[Federal Register Volume 70, Number 35 (Wednesday, February 23, 2005)]
[Notices]
[Pages 8864-8866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-737]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51215; File No. SR-NASD-2005-015]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Revisions to the Series 55 Examination Program

February 16, 2005.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 31, 2005, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
items I, II and III below, which items have been prepared by NASD. NASD 
filed this proposal pursuant to section 19(b)(3)(A)(i) \3\ of the Act 
and Rule 19b-4(f)(1) thereunder,\4\ 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\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is filing revisions to the study outline and selection 
specifications for the Limited Representative--Equity Trader (Series 
55) examination program.\5\ The proposed revisions update the material 
to reflect changes to the laws, rules, and regulations covered by the 
examination. NASD is not proposing any textual changes to the By-Laws, 
Schedules to the By-Laws, or Rules of NASD.
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    \5\ NASD also is proposing corresponding revisions to the Series 
55 question bank, but based upon instruction from the Commission 
staff, NASD is filing SR-NASD-2005-015 for immediate effectiveness, 
and is not filing the question bank for Commission review. See 
letter to Alden S. Adkins, Senior Vice President and General 
Counsel, NASD Regulation, from Belinda Blaine, Associate Director, 
Division of Market Regulation, SEC, dated July 24, 2000. The 
question bank is available for Commission review.
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    The revised study outline is available at NASD and at the 
Commission. However, NASD has omitted the Series 55 selection 
specifications from this filing and has submitted the specifications 
under separate cover to the Commission with a request for confidential 
treatment pursuant to Rule 24b-2 under the Act.\6\
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    \6\ 17 CFR 240.24b-2.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASD included statements 
concerning the purpose of and basis for its proposal and discussed any 
comments it received regarding the proposal. The text of these 
statements may be examined at the places specified in item IV below. 
NASD 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
    Pursuant to section 15A(g)(3) of the Act,\7\ which requires NASD to 
prescribe

[[Page 8865]]

standards of training, experience, and competence for persons 
associated with NASD members, NASD has developed examinations, and 
administers examinations developed by other self-regulatory 
organizations, that are designed to establish that persons associated 
with NASD members have attained specified levels of competence and 
knowledge. NASD periodically reviews the content of the examinations to 
determine whether revisions are necessary or appropriate in view of 
changes pertaining to the subject matter covered by the examinations.
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    \7\ 15 U.S.C. 78o-3(g)(3).
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    The Series 55 examination is required, with certain limited 
exceptions, for registered representatives who are engaged in 
proprietary trading, the execution of transactions on an agency basis, 
or the direct supervision of such activities, with respect to 
transactions in equity, preferred or convertible debt securities 
effected otherwise than on a securities exchange. There is an exception 
from the requirement for the Series 55 examination for any person 
associated with a member whose trading activities are conducted 
principally on behalf of an investment company that is registered with 
the Commission pursuant to the Investment Company Act of 1940 \8\ and 
that controls, is controlled by, or is under common control with the 
member.
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    \8\ 15 U.S.C. 80a-1 et seq.
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    A committee of industry representatives, together with NASD staff, 
recently undertook a review of the Series 55 examination program. As a 
result of this review, NASD is proposing revisions to the section on 
The Nasdaq Stock Market, Inc. (``NASDAQ'') Automated Execution and 
Trading Systems in the study outline to better reflect the importance 
of the NASDAQ Market Center--Execution Service (SuperMontage). NASD 
also is proposing revisions to the study outline to remove certain 
portions (such as SEC Rules 11Ac1-7 \9\ and 17a-4,\10\ Overallotments 
(Greenshoe), Tender Offers, and NASD Rule 11810 (Buying-In)) that 
relate more to a firm's sales practice or operations department than to 
the firms' NASDAQ trading desk. As a result of the revisions, the title 
of Section 2 was changed from ``NASDAQ Automated Execution and Trading 
Systems'' to ``NASDAQ Display, Execution and Trading Systems.'' NASD is 
further proposing revisions to the study outline to reflect the new SEC 
short sale requirements.\11\ In addition, the number of questions on 
each section of the study outline was modified as follows: NASDAQ and 
Over-The-Counter Markets, decreased from 45 to 42 questions; NASDAQ 
Display, Execution and Trading Systems, increased from 9 to 15 
questions; Trade Reporting Requirements, decreased from 18 to 16 
questions; and General Industry Standards, decreased from 28 to 27 
questions.
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    \9\ 17 CFR 240.11Ac1-7.
    \10\ 17 CFR 240.17a-4.
    \11\ Exchange Act Release No. 50103 (July 28, 2004), 69 FR 48008 
(August 6, 2004) (S7-23-2003).
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    NASD is proposing similar changes to the corresponding sections of 
the Series 55 selection specifications and question bank. The number of 
questions on the Series 55 examination will remain at 100, and 
candidates will have three hours to complete the exam. Also, each 
question will continue to count one point, and each candidate must 
correctly answer 70 percent of the questions to receive a passing grade
2. Statutory Basis.
    NASD believes that the proposed revisions to the Series 55 
examination program are consistent with the provisions of sections 
15A(b)(6) \12\ and 15A(g)(3) of the Act,\13\ which authorize NASD to 
prescribe standards of training, experience, and competence for persons 
associated with NASD members.
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    \12\ 15 U.S.C. 78o-3(b)(6).
    \13\ 15 U.S.C. 78o-3(g)(3).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) of the Act \14\ and Rule 19b-4(f)(1) thereunder,\15\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
NASD proposes to implement the Series 55 examination program no later 
than April 29, 2005. NASD will announce the implementation date in a 
Notice to Members to be published no later than 60 days after SEC 
Notice of this filing.
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    \14\ 15 U.S.C. 78s(b)(3)(A)(i).
    \15\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the 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.

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-NASD-2005-015 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-NASD-2005-015. 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 NASD. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You

[[Page 8866]]

should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-NASD-2005-015 
and should be submitted on or before March 16, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-737 Filed 2-22-05; 8:45 am]
BILLING CODE 8010-01-P