[Federal Register Volume 60, Number 121 (Friday, June 23, 1995)]
[Notices]
[Pages 32721-32722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15369]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35852; File No. SR-CHX-95-06]


Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change To Add Interpretation 
and Policies .01, .02, and .03 Under Rule 3 of Article V of the 
Exchange's Rules and To Add a New Clerk's Fee

June 16, 1995.
    On March 1, 1995 the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to add interpretation and 
policies .01, .02 and .03 under Rule 3 of Article V of the Exchange's 
Rules and to add a new clerk's fee.

    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4 (1994).
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    The proposed rule change was published for comment in Securities 
Exchange Act Release No. 35667 (May 3, 1995), 60 FR 24947 (May 10, 
1995). No comments were received on the proposal.
    First, the proposed rule change adopts interpretations under which 
all Floor employees will be required to submit a Uniform Application 
for Securities Industry Registration or Transfer (``Form U-4'') in 
order to become registered.\3\ The Form U-4 requires detailed 
disclosure of background information, including information regarding 
employment and disciplinary history, and is the standard industry form 
submitted to Self Regulatory Organizations (``SROs'') for individuals 
required to be registered (including securities salespersons and 
traders). The Form U-4 also requires this information to be updated 
whenever the information submitted becomes inaccurate or incomplete.

    \3\ Currently, only Floor employees that accept orders from the 
public and applicants for membership are required to submit a Form 
U-4 to the Exchange.
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    Second, the Exchange also is imposing a requirement that a member 
(or member organization) promptly give written notice of termination of 
a Floor employee to the Exchange on the Uniform Termination Notice for 
Securities Industry Registration (Form U-5) \4\ and concurrently 
provide a copy of such notice to the person who has been terminated.

    \4\ Form U-5 contains information relating to the circumstances 
surrounding the termination of an applicant's prior employment, and 
must be completed and submitted to the NASD, and other SROs 
requiring such a submission under their respective rules, whenever a 
registered employee is terminated.
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    Third, the proposal will require all Floor employees of members and 
member organizations and all Exchange members to be fingerprinted and 
to submit such fingerprints to the Exchange for identification, 
background checking, and appropriate processing.\5\

    \5\ Fingerprinting currently is required for each partner, 
director, officer or employee of broker-dealers pursuant to Rule 
17f-2 under the Act, with certain exceptions. Floor clerks are not 
required by Rule 17f-2 to submit fingerprints because they do not 
physically handle monies or securities. See 17 CFR 240.17f-2 (1994).
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    Finally, the proposal will impose an initial registration fee on 
clerks of $50.
    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).\6\ In particular, 
the Commission believes the proposal is consistent with the Section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, and, in general, to protect investors and the 
public. Further, the Commission believes that the proposal is 
consistent with Section 6(c)(2) of the Act \7\ in that it should assist 
the Exchange in fulfilling its regulatory responsibilities regarding 
the granting of membership by identifying those individuals who are 
subject to a statutory disqualification under Section 3(a)(39) of the 
Act.\8\ In [[Page 32722]] addition, it should assist the Exchange in 
providing detailed information to the Commission under certain 
circumstances as required in Rule 19h-1.\9\ Moreover, the Commission 
believes that the additional fingerprinting requirements being imposed 
by the Exchange will further enhance security measures implemented by 
the CHX and is consistent with Section 17(f)(2) of the Act.\10\ 
Finally, the Commission finds that the clerk's fee is consistent with 
Section 6(b)(4) of the Act, which requires exchange rules to provide 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and issuers and other persons using its 
facilities.\11\

    \6\ 15 U.S.C. 78f(b) (1988).
    \7\ See 15 U.S.C. 78f(c) (1988).
    \8\ The Exchange is required to make a determination in each 
case where an individual who is subject to a statutory 
disqualification (e.g., is suspended or barred by an SRO, or has 
been convicted of any felony or certain enumerated misdemeanors) 
seeks admission to or continuance in membership, participation in, 
or association with a member or member organization. See 15 U.S.C. 
78c(a)(39) (1988).
    \9\ Specifically, the Rule requires SROs to notify the 
Commission whenever it determines to admit or continue in membership 
or participation or association with a member or member 
organization, any person who is subject to a statutory 
disqualification. See 17 CFR 240.19h-1 (1994).
    \10\ See supra note 5.
    \11\ 15 U.S.C. 78f(b)(4) (1988).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-CHX-95-06) is approved.

    \12\ 15 U.S.C. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\

    \13\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-15369 Filed 6-22-95; 8:45 am]
BILLING CODE 8010-01-M