[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