[Federal Register Volume 59, Number 202 (Thursday, October 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26056]
[[Page Unknown]]
[Federal Register: October 20, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34842; File No. SR-Phlx-94-51]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. Relating to Revisions
to the General Securities Sales Supervisor (Series 8) Examination, and
the Corresponding Examination Specifications and Content Outline
October 14, 1994.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ notice is hereby given that on October 3, 1994, the
Philadelphia Stock Exchange, Inc. (``Phlx'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II and III below, which Items have
been prepared by the Phlx. 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. Sec. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes, in conjunction with the other self-regulatory
organizations (``SROs''), to adopt and use a revised version of the
General Securities Sales Supervisor (``Series 8'') Examination,
examination specifications and content outline.\2\ The Phlx proposes to
incorporate references to this examination into its rules by adding
paragraph (d) to rule 748, Supervision.
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\2\For a detailed description of the revised Series 8
examination, specifications and content outline, see Securities
Exchange Act Release Nos. 34335 (July 8, 1994), 59 FR 35961 [File
No. SR-NYSE-94-23] (notice of proposed rule change relating to the
revision of the Series 8 examination content outline); and 34336
(July 8, 1994) 59 FR 35962 [File No. SR-NYSE-94-24] (notice of
proposed rule change relating to the revision of the Series 8
examination and specifications).
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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 Phlx 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 IV below. The Phlx 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
The General Securities Sales Supervisor (``Series 8'') Examination
is an industry-wide qualification examination for securities sales
supervisors. The Series 8 examination is generally required under rules
of the self-regulatory organizations (``SROs'') for persons who are
engaged in the supervision of general securities branch offices (i.e.,
branch office managers) and of general securities registered
representatives. The Series 8 examination tests a candidate's knowledge
of securities industry rules and regulations and certain statutory
provisions applicable to general securities sales supervision. The
Series 8 examination specifications detail the areas covered by the
examination and break down the number of examination questions culled
from each area. The Series 8 content outline details the subject
coverage and question allocation of the examination. The content
outline reflects the revised content of the examination.
Revision of the Series 8 examination, specifications and content
outline was recently undertaken by an industry committee composed of
representatives from SROs (the New York Stock Exchange, the American
Stock Exchange, the Chicago Board Options Exchange, the Municipal
Securities Rulemaking Board, the National Association of Securities
Dealers and the Philadelphia Stock Exchange) and representatives from
broker-dealers, including branch office managers, compliance personnel
and corporate executives, in order to update the examination in view of
changes in relevant laws, rules and regulations, the development of new
products, and to reflect various changes in industry practices. The
committee reviewed the examination specifications, content areas and
item bank and developed new questions in new areas.
The revised examination continues to cover the areas of knowledge
required to supervise sales activities in securities, however, the
focus of the content of the examination has been shifted to concentrate
more closely on supervisory duties. Accordingly, certain questions have
been deleted which deal with routine calculations and basic product
knowledge and questions on new federal and SRO rules and regulations
have been incorporated into the exam, as well as questions on new
products, supervision and changes in industry practices. The revised
examination and specifications include coverage of these new areas. The
examination will remain a six-hour, two-part, 200 question examination.
The Phlx also proposes to adopt a new paragraph to Phlx Rule 748,
Supervision, to expressly incorporate a supervisory examination into
Exchange rules. Specifically, persons delegated supervisory
responsibility pursuant to Rule 748 (b) and (c) would be required by
proposed paragraph (d) to meet the Exchanges' qualification
requirements, including successful completion of a supervisory
examination deemed acceptable by the Exchange. This requirement is
substantially similar to existing provision of other exchanges.\3\
Currently, Rule 748 requires member or participant organizations to
supervise all registered representatives and each office, department or
business activity. In addition, a general partner or principal
executive officer must be designated to assume overall responsibility
for internal supervision of the organization and compliance with
securities laws and regulations, including establishing written
supervisory procedures delegating supervisory responsibilities and
instituting a supervisory review procedure.
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\3\See e.g., NYSE Rule 342(d) and Supplementary Material .13.
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With respect to qualifications for supervisory personnel, Rule 748
merely requires employees with delegated supervisory responsibility to
be ``qualified,'' and persons responsible for any group of employees to
``reasonably discharge'' those duties. The proposed new language is
intended to bridge this gap by expressly requiring supervisory
personnel to qualify with the Exchange by successfully completing the
appropriate examination, which will be indicated in the Exchange's
memorandum to its membership. The Exchange notes that although options
activity and personnel, including foreign currency options, are also
subject to Rule 748, additional supervisory requirements for option
accounts apply.\4\
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\4\See Phlx Rules 1024 and 1025.
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The other SRO participants will also file the revised examination
and specifications for approval by the SEC. The Exchange intends to
implement the new Series 8 content outline and examination jointly with
the other SROs after the Commission has approved the proposed rule
changes of all the other SROs.
The statutory basis for the Series 8 Examination lies in Section
6(c)(3)(B) of the Act. Under that Section, it is the Exchange's
responsibility to prescribe standards of training, experience and
competence for persons associated with Exchange members and member
organizations. Pursuant to this statutory obligation, the Exchange has
developed examinations that are administered to establish that persons
associated with Exchange members and member organizations have attained
specific levels of competence and knowledge.
The addition of new language to Phlx Rule 748 is also consistent
with Section 6(b)(5) in that it is designed to promote just and
equitable principles of trade, prevent fraudulent and manipulative acts
and practices, and protect investors and the public interest by
bolstering the Exchange's supervision rule through a qualification and
examination requirement for supervisory personnel.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will 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
Comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the publication of this notice in the Federal
Register or within such other period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
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. Sec. 552, will be available for inspection and copying at
the Commission's Public Reference Room, 450 Fifth Street, NW.,
Washington, DC 20549. Copies of the filing will also be available for
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-94-51 and should be
submitted by November 10, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-26056 Filed 10-19-94; 8:45 am]
BILLING CODE 8010-01-M
