[Federal Register Volume 61, Number 77 (Friday, April 19, 1996)]
[Notices]
[Pages 17339-17341]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9636]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37112; International Series Release No. 967; File No. 
SR-NASD-96-13]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the National 
Association of Securities Dealers, Inc. Relating to the Use of the New 
York Stock Exchange's Modified General Securities Representative 
Examination (Series 47) to Qualify as a General Securities 
Representative

April 12, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 3, 1996, the 
National Association of Securities Dealers, Inc. (``NASD'' or 
``Association'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the NASD. The Commission is 
publishing this notice to solicit

[[Page 17340]]

comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD has filed a proposed change to Schedule C of the By-Laws 
that would allow persons in good standing with the Japanese securities 
regulators to qualify as general securities representatives (Series 7) 
by passing a modified general securities representative examination 
(Series 47) which was developed by the New York Stock Exchange 
(``NYSE''). The following is the full text of the proposed rule change 
to Schedule C. New language is italicized.

Schedule C to the NASD By-Laws

* * * * *

Part III Registration of Representatives

* * * * *

(2) Categories of Representative Registration

(a) General Securities Representative

* * * * *
    (ii)
* * * * *
    (h) A person presently registered and in good standing as a 
representative with any Japan stock exchange, or with any Japan 
Securities Dealers Association, and who has passed the Japan Module 
of the General Securities Registered Representative Examination, 
shall be qualified to be registered as a General Securities 
Representative except that such person's activities may not involve 
the solicitation, purchase and/or sale of municipal securities as 
defined in Section 3(a)(29) of the Act.\2\
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    \2\ The Commission notes, pursuant to a new rule numbering 
system for the NASD Manual anticipated to be effective no later than 
May 31, 1996, that this rule will become NASD Rule 1032(a)(2)(H).
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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 NASD 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 III below. The NASD 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
    It is the NASD's responsibility under Section 15A(g)(3) of the Act 
\3\ to prescribe standards of training, experience, and competence for 
persons associated with NASD members. Pursuant to this statutory 
obligation, the NASD has developed examinations and administers 
examinations developed by other self-regulatory organizations designed 
to establish that persons associated with NASD members have attained 
specified levels of competence and knowledge.
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    \3\ 15 U.S.C. 78o-3(g)(3).
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    This proposed amendment to Schedule C is intended to coordinate 
with the recent SEC approval of a NYSE rule that allows a qualified 
registered representative \4\ in good standing with the Japanese 
securities regulators to become qualified as a general securities 
representative (Series 7) by passing a modified general securities 
representative examination (Series 47) developed by the NYSE.\5\ This 
amendment is also necessary because of the requirement of Section 
15(b)(8) of the Act that requires most NYSE members to also be members 
of the NASD.\6\ Thus, there is a dual registration requirement with 
both the NYSE and the NASD for individuals who perform certain 
functions with NYSE members. At the present time, the NASD has no rule 
that allows for NASD registration of a person who has passed the 
modified qualification examination. The Series 47 examination is 160 
questions and is 240 minutes long.
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    \4\ The Commission notes that in order to become a registered 
representative in Japan, all of the applicants, both foreign and 
domestic, who do not meet certain experiential requirements must 
pass the Securities Sales Representative Qualification Examination. 
This test is composed of the Class 1 Examination, the Class 2 
Examination, and the Investment, Trust, and Bond Examination. An 
applicant's experience and area of interest determines which parts 
of the Securities Sales Representative Qualification Examination are 
applicable. See Securities Exchange Act Release No. 36514 (Nov. 27, 
1995), 60 FR 62118.
    \5\ See Securities Exchange Act Release No. 36708 (Jan. 11, 
1996), 61 FR 1808 (approving File No. SR-NYSE-95-36).
    \6\ 15 U.S.C. 78o(b)(8).
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2. Statutory Basis
    The NASD believes the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) \7\ and Section 15A(g)(3) \8\ of the 
Act in that the NASD is required to prescribe standards of training, 
experience, and competence for persons associated with NASD members. 
Pursuant to this statutory obligation, the NASD develops and 
administers examinations to establish that persons associated with NASD 
members have attained specified levels of competence and knowledge.
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    \7\ 15 U.S.C. 78o-3(b)(6).
    \8\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD believes the proposed rule change will impose no 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 NASD has neither solicited nor received written comments.

III. 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Also, copies of such filing will be available 
for inspection and copying at the principal office of the NASD. All 
submissions should refer to File No. SR-NASD-96-13 and should be 
submitted by May 10, 1996.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    After careful review, the Commission finds, for the reasons set 
forth below, that the NASD's proposed rule change is consistent with 
the requirements of Section 15A of the Act \9\ and the rules and 
regulations thereunder applicable to a national securities association. 
Specifically, the Commission believes the proposal is consistent with 
the

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requirements of Section 15A(b)(6) and Section 15A(g)(3)(B).\10\
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    \9\ 15 U.S.C. 78o-3.
    \10\ 15 U.S.C. 78o-3(b)(6) and 78o-3(g)(3)(B).
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    The Commission believes the proposal is consistent with Section 
15A(b)(6)\11\ because it is designed to foster cooperation with persons 
engaged in regulating transactions in securities and to help perfect 
the mechanism of a free and open market. The Series 47 reduces 
duplicative qualification requirement and, at the same time, allows the 
NASD to ensure that the Japanese representatives desiring to become 
registered with the NASD are fully qualified.
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    \11\ 15 U.S.C. 78o-3(b)(6).
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    The Commission believes the proposal is consistent with Section 
15A(g)(3)(B) \12\ because it establishes standards of training, 
experience, and competence for persons associated with NASD members. 
The Series 47 should provide comprehensive coverage of the topics 
contained in the Series 7 that are not covered, or are not covered in 
sufficient detail, in the Securities Sales Representative Qualification 
Examination. Accordingly, the Series 47, combined with the Securities 
Sales Representative Qualification Examination, should measure the 
qualifications of Japanese representatives adequately.
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    \12\ 15 U.S.C. 78f(c)(3)(B).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of the 
notice in the Federal Register. This will enable qualified Japanese 
registered representatives subject to the dual registration requirement 
of Section 15(b)(8)\13\ desiring to become registered with the NASD to 
immediately reap the benefits of reduced regulatory duplication. In 
addition, the NASD's proposal does not raise any new regulatory 
concerns because it is adopting the same Series 47 module previously 
proposed by the NYSE and approved by the Commission.\14\ Therefore, the 
Commission finds that there is good cause, consistent with Section 15A 
of the Act,\15\ to accelerate the approval of the NASD's proposal.
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    \13\ 14 U.S.C. 78o(b)(8).
    \14\ See Securities Exchange Act Release No. 36708 (Jan. 11, 
1996), 61 FR 1808 (approving File No. SR-SR-NYSE-95-36).
    \15\ 15 U.S.C. 78o-3.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NASD-96-13) is approved.

    \16\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR. 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-9636 Filed 4-18-96; 8:45 am]
BILLING CODE 8010-01-M