[Federal Register Volume 70, Number 14 (Monday, January 24, 2005)]
[Notices]
[Page 3417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-254]



[[Page 3417]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51038; File No. SR-PCX-2004-96]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change To Amend PCXE Rule 4.5 To 
Require All Financial/Operations Principals of PCXE ETP Firms to 
Successfully Complete the Series 27 Examination and To Add PCXE Rule 
6.18(d) To Require All Compliance Supervisors of PCXE ETP Firms To 
Successfully Complete the Series 24 Examination

January 14, 2005.
    On October 20, 2004, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its subsidiary, PCX Equities, Inc. (``PCXE''), 
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 PCXE Rule 4.5 to require all financial/operations principals of 
PCXE ETP Firms to successfully complete the National Association of 
Securities Dealers, Inc.'s (``NASD'') Financial and Operations 
Principal Examination (``Series 27 Examination''), and to add PCXE Rule 
6.18(d) to require all compliance supervisors of PCXE ETP Firms to 
successfully complete NASD's General Securities Principal Examination 
(``Series 24 Examination''). The proposed rule change was published for 
comment in the Federal Register on December 14, 2004.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50818 (December 7, 
2004), 69 FR 74558.
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    Among other things the proposed rule change establishes a 
requirement that each Electronic Trading Permit (``ETP'') holder 
subject to Securities Exchange Act Rule 15c3-1 \4\ designate a 
Financial/Operations Principal (``FINOP'') and that the FINOP pass the 
Series 27 Examination. It also requires supervisory personnel to pass 
the Series 24 Examination and if the person subject to the Series 24 
requirement also does business with the public that person must pass 
the General Securities Sales Supervisor Qualification Examination 
(``Series 9/10'').
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    \4\ 17 CFR 240.15c3-1.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange \5\ and, in 
particular, the requirements of Section 6 of the Act \6\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change is consistent with Section 6(b) of the Act \7\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act \8\ 
in particular, because it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principals of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. The Commission believes that 
requiring all financial/operations principals of PCXE ETP Firms to 
successfully complete the Series 27 Examination ensures that 
individuals who prepare the financial statements of PCXE ETP Firms will 
meet uniform qualifications to prepare such statements. The Commission 
also finds that requiring all compliance supervisors of PCXE ETP Firms 
to successfully complete the Series 24 Examination ensures that those 
who are supervising equities trading be uniformly qualified. The 
Commission notes that the proposed rule change gives PCXE the authority 
to waive all or a portion of the Series 24 Examination requirements 
pursuant to PCXE Rule 6.18(d). In evaluating whether to grant a full or 
partial waiver from the examination requirements, PCXE represents that 
it will review a number of factors including but not limited to the 
individual's industry experience, education, previous registration 
history with the Exchange and other examinations taken by the 
individual that may be acceptable substitutes in conjunction with 
securities industry experience. The Commission expects that PCXE will 
carefully evaluate the criteria when determining whether to grant a 
full or partial waiver, and will do so only for those candidates whose 
qualifications have been satisfactorily demonstrated, and for whom 
granting a waiver is consistent with protecting investors and the 
public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-PCX-2004-96) be, and it 
hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E5-254 Filed 1-21-05; 8:45 am]
BILLING CODE 8010-01-P