[Federal Register Volume 69, Number 91 (Tuesday, May 11, 2004)]
[Notices]
[Pages 26198-26200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10602]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49653; File No. SR-NYSE-2004-19]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 thereto by 
the New York Stock Exchange, Inc. Relating to Series 86/87 Examination 
Development Fee for Research Analysts

May 4, 2004.
    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 April 30, 2004, the New York Stock Exchange, Inc. (``NYSE'') 
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 NYSE. On April 30, 2004, the NYSE filed 
Amendment number 1 to the proposed rule change (``Amendment No. 
1'').\3\ The NYSE has designated this proposal as one establishing or 
changing a due, fee or other charge imposed by

[[Page 26199]]

the NYSE pursuant to section 19(b)(3)(A)(ii) of the Act \4\ and Rule 
19b-4(f)(2) thereunder,\5\ which renders the proposal effective upon 
filing with the Commission. 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\ See letter from William Jannace, Director, Rule and 
Interpretive Standards, NYSE, to Katherine England, Assistant 
Director, Division of Market Regulation, Commission, dated April 29, 
2004. In Amendment No. 1, the NYSE clarified that after 
implementation of the Series 86/87, the NYSE will continue to 
update, as necessary, the examination content and questions, and 
maintain statistics related to the maintenance of the exam.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is filing with the Commission a proposed rule change that 
would establish an examination development fee for the Research Analyst 
Qualification Examination (``Series 86/87'').

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 NYSE 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 NYSE 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
    NYSE Rule 344.10 requires that research analysts be registered 
with, qualified by, and approved by the NYSE. On July 29, 2003, the 
Commission approved amendments to NYSE Rule 472 (``Communications With 
The Public''), Rule 351 (``Reporting Requirements''), Rule 344 
(``Research Analysts And Supervisory Analysts''), and Rule 345A 
(``Continuing Education For Registered Persons'').\6\ The amendments 
include a new Research Analyst Qualification Examination requirement 
for research analysts who are primarily responsible for the preparation 
of the substance of research reports and/or whose names appear on such 
reports (NYSE Rule 344.10).
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    \6\ See Securities Exchange Act Release No. 48252 (July 29, 
2003), 68 FR 45875 (August 4, 2003) (SR-NYSE-2002-49).
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    Accordingly, the NYSE, together with the National Association of 
Securities Dealers, Inc. (``NASD''), developed a Research Analyst 
Qualification Examination, which is a two-part examination that tests 
competency of fundamental security analysis and valuation (Series 86) 
and applicable federal rules and regulations and self-regulatory 
organization (SRO) rules (Series 87).\7\
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    \7\ On January 27, 2004, the Exchange filed with the Commission 
for immediate effectiveness the Series 86/87 study outline. See 
Securities Exchange Act Release No. 49253 (February 13, 2004), 69 FR 
8257 (February 23, 2004) (notice of filing and immediate 
effectiveness of File No. SR NYSE-2003-41). The NYSE previously 
filed with the Commission on January 16, 2004, a proposed rule 
change for immediate effectiveness that delayed the effective date 
of NYSE Rule 344.10 to ``not later than March 30, 2004.'' See 
Securities Exchange Act Release No. 49119 (January 23, 2004), 69 FR 
4337 (January 29, 2004) (notice of filing and immediate 
effectiveness of File No. SR-NYSE-2004-01). On January 30, 2004, the 
Exchange filed with the Commission a proposed rule change that would 
establish certain prerequisites to and exemptions from the Research 
Analyst Qualification Examination. See Securities Exchange Release 
No. 49314 (February 24, 2004), 69 FR 9888 (March 2, 2004) (SR-NYSE-
2004-03).
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    NYSE Rule 344.10 became effective on March 30, 2004. Concurrently, 
the NASD filed a proposed rule change establishing an administration 
fee of $105.00 and $55.00 for an associated person to take the Series 
86 and Series 87 examinations, respectively.\8\ Its fees are based on 
the costs to the NASD to administer the examinations, including 
printing, delivery and systems changes. Associated persons of NYSE only 
members and member organizations that take the examination must pay the 
fees stated in the NASD's filing to the NASD.
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    \8\ See Securities Exchange Act Release No. 49527 (April 2, 
2004), 69 FR 19255 (April 12, 2004) (SR-NASD-2004-49).
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    The NYSE's filing would establish an examination development fee of 
$45.00, to be collected by the NASD on behalf of the NYSE, each time an 
individual takes either of the Series 86 or Series 87 examinations. 
This development fee, which is the subject of this filing, was 
determined by the NYSE based on the costs incurred to develop, 
implement, and maintain the Series 86 and Series 87 examinations.\9\ 
The NYSE represents that after implementation of the Series 86/87, the 
NYSE expects to continue to update, as necessary, the examination 
content and questions, and maintain statistics and conduct various 
examination committee meetings.\10\ Accordingly, the NYSE notes that 
this fee will be assessed on an on-going basis, as is the case with 
various other qualification examinations, e.g. the Series 7 (General 
Securities Registered Representative) Examination. The total 
examination and development fees assessed on each individual who takes 
a Series 86 examination for registration as a research analyst will be 
$150.00.
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    \9\ See Amendment No. 1, supra note 3.
    \10\ See Amendment No. 1, supra note 3.
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    The total examination and development fees assessed on each 
individual who takes a Series 87 examination for registration as a 
research analyst will be $100.00. In addition, there shall be a service 
charge of $15.00 in addition to the fees described above for any 
examination taken in a foreign test center located outside the 
territorial limits of the United States. Such fees will be paid to the 
NASD, with no portion thereof being remitted to the NYSE.
    On March 24, 2004, the Commission approved an interpretation to 
NYSE Rule 344, which permits a research analyst candidate who has 
passed both Level I and Level II of the Chartered Analyst (CFA) 
Examination to request an exemption from the Series 86 examination.\11\ 
The CFA examination is administered by the Association for Investment 
Management and Research. To be eligible for the exemption, an applicant 
must not only have passed Levels I and II of the CFA examination, but 
also must either (1) have functioned continuously as a research analyst 
since having passed CFA Level II or (2) have passed CFA Level II within 
two years of application for registration as a research analyst. 
Applicants who do not meet these criteria may, based upon previous 
related employment/experience, make a written request to the NYSE or 
the NASD for a waiver. The NASD will be processing all requests for 
exemptions from the Series 86. Each candidate who is granted a waiver 
for the Series 86 shall be assessed as a waiver application fee, the 
fee for this examination. Associated persons of NYSE-only members and 
member organizations who are granted a waiver or exemption must still 
pay the examination fee to the NASD, plus the NYSE development fee that 
will be collected by the NASD and remitted to the NYSE.
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    \11\ See Securities Exchange Act Release No. 49464 (March 24, 
2004), 69 FR 16628 (March 30, 2004) (SR-NYSE-2004-03).
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2. Statutory Basis
    The NYSE believes that the proposal is consistent with section 6(b) 
of the Act,\12\ in general, and section 6(b)(4) of the Act,\13\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE does not believe that the proposed rule change will impose 
any

[[Page 26200]]

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

    Written comments on the proposed rule change were neither solicited 
nor received.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \14\ and subparagraph (f)(2) of Rule 19b-4 
\15\ thereunder because it establishes a fee to be imposed by the NYSE. 
Accordingly, the proposal has taken effect upon filing with the 
Commission. At any time within 60 days of the filing of such 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.\16\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \15\ 17 CFR 240.19b-4(f)(2).
    \16\ For the purposes of calculating the 60-day abrogation 
period, the Commission considers the proposed rule change to have 
been filed on April 30, 2004, the date the NYSE filed Amendment No. 
1.
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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 proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSE-2004-19 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NYSE-2004-19. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 also will be available for inspection and copying at the 
principal office of the NYSE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2004-19 and should be submitted on or before June 
1, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-10602 Filed 5-10-04; 8:45 am]
BILLING CODE 8010-01-P