[Federal Register Volume 64, Number 199 (Friday, October 15, 1999)]
[Notices]
[Pages 56005-56007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26893]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41984; File No. SR-NYSE-99-37]
Self-Regulatory Organization; Notice of Filing and Order Granting
Accelerated Approval of Proposed Rule Change by the New York Stock
Exchange, Inc. to Revise the Uniform Application for Securities
Industry Registration or Transfer (Form U-4) and Uniform Termination
Notice for Securities Industry Registration (Form U-5)
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 August 31, 1999, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.\3\ For the reasons
discussed below, the Commission is granting accelerated approval of the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ A non-substantive amendment was made to the proposal. In
this amendment, the NYSE removed language describing certain aspects
of the National Association of Securities Dealers, Inc.'s (``NASD'')
Web CRD policy because the language was inaccurate. Telephone
conversation between Mary Anne Furlong, Director, Rule and
Interpretative Standards, NYSE, and Joseph P. Corcoran, Attorney,
Division of Market Regulation, Commission, on September 9, 1999.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The NYSE proposes to adopt the revised Form U-4 (``Uniform
Application for Securities Industry Registration or Transfer'') and the
revised Form U-5 (``Uniform Termination Notice for Securities
[[Page 56006]]
Industry Registration'').\4\ The Forms, submitted as Exhibit A with
this proposal, may be examined in the Commission's Public Reference
Room and at the Exchange.
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\4\ The revised Forms U-4 and U-5 were approved by the
Commission on June 25, 1999. See Release No. 34-41560 (June 25,
1999), 64 FR 36059 (July 2, 1999) (File No. SR-NASD-98-96).
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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, 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 III 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
The purpose of this filing is to request approval of the revised
Forms U-4 and U-5 for use at the NYSE. These forms are used by the
Exchange as part of its registration and oversight of persons
associated with members and member organizations. In addition,
information from these forms appears on the Central Registration
Depository (``CRD'') system, in which the Exchange participates. The
CRD is an industry-wide automated system that allows for the efficient
review and tracking of registered persons in the securities industry,
as well as changes in their employment histories.
The revised forms, along with the NASD's plan of implementation of
the World Wide Web-based Central Registration Depository (``Web CRD''),
were approved by the Commission on June 25, 1999.\5\ The revision of
Forms U-4 and U-5 was part of the NASD's effort to modernize the CRD
system and to streamline the registration and termination process of
individuals in the securities industry. The Forms U-4 and U-5 were
amended so that they can be submitted electronically through the World
Wide Web. In addition, certain disclosure questions on the forms were
amended to capture more disciplinary information about potential and
current registered representatives. In most cases, individuals seeking
registration will be required to fill out and submit an electronic Form
U-4. Further, when an associated person terminates his association with
a broker-dealer, the broker-dealer will be required to fill out and
submit an electronic Form U-5.
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\5\ Id.
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Currently, Forms U-4 and U-5 for persons employed by Exchange
members and member organizations that are not also members of the NASD
(``non-NASD members'') are submitted on paper directly to the Exchange.
In the future, however, it is anticipated that non-NASD members will be
able to file the forms electronically through Web CRD.
To allow Web CRD to efficiently process the revised forms, NASD
made certain formatting and technical changes to the original
electronic forms that were approved by the Commission in 1996, but not
made effective because the NASD decided to change the technology they
were going to use to modernize the CRD system. In addition to
reformatting the Disclosure Reporting Pages, the substantive amendments
to the form involve changes, which were described in SR-NASD-98-96, to
certain disclosure questions. In particular, the Form U-4 question
eliciting information on settled customer complaints was expanded to
include oral complaints involving sales practice allegations that are
settled for $10,000 or more.\6\ Additionally, two Form U-5 questions
were expanded to elicit information on criminal or regulatory actions
initiated on the basis of events that occurred while an individual was
employed by a firm, even if the actions were initiated after the
individual had been terminated.\7\
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\6\ Question 23I(2) on the Proposed U-4.
\7\ Question 16 and 17 on the Proposed U-5.
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The Exchange believes that the revised Forms U-4 and U-5 will
assist the Exchange in its registration and oversight functions by
providing more detailed reporting concerning persons associated with
members and member organizations. Moreover, in the future, it is
anticipated that non-NASD members of the NYSE will be able to file the
forms electronically through Web CRD.
2. Statutory Basis
The Exchange believes that the use of the revised Forms U-4 and U-5
is consistent with Section 6(b)(5) \8\ of the Act because the use of
standard registration forms fosters cooperation and coordination with
persons engaged in regulating transactions in securities. Additionally,
the information reported on the forms assists the Exchange in its
responsibilities under Section 6(c) \9\ of the Act, which requires that
an Exchange deny membership to persons subject to a statutory
disqualification or persons who cannot meet such standards of training,
experience and competence as are prescribed by the rules of the
Exchange or persons who have engaged in acts or practices inconsistent
with just and equitable principles of trade.
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\8\ 15 U.S.C. 78f(b)(5).
\9\ 15 U.S.C. 78f(c).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposal does not impose any 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 were neither solicited nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
is consistent with the Act. Persons making written submissions should
file six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 will also be available for
inspection and copying at the principal office of the NYSE. All
submissions should refer to File No. SR-NYSE-99-37 and should be
submitted by November 5, 1999.
IV. Commission's Findings and Order Granting Accelerated Approval
of Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the Act and the rules and regulations thereunder \10\ applicable
to a national
[[Page 56007]]
securities exchange. In particular, the Commission believes that the
proposed rule change is consistent with Section 6(b)(5) \11\ which
requires, among other things, that the rules of an exchange be designed
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, not to permit unfair
discrimination among customers, issuers, brokers or dealers, and, in
general, to protect investors and the public interest.
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\10\ Pursuant to Section 3(f) of the Act, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. The Commission notes that the forms and the
CRD system provide self-regulatory organizations, including the
NYSE, with a centralized and efficient means of maintaining
information on member firms and their associated persons. 15 U.S.C.
78c(f).
\11\ 15 U.S.C. 78f(b)(5).
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Additionally, the Commission believes that the revised Forms U-4
and U-5 will assist the Exchange in its registration and oversight
functions by providing the Exchange with more relevant information
about persons associated with members and member organizations.
Moreover, in the future, it is anticipated that non-NASD members of the
NYSE will be able to file the forms electronically through Web CRD.
Electronic filing should help expedite the registration process for
non-NASD members.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice thereof in the Federal Register. The Commission notes that the
forms have previously been approved by the Commission and are currently
in effect.\12\ The Commission also notes that the previous filing was
submitted for the requisite notice and comment period, and the
commission received no public comments. Furthermore, the proposed rule
change raises no new issue of regulatory concern. The Commission
believes, therefore, that granting accelerated approval to the propsoed
rule change is appropriate and consistent with Section 6 \13\ of the
Act.
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\12\ See supra note 4.
\13\ 15 U.S.C. 78f.
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-NYSE-99-37) is hereby
approved on an accelerated basis.
\14\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-26893 Filed 10-14-99; 8:45 am]
BILLING CODE 8010-01-M
