[Federal Register Volume 65, Number 142 (Monday, July 24, 2000)]
[Notices]
[Pages 45644-45645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18626]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43047; File No. SR-Phlx 00-46]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
Philadelphia Stock Exchange, Inc., to Allow an Exemption From the 
Series 7 Exam for Certain Off-Floor Traders

July 18, 2000.
    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 27, 2000, the Philadelphia Stock Exchange, Inc. (``Phlx'' 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. On July 10, 2000, the Phlx amended the proposal.\3\ The 
Exchange filed the proposal pursuant to section 19(b)(3)(A) of the 
Act,\4\ and Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal 
effective upon filing with the Commission.\6\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The amendment (``Amendment No. 1'') made minor, technical 
changes to the original proposal. The filing date of the proposal, 
for purposes of calculating the 60-day abrogation period, is July 
10, 2000, the date the Phlx filed Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
    \6\ The Phlx provided written notice to the Commission on June 
5, 2000, that it intended to file this proposal. See Rule 19b-
4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii). See also footnote 3, 
supra.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx, pursuant to Rule 19b-4 of the Act, proposes to amend to 
the text of Phlx Rule 604 by adding paragraph (e)(iii) to reflect an 
exemption to the Rule's requirement that current off-floor traders as 
well as future off-floor traders successfully complete the Uniform 
Registered Representative Examination Series 7 (``Series 7 Exam''). 
Currently, paragraph (e)(ii) of Phlx Rule 604 states that the 
requirement to successfully complete the Series 7 Exam applies to 
current off-floor traders as well as future off-floor traders who 
affiliate with members at a later date. The Exchange is proposing to 
exempt off-floor traders who are currently members in good standing of 
a national securities exchange or who have ever been a member in good 
standing of a national securities exchange for not less than 12 
consecutive years. The text of the proposed rule is below. Proposed new 
language is in italics.
* * * * *

Rule 604. Registration and Termination of Registered Persons

    (a)-(d) No change.
    (e)
    (i) No change.
    (ii) No change.
    (iii) Any off-floor trader who is currently a member in good 
standing of a national securities exchange or has ever been a member in 
good standing of a national securities exchange for not less than 12 
consecutive years, shall be exempt from the examination requirements 
set forth in section (i) and (ii) hereof.
* * * * *

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 Exchange included statements 
concerning the purpose of and basis of its proposal and discussed any 
comments it received regarding the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
The Exchange 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 Exchange proposes to create an exemption to the Series 7 Exam 
requirement to those off-floor traders who are currently members in 
good standing of a national securities exchange or who have ever been a 
member in good standing of a national securities exchange for not less 
than 12 consecutive years. The Phlx believes

[[Page 45645]]

such membership or experience is an appropriate substitute for the 
Series 7 Exam requirement.
    Phlx Rule 604 was amended on August 20, 1999, to require successful 
completion of the Series 7 Exam by persons associated with members or 
participant organizations for which the Exchange is the Designated 
Examining Authority and who trade off the floor of the Exchange.\7\ The 
purpose of that amendment was to insure that all off-floor traders, by 
successfully completing the Series 7 Exam, demonstrated that they had 
satisfied prescribed standards of training, experience and competence 
as a condition of becoming off-floor traders.
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    \7\ See Securities Exchange Act Release No. 41776 (August 20, 
1999), 64 FR 47214 (August 30, 1999) (SR-Phlx-99-07).
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    The Phlx has proposed an exemption to the Series 7 Exam requirement 
in response to a significant number of requests for exemptions received 
by the Exchange's Examinations Department. The majority of such 
requests for exemption were from Exchange members who cited their 
experience as a member of a national securities exchange as a valid 
reason for exemption.
    Pursuant to the Act, self-regulatory organizations(``SROs'') are 
charged with assuring that associated persons of their members satisfy 
prescribed standards of training, experience and competence as a 
condition to membership. The Exchange believes that the criteria as 
stated in the proposed amendment should do so. The individuals 
qualifying for the proposed exemption have either successfully 
completed the Series 7 Exam in becoming a member in good standing of a 
national securities exchange, or, through their years of experience as 
on-floor or off-floor traders, have developed an expertise, proficiency 
and knowledge in the areas that are tested in the Series 7 Exam.\8\
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    \8\ Areas tested in the Series 7 Exam include compliance with 
federal and state laws and industry regulations, characteristics of 
different investment products, investment risks, and principal 
factors affecting securities markets and prices for individual 
securities.
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    The criteria for the exemption were established by the Exchange's 
Admissions Committee (``Committee''). The Committee will review those 
applications of individuals applying for the exemption. If, during that 
review, it is evident that an applicant has been a member in good 
standing of a national securities exchange for not less than 12 
consecutive years, or is currently a member in good standing of a 
national securities exchange, then that individual shall be exempt from 
the examination requirements as set forth in Phlx Rule 604. This 
proposal does not affect the applicability of the Series 7 Exam 
requirement to any other persons that Phlx Rule 604 dictates must meet 
the requirement.
2. Statutory Basis
    The Phlx believes that the proposal is consistent with section 6 of 
the Act,\9\ in general, and furthers the objectives of sections 
6(c)(3)(A) and (B) of the Act \10\ in particular, in that it is 
designed to insure that the appropriate standards of training, 
experience and competence for brokers and dealers and persons 
associated with Exchange members are met to protect investors and the 
public. The Exchange believes that the proposed rule change also is 
consistent with section 6(b)(5) of the Act,\11\ in that it is designed 
to perfect the mechanisms of a free and open market system, and to 
protect investors and the public interest by requiring that those off-
floor traders seeking an exemption are properly qualified, as evidenced 
by prior or current membership.
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    \9\ 15 U.S.C. 78f
    \10\ 15 U.S.C. 78f(c)(3)(A) and (B)
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx does not believe that the proposed rule change will result 
in any inappropriate burden on competition.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to section 19(b)(3)(a) of the Act \12\ and 
Rule 19b-4(f)(6) \13\ thereunder. 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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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 proposal 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 in the Commission's 
Public Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the Phlx. All 
submissions should refer to file number SR-Phlx-00-46 and should be 
submitted August 14, 2000.

    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).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-18626 Filed 7-21-00; 8:45 am]
BILLING CODE 8010-01-M