[Federal Register Volume 69, Number 61 (Tuesday, March 30, 2004)]
[Notices]
[Pages 16628-16629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49464; File Nos. SR-NYSE-2004-03; SR-NASD-2004-020]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval of Proposed Rule Changes by the New York Stock Exchange, Inc. 
and the National Association of Securities Dealers, Inc. Relating to 
Certain Prerequisites to and Exemptions From Taking the Research 
Analyst Qualification Examination (``Series 86/87'')

March 24, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ on January 30, 2004, the 
New York Stock Exchange, Inc. (``NYSE'' or the ``Exchange''), and on 
February 3, 2004, the National Association of Securities Dealers, Inc. 
(``NASD''), filed with the Securities and Exchange Commission (``SEC'' 
or the ``Commission'') proposed rule changes to set forth certain 
prerequisites and exemptions from the requirement that all members who 
function as research analysts be registered as such and pass a 
qualification examination. Specifically, the proposed rule changes 
would (1) establish, as a prerequisite to be registered as a research 
analyst, the requirement that an applicant also be registered as a 
General Securities Representative and (2) provide for an exemption from 
the analytical portion of the Research Analyst Qualification 
Examination (Series 86) for certain applicants who have passed both 
Levels I and II of the Chartered Financial Analyst (``CFA'') 
Examination.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule changes were published for comment for fifteen 
days in the Federal Register on March 2, 2004.\3\ The Commission 
received one comment on SR-NASD-2004-020.\4\ This order approves the 
proposed rule changes on an accelerated basis.
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    \3\ See Securities Exchange Act Release No. 49314 (February 24, 
2004), 69 FR 9888.
    \4\ The Commission received one comment letter on SR-NASD-2004-
020, which generally supported the proposal but mainly addressed the 
issue of soft dollar payments for third-party research.
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    The Commission finds that the proposed rule changes are consistent 
with the requirements of the Act and the regulations thereunder 
applicable to the NYSE and NASD.\5\ In particular, the Commission 
believes that the proposals are consistent with Sections 6(b)(8) and 
6(c)(3)(B) of the Act,\6\ and Sections 15A(b)(6) and 15A(b)(9) of the 
Act.\7\
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    \5\ See 15 U.S.C. 19(b)(2).
    \6\ 15 U.S.C. 78f(b)(8) and (c)(3)(B).
    \7\ 15 U.S.C. 78o-3(b)(6) and (b)(9).
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    The Commission finds that the NYSE's proposed rule change is 
consistent with Section 6(c)(3)(B) of the Act.\8\ Section 6(c)(3)(B) of 
the Act \9\ provides that a national securities exchange may bar a 
natural person from becoming a member or associated with a member, or 
condition the membership of a natural person or association of a 
natural person with a member, if such natural person does not meet such 
standards of training, experience and competence as are prescribed by 
the rules of the exchange. Section 6(c)(3)(B) of the Act \10\ also 
provides that a national securities exchange may examine and verify the 
qualifications of an applicant to become a person associated with a 
member in accordance with procedures established by the rules of the 
exchange, and require any person associated with a member, or any class 
of such persons, to be registered with the exchange in accordance with 
procedures so established.
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    \8\ 15 U.S.C. 78f(c)(3)(B).
    \9\ Id.
    \10\ Id.
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    In addition, the Commission finds that the NYSE's proposed rule 
change is consistent with Section 6(b)(8) of the Act,\11\ which 
requires that the rules of an exchange not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act.
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    \11\ 15 U.S.C. 78f(b)(8).
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    The Commission finds that the NASD's proposed rule change is 
consistent with Section 15A(g)(3).\12\ Section 15A(g)(3) of the Act 
\13\ provides that a registered securities association may bar a 
natural person from becoming associated with a member or condition the 
association of a natural person with a member if such natural person 
does not meet such standards of training, experience, and competence as 
are prescribed by the rules of the association. Section 15A(g)(3) of 
the Act \14\ also provides that a registered securities association may 
examine and verify the qualifications of an applicant to become a 
person associated with a member in accordance with procedures 
established by the rules of the association and require a natural 
person associated with a member, or any class of such natural persons, 
to be registered with the association in accordance with procedures so 
established.
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    \12\ 15 U.S.C. 78o-3(g)(3).
    \13\ Id.
    \14\ Id.

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[[Page 16629]]

    In addition, the Commission finds that the proposed rule change is 
consistent with Section 15A(b)(9) of the Act,\15\ which requires that 
the rules of an association not impose any burden on competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act.
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    \15\ 15 U.S.C. 78o-3(b)(9).
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    The Commission finds good cause for approving the NYSE and NASD 
proposed rule changes prior to the thirtieth day after the date of 
publication of notice thereof in the Federal Register.\16\ The 
proposals set forth certain prerequisites and exemptions from the 
research analyst registration requirements. The NYSE and the NASD 
stated their intentions to file proposed rule changes to require that 
applicants also be registered as General Securities Representatives as 
a prerequisite to being registered as research analysts, in related 
rule filings that were published in the Federal Register on February 
13, 2004.\17\ In addition, the proposals to provide for an exemption 
from the analytical portion of the Research Analyst Qualification 
Examination for certain applicants who have passed certain portions of 
the CFA Examination, are responsive to comments received in response to 
the SRO's rule changes that mandated registration requirements for 
research analysts. Those rule changes were approved on July 29, 
2003.\18\
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    \16\ In approving the NYSE's proposal, as amended, the 
Commission has considered the proposed rule's impact on efficiency, 
competition and capital formation. 15 U.S.C. 78c(f).
    \17\ See note 3 supra.
    \18\ See Securities Exchange Act Release No. 48252, 69 FR 45875 
(August 4, 2003).
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    The Commission believes, moreover, that approving these proposed 
rule changes further the public interest and the investor protection 
goals of the Exchange Act. Finally, the Commission also finds that it 
is in the public interest to approve the rules as soon as possible to 
expedite the implementation of the research analyst registration 
requirements.
    Accordingly, the Commission finds good cause, consistent with 
Sections 6(c)(3)(B), 15A(b)(6) and 19(b) of the Exchange Act,\19\ to 
approve the proposed rule changes on an accelerated basis.
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    \19\ 15 U.S.C. 78f(c)(3)(B), 78o-3(b)(6), and 78s(b).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\20\ that the proposed rule changes (SR-NYSE-2004-03; SR-NASD-2004-
020) are approved on an accelerated basis.
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    \20\ 15 U.S.C. 78s(b)(2).
    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-7079 Filed 3-29-04; 8:45 am]
BILLING CODE 8010-01-P