[Federal Register Volume 69, Number 128 (Tuesday, July 6, 2004)]
[Notices]
[Pages 40701-40702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15156]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49922; File No. SR-PCX-2003-51]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change, and Amendments No. 1, 2, and 3 Thereto, by the Pacific 
Exchange, Inc. Relating to Conditions of PCX Membership

June 28, 2004.
    On October 29, 2003, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend its rules regarding the Exchange's 
conditions to membership. Specifically the Exchange proposes to: (1) 
Modify rules relating to PCX administered examinations for Floor 
Brokers and Market Makers; and (2) adopt a rule permitting waiver of 
the examination requirements by the Membership Committee. The PCX filed

[[Page 40702]]

Amendments No.1,\3\ No. 2,\4\ and No. 3,\5\ on December 18, 2003, March 
15, 2004, and April 23, 2004, respectively. The proposed rule change, 
as amended, was published for comment in the Federal Register on May 
19, 2004.\6\ The Commission received no comment letters on the 
proposal. This order approves the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Steven B. Maitlin, Regulatory Policy, PCX, 
to Nancy Sanow, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated December 17, 2003 (``Amendment No. 
1'').
    \4\ See Letter from Steven B. Maitlin, Regulatory Policy, PCX, 
to Nancy Sanow, Assistant Director, Division, Commission, dated 
March 12, 2004 (``Amendment No. 2'').
    \5\ See Letter from Steven B. Maitlin, Regulatory Policy, PCX, 
to Nancy Sanow, Assistant Director, Division, Commission, dated 
April 22, 2004 (``Amendment No. 3'').
    \6\ See Securities Exchange Act Release No. 49681 (May 11, 
2004), 69 FR 75010.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange \7\ 
and, in particular, the requirements of Section 6 and Section 15 of the 
Act.\8\ Specifically, Section 6(c)(3)(A) of the Act provides that a 
national securities exchange may deny membership to, or condition the 
membership of, a registered broker-dealer if any natural persons 
associated with the broker or dealer do not meet the standards of 
training, experience and competence as are prescribed by the rules of 
the exchange.\9\ Moreover, Section 15(b)(7)(C) of the Act provides that 
the Commission may rely on the registered securities associations and 
national securities exchanges to ``require registered brokers and 
dealers and persons associated with such brokers and dealers to pass 
tests administered by or on behalf of any such association or 
exchange.'' \10\ To further the goals of Section 15(b)(7) of the Act, 
the Commission in 1993 adopted Rule 15b7-1,\11\ which prohibits 
registered broker-dealers from effecting any transaction in, or 
inducing the purchase or sale of, any security unless any natural 
person associated with such broker or dealer who effects or is involved 
in effecting such transaction is registered or approved in accordance 
with the standards of training, experience, competence, and other 
qualification standards (including but not limited to submitting and 
maintaining all required forms, paying all required fees and passing 
any required examinations) established by the rules of any national 
securities exchange of which such broker or dealer is a member.
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    \7\ In approving this proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f and 78o.
    \9\ 15 U.S.C. 78f(c)(3)(A).
    \10\ 15 U.S.C. 78o(b)(7)(C).
    \11\ 17 CFR 240.15b7-1.
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    The Commission believes that the Exchange should be able to 
maintain the integrity and competency of securities industry personnel 
in its market under the proposed rule change. The proposed rule change 
will extend the time period when a former member of the PCX or another 
self-regulatory organization (``SRO'') may have taken an examination 
from two years to five years if the applicant has been a member of an 
SRO within six months of the application date for Exchange membership. 
In addition, the proposal allows the Membership Committee to waive the 
examination requirement if the Committee believes the applicant is 
qualified based upon the applicant's industry experience, the type of 
registration requested, the previous history of the applicant with the 
PCX and any other examinations the applicant has successfully completed 
that may be considered acceptable substitutes.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change and Amendments No. 1, 2, and 3 
thereto (File No. SR-PCX-2003-51) are approved.
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-15156 Filed 7-2-04; 8:45 am]
BILLING CODE 8010-01-P