[Federal Register Volume 63, Number 236 (Wednesday, December 9, 1998)]
[Notices]
[Pages 67969-67970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32605]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40720; File No. SR-NYSE-98-36]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. to Amend Rule 35 (``Floor 
Employees To Be Registered'') and Adopt a New Interpretation to Rule 35

November 30, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934,\1\ (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on October 22, 1998, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the NYSE. 
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).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change consists of an amendment to Exchange Rule 
35 (``Floor Employees to be Registered'') and a new interpretation with 
respect to the administration of proposed amended Rule 35. The text of 
the proposed rule is as follows. Additions are italicized; deletions 
are [bracketed].

Proposed Amendments to Rule 35

Floor Employees To Be Registered

    Rule 35. No employee of a member or member organization shall be 
admitted to the Floor unless he is registered with, qualified by and 
approved by the Exchange, and upon compliance of both the employer 
and employee with such requirements as the Exchange may determine.

   Supplementary Material

    .10-.50 No Change
    .60 Qualifications for Registration--Unless otherwise determined 
by the Exchange, each candidate for registration shall qualify by 
meeting the training requirements and by passing applicable 
qualification examination(s) as prescribed by the Exchange.
    [.60] .70 No Change in Text

Proposed New Interpretation to Rule 35

Rule 35--Floor Employees to be Registered

    /01 Unless otherwise determined by the Exchange, all Floor 
employees of members or member organizations (i.e., Trading 
Assistants) shall pass the Trading Assistant Qualification 
Examination (``Series 25'').
    New Trading Assistant candidates must complete three months of 
training, including on-the-job and classroom training, as prescribed 
by the Exchange, prior to taking the Series 25 Examination. During 
the three month training period, the Trading Assistant candidate may 
perform the functions and duties of a Trading Assistant provided 
that the candidate is properly supervised. However, a new Trading 
Assistant candidate must complete required training and pass the 
Series 25 Examination before functioning as an ``unsupervised'' 
Trading Assistant (i.e., functioning without the specialized 
supervision required during the training period).

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 Exchange 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 and is set forth in sections A, B, and C below.

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

1. Purpose
    The purpose of the rule change is to revise Rule 35 to require 
Floor employees of members and member organizations to satisfy 
prescribed training and qualification examination requirements before 
being admitted to the Exchange Trading Floor. The proposed rule change 
will also adopt a new interpretation to Rule 35 to implement the 
qualification examination requirements for Floor Employees.
    Exchange Rule 35 dictates the terms under which an employee of a 
member or member organization may be admitted to the Exchange Trading 
Floor. Currently, the registration process for such Floor employees 
i.e., Post Clerks and Booth Clerks, also known as Trading Assistants, 
consists of submission to the Exchange of a completed Form U-4 
(``Uniform Application for Securities Industry Registration or 
Transfer'') and the candidate's fingerprints. Under the proposed 
amendments to Rule 35, these Trading Assistants, will have to be 
qualified by taking and passing appropriate qualification 
examination(s) and by meeting prescribed training requirements.
    In order to qualify Trading Assistants, the Exchange, in 
conjunction with a committee of Exchange Members and Trading 
Assistants, developed a new qualification examination, the Trading 
Assistant Qualification Examination (``Series 25 Examination''). The 
Series 25 Examination will ensue that Trading Assistants have the basic 
knowledge, skills and abilities necessary to perform the functions and 
carry out the responsibilities of a Trading Assistant. The Series 25 
Examination itself is the subject of a separate filing.\3\
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    \3\ Securities Exchange Act Release No. 40721 (November 30, 
1998).
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    The requirement to take and pass the Series 25 examination in order 
to qualify as a Trading Assistant will apply to all current and 
prospective Trading Assistants. The proposed new interpretation to Rule 
35 will establish that new Trading Assistants will be required to 
undergo three months of training (including on-the-job and prescribed 
classroom instruction provided by the Exchange) prior to taking the 
examination. New Trading Assistants will not be permitted to perform 
their functions without appropriate supervision until passing the 
examination. Current Trading Assistants would have one year from 
implementation of the qualification requirement to pass the examination 
and do not have to complete classroom training. If a current Trading 
Assistant fails the Series 25 examination twice, however, he or she 
must complete classroom training before retaking the examination. The 
NYSE intends to publish the new interpretation as an Interpretation 
Memorandum for inclusion in the Exchange's Interpretation Handbook.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(c)(3)(B) of the Act.\4\ Under that 
Section, it is the Exchange's responsibility to prescribe standards of 
training, experience and

[[Page 67970]]

competence for persons associated with Exchange members and member 
organizations.
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    \4\ 15 U.S.C. 78f(c)(3)(B)
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    In addition, under Section 6(c)(3)(B) of the Act, \5\ the Exchange 
may bar a natural person from becoming a member or person associated 
with a member, if such natural person does not meet such standards of 
training, experience and competence as are prescribed by the rules of 
the Exchange. Pursuant to this statutory obligation, the Exchange has 
developed an examination that will be administered to establish that 
Trading Assistants have attained specified levels of competence and 
knowledge.
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    \5\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal does not impose any 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

    Comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. 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. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of the filing will also be 
available for inspection and copying at the principal office of the 
NYSE. All submissions should refer to the File No. SR-NYSE-98-36 and 
should be submitted by December 30, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to the delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margater H. McFarland,
Deputy Secretary.
[FR Doc. 98-32605 Filed 12-8-98; 8:45 am]
BILLING CODE 8010-01-M