[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Notices]
[Pages 37186-37187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15775]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48042; File No. SR-NASD-2003-91]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to a New Qualification Examination: 
General Securities Principal Sales Supervisor Module (Series 23)

June 17, 2003.
    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 5, 2003, the National Association of Securities Dealers, Inc. 
(``NASD''), 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 NASD. 
NASD filed the proposal pursuant to section 19(b)(3)(A) of the Act,\3\ 
and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission.\5\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ 5NASD provided the Commission with written notice of its 
intent to file the proposed rule change on May 28, 2003. See Rule 
19b-4(f)(6)(iii), 17 CFR 240.19b4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD proposes to establish the General Securities Principal Sales 
Supervisor Module (``Series 23'') examination program, and is filing 
with the Commission the selection specifications and study outline for 
the Series 23 examination.\6\ NASD is proposing the Series 23 
examination program in connection with a change to the New York Stock 
Exchange, Inc. (``NYSE'') qualification requirements whereby the NYSE 
recognized the NASD's General Securities Principal (``Series 24'') 
examination program as an acceptable qualification alternative to the 
General Securities Sales Supervisor (``Series 9/10'') examination 
program for supervisory persons whose duties do not include the 
supervision of options or municipal securities sales activity.\7\ 
Accordingly, NASD is proposing to accept the Series 9/10 examination as 
an acceptable qualification alternative to the Series 24 examination 
for associated persons who are required to register and qualify as 
Series 24 principals with NASD, provided that such persons also pass 
the proposed Series 23 examination, which covers material from the 
Series 24 examination not otherwise covered under the Series 9/10 
examination. NASD is not proposing any textual changes to the By-Laws, 
Schedules to the By-Laws, or Rules of NASD.
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    \6\ 6 Based upon instruction from Commission staff, NASD is 
submitting SR-NASD-2003-91 for immediate effectiveness pursuant to 
section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder, and 
is not filing the question bank for Commission review. See letter to 
Alden S. Adkins, Senior Vice President and General Counsel, NASD 
Regulation, from Belinda Blaine, Associate Director, Division of 
Market Regulation, SEC, dated July 24, 2000. The question bank, 
which is a subset of the existing Series 24 question bank, is 
available for Commission review.
    \7\ 7 See Securities Exchange Act Release No. 46631 (October 9, 
2002), 67 FR 64187 (October 17, 2002) (SR-NYSE-2002-24)(approval 
order).
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    A description of the Series 23 examination is included in the study 
outline that was attached to the proposed rule change. Additional 
information on the examination is included in the Series 23 selection 
specifications, which NASD omitted from this filing, but has submitted 
with a request for confidential treatment under separate cover to the 
Commission's Secretary pursuant to Rule 24b-2 under the Act.\8\
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    \8\ 817 CFR 240.24b-2 (allowing the nondisclosure of information 
filed with the Commission and with any exchange).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD 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. NASD 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
    On October 9, 2002, the SEC approved a proposed rule change to NYSE 
Rule 342 (``Offices--Approval, Supervision and Control'') that 
recognized NASD's Series 24 examination as an acceptable qualification 
alternative to the Series

[[Page 37187]]

9/10 examination for supervisory persons whose duties do not include 
the supervision of options or municipal securities sales activity.\9\ 
In an effort to establish reciprocal qualification standards, NASD is 
proposing to accept the Series 9/10 examination in lieu of the Series 
24 examination for associated persons who are required to register and 
qualify as Series 24 principals with NASD, provided that such persons 
pass the newly-developed Series 23 qualification examination in 
addition to passing the Series 9/10 examination.
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    \9\ 9 See Securities Exchange Act Release No. 46631 (October 9, 
2002), 67 FR 64187 (October 17, 2002) (SR-NYSE-2002-24) (approval 
order).
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    Pursuant to section 15A(g)(3) of the Act,\10\ which requires NASD 
to prescribe standards of training, experience, and competence for 
persons associated with NASD members, NASD has developed the Series 23 
examination program to establish that persons associated with NASD 
members who have passed the Series 9/10 examination and who are seeking 
to register and qualify with NASD as Series 24 principals have attained 
specified levels of competence and knowledge.
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    \10\ 15 U.S.C. 78o-3(g)(3).
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    The Series 23 examination is a limited qualification examination 
that covers those subject matters that are covered on the Series 24 
examination, but not included on the Series 9/10 examination. The 
Series 23 examination program tests a candidate's knowledge of 
securities industry rules and regulations pertaining to the supervision 
of investment banking, securities markets and trading, as well as 
financial responsibility requirements. A committee of industry 
representatives that oversees the Series 24 examination program, 
together with NASD staff, compared the subject matters covered on the 
Series 9/10 and Series 24 examinations to determine the topics that 
should be extracted from the Series 24 examination to create the Series 
23 examination program. The committee, including NASD staff, developed 
the selection specifications, study outline, and question bank for the 
Series 23 examination.
    The Series 23 examination will be divided into five topical 
sections. The topical sections and the number of questions designated 
to each such section are as follows: Supervision of Investment Banking 
Activities (25); Supervision of Trading and Market Making Activities 
(29); Supervision of Brokerage Office Operations (16); Sales 
Supervision, General Supervision of Employees, Regulatory Framework of 
NASD (19); and Compliance with Financial Responsibility Rules (11). The 
selection specifications for the Series 23 examination, which NASD has 
omitted from this filing and has submitted with a request for 
confidential treatment under separate cover to the Commission's 
Secretary pursuant to Rule 24b-2 under the Act,\11\ describe additional 
confidential information regarding the examination.
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    \11\ 17 CFR 240.24b-2.
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    The Series 23 examination will be a 2\1/2\-hour, 100-question 
examination with 70% as the passing score.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of sections 15A(b)(6) \12\ and 15A(g)(3) of the Act,\13\ 
which authorize NASD to prescribe standards of training, experience, 
and competence for persons associated with NASD members.
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    \12\ 15 U.S.C. 78o-3(b)(6).
    \13\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

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

    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 \14\ and 
Rule 19b-4(f)(6) thereunder.\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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 NASD. All 
submissions should refer to file number SR-NASD-2003-91 and should be 
submitted by July 14, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland.
Deputy Secretary.
[FR Doc. 03-15775 Filed 6-20-03; 8:45 am]
BILLING CODE 8010-01-P