Council on 
Continuing Education (``Council'') was formed in September 1993, with 
representatives from six SROs and thirteen broker-dealers.
    After studying the recommendations of the Council, the SROs 
participating in the Council submitted proposed rule changes with the 
Commission to adopt continuing education requirements. The proposed 
rule changes could codify the Task Force's recommendations, allow 
uniform implementation of the continuing education program, and provide 
a means for the SROs to monitor and enforce the program's requirements.

B. The Regulatory Element

    The Regulatory Element requires uniform, periodic training in a 
variety of regulatory subjects. It provides that registered persons, 
unless exempt, must complete a prescribed training program after their 
second, fifth, and tenth registration anniversary dates.\8\ The 
Regulatory Element will not apply to registered persons whose 
activities are limited solely to the transaction of business on the 
floor of a national securities exchange with members or registered 
broker-dealers.\9\ The Regulatory Element also will not apply to 
persons registered for more than ten years as of the effective date of 
the rule, unless such persons become subject to the re-entry provisions 
described below. Persons registered for ten years or less as of the 
effective date of the rule will be required to satisfy the Regulatory 
Element and complete the computer-based training program after the 
occurrence of the next relevant registration anniversary date and on 
any applicable registration anniversary date(s) thereafter.\10\

    \8\Any registered person who has terminated his or her 
association with a member and who, within two years of the date of 
termination, becomes reassociated in a registered capacity with a 
member, would be required to complete the training program at such 
intervals (two, five, and ten years) as would apply based upon the 
individuals' initial registration anniversary date rather than the 
date of reassociation in a registered capacity. In the event a non-
associated person's second, fifth, or tenth anniversary date passes 
without such individual completing the appropriate phase of the 
training program on a timely basis, that person would be required to 
complete such phase prior to becoming reassociated in a registered 
capacity.
    \9\Amendments No. 1 as filed by the NYSE, AMEX, CBOE, CHX, PSE, 
and PHLX revised the language of the proposal to clarify that the 
foregoing exemption covers non-member registered persons as well as 
registered persons who are members. See supra note 6.
    \10\As a result, a person whose tenth year anniversary date 
falls on the implementation date of the continuing education 
requirement would have to participate in the Regulatory Element 
within 120 days of that date. Alternatively, a person registered 
more than ten years on the implementation date, and not subject to a 
disciplinary action within the last ten years, would not have to 
participate in the Regulatory Element.
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    The Regulatory Element will be administered using computer-based 
interactive training techniques and will consist of standardized 
subject matters covering compliance, ethics, and sales practice issues, 
among other subjects. Failure to complete the program within prescribed 
time-frames (i.e., within 120 days after the occurrence of the 
applicable registration anniversary date, or as otherwise determined by 
the SROs) will result in a person's registration being deemed inactive 
and that person being prohibited from performing the functions of a 
registered person until such time as the person has completed the 
program. The applicable SRO will terminate administratively the 
registration of anyone who is inactive for two years, provided that 
upon application and a showing of good cause, the SRO may allow a 
registered person additional time to satisfy the program 
requirements.\11\

    \11\Anyone administratively terminated must requalify by taking 
the appropriate exam (e.g., the General Securities Registered 
Representative Examination or ``Series 7'') before such person's 
registration could be reactivated. The Commission recently approved 
the use of a revised Series 7 examination. See Securities Exchange 
Act Release Nos. 35021 (November 29, 1994), 59 FR 62768 (December 6, 
1994) (approving PHLX proposal), and 34853 (October 18, 1994), 59 FR 
53694 (October 25, 1994) (approving NYSE proposal).
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    Unless otherwise determined by a self-regulatory organization, a 
registered person, including anyone who has completed all or part of 
the Regulatory Element of the program or who meets the exemption for 
persons registered more than ten years, will be required to re-enter 
the Regulatory Element and satisfy all of its requirements in the event 
such person: [[Page 8428]] 
    1. because subject to any statutory disqualification as defined in 
Section 3(a)(39) of the Act;\12\

    \12\15 U.S.C. Sec. 78c(a)(39) (1988 & Supp. 1993).
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    2. becomes subject to suspension or to the imposition of a fine of 
$5,000 or more for violation of any provision of any securities law or 
regulation; or any agreement with, or rule or standard of conduct of, 
any securities governmental agency, securities self-regulatory 
organization, or as imposed by any such regulatory or self-regulatory 
organization in connection with a disciplinary proceeding; or
    3. is ordered as a sanction in a disciplinary action to re-enter 
the continuing education program by any securities governmental agency 
or securities self-regulatory organization.\13\

    \13\Amendment No. 1 as filed by the SROs revised the language of 
the proposal to provide that an order to re-enter the continuing 
education program may be made by any securities governmental agency 
or securities self-regulatory organization. Previously, the proposal 
provided that such an order was to be made only by the ``Commission, 
any securities self-regulatory organization or any state securities 
agency.'' See supra note 6.
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    Re-entry begins with initial participation within 120 days of the 
registered person become subject to the statutory disqualification, or 
the disciplinary action becoming final, and on three additional 
occasions thereafter, at intervals of two, five, and ten years after 
re-entry.\14\ Although the re-entry provision applies notwithstanding 
that a registered person has completed all or part of the program 
requirements based on length of time as a registered person or 
completion of ten years of participation in the program, it does not 
apply any registered person whose activities are limited solely to the 
transaction of business on the floor with the registered persons.\15\

    \14\Amendment No. 1 as filed by the SROs revised the language of 
the proposal to clarify that the 120 day period would start to run 
upon a registered person becoming subject to a statutory 
disqualification as well as within 120 days of a disciplinary action 
being final. Id.
    \15\Id.
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C. The Firm Element

    To satisfy the Firm Element of the program, SRO members are 
required to develop and administer training programs to enhance the 
knowledge, skills, and professionalism of their registered sales, 
trading, and investment banking personnel who have direct contact with 
customers, and for the immediate supervisors of such persons. Members 
must prepare training plans that take into consideration the 
organization's size, organizational structure, scope of business 
activities, and regulatory developments. In addition, training plans 
should take advantage of the feedback that will be generated from the 
Regulatory Element regarding the performance of covered persons. At a 
minimum, programs used to implement a member's training plan must be 
appropriate for the business and associated risk factors, suitability 
and sales practice considerations, and applicable regulatory 
requirements, of the securities products offered by the member.
    Members will be required to review and, if necessary, update their 
training plans annually. The SROs may require their members, either 
individually or as part of a group, to provide specific training in any 
areas the SROs deem necessary. Persons subject to the training plan 
will have an affirmative obligation to participate in the programs 
identified by the member. Accordingly, members will be required to 
maintain records documenting the content of their training programs and 
the completion of the program by registered persons covered under the 
plan.
    The SROs will not pre-approve training materials and programs 
developed by members or providers. The SROs will, however, communicate 
regularly with members regarding their expectations for the content of 
training programs. As the program evolves, it is expected that 
educational standards will be defined by the SROs for products and 
services where heightened regulatory concerns exist.

D. Effective Date

    The effective date for the Regulatory Element portion of the 
program is July 1, 1995. Any person registered ten years or less as of 
the effective date shall participate initially within 120 days after 
the occurrence of such person's second, fifth, or tenth registration 
anniversary date, whichever anniversary date first applies. The SROs 
intend that the requirements of the Firm Element be implemented in two 
steps under which members will be required to have completed their Firm 
Element plans by July 1995, with actual implementation of the plans no 
later than January, 1996.

III. Comments Received by the Commission

    The Commission received two comment letters regarding the SROs' 
proposals, one from the Boston Stock Exchange (``BSE''),\16\ and the 
other from the Certified Financial Planner Board of Standards, Inc. 
(``CFPBS'').\17\ The BSE supports the SROs' proposals and believes that 
implementation of the continuing education program will elevate the 
quality of the securities markets and increase the level of service and 
protection afforded investors.

    \16\See letter from John I. Fitzgerald, Executive Vice 
President, Legal Affairs and Trading Services, BSE, to Jonathan G. 
Katz, Secretary, SEC, dated January 25, 1995.
    \17\See letter from Robert P. Goss, CFP, Executive Director, 
CFPBS, to Secretary, SEC, dated January 4, 1995. The CFPBS 
establishes qualifications for initial professional certification 
that include education, examination, experience, and ethics 
requirements. In addition, it develops and administers continuing 
post-certification requirements and disciplinary procedures for its 
licensees. The CFPBS licenses nearly 30,000 persons in the United 
States, of whom approximately 18,000 are licensed to sell 
securities.
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    The CFPBS is concerned that certain requirements of the Firm 
Element could impose continuing education requirements beyond those 
currently imposed by the CFPBS upon its licensees. The CFPBS would like 
the continuing education requirements proposed by the SROs to be 
completely reciprocal with those of the CFPBS.
    While the Commission is sympathetic to the concerns of the CFPBS, 
it believes that the specialized knowledge expected of individuals who 
are licensed to sell securities warrant the imposition by the SROs of 
educational requirements that exceed those required by the CFPBS of its 
licensees.

IV. Comments Solicited By the SROs

    On August 15, 1994, the NASD published Special Notice to Members 
(``NTM'') 94-59 to request comment regarding the NASD's draft rules to 
create a mandated continuing education program for the securities 
industry. thirty-three comment letters were received in response, of 
which five opposed the proposal, and the remaining commenters either 
expressed support for, or were not opposed to, the proposal. In 
addition, on August 15, 1994, the MSRB published its proposed 
Continuing Education Requirement, Rule G-3, and subsequently received 
five comment letters.\18\ The NYSE received one comment letter.

    \18\MSRB Reports, Vol. 14, No. 4 (August 15, 1994).
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A. Comments Regarding the Regulatory Element

    Several commenters expressed concern about certain provisions of 
the draft rules. These concerns include a perceived ambiguity regarding 
when registered persons must participate in the Regulatory Element; the 
effects of inactive status and how to reactivate registration; and the 
apparent ability of the SEC and the SROs arbitrarily to mandate re-
entry into the Regulatory Element. The SROs subsequently addressed 
these concerns in the [[Page 8429]] proposals they filed with the 
Commission.\19\

    \19\See infra, Part IV, Section C.
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    Other concerns were raised with respect to the Regulatory Element, 
including its cost and focus (some found its scope too broad, others 
too narrow). Concern also was expressed that the re-entry provision's 
disciplinary fine threshold was ambiguous as written and could be 
unfair in application. Other commenters focused on the statistics to be 
generated by the Regulatory Element. Specifically, they were concerned 
about the types of statistics that would be available, and the intended 
and acceptable uses of such statistics.
    Several commenters were concerned that the Regulatory Element would 
only be administered at NASD operated testing centers. Suggested 
alternatives included administering the Regulatory Element at firms, 
subject to appropriate controls, and reliance on third party 
interactive programs similar to those provided to the futures industry.
    One commenter suggested that the securities industry model the 
Regulatory Element after state insurance continuing education programs, 
in which the licensing authority imposes the regulatory requirement 
directly on the individual, rather than on the firm. Another suggestion 
was that the Central Registration Depository (``CRD'')\20\ help firms 
comply with the Regulatory Element. Specifically, CRD could be used by 
firms to determine the length of service of their registered persons 
and to identify those that would be subject to the Regulatory Element 
in each of the next few years.

    \20\CRD is a computerized filing and data processing system 
operated by the NASD that maintains registration information 
regarding registered broker-dealers and their registered personnel 
for access by state regulators, SROs, and the Commission.
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B. Comments Regarding the Firm Element

    A concern expressed by several commenters regarding the Firm 
Element was the cost it will impose on smaller firms. To mitigate this 
effect, it was suggested that the SROs prepare and administer training 
programs; provide subsidies to smaller firms to help them comply with 
the Firm Element; or that a video satellite program be created that 
would enable firms to secure qualified speakers, and include material 
that would comply with the Firm Element.
    Several commenters stated that the standards for the Firm Element 
are too vague to allow firms to ensure proper compliance. Some 
commenters suggested that the Firm Element focus on suitability, and 
that some form of pre-approval be provided regarding the contents of a 
firm's program. Another commenter questioned the usefulness of feedback 
from the Regulatory Element in developing an appropriate Firm Element. 
Concern also was expressed regarding the apparent authority of an SRO 
arbitrarily to prescribe specific training for a member firm. Finally, 
there was uncertainty regarding those who would be deemed ``covered 
persons.''

C. Response to Comments

    In their filings with the Commission, the SROs addressed certain of 
the commenters' concerns by making three technical changes to the 
Regulatory Element portion of the rules as originally drafted. First, 
the SROs revised the rules to state clearly that registered persons 
must participate in the Regulatory Element on three occasions: after 
the occurrence of their second, fifth, and tenth registration 
anniversary dates. Second, the SROs expanded the provision concerning 
failure to complete the Regulatory Element to state that a registration 
that is inactive for a period of two calendar years would be terminated 
administratively, and that a person whose registration is so terminated 
must requalify by taking the appropriate examination, before such 
person's registration could be reactivated. Third, the SROs revised the 
re-entry provision of the Regulatory Element to clarify that a 
securities governmental agency or securities SRO could only require re-
entry into the program in connection with a sanction in a disciplinary 
action. This change is meant to address the concerns of those 
commenting on the due process issues that could arise if regulatory 
authorities were able to mandate re-entry arbitrarily.
    In response to comments received, the Council has stated that the 
CRD system will be used to track and communicate anniversary dates and 
evidence of completion of the Regulatory Element. The Regulatory 
Element's computer based systems will also capture, store, and analyze 
data that will indicate who took the training, when, and where, as well 
as other information.

V. Discussion

    The Commission believes that the SROs' proposed rule changes are 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to national securities exchanges, 
national securities associations, and the MSRB and, in particular, the 
respective requirements of Sections 6(b)(5), 15A(b)(6), and 
15B(b)(2)(C) of the Act.\21\ Sections 6(b)(5), 15A(b)(6), and 
15B(b)(2)(C) require, among other things, that the rules of an 
exchange, an association, or the MSRB, respectively, be designed to 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, protect investors and the public 
interest. The Commission further believes that the proposed rule 
changes also are consistent with the respective provisions of Sections 
6(c)(3)(B), 15A(g)(3)(A), and 15B(b)(2)(A) of the Act,\22\ each of 
which makes it the responsibility of an exchange, an association, or 
the MSRB to prescribe standards of training, experience and competence 
for persons associated with SRO members.

    \21\15 U.S.C. Secs. 78f(b)(5), 78o-3(b)(6), and 78o-4(b)(2)(C) 
(1988).
    \22\15 U.S.C. Secs. 78f(c)(3)(B), 78o-3(g)(3)(A), and 78o-
4(b)(2)(A) (1988).
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    The Commission also believes that the proposed rule change is 
consistent with the purposes underlying Section 15(b)(7) of the 
Act,\23\ which generally prohibits a registered broker-dealer from 
effecting any transaction in, or inducing the purchase or sale of, any 
security unless such broker-dealer meets the standards of training 
experience, competence, and other qualifications as the Commission 
finds necessary or appropriate in the public interest or for the 
protection of investors.\24\ The Commission believes that the SROs' 
proposals to impose affirmative obligations on registered persons on a 
continuing basis are an appropriate means of maintaining and 
reinforcing the qualification standards applicable when a person first 
is registered. Moreover, it is Commission policy to rely principally on 
the SROs for the formulation and administration of qualification 
standards, subject to Commission review and oversight.\25\

    \23\15 U.S.C. Sec. 78o(b)(7) (1988).
    \24\Id.
    \25\See Rule 15b7-1 under the Act, 17 CFR 240.15b7-1 (1994), and 
Securities Exchange Act Release No. 32261 (May 4, 1993), 58 FR 27656 
(May 11, 1993) (in adopting Rule 15b7-1 to require broker-dealers to 
comply with SRO qualification standards, the Commission stated that 
it has been longstanding Commission policy to rely principally on 
the SROs in the formulation and administration of qualification 
standards, subject to Commission review and oversight).
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    The SROs' proposals convey broadly applicable information relating 
to compliance, regulatory, ethical, and general sales practice 
standards, as well as job related material for specific professional 
areas and products. The SROs have divided the continuing 
[[Page 8430]] education program into two parts: The Regulatory Element, 
which emphasizes subjects regarding legal and ethical standards, and 
the Firm Element, which contemplates the timely transmission of product 
related information to maintain and expand individuals' professional 
knowledge. Taken together, the Elements form the basis for an 
educational program that should ensure that registered persons have the 
training and knowledge necessary to conduct themselves in an 
appropriate professional manner, over the course of their careers. The 
Commission also notes that the re-entry provision of the Regulatory 
Element, which is triggered by disciplinary action, will ensure that 
those individuals who have not complied with all applicable regulatory 
requirements, receive further training as a condition to their re-entry 
into business.
    The Commission believes that a continuing education requirement for 
persons in the securities industry, administered pursuant to industry 
developed standards, will benefit public investors as a result of the 
increased knowledge and enhanced understanding of regulatory and 
ethical standards by industry members. SRO qualification of registered 
persons of broker-dealers is of critical importance in promoting 
compliance with the requirements of the federal securities laws. 
Increasing the sensitivity of registered persons to regulatory and 
ethical matters also should enhance investor confidence in the 
securities industry. Moreover, the recent attention that has been 
devoted to derivatives underscores the need for securities industry 
personnel to receive thorough training in the products in which they 
deal.
    The SROs have noted that the Regulatory Element of the program 
initially will be administered only in the NASD's testing centers, 
stating that this is necessary to allow the NASD to manage the 
introduction of the program in a reasonable manner. Nevertheless, 
interest has been expressed in permitting member firms either to 
administer the Regulatory Element in-house, or to solicit the services 
of outside vendors. While recognizing the concerns of the Council and 
the SROs regarding the technological and administrative issues that 
arise in connection with the in-house administration of the Regulatory 
Element, the Commission encourages the Council and the SROs to continue 
to study whether practical and reasonable alternatives to the NASD's 
testing centers can be developed.\26\

    \26\Specifically, delivery of the Regulatory Element other than 
through the NASD's testing centers would require that appropriate 
safeguards be developed to ensure the integrity of the program and 
the ability to capture the necessary information for feedback.
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    The Commission notes with approval that the Firm Element Committee 
of the Council is developing guidelines for dealers' use in devising 
and carrying out training programs to meet the requirements of the Firm 
Element, including providing guidance as to how different firms might 
approach the requirements (e.g., firms that deal with one product, 
small firms, and firms with large numbers of very small offices or solo 
representatives).
    These guidelines will offer suggestions intended to help firms 
devise appropriate and reasonable programs consistent with their own 
unique characteristics and businesses. The Commission believes that 
such guidance will particularly benefit smaller firms and should lessen 
their costs of compliance with the Firm Element. The Commission 
encourages the SROs, as they gain experience with the continuing 
education program, to continue such efforts.

VI. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\27\ that the proposed rule changes (File Nos. SR-AMEX-94-59, SR-
CBOE-94-49, SR-CHX-94-27, SR-MSRB-94-17, SR-NASD-94-72, SR-NYSE-94-43, 
SR-PSE-94-35, and SR-PHLX-94-52) are approved.

    \27\15 U.S.C. Sec. 78s(b)(2) (1988).

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-3569 Filed 2-13-95; 8:45 am]
BILLING CODE 8010-01-M