[Federal Register Volume 64, Number 13 (Thursday, January 21, 1999)]
[Notices]
[Pages 3330-3331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1324]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40943; File No. SR-NYSE-98-36]
Self-Regulatory Organizations; New York Stock Exchange, Inc.
Order Approving Proposed Rule Change To Amend Rule 35 (``Floor
Employees To Be Registered'') and Adopt a New Interpretation to Rule 35
January 13, 1999.
I. Introduction
On October 22, 1998, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend Rule 35 and add a new
interpretation with respect to the administration of proposed Rule 35.
The proposed rule change was published for comment in the Federal
Register on December 9, 1998.\3\ The Commission did not receive any
comments on the proposal. This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Securities Exchange Act Release No. 40720 (November 30,
1998), 63 FR 67969 (December 9, 1998).
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II. Description of the Proposal
The Exchange is proposing to amend Rule 35 to require floor
employees of members and member organizations to satisfy prescribed
training and successfully complete a qualification examination before
being admitted to the Exchange trading floor. The proposed rule change
also provides a new interpretation to Rule 35 to implement the
qualification examination requirements for floor employees.
Currently, floor employees i.e., post clerks and booth clerks, also
known as trading assistants (``Trading Assistants'') are only required
to submit a completed Form U-4 (``Uniform Application for Securities
Industry Registration or Transfer'') along with their fingerprints to
the Exchange before being admitted to the trading floor. Under proposed
Rule 35, Trading Assistants will be required, in addition to the
current requirements, to be qualified by taking and passing an
appropriate qualification examination and by meeting prescribed
training requirements.
The Exchange has been working with a committee of Exchange members
and Trading Assistants to develop a new qualification exam, the Trading
Assistant Qualification Examination (``Series 25 Examination'').\4\ The
Exchange believes the Series 25 Examination will ensure that trading
assistants have the basic knowledge, skills and abilities necessary to
perform the functions and carry out the responsibilities of a trading
assistant.
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\4\ The Series 25 Examination itself is the subject of a
separate filing. See Securities Exchange Act Release No. 40944
(January 13, 1999).
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The requirement to take and pass the Series 25 Examination will
apply to all current and prospective Trading Assistants. The new
interpretation to Rule 35, as proposed, shall require new Trading
Assistants to attend three-months of training (including on-the-job and
prescribed classroom instruction provided by the Exchange) before
taking the exam. New Trading Assistants will not be permitted to
perform functions until passing the examination. Current Trading
Assistants will have one year to pass the examination \5\ and will not
be required to complete classroom training. If, however, a current
Trading Assistant fails the Series 25 Examination twice, he or she will
be required to attend the classroom training before retaking the exam.
The NYSE states that it intends to publish this new interpretation as
an Interpretation Memorandum for inclusion in the Exchange's
Interpretation Handbook.
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\5\ The Exchange plans to implement this proposed rule change on
March 15, 1999. Therefore, current Trading Assistants will have
until March 15, 2000 to pass the examination. Telephone call between
Mary Anne Furlong, Director, Rule and Interpretative Standards, NYSE
and Kelly McCormick, Attorney, Division of Market Regulation, SEC,
dated January 13, 1999.
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III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\6\ In
particular, the Commission finds that the proposed rule change is
consistent with the requirements of Section 6(c)(3)(B) of the Act.\7\
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\6\ In reviewing this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(c)(3)(B).
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[[Page 3331]]
Section 6(c)(3)(B) of the Act \8\ provides, among other things,
that a national securities exchange may examine and verify the
qualifications of applicants who desire to become associated with a
member and may require any person associated with a member to be
registered with the exchange in accordance with established procedures.
This section also provides that the exchange may bar a person from
becoming a member if such person does not meet standards of training,
experience, and competence as are prescribed by the rules of the
exchange.
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\8\ Id.
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The Commission finds that the Series 25 Examination satisfies
Section 6(c)(3)(B) because it provides the Exchange with a means to
measure a Trading Assistant's ability and qualifications. The Exchange
has the responsibility to ensure that its members and persons
associated with members meet standards of training, experience, and
competence. By requiring all current and potential Trading Assistants
to pass the Series 25 Examination, the Exchange ensure that the Trading
Assistants admitted to the Exchange's trading floor are duly trained
and qualified to competently perform their duties and functions.
Moreover, the Commission finds that the proposal is consistent with
the requirements of Section 6(b)(5) of the Act,\9\ which provides,
among other things, that the rules of the Exchange be designed, in
general, to protect investors and the public interest. The proposed
rule change ensures that the Trading Assistants admitted to the
Exchange trading floor are qualified to effectively perform in their
positions. By ensuring the qualifications and abilities of trading
assistants, the Commission believes that the integrity of the Exchange
is maintained, which should protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-98-36) is approved.
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\10\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-1324 Filed 1-20-99; 8:45 am]
BILLING CODE 8010-01-M