[Federal Register Volume 63, Number 250 (Wednesday, December 30, 1998)]
[Notices]
[Pages 71991-71993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34514]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40812; File No. SR-NYSE-98-44]
Self-Regulatory Organizations; Proposed Rule Change by the New
York Stock Exchange, Inc. Relating to an Interpretation With Respect to
Rule 344 (``Supervisory Analysts'')
December 21, 1998.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 3, 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
Exchange. 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 interpretation with respect
to the meaning and administration of Exchange Rule 344 (``Supervisory
Analysts''). Additions are italicized; deletions are bracketed.
Rule 344
/01 Qualifications
Supervisory Analyst candidates shall qualify by taking and
passing the Supervisory Analyst (Series 16) Examination.
Experience
Appropriate experience for a candidate for Supervisory Analyst
[has been defined as] means having at least three years prior
experience [as a securities analyst] within the immediately
preceding six years involving securities or financial analysis.
Examples of appropriate experience may include the following:
Equity or Fixed Income Research Analyst;
Credit Analyst for a securities rating agency;
Supervising preparation of materials prepared by
financial/securities analysts;
[[Page 71992]]
Financial analytical experience gained at banks,
insurance companies or other financial institutions;
Academic experience relating to the financial/
securities markets/industry.
/02 No Change
/03 Chartered Financial Analyst (CFA)
Successful completion of the CFA Level I Examination given by
the Institute of Chartered Financial Analysts (in lieu of completion
of Levels I, II and III for a full CFA designation) will suffice to
allow a Supervisory Analyst candidate to [take a special version of
the Supervisory Analyst's examination which is limited to Exchange
Rules on research standards and related matters] qualify by taking
Part 1 of the Series 16 Qualification Examination.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the NYSE 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 Exchange 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
The purpose of the proposed rule change is to set forth an
interpretation concerning the meaning and administration of Exchange
Rule 344 with respect to establishing standards for the qualification
of candidates for Supervisory Analyst designation at member
organizations. It is intended that this interpretation will be
published as an Interpretation Memorandum for inclusion in the
Exchange's Interpretation Handbook.
Exchange Rule 344 sets the standards that must be met by candidates
for Supervisory Analyst designation at member organizations. Research
reports issued by a member organization must, under the provisions of
Rule 472(b) (``Communications with the Public''), be prepared or
approved by a Supervisory Analyst.
Rule 344 requires that, to be approved by the Exchange, Supervisory
Analysts must provide evidence of ``appropriate experience'' and pass
the Supervisory Analyst Examination (the ``Series 16 Examination'') or
complete CFA Level I and pass Part I of the Series 16 Exam. The
examination consists of two parts: Part I, Regulatory Administration,
and Part II, Review of Security Analysis. Currently, the Exchange deems
``three years prior experience as a securities analyst'' as
constituting ``appropriate experience.'' The Exchange proposes to amend
the existing interpretation to Rule 344 to require Supervisory Analyst
candidates to have three years experience, within the most recent six
years, involving securities or financial analysis in order to be
qualified. Candidates will continue to be required to qualify by taking
and passing the Series 16 Examination.
Member organizations have expressed their belief that the current
three year securities analyst experience requirement is too limiting in
today's business environment where the role of the Supervisory Analyst
has changed. Previously, a Supervisory Analyst typically performed
actual analysis and wrote reports in addition to supervising the
preparation of and reviewing the reports written by others. Currently,
it is common for Supervisory Analysts to perform functions limited to
the review of research reports written by others. Accordingly, three
years experience as a ``securities analyst'' should not be the only
acceptable experience that a person may have to be qualified to perform
the job function.
Examples of appropriate experience under the proposed revised
interpretation include (1) equity or fixed income research analyst; (2)
supervisor of preparation of materials by analysts; (3) credit analyst
for a securities rating agency; certain financial analytical
experience; and (4) certain academic experience. The Exchange believes
that this proposed interpretation will appropriately broaden the types
of experience that would be acceptable to qualify Supervisory Analyst
candidates.
The Exchange believes that the proposed rule change is consistent
with the requirements of Section 6(c)(3)(B) of the Act.\3\ 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 developed standards to ensure that persons
associated with Exchange members and member organizations as
Supervisory Analysts are appropriately qualified and meet experience
requirements.
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\3\ 15 U.S.C. 78f(c)(3)(B).
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In addition, under Section 6(c)(3)(B) of the Act, 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
proposed this new interpretation to establish appropriate experience
requirements of Supervisory Analyst candidates.
B. Self-Regulatory Organization's Statement on Burden on Competition
The NYSE does not believe that the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or 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 NYSE consents, the Commission will:
(A) By order approve such 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 proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, 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 NYSE. All
submissions should refer to File No.
[[Page 71993]]
SR-NYSE-98-44 and should be submitted by January 20, 1999.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-34514 Filed 12-29-98; 8:45 am]
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