[Federal Register Volume 64, Number 30 (Tuesday, February 16, 1999)]
[Notices]
[Pages 7680-7681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3667]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41021; File No. SR-NYSE-98-44]


Self-Regulatory Organizations; New York Stock Exchange, 
Incorporated; Order Approving Proposed Rule Change Regarding an 
Interpretation With Respect to Rule 344 (``Supervisory Analysts'')

February 4, 1999.

I. Introduction

    On December 3, 1998, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with 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 amending an interpretation 
regarding the meaning and administration of NYSE Rule 344 
(``Supervisory Analysts''). Notice of the proposal appeared in the 
Federal Register on December 30, 1998.\3\ The Commission received no 
comments on the proposal. This order approves the proposed rule change.
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    \1\ 17 CFR 240.19b-4.
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ Securities Exchange Act Release No. 40812 (December 21, 
1998), 63 FR 71991 (December 30, 1998).
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II. Description of Proposal

    The Exchange proposed to amend an interpretation concerning the 
meaning and administration of NYSE Rule 344. NYSE Rule 344 establishes 
standards for qualification of candidates for Supervisory Analyst 
designation at member organizations. The Exchange intends to publish 
the interpretation as an Interpretation Memorandum for inclusion in the 
Exchange's Interpretation Handbook.
    Research reports issued by a member organization must, under the 
provisions of NYSE Rule 472(b) (``Communications with the Public''), be 
prepared or approved by a Supervisory Analyst. NYSE 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 the Chartered 
Financial Analysts Level I Examination and pass Part I of the Series 16 
Examination. The examination consists of two parts: Part I, Regulatory 
Administration, and Part II, Review of Security Analysis. Currently, 
the interpretation of NYSE Rule 344 requires Supervisory Analyst 
candidates to have ``at least three years prior experience as a 
securities analyst.'' The interpretation, as amended, requires 
Supervisory Analyst candidates to have ``at least three years 
experience, within the most recent six years, involving securities or 
financial analysis.'' The Exchange will continue to require candidates 
for the Supervisory Analyst designation to pass the Series 16 
Examination.
    The Exchange also proposed to include in the interpretation the 
following as examples of appropriate experience: (1) Equity or fixed 
income research analyst; (2) credit analyst for a securities rating 
agency; (3) supervising preparation of materials prepared by financial/
securities analysts; (4) financial analytical experience gained at 
banks, insurance companies or other financial institutions; and (5) 
academic experience relating to the financial/securities markets/
industry.

III. Discussion

    After careful review, 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 \4\ 
and, in particular,

[[Page 7681]]

the requirements of Section 6 and the rules and regulations 
thereunder.\5\ The Commission believes that the proposal is consistent 
with the provisions of Section 6(c)(3)(B) of the Act \6\ providing that 
an exchange may examine and verify the qualifications of an applicant 
to become a person associated with a member in accordance with 
procedures established by the rules of the exchange and that an 
exchange may bar a natural person from becoming a member or person 
associated with a member, if such person does not meet such standards 
of training, experience, and competence as are prescribed by the rules 
of the exchange.
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    \4\ In approving this rule, the Commission has considered the 
proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(c)(3)(B).
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    The Commission believes the Exchange has developed standards to 
help ensure that persons associated with Exchange members and member 
organizations as Supervisory Analysts are appropriately qualified and 
experienced to approve communications with the public. The Exchange 
represents that requiring three years experience as a ``securities 
analyst'' is too restrictive in light of the current business 
environment. Because the role of Supervisory analyst has changed to 
consist primarily of reviewing research reports prepared by others, as 
opposed to, the preparation of research reports, ``appropriate 
experience'' need not be limited to exclusively experience as a 
``securities analyst.'' The Commission believes that expanding the 
definition of industry experience as set forth in the proposal is 
consistent with the requirements of the Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-NYSE-98-44) is approved.

    \7\ 15 U.S.C. 78s(b)(2).
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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. 99-3667 Filed 2-12-99; 8:45 am]
BILLING CODE 8010-01-M