[Federal Register Volume 64, Number 206 (Tuesday, October 26, 1999)]
[Notices]
[Pages 57679-57680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27890]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42033; File No. SR-NYSE-99-23]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. Relating to Revisions to the Exchange's Branch Office Application

October 19, 1999.
    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 June 8, 1999, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The proposal was amended on September 9, 1999,\3\ so as to be 
filed as a ``non-controversial'' rule change under Rule 19b-4(f)(6).\4\ 
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.
    \3\ See Letter to Belinda Blaine, Associate Director, Division 
of Market Regulation, SEC, from James E. Buck, Senior Vice President 
and Secretary, NYSE, dated September 8, 1999 (``Amendment No. 1''). 
The NYSE originally filed the proposed rule change under Section 
19(b)(3)(A)(iii) of the Act. 15 U.S.C. 78s(b)(3)(A)(iii). Amendment 
No. 1 also includes a rearranged version of the revised Branch 
Office Application Form. Additionally, in Amendment No. 1, the NYSE 
further clarifies the intent of the proposal and describes the 
implementation plan for the electronic filing program.
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule change

    The NYSE proposes to revise its Branch Office Application form to 
require more detailed information relating to the establishment of new 
branch offices by Exchange members and member organizations and to 
adopt a new Office Space Sharing form. The test of the proposed rule 
change is available at the Office of the Secretary, the NYSE and at the 
Commission.

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 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 NYSE 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.

1. Purpose
    The purpose of this proposed rule change is to submit to the 
Commission the following two forms: the revised Branch Office 
Application and the new Office Space Sharing form. The Branch Office 
Application is employed by Exchange members and member organizations 
seeking Exchange approval of a new branch office in accordance with 
Exchange Rule 342 (``Offices--Approval, Supervision and Control''). 
Exchange Rule 342(c) requires that a member or member organization 
obtain the Exchange's prior written consent for each office 
established, other than a main office. Exchange Rule 343 (``Offices--
Sole Tenancy, Hours, Disply of Membership Certificates'') contains 
criteria under which members or member organizations may share office 
space with the securities-related individuals and organizations. The 
NYSE proposes to adopt an Office Space Sharing form, which will be used 
by members and member organizations seeking to share office space 
pursuant to NYSE Rule 343.
    The Exchange determined to revise its Branch Office Application so 
that the form will provide more meaningful and detailed information 
concerning the personnel and activities of a member's or member 
organization's proposal branch office. Such additional information on 
the Application will enable the Exchange to make a better-informed 
decision concerning approval of the location.
    Specifically, additional information required by the revised 
Application includes:
    (i) A description of the types of activities to be conducted and 
the products to be offered at the branch office;
    (ii) The estimated number of accounts to be serviced by the office;
    (iii) Whether any persons assigned to the office are subject to 
Statutory Disqualification or have reportable adverse disciplinary 
histories;
    (iv) Whether the office will have independent contractors assigned 
to it;
    (v) Whether the office has been acquired from another broker-dealer 
or financial institution;
    (vi) Where records pertaining to the office are maintained;
    (vii) whether any person other than the member organization have a 
financial interest in the office;
    (viii) Whether the broker-dealer and the office's registered 
representatives have required state registrations; and
    (ix) Submission of the social security number and Central 
Registration Depository (``CRD'') number of each registered person to 
be assigned to the office.
    If the office will be shared with another person or organization, 
an Office Space Sharing form, which addresses compliance with the 
Exchange's space sharing rule, NYSE Rule 343, will be completed as part 
of the Branch Office Application.
    Generally, NYSE Rule 343 prohibits Exchange members and member 
organizations from sharing office space with other broker-dealers, 
investment advisors or any other persons who conduct a securities or 
commodities business with the public, without prior approval of the 
Exchange. However, the rule sets forth certain conditions under which 
Exchange members or member organizations may share office space with 
securities-related individuals or organizations. If each of the 
appropriate rule provision's enumerated conditions is met, the Exchange 
may permit a space-sharing arrangement. The new Office Space Sharing 
form will serve as an attestation by the member or member organization 
that the conditions required by NYSE Rule 343 have been met. Exchange 
approval of the branch office location will encompass, where 
applicable, approval of the space

[[Page 57680]]

sharing arrangement; there will not be a separate approval of the space 
sharing arrangement.
    The Exchange intends that, commencing in or about the second 
calendar quarter of 2000, the filing and processing of all Branch 
Office Applications will be performed electronically by all member 
firms that have Internet access via a software package that the 
Exchange will provide free of charge to all member organizations.\5\ 
The NYSE has represented that, during December 1999, it will issue an 
Information Memorandum informing all members and member organizations 
that, as of February 1, 2000, all new branch office applications must 
be submitted on the revised form.\6\ Electronic filings will be made by 
firms who have had the appropriate software installed; all others will 
manually file the revised form. By June 30, 2000, all members and 
member organizations with Internet access will have the software 
installed to enable electronic filing.
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    \5\ In Amendment No. 1, the Exchange explains that 
implementation will be gradual instead of immediate implementation 
by all member organizations because the Exchange Technology staff 
and all applicable member organization staff will be focusing 
efforts and resources on overall Y2K compliance during the last 
quarter of 1999. Installation of the software will be prioritized by 
firms who are the most active in submitting new branch office 
applications. See Amendment No. 1, supra note 3.
    \6\ Id.
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    As a security measure, member organizations will be required to 
identify to the Exchange those persons who will become registered users 
and who will have access to the program and the ability to transmit 
information to the Exchange. Once submitted to the Exchange, the 
application and its current status may be viewed at any time by the 
authorized member organization personnel through the software program. 
The Exchange has been testing this electronic program since April 1999. 
This application is Internet-based and will be the sole method for 
submission of Branch Office Applications to the Exchange, although 
member organizations that do not have Internet access may submit the 
applications in hard copy.
    The Exchange believes that revisions to the Branch Office 
Application will enhance the utility of the form in connection with the 
Exchange's regulatory oversight responsibilities by providing more 
detailed reporting and substantive disclosures. The revised form will 
also aid in monitoring for compliance with NYSE Rule 342 which mandates 
that each office, department and business activity of the member 
organization be under the supervision and control of the member 
organization establishing it and of the personnel delegated such 
authority and responsibility.
2. Statutory Basis
    The Exchange believes the proposed rule change in consistent with 
Section 6(b)(5) of the Act \7\ which requires that the rules of the 
Exchange be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest, in that it will 
enhance the process of Exchange review and approval of new branch 
offices established by Exchange members and member organizations. 
Further, the revised Branch Office Application and new Office Space 
Sharing forms will provide the Exchange with a centralized and 
efficient means of maintaining information concerning member 
organizations, their branch offices, and associated persons.
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    \7\ 15 U.S.C. 78f(b)(5).
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A) of the Act,\8\ and Rule 19b-4(f)(6) thereunder,\9\ 
because the proposed rule change: (1) Does not significantly affect the 
protection of investors or the public interest; (2) does not impose any 
significant burden on competition; (3) does not become operative for 30 
days from the date of filing, or such shorter time that the Commission 
may designate if consistent with the protection of investors and the 
public interest; and (4) the NYSE provided the Commission with written 
notice of its intent to file the proposed rule change at least five 
business days prior to the filing date.\10\ At any time within 60 days 
of the filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). In reviewing this proposal, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78(c)f.
    \10\ Although originally filed under Section 19(b)(3)(A)(iii) on 
June 8, 1999, the Exchange refiled the proposed rule change under 
Rule 19b-4(f)(6) on September 9, 1999, at the suggestion of the 
Commission. See Amendment No. 1, supra note 3. Because the 
Commission had the proposed rule filing for more than five business 
days, because Amendment No. 1 did not substantively alter the 
proposed rule change already before the Commission, and because the 
Commission instructed the Exchange to refile the proposed rule 
change under Rule 19b-4(f)(6), the Commission waives the five-day 
written notice requirement for a proposed rule change under Rule 
19b-4(f)(6).
    \11\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-
0609. 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 also will be 
available for inspection and copying at the principal office of the 
NYSE. All submissions should refer to File No. SR-NYSE-99-23 and should 
be submitted by November 16, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-27890 Filed 10-25-99; 8:45 am]
BILLING CODE 8010-01-M