[Federal Register Volume 65, Number 33 (Thursday, February 17, 2000)]
[Notices]
[Pages 8220-8222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3746]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42404; File No. SR-CHX-99-32]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Chicago 
Stock Exchange, Inc. Relating to Amendments to the Exchange's 
Continuing Education Requirements

February 7, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice hereby is given that 
on January 3, 2000, the Chicago Stock Exchange, Inc. (``CHX'' or 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization (``SRO''). 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.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its continuing education 
requirements under CHX Article VI, Rule 9 to conform to recommendations 
made by the Securities Industry/Regulatory Council on Continuing 
Education. The text of the proposed rule change is available upon 
request from the Commission's Public Reference Room or the CHX.

[[Page 8221]]

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 self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received regarding 
the proposed rule change. The text of these statements may be examined 
at the places specified in Item III below. The self-regulatory 
organization 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
    Based on recommendations made by the Securities Industry/Regulatory 
Council on Continuing Education and rule changes adopted by other SROs 
based on these recommendations,\3\ the CHX proposes to amend its 
continuing education requirements for registered persons. Exchange 
Article VI, Rule 9 governs the CHX's continuing education requirements 
for registered persons. For purposes of the rule, the term ``registered 
persons'' is defined as any member, registered representative or other 
person required to be registered under Exchange rules other than any 
such person whose activities are limited solely to the transaction of 
business on the floor of the Exchange with members or registered 
broker-dealers.
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    \3\ See Securities Exchange Act Release No. 39712 (March 3, 
1998), 63 FR 11939 (March 11, 1998) (approving File Nos. SR-CBOE-97-
68; SR-MSRB-98-02; SR-NASD-98-03; and SR-NYSE-97-33). See also 
Securities Exchange Act Release No. 39711 (March 3, 1998), 63 FR 
12118 (March 12, 1998) (File No. SR-AMEX-98-08) and Securities 
Exchange Act Release No. 39802 (March 25, 1998), 63 FR 15474 (March 
31, 1998) (File No. SR-Phlx-98-13). The Commission received 5 
comment letters, which were discussed in the order approving the 
initial proposals. See Securities Exchange Act Release No. 39712 
(March 3, 1998).
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    The continuing education program consists of two parts, a 
Regulatory Element and a Firm Element. The Regulatory Element requires 
registered persons to participate in interactive computer based 
training at specified intervals and encompasses regulatory and 
compliance issues, sales practice concerns and business ethics. The 
Firm Element requires that each member and member organization conduct 
annually an analysis of their training needs and administer such 
training on an ongoing basis to their registered persons who have 
direct contact with customers.
    The Exchange now proposes to modify Article VI, Rule 9 to conform 
to the changes made by the other industry participants. Currently, Rule 
9 requires all registered persons to complete the Regulatory Element 
training on three occasions: their second, fifth and tenth registration 
anniversaries (and also when they are the subject of significant 
disciplinary action). Once persons are registered for more than ten 
years, they are graduated from the Regulatory Element program.
    The proposed rule change would require participation in the 
Regulatory Element throughout a registered person's career, 
specifically, on the second registration anniversary and every three 
years thereafter, with no graduation from the program. However, the 
proposed rule will allow a one-time exemption for persons who have been 
registered for more than ten years as of March 1, 2000. The proposed 
rule change would also require that persons registered in a supervisory 
capacity will have to have been registered in a supervisory capacity 
for more than ten years as of March 1, 2000 to be covered by this one-
time exemption. Lastly, the proposed rule change would require members 
to focus on supervisory training needs and address such needs in the 
Firm Element training plan.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act, in general, and furthers the objectives of 
Section 6(c)(3)(A) \4\ and Section 6(c)(3)(B) \5\, in particular. These 
sections prescribe appropriate standards of training, experience, and 
competence for broker-dealers and their associated persons. The 
Exchange believes that the proposed rule change is also consistent with 
Section 6(b)(5) \6\ of the Act, in that it is designed to perfect the 
mechanisms of a free and open market and a national market system, and 
to protect investors and the public interest.
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    \4\ 15 U.S.C. 78f(c)(3)(A).
    \5\ 15 U.S.C. 78f(c)(3)(B).
    \6\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed rule change will impose no 
burden on competition.

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

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

III. 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, NW, Washington DC 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 will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CHX-99-32 and 
should be submitted by March 9, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission has reviewed the CHX's proposed rule change and 
finds, for the reasons set forth below, that the proposal is consistent 
with the requirements of Section 6 \7\ of the Act and the rules and 
regulations thereunder applicable to a national securities exchange. 
Specifically, the Commission believes the proposal is consistent with 
Section 6(b)(5) \8\ of the Act, which requires that the rules of an 
Exchange be designed to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearning, settling, processing information with respect 
to, and facilitating transactions in securities, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the

[[Page 8222]]

public interest. \9\ The Commission further believes that the proposed 
rule change is consistent with Section 6(c)(3)(B),\10\ which makes it 
the responsibility of an exchange to prescribe standards of training, 
experience, and competence for persons associated with SRO members.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
    \9\ In approving this rule, the Commission notes that it has 
also considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(c)(3)(B).
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    The Commission also believes that the proposed rule change is 
consistent with the purposes underlying Section 15(b)(7) of the Act, 
which generally prohibits a registered person from effecting any 
transaction in, or inducing the purchase or sale of, any security 
unless such registered person meets the standard of training, 
competence and other qualifications as the Commission finds necessary 
or appropriate in the the public interest or for the protection of 
investors. The Commission finds that the CHX's proposed rule change is 
in appropriate means of maintaining and reinforcing the initial 
qualification standards required of a registered person; participating 
in the Regulatory Element throughout their securities industry careers 
should assist registered persons to keep current on developments in the 
industry.
    The Commission finds good cause for approving the proposed rule 
change (SR-CHX-99-32) prior to the thirtieth day after the date of 
publication of notice thereof in the Federal Register. These amendments 
proposed by the CHX on continuing education requirements have been 
uniformly adopted by other SRO Council members.\11\
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    \11\ See supra note 3.
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    It is therefore ordered, pursuant to Section 19(b)(2) \12\ of the 
Act, that the proposed rule change (SR-CHX-99-32) is hereby approved on 
an accelerated basis. This rule change shall become effective on March 
1, 2000.\13\
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ CHX intends for the amendments to its continuing education 
requirements reflected in this proposed rule change to be effective 
as of March 1, 2000. Telephone conversation between Michael Cardin, 
Manager, Market Regulation, CHX and Geoffrey Pemble, Attorney, 
Division of Market Regulation, SEC, January 24, 2000.
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For the Commission, by the Division of Market Regulation, pursuant to 
delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-3746 Filed 2-16-00; 8:45 am]
BILLING CODE 8010-01-M