[Federal Register Volume 64, Number 4 (Thursday, January 7, 1999)]
[Notices]
[Pages 1039-1040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-296]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 40861; File No. SR-BSE-98-14]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Boston 
Stock Exchange, Inc. Relating to its Arbitration Rules

December 29, 1998.
    Pursuant of Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on December 9, 1998 \3\ the Boston Stock Exchange, Inc. 
(``Exchange'') filed with the 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 Exchange. The 
Commission is publishing this notice and order to solicit comments on 
the proposed rule change from interested persons and to grant 
accelerated approval to the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4
    \3\ Technical, non-substantive corrections were made pursuant to 
a December 29, 1998 conversation between Karen Aluise, Boston Stock 
Exchange, and Kathy England, Assistant Director, Division of Market 
Regulation, SEC.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange seeks to amend its arbitration rules regarding 
arbitration of employment discrimination claims. The text of the 
proposed rule changes are as follows; additions are italicized.
* * * * *

CHAPTER XXXII

Arbitration

Arbitration Code

    Sec. 1(a) Members--Except as provided in subparagraph (c)(1) below, 
. . .
    (b) Customers or Non-Members--Except as provided in subparagraph 
(c)(1) below, . . .
    (c) Jurisdiction--. . .
    (1) A claim alleging employment discrimination, including any 
sexual harassment claim, in violation of a statute should be eligible 
for arbitration only where the parties have agreed to arbitrate the 
claim after it has arisen.
* * * * *

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 III 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

    (a) The purpose of the proposed rule change is to amend the 
Exchange's arbitration rules to exclude from mandatory arbitration any 
employee dispute between a registered representative or associated 
persons and a member organization alleging employment discrimination in 
violation of a statute, including sexual harassment, unless the parties 
to arbitrate the claim after it has arisen. This change follows the 
lead of the New York Stock Exchange (``NYSE'') \4\ and the National 
Association of Securities Dealers (``NASD'') \5\ concerning arbitration 
of employment discrimination claims in their respective fora, and is 
intended to prevent such claims from finding haven in the Exchange's 
arbitration forum unless there is a post-dispute arbitration agreement.
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    \4\ See Exchange Act Release No. 40858 (December 19, 1998) 
______ FR ____________ (January ____, 1998) (SR-NYSE-98-28).
    \5\ See Exchange Act Release No. 40109 (June 22, 1998) 63 FR 
35299 (June 29, 1998).
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    (b) The statutory basis for the proposed rule change is Section 
6(b)(5) of the Exchange Act, in that it is designed to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, and is not designed to permit 
unfair discrimination between customers, issuers, brokers or dealers.

[[Page 1040]]

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange 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

    The Exchange is requesting accelerated approval of the proposed 
rule change pursuant to Section 19(b)(2) to ensure that this rule 
becomes effective on January 1, 1999 in conjunction with the 
effectiveness of comparable rules of the NYSE, which was approved by 
the Commission on December 29, 1998). Other self-regulatory 
organizations (``SROs'') are adopting these rules or issuing 
interpretive releases to provide uniformity throughout the securities 
industry.

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 Exchange Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., 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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to file number SR-BSE-98-14 and 
should be submitted by January 28, 1999.

V. Conclusion

    The Exchange is requesting accelerated approval of the proposed 
rule change pursuant to Section 19(b)(2) to ensure that this rule 
becomes effective on January 1, 1999 in conjunction with the 
effectiveness of comparable NYSE rules. It is expected that in the near 
future other SROs will adopt similar rules or issue interpretive 
releases to provide uniformity throughout the securities industry. To 
prevent prospective plaintiffs from being disadvantaged by any 
inconsistency in the effective dates of SROs rule changes or 
interpretive releases, the Commission finds good cause for approving 
the proposal prior to the 30th day after the date of publication of 
notice of the filing in the Federal Register.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\6\ that the proposal, SR-BSE-98-14, be and hereby is 
approved on an accelerated basis.\7\

    \6\ 15 U.S.C. 78s(b)(2).
    \7\ In approving the proposal, the Commission has considered the 
rule's impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-296 Filed 1-6-99; 8:45 am]
BILLING CODE 8010-01-M