[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Notices]
[Pages 40928-40929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19266]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41626; File No. SR-NYSE-99-19]


Self-Regulatory Organization; Order Approving Proposed Rule 
Change by the New York Stock Exchange, Inc. To Adopt a New 
Interpretation of Rule 35 (``Floor Employees To Be Registered'')

July 20, 1999.

I. Introduction

    On May 14, 1999, the New York Stock Exchange, Inc. (``Exchange'') 
filed with the Securities and Exchange Commission (``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 
adopt a new interpretation of Exchange Rule 35 (``Floor Employees to be 
Registered''). The proposed rule change was published for comment in 
the Federal Register on June 18, 1999.\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. 41514 (June 10, 1999), 
64 FR 32912 (June 18, 1999).
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II. Description of the Proposal

    The purpose of the proposed new interpretation of Rule 35 is to 
prescribe the qualification requirements (i.e., training and 
examination) for Front Line Specialist Clerks (``FLS Clerks''). In 
addition to dictating the terms under which employees of members or 
member organizations may be admitted to the Exchange Trading Floor, 
Rule 35 mandates compliance by both employer and employee with such 
requirements as the Exchange may determine. The proposed interpretation 
of Rule 35 will require FLS Clerks to pass a new examination, developed 
by the Exchange in cooperation with a committee of Floor 
representatives (members, Specialists, and FLS Clerks) called the Front 
Line Specialist Clerk Qualification Examination (``Series 21''). The 
examination is intended to ensure that FLS Clerks have the basic 
knowledge and skills necessary to perform their duties, which include 
assisting Floor Specialists.
    The Series 21 examination is a 90-minute test consisting of 65 
questions. The examination covers such topics as preparing for the 
market opening, opening the display book, preparing for the market 
close, and generating trade reports. Though the requirement to take and 
pass the proposed Series 21 examination will apply to all prospective 
and current FLS Clerks, qualification requirements will differ as 
follows:

Prospective FLS Clerks

    Individuals not currently functioning as FLS Clerks will be 
required to pass the Series 25 qualifying examination as a prerequisite 
to taking the Series 21 examination. Upon passing the Series 25, the 
prospective FLS Clerk must complete a training program to become 
eligible for the Series 21 examination. The training program shall 
consist of a minimum of six months of ``on-the-job'' experience with a 
Specialist under a supervisory program to be determined by the 
Specialist. All candidates must pass the Series 21 examination before 
functioning as an unsupervised FLS Clerk, i.e., functioning without the 
specialized supervision require during the training period.

Current FLS Clerks

    Individuals who are currently functioning as FLS Clerks will be 
required to pass the Series 21 examination within one year of its 
implementation. The Series 25 examination (Trading Assistant 
Qualification Examination) is a prerequisite to taking the Series 21 
examination, but no training program will be required for these 
individuals since they already are acting in the capacity of FLS 
Clerks.

III. Discussion

    The Commission finds that the require is consistent with the 
requirements of the Act and the rules and required thereunder 
applicable to a national securities exchange.\4\ In particular, the 
Commission finds that the proposed rule change is consistent with the 
requirements of Section

[[Page 40929]]

6(c)(3)(B) of the Act,\5\ which provides that 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. The Commission finds that requiring the FLS Clerks to 
take the Series 21 examination and to under on-the-job training is 
consistent with Section 6(c)(3)(B) because it provides the Exchange 
with a means to measure an FLS Clerk's ability and qualifications and 
to ensure that the Clerks are trained in an on-the-job setting. The 
Series 21 Examination covers such topics as preparing for the market 
opening, operating the display book, preparing for the market close, 
and generating trade reports, all topics designed to measure the 
Clerk's ability to perform his or her assigned tasks. Requiring all 
current and future FLS Clerks to pass the Series 21 Examination will 
help ensure that they are adequately trained and qualified to perform 
their duties competently.
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    \4\ In approving the proposed rule change, the Commission also 
has considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(c)(3)(B).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\6\ that the proposed rule change (SR-NYSE-99-19) is approved.
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    \6\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 99-19266 Filed 7-27-99; 8:45 am]
BILLING CODE 8010-01-M