[Federal Register Volume 68, Number 122 (Wednesday, June 25, 2003)]
[Notices]
[Pages 37882-37884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16011]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48041; File No. SR-AMEX-2003-06]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the American Stock Exchange LLC Relating 
to Mandatory Continuing Education for All Floor Members and Mandatory 
Continuing Education and Initial Test Requirements for Floor Clerks of 
Members and Member Firms

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 February 3, 2003, the American Stock Exchange LLC (``Amex'' or 
``Exchange'') 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 Amex. On May 21, 
2003, the Amex amended the proposed rule change.\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 Ivonne L. Natal, Associate General Counsel, 
Amex, to Katherine A. England, Assistant Director, Division of 
Market Regulation, Commission, dated May 20, 2003 (``Amendment No. 
1''). In Amendment No. 1, the Exchange replaced the original filing 
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt Amex Rule 359 (Mandatory Continuing 
Education for all Floor Members and Mandatory Continuing Education and 
Initial Test Requirements for Floor Clerks of Members and Member Firms) 
to ensure that Floor members are regularly apprised of critical 
regulatory and operational issues affecting the Exchange and that all 
other individuals affiliated with members or member organizations, and 
necessary for the transaction of business on the Amex trading floor, 
demonstrate a basic understanding of the auction market, as well as an 
understanding of the critical regulatory and operational issues 
affecting the Exchange in particular, and the securities industry in 
general. Below is the text of the proposed rule change. Proposed new 
text is italicized.
* * * * *
    Mandatory Continuing Education for all Floor Members and Mandatory 
Continuing Education and Initial Test Requirements for Floor Clerks of 
Members and Member Firms.
    Rule 359. All regular and options principal members, limited 
trading permit holders, their clerks (post, booth and DK) active in the 
business of the Exchange trading floor will be required to participate 
in the Exchange-sponsored mandatory continuing education program to be 
conducted annually and at such other times as the Exchange deems 
appropriate. Any individual who fails to attend a mandatory continuing 
education program will be subject to disciplinary action under the 
Exchange's Minor Rule Violation Fine System.
    Additionally, all floor clerks, with no previous trading floor 
experience (other than those performing strictly ministerial functions) 
who are employed after the adoption of this rule will be subject to the 
training and are required to pass a qualifying exam; and all specialist 
clerks, with no previous trading floor experience, who are employed 
after the adoption of this rule, will be subject to additional training 
and an additional qualifying exam.
    The Exchange will levy a per program fee as indicated in its 
Schedule of Fees for each participant (members and clerks) in any of 
the continuing education and testing programs.
* * * * *

Amex Price List

Member Fees
I. Membership Dues
    No change.
II. Initiation Fees
    No change.
III. Membership Fees
    No change.
IV. Examination Fees
    No change.

V. Continuing Education Fees

    $50.00 per participant/per year
    Notes: No change.
* * * * *

[[Page 37883]]

Minor Rule Violation Fine System

Part 1
General Rule Violations
    Rule 590. (a) through (f)--No change.
    (g) The following is a list of the rule violations and applicable 
fines that may be imposed by the Exchange's Enforcement Department 
pursuant to Part 1 of this Rule.
    1.-13. No change.
    14. Failure to attend mandatory continuing education as required by 
Rule 359.
    (h) No change.
* * * * *

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 Amex 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. 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
    In order to protect public customers and maintain its competitive 
position, the Exchange believes that it needs to ensure that all 
individuals active in the transaction of business on the Amex trading 
floor demonstrate a basic understanding of the auction market. While an 
examination is required before an Exchange member may conduct business 
on the Floor of the Exchange, no such initial requirement currently 
exists for those members' clerks who perform a critical role in the 
conduct of that business. For these same reasons, and particularly in 
this age of rapid and continuous change and diversity in innovative 
securities products, the Exchange states that it needs to ensure that 
individuals on the Amex trading floor continue to possess this basic 
understanding of the auction market, as well as an understanding of the 
critical regulatory and operational issues affecting the Exchange in 
particular, and the securities industry in general.
    The continuing education needs of the securities industry were 
studied in 1993 by the Securities Industry Task Force on Continuing 
Education. The Task Force released a report recommending mandatory 
continuing education for registered representatives. In 1999, the New 
York Stock Exchange (the ``NYSE'') instituted a semiannual program of 
continuing education for its floor members. That same year, with SEC 
approval, the NYSE amended its Rule 35 implementing training and 
qualification requirements for floor employees of members or member 
organizations, including a new Trading Assistant Qualification 
Examination (Series 25). The NYSE also required that Front Line 
Specialist Clerk candidates submit to a six-month, specialist-
supervised, on-the-job training period and, thereafter, pass the Series 
21 examination, before being permitted to function as a Front Line 
Specialist Clerk. Most recently, in June 2000, the SEC approved 
amendments to NYSE Rule 103A making mandatory the periodic (i.e., 
semiannual ``and at such other times as may be necessary'') training of 
all NYSE floor members.
    The Exchange believes that mandatory continuing education should be 
an integral part of an efficient trading floor operation. Consequently, 
we are proposing that newly hired floor clerks (other than those 
performing strictly ministerial functions) with no previous floor 
experience, be tested within a three-month on-the-job training period 
to ensure that they can properly perform their functions on the trading 
floor. The training period should be sufficient for an individual to 
learn the basic systems and regulations needed to function effectively 
as a member firm clerk.
    The Exchange further proposes that an additional level of training 
and testing be required for newly-hired specialist clerks, with no 
previous experience as specialists or specialist clerks. In order to 
qualify as a specialist clerk, a candidate must, first, have either 
floor experience or be subject to the training and exam requirement of 
a floor clerk. In addition, a specialist clerk candidate will be 
required to have on-the-job and classroom training specifically related 
to the job of specialist clerk. The specialist clerk training would not 
exceed three months, which could be concurrent with or consecutive to 
any floor clerk training required by the candidate.
    Continuing education for members and their floor employees is both 
necessary and beneficial. The needs of the Amex, however, are, in some 
ways, unique. Accordingly, the Exchange is proposing an annual, 
mandatory continuing education program for members and their employees. 
However, Exchange staff would be authorized to schedule additional 
mandatory educational sessions at such other times as it deems 
necessary and/or appropriate. These additional mandatory sessions could 
be of a general nature for all members and member firm personnel, or 
they could be tailored to address the needs of a specific group, e.g., 
as with the introduction of a new product or in a specific situation 
where only certain members could effect transactions and for which 
particular expertise is required.
    The Exchange proposes to include the failure to attend a mandatory 
continuing education session in the General Rule Violations section of 
the Exchange's Minor Rule Violation Fine Systems, under which a fine 
may be imposed by the Exchange's Enforcement Department for failure to 
attend a mandatory continuing education session.
    In order to finance the development and implementation of an 
effective continuing education and testing program, the Exchange 
proposes to levy an annual fee for each participant (members and 
clerks) in any of the programs. On approval of Amex Rule 359, the fee 
will be set at $50. This fee will be incorporated in the Amex Fee 
Schedule (Price List) and may be changed from time to time in the same 
manner as other Amex fees are revised.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with section 6(b) of the Act \4\ in general and furthers the 
objectives of sections 6(b)(4) and (5) in particular,\5\ in that it is 
designed to (i) provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities, and (ii) 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 public interest. 
The proposed rule change is designed to ensure that Floor members are 
regularly apprised of critical regulatory and operational issues 
affecting the Exchange and that all other individuals affiliated with 
members and member organizations, and necessary for the transaction of 
business on the Exchange trading floor, demonstrate a basic 
understanding of the auction market as well as the critical regulatory 
and operational issues affecting the Exchange in particular, and the 
securities industry in general.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).

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[[Page 37884]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is 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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 Amex consents, the Commission will:
    (A) By order approve the 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, as amended, 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 Amex. All submissions should refer to File No. 
SR-AMEX-2003-06 and should be submitted by July 16, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-16011 Filed 6-24-03; 8:45 am]
BILLING CODE 8010-01-P