[Federal Register Volume 69, Number 184 (Thursday, September 23, 2004)]
[Notices]
[Pages 57126-57127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2353]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50404; File No. SR-NYSE-2004-33]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change and Amendment No. 1 Thereto To 
Amend Exchange Rule 345A (``Continuing Education for Registered 
Persons'')

September 16, 2004.
    On June 28, 2004, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') a proposed rule change, pursuant to section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ to rescind all currently effective exemptions from 
required participation in the Regulatory Element programs. On August 4, 
2004, the Exchange submitted Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change, as amended, was published for 
comment in the Federal Register on August 17, 2004.\4\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Darla Stuckey, Corporate Secretary, NYSE, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated August 3, 2004 (``Amendment No. 1''). In Amendment 
No. 1, the NYSE made technical corrections and clarifications to the 
filing.
    \4\ See Securities Exchange Act Release No. 50177 (August 10, 
2004), 69 FR 51134 (August 17, 2004).
---------------------------------------------------------------------------

    NYSE Rule 345A currently provides, in part, that no member or 
member organization shall permit any registered person to continue to, 
and no registered person shall continue to, perform duties as a 
registered person, unless such person has complied with the Regulatory 
Element of the continuing education requirement set forth in this 
Rule.\5\ The Regulatory Element component of NYSE Rule 345A requires 
each registered person to complete a standardized, computer-based, 
interactive continuing education program within 120 days of their 
second registration anniversary date and every three years thereafter, 
or as otherwise prescribed by the Exchange. Persons who fail to 
complete the Regulatory Element are deemed inactive and may not perform 
in any capacity or be compensated in any way requiring registration.
---------------------------------------------------------------------------

    \5\ See NYSE Rule 345A(a).
---------------------------------------------------------------------------

    Currently, registered persons who were continuously registered, 
without a serious disciplinary action,\6\ for more than ten years as of 
the Rule's effective date (i.e., July 1, 1995) were initially, and 
continue to be, exempt from Regulatory Element requirements under NYSE 
Rule 345A. The ``graduated'' exemption, although discontinued as of 
July 1998,\7\ continues to apply to registered persons who were 
``graduated'' \8\ prior to the discontinuation of the exemption.
---------------------------------------------------------------------------

    \6\ For purposes of NYSE Rule 345A, a ``disciplinary action'' 
includes statutory disqualification as defined in Section 3(a)(39) 
of the Act; suspension or imposition of a fine of $5,000 or more; or 
being subject to an order from a securities regulator to re-enter 
the Regulatory Element program. See Rule 345A(a)(3)(i)-(iii).
    \7\ See Securities Exchange Act Release No. 39712 (March 3, 
1998), 63 FR 11939 (March 11, 1998)(SR-NYSE-97-33).
    \8\ Once the tenth anniversary program requirement was 
satisfied, the registered person became exempt from Regulatory 
Element requirements going forward (absent a serious disciplinary 
event).
---------------------------------------------------------------------------

    However, in response to recommendations made by the Securities 
Industry/Regulatory Council on Continuing Education (the ``Council''), 
the NYSE submitted a proposed rule change to rescind all currently 
effective exemptions from required participation in Regulatory Element 
programs.\9\ The Council believes that there is great value in exposing 
all registered industry participants to the full benefit of Regulatory 
Element programs.
---------------------------------------------------------------------------

    \9\ The Council recommended at its December 2003 meeting that 
SRO Rules (e.g., NYSE Rule 345A) be amended to eliminate existing 
exemptions from the Regulatory Element and to require all 
``grandfathered'' and ``graduated'' persons to fully participate in 
future standardized continuing education programs, according to the 
Rule's prescribed schedule. See proposed NYSE Rule 345A(a)(1). Note 
that the proposed amendments renumber existing paragraphs of the 
Rule; the Rule's prescribed schedule is currently found in NYSE Rule 
345A(a).
---------------------------------------------------------------------------

    Proposed amendments are expected to become effective on April 4, 
2005, due to changes that would have to be made to the CRD System. 
Should the necessary CRD System changes be delayed, the effective date 
would be within 30 days of the implementation of such changes. NYSE 
membership will be notified via an Information Memo.
    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of section 6 of the Act,\10\ and the 
rules and regulations thereunder applicable to a national securities 
exchange.\11\ In particular, the Commission finds that the proposed 
rule change is consistent

[[Page 57127]]

with section 6(b)(5) of the Act,\12\ which requires, among other 
things, that the Exchange's rules be designed to promote just and 
equitable principles of trade, to prevent fraudulent and manipulative 
acts and, in general, to protect investors and the public interest. The 
Commission believes that the proposed rule change should help to ensure 
that all registered persons are kept up-to-date on regulatory, 
compliance, and sales practice-related industry issues. Further, the 
Commission believes that the proposed rule change will reinforce the 
importance of compliance with just and equitable principles of trade by 
exposing all registered industry participants to the full benefits of 
the Regulatory Element programs, which include a new Regulatory Element 
module that focuses specifically on ethics.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(6).
    \11\ In approving the proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-NYSE-2004-33), as amended, 
is approved.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2353 Filed 9-22-04; 8:45 am]
BILLING CODE 8010-01-P