[Federal Register Volume 66, Number 148 (Wednesday, August 1, 2001)]
[Notices]
[Pages 39808-39809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19095]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44588; File No. SR-NYSE-2001-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to Amendment of 
Rule 342 (``Offices--Approval, Supervision and Control'')

July 25, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'')\1\, and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on May 15, 2001, the New York Stock Exchange, Inc. filed with the 
Securities and Exchange Commission (``Commission''), the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the self-regulatory organization. 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 proposed rule change consists of amendments with respect to the 
meaning and administration of existing Exchange Rule 342.13(b) 
(``Acceptability of Supervisors''). Amendments to Rule 342.13(b) will 
rescind the requirement that Compliance Official candidates take the 
General Securities Sales Supervisor Qualification Examination (Series 
9/10), as a prerequisite to the Compliance Official Qualification 
Examination (Series 14), if the member or member organization does 
business with the public. It is believed that this is a duplicative 
requirement since both the Compliance Official Qualification 
Examination (Series 14) and the General Securities Sales Supervisor 
Qualification Examination (Series 9/10) contain similar material.

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. The text of these statements may be examined at 
the places specified in Item IV 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
    The purpose of the proposed rule change is to amend Rule 342.13(b) 
to rescind the requirement that Compliance Official candidates take the 
General Securities Sales Supervisor Qualification Examination (Series 
9/10), if the member or member organization does business with the 
public. Compliance Official candidates will continue to be required to 
take and pass the Compliance Official Qualification Examination (Series 
14).
    Background. In 1989, the Compliance Official Qualification 
Examination (Series 14) was adopted \3\ as a qualification requirement 
for Compliance Supervisors. Rule 342.13(b) was amended to require that 
``each member not associated with a member organization and in the case 
of a member organization, the person (or persons) designated to direct 
day-to-day compliance activity (such as the Compliance Officer, Partner 
or Director) and each person at the member organization directly 
supervising ten or more persons engaged in compliance activity should 
have overall knowledge of the securities laws and Exchange rules and 
must pass the Compliance Official Qualification Examination.'' In 
addition, if the member or member organization does business with the 
public, the Compliance Official candidate must also first pass the 
General Securities Sales Supervisor Qualification Examination (Series 
9/10). The Series 9/10 examination was formerly known as the Series 8 
examination.
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    \3\ See Securities Exchange Act Release No. 27019, July 11, 
1989; 54 FR 30127 (July 18, 1989).
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    Proposed Amendment of Rule 342.13(b). Recently, the Exchange sought 
industry input and recommendations with respect to various 
qualifications and examination requirements. One recommendation that 
emerged from this process is to amend Rule 342.13(b) to rescind the 
prerequisite that Compliance Official candidates from members or member 
organizations doing a public business be required to take the General 
Securities Sales Supervisor Qualification Examination.
    The Exchange believes that requiring the prerequisite is a 
duplicative requirement since both the Compliance Official 
Qualification Examination (Series 14) and the General Securities Sales 
Supervisor Qualification Examination (Series 9/10) contain 
substantially similar material (e.g,) both exams cover sales practices, 
general supervision, credit regulation, capital requirements, trading 
practices and compliance responsibilities. The major difference is that 
the Series 9/10 contains more comprehensive coverage of options and 
municipal securities but these subjects are covered by other exams 
(e.g.,) Series 4--Registered Options Principal and Series 53--Municipal 
Securities Principal that would be required of personnel involved in 
supervising those activities.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the Act and the rules and regulations thereunder applicable to a 
national securities exchange, and in particular, with the requirements 
of sections 6(b)(5) and 6(c)(3)(B) of the Act.\4\ Section 6(b)(5) \5\ 
requires, among other things, that the rules of an exchange be designed 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and in general, to prescribe standards of 
training, experience and competence for persons associated with 
Exchange members and member organizations.
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    \4\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78f(c)(3)(B).
    \5\ 15 U.S.C. 78f(b)(5).

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[[Page 39809]]

    Under section 6(c)(3)(B) of the Act,\6\ it is the Exchange's 
responsibility to prescribe standards of training, experience and 
competence for persons associated with Exchange members and member 
organizations.
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    \6\ 15 U.S.C. 78f(c)(3)(B).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposal does not impose any burden 
on competition not necessary or appropriate in furtherance of the 
purposes of the Act.

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

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

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

    Within 35 days of the publication of this notice in the Federal 
Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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, 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 the filing will also be 
available for inspection and copying at the principal office of the 
NYSE. All submissions should refer to File No. SR-NYSE-2001-11 and 
should be submitted by August 22, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-19095 Filed 7-31-01; 8:45 am]
BILLING CODE 8010-01-M