[Federal Register Volume 62, Number 33 (Wednesday, February 19, 1997)]
[Notices]
[Pages 7485-7486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4048]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38274; International Series Release No. 1051; File No. 
SR-CBOE-97-04]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Incorporated Relating to Adoption of Foreign Examination 
Modules

February 12, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ notice is hereby given that on January 24, 1997, the 
Chicago Board Options Exchange, Incorporated (``CBOE or Exchange'') 
filed with Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the CBOE. The CBOE has designated this 
proposal as a noncontroversial rule change pursuant to Section 
19(b)(3)(A) of the Act and subparagraph (e)(6) of Rule 19b-4. The 
Commission is publishing this notice to solicit 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 CBOE proposes to adopt certain foreign examination modules for 
the United Kingdom (``U.K.''), Canada and Japan, which would reduce 
duplicative qualification standards. The exams were developed by the 
New York Stock Exchange (``NYSE'') and currently are in use by the NYSE 
and National Association of Securities Dealers (``NASD''). Exchange 
Rule 9.3 has certain requirements for registered representatives, one 
of which is passing various tests. The Exchange previously has 
recognized the requirement that all registered representative pass the 
Series 7 examination. The CBOE now is expanding the types of exams that 
may satisfy the Series 7 requirement.

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 CBOE 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 CBOE has prepared summaries, set forth in sections 
A, B, and C below, of the most significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The purpose of the proposed rule change is to adopt foreign 
examination modules for the U.K., Canada and Japan. Exchange Rule 9.3 
has certain requirements for registered representatives, one of which 
is passing various tests. The Exchange previously has recognized the 
requirement that all registered representatives pass the Series 7 
examination. The CBOE now is expanding the types of exams that may 
satisfy the Series 7 requirement.
    These foreign examination modules allow persons in good standing 
with the securities regulators of their respective countries to qualify 
as general securities registered representatives (Series 7 registrants) 
by successfully completing certain modified general securities 
representative examinations which have been developed by the NYSE.\2\
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    \2\ See Securities Exchange Act Release No. 27967 (May 1, 1990), 
55 FR 19131 (May 8, 1990) (approving File No. SR-NYSE-89-22, Series 
17); Securities Exchange Act Release No. 36629, International Series 
Release No. 909 (Dec. 21, 1995), 60 FR 67385, corrected, Securities 
Exchange Act Release No. 36629A, International Series Release No. 
909A (Jan. 4, 1996), 61 FR 744 (Jan. 10, 1996) (approving File No. 
SR-NYSE-95-29, Series 37 and Series 38); Securities Exchange Act 
Release No. 36708, International Series Release No. 915 (Jan. 11, 
1996), 61 FR 1808 (Jan. 23, 1996) (approving File No. SR-NYSE-95-36, 
Series 47).
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    The purpose of the proposal is to reduce duplicative qualification 
standards that foreign registered representatives from the U.K., Canada 
and Japan encounter to qualify as a U.S. general securities registered 
representative, the equivalent of the Series 7 registration. A person 
who qualifies through one of these examinations may perform all of the 
functions permitted of a person who holds a Series 7 registration, with 
the exception of selling municipal securities. The examination modules 
for the U.K. (Series 17), Canada (Series 37/38) and Japan (Series 47) 
currently are in use by the NYSE and NASD.\3\ At the present time, the 
CBOE has no rule which allows CBOE registration of a person who has 
passed the Series 17, Series 37/38 or series 47 versions of the 
modified general securities representative examinations.
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    \3\ See Securities Exchange Act Release No. 27967 (May 1, 1990), 
55 FR 19131 (May 8, 1990) (approving File No. SR-NYSE-89-22, Series 
17); Securities Exchange Act Release No. 36629, International Series 
Release No. 909 (Dec. 21, 1995), 60 FR 67385, corrected, Securities 
Exchange Act Release No. 36629A, International Series Release 
No.909A (Jan 4, 1996), 61 FR 744 (Jan. 10, 1996) (approving File No. 
SR-NYSE-95-29, Series 37 and Series 38); Securities Exchange Act 
Release No. 36708, International Series Release No. 915 (Jan. 11, 
1996), 61 FR 1808 (Jan 23, 1996) (approving File No. SR-NYSE-95-36, 
Series 47); see also Securities Exchange Act Release No. 36825 (Feb. 
9, 1996), 61 FR 6052 (approving File No. SR-NASD-96-04, Series 37 
and 38); Securities Exchange Act Release No. 37112 (April 12, 1996), 
61 FR 17339 (approving File No. SR-NASD-96-13).
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    The CBOE wishes to give U.K., Canadian, and Japanese registered 
representatives the same advantage they have at the NYSE and NASD by 
eliminating duplicative examinations. the CBOE believes that these 
examinations will benefit both the Exchange and the foreign 
representative affected by the proposal.
    The Series 17 version, the Limited Registered Representative 
Examination,

[[Page 7486]]

is for U.K. registrants who have successfully completed the basic exam 
of the U.K. and who are in good standing with The Securities 
Association (``TSA'').\4\ Essentially, the modified Series 7 
Examination deletes those substantive sections of the Standard Series 7 
which overlap with the TSA examination. The Series 17 is a ninety (90) 
question examination dealing with U.S. securities laws, regulations, 
sales practices and special products drawn from the standard Series 7 
Examination.
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    \4\ TSA is a U.K. self-regulatory organization which regulates 
members of the U.K. exchanges and broker-dealer firms, and has rule 
making authority granted to it by the Securities and Investment 
Board.
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    The Series 37 version is for Canadian registrants who have 
successfully completed the basic core module of the Canadian Securities 
Institute program. the Series 38 version is for Canadian registrants 
who, in addition to having successfully completed the basic core module 
of the Canadian Securities Institute program, have also successfully 
completed the Canadian option and futures program. Both the Series 37 
and 38 share topics and test questions with the parent Series 7 program 
but cover only subject matter that is not covered, or not covered in 
sufficient detail, on the Canadian qualification examination. The 
Series 37 has 90 questions and is 150 minutes in duration, while the 
Series 38, an abbreviated version of the series 37, has only 45 
questions and is 75 minutes in duration. Forty-five questions 
pertaining to options from the series 37 were omitted from the Series 
38.
    To become registered with the Exchange, qualified Japanese 
registered representatives in good standing with the Japanese 
securities authorities would be required to obtain a passing score on 
the Series 37. As a subset of the Series 7, this 160 question and 240 
minute long module is designed to test a Japanese registered 
representative's knowledge of U.S. securities law, markets investment 
products, and sales practices.
    The statutory basis for these foreign examination modules lies in 
Section 6(c)(3)(B) of the Act. Under that section, it is the Exchange's 
responsibility to prescribe standards of training, experience, and 
competence for persons associated with Exchange members and member 
organizations. Pursuant to this statutory obligation, the Exchange has 
adopted examinations that are administered to establish that persons 
associated with Exchange members and member organizations have attained 
specified levels of competence and knowledge.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The CBOE does not believe that the proposed rule change will impose 
any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
(3) does not become operative for thirty days from January 24, 1997, 
the date on which it was filed, and the Exchange provided the 
Commission with written notice of its intent to file the proposed rule 
change at least five business days prior to the filing date, it has 
become effective pursuant to Section 19(b)(3)(A) of this Act \5\ and 
Rule 19b-4(e)(6) \6\ thereunder. At any time within sixty days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(e)(6).
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V. 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, NW., Washington, DC 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 in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
CBOE. All submissions should refer to the file number in the caption 
above and should be submitted by March 12, 1997.

    For the Commission by the Division of market Regulation pursuant 
to the delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4048 Filed 2-18-97; 8:45 am]
BILLING CODE 8010-01-M