[Federal Register Volume 67, Number 172 (Thursday, September 5, 2002)]
[Notices]
[Pages 56863-56865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22605]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46425; File No. SR-NYSE-2002-24]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the New York Stock Exchange, Inc. To 
Adopt Amendments to Exchange Rule 342 (``Offices--Approval, Supervision 
and Control'') August 28, 2002.

    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 July 12, 2002, 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 NYSE filed an amendment to the proposed rule change on 
August 16, 2002.\3\ 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\ See letter from Mary Yeager, Assistant Secretary, NYSE, to 
Nancy Sanow, Assistant Director, Division of Market Regulation, SEC, 
dated August 15, 2002, and attachments (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposal consists of the adoption of proposed amendments to 
NYSE Rule 342 (``Offices--Approval, Supervision and Control''). The 
proposed amendments would recognize the National Association of 
Securities Dealers' General Securities Principal Examination (``Series 
24 Examination'') as an acceptable qualification alternative to the 
General Securities Sales Supervisor Qualification Examination (``Series 
9/10 Examination'') for supervisory persons whose duties do not include 
the supervision of options or municipal securities sales activity. In 
addition, the amendments update and clarify certain provisions of the 
Rule.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *
Rule 342. Offices--Approval, Supervision and Control
    (a) through (d)--NO CHANGE--Inclusion of (d) below is for reference 
purposes only.
    (d) Qualified persons acceptable to the Exchange shall be in charge 
of:
    (1) Any office of a member or member organization,
    (2) Any regional or other group of offices,
    (3) Any sales department or activity.
    (e) through Supplementary Material .12--NO CHANGE.
    .13 Acceptability of supervisors. (a) Generally.--Any member, 
allied member or employee who is a candidate for acceptability under 
(d)(1), (2), or (3) above must [should] have a creditable three year 
record as a registered representative or equivalent experience, and [is 
expected to] must pass [either the Allied Member Examination or the 
Branch Office Manager Examination to qualify under (d)(1) or (2), or] 
the General Securities Sales Supervisor Qualification Examination 
(Series 9/10) or another [an] examination acceptable to the Exchange 
which demonstrates competency relevant to assigned responsibilities [to 
supervise a specific sales department or activity to qualify under 
(d)(3)]. The General Securities Principal Examination (Series 24), if 
taken and passed after July 1, 2001, is an acceptable alternative for 
persons whose duties do not include the supervision of options or 
municipal securities sales activity. The examination requirement may be 
waived at the discretion of the Exchange. [Special examinations may be 
arranged for persons whose principal work is in unusual fields.]
* * * * *

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 for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these

[[Page 56864]]

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

Recognition of the Series 24 Examination

    The Exchange proposes to amend NYSE Rule 342 (``Offices--Approval, 
Supervision and Control'') to recognize the National Association of 
Securities Dealers' (``NASD'') General Securities Principal Examination 
(``Series 24 Examination'') as an acceptable qualification alternative 
to the General Securities Sales Supervisor Qualification Examination 
(``Series 9/10 Examination'') for supervisory persons whose duties do 
not include the supervision of options or municipal securities sales 
activity. The proposed amendment is an Exchange initiative to 
eliminate, when possible, duplicative examination qualification 
requirements. As of July 2, 2001, NASD has enhanced the Series 24 
Examination by including test questions sufficient to provide 
appropriate coverage of NYSE rules.

Background and Detail

    NYSE Rule 342 prescribes the Exchange's general supervisory 
requirements for members and member organizations. Among these 
requirements are qualification standards for personnel delegated 
supervisory responsibility. NYSE Rule 342.13 (``Acceptability of 
Supervisors'') requires that a person delegated certain supervisory 
responsibilities \4\ should ``have a creditable record as a registered 
representative or equivalent experience, and is expected to pass either 
the Allied Member Examination or the Branch Office Manager Examination 
* * *.'' The ``Branch Manager Examination'' is now known as the General 
Securities Sales Supervisor Qualification Examination or the Series 9/
10 Examination. Currently, one must pass the Series 9/10 Examination, 
or its historical equivalent (e.g., the Series 8 Examination) in order 
to qualify as a branch office manager. On-site qualified branch office 
managers are required in branch offices with four or more registered 
persons.
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    \4\ Reference is made to 342(d)(1), persons in charge of ``any 
office of a member or member organization'' and 342(d)(2), persons 
in charge of ``any regional or other group of offices.''
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    The proposed amendments would eliminate the reference to the 
``Branch Office Manager Examination'' and specify the Series 9/10 
Examination as the referenced qualification requirement. In addition, 
the Series 24 Examination would be referenced and, if taken and passed 
after July 1, 2001, would be recognized as an alternative to the Series 
9/10 Examination for persons whose duties do not include the 
supervision of options or municipal securities sales activity.
    Though not included in the proposed rule amendments, a person with 
a Series 24 registration who is delegated responsibility to supervise 
options sales activity could qualify to do so by passing the Options 
Principal Examination (``Series 4 Examination'') or, alternately, the 
Series 9 Examination. If delegated responsibilities include supervision 
of municipal securities sales activity, such person could qualify by 
passing the Municipal Securities Principal Examination (``Series 53 
Examination'') or the Series 10 Examination. The Exchange is currently 
working with the NASD to develop a comprehensive examination that will 
incorporate the elements of both the Series 24 and the Series 9/10 
Examinations and would qualify persons as an NYSE Securities Sales 
Supervisor or an NASD Securities Principal.

Additional Amendments to Rule 342.13

    The proposed rule amendments to NYSE Rule 342.13 would also 
accomplish the following:
    [sbull] Clarify that, absent a waiver by the Exchange, the 
qualification requirement to supervise ``any sales department or 
activity''\5\ is the Series 9/10 Examination, the Series 24 
Examination, or another examination acceptable to the Exchange which 
demonstrates competency relevant to assigned responsibilities.
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    \5\ Incorporated into 342.13 by reference to 342(d)(3).
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    [sbull] Codify that supervisor candidates must have a creditable 
``three year'' record as a registered representative or equivalent 
experience. The addition of the ``three year'' requirement codifies the 
current written Interpretation of the Rule.
    [sbull] Eliminate reference to the ``Allied Member Examination.'' 
This examination is no longer given to Allied Member candidates, since 
qualification examination requirements are now determined on a case-by-
case basis according to the functions and responsibilities of the 
prospective Allied Member.
    [sbull] Eliminate reference to ``special examinations'' that ``may 
be arranged for persons whose principal work is in unusual fields.'' 
The Rule's prior reference to an ``examination acceptable to the 
Exchange which demonstrates competency relevant to assigned 
responsibilities'' renders the ``special examinations'' reference 
redundant.
    [sbull] Clarify the prerequisites outlined in the first sentence of 
NYSE Rule 342.13 by replacing the word ``should'' and the phrase ``is 
expected to'' with the less ambiguous word, ``must.''
2. Statutory Basis
    The NYSE believes the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and in particular, with 
the requirements of section 6(c)(3)(B) of the Act.\6\ Under that 
Section, 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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    In addition, the Exchange, under section 6(c)(3)(B),\7\ may bar a 
natural person from becoming a member or person associated with a 
member if such natural person does not meet such prescribed standards 
of training, experience, and competence as are prescribed by the rules 
of the Exchange.
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    \7\ Id.
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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 were neither solicited nor received.

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

    Within 35 days of the date of 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 Exchange consents, the Commission will:

[[Page 56865]]

    (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 such filing will also be 
available for inspection and copying at the principal office of the 
NYSE. All submissions should refer to file number SR-NYSE-2002-24 and 
should be submitted by 21 days from September 26, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-22605 Filed 9-4-02; 8:45 am]
BILLING CODE 8010-01-P