[Federal Register Volume 59, Number 205 (Tuesday, October 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26434]
[[Page Unknown]]
[Federal Register: October 25, 1994]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34853; File Nos. SR-NYSE-94-26; SR-NYSE-94-27]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Order Approving a Proposed Rule Change Relating to Examination
Specifications for the General Securities Registered Representative
(Series 7) Examination, and the Corresponding Content Outline
October 18, 1994.
I. Introduction
On June 30, 1994, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') 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\
proposed rule changes (File Nos. SR-NYSE-94-26 and SR-NYSE-94-27) to
revise the General Securities Registered Representative (Series 7)
Examination Specifications and the corresponding Content Outline.
---------------------------------------------------------------------------
\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1994).
---------------------------------------------------------------------------
The proposed rule changes were published for comment in Securities
Exchange Act Release Nos. 34340 (July 8, 1994), 59 FR 35959 (July 14,
1994); and 34341 (July 8, 1994), 59 FR 35960 (July 14, 1994). No
comments were received on the proposals. This order approves the
proposed rule changes contingent upon the filing of the revised
Examination Specifications and Content Outline by other appropriate
self-regulatory organizations (``SROs''), and approval of those filings
by the Commission.
II. Description of the Proposal
The NYSE is revising, updating and seeking approval for the Series
7 Examination, Specifications and Content Outline. The Series 7
Examination was created in 1974 as an industry-wide qualification
examination for persons seeking registration as general securities
representatives. The Series 7 Examination is generally required under
SRO rules for persons who are engaged in the solicitation, purchase, or
sale of securities for the accounts of customers. The purpose of the
Series 7 Examination is to ensure that registered representatives have
the basic knowledge necessary to perform their functions and
responsibilities. The Series 7 Specifications detail the areas covered
by the examination and break down the number of examination questions
culled from each area, while the Content Outline details the subject
coverage and question allocation of the examination.
Revision of the Series 7 Examination, Specifications and Content
Outline was initiated in April 1993 by an industry committee of SROs
and representatives from broker-dealers in order to update the
examination in view of changes in the securities industry, including
changes in relevant rules and regulations, the development of new
securities products, and changes in the job of registered
representatives as firms offer an increasingly wide range of financial
services.\3\ The Examination Specifications and Content Outline for the
Series 7 have not been revised since 1986.
---------------------------------------------------------------------------
\3\SROs on the committee include the New York, American and
Philadelphia Stock Exchanges, Chicago Board Options Exchange, the
Municipal Securities Rulemaking Board, and the National Association
of Securities Dealers. Broker-dealer representatives include branch
office managers, compliance officers, training personnel and
registered representatives.
---------------------------------------------------------------------------
The industry committee updated the existing statements of the
critical functions of registered representatives to ensure current
relevance and appropriateness and drafted statements of tasks expected
to be performed by entry-level registered representatives and conformed
the existing Content Outline to the task statements. The Content
Outline reflects the revised content of the examination. Under the
proposed rule change, the total number of questions in the Series 7
Examination will remain at 250, and the revised examination will cover
all financial product areas covered on the present Series 7 Examination
as well as several new products, including collateralized mortgage
obligations (``CMOs''), long term equity anticipation securities
(``LEAPS'') and CAPS,\4\ with reduced emphasis on direct participation
programs.
---------------------------------------------------------------------------
\4\OEX CAPS and SPX CAPS are new securities based on the S&P 100
(OEX) and the S&P 500 (SPX) that give investors the right to
participate to a predetermined level in upward or downward movements
in either index.
---------------------------------------------------------------------------
Under the proposed rule change, the NYSE will appoint a committee
to review the Series 7 Content Outline and Specifications periodically
to determine any adjustments that may be required. The committee will
represent a broad range of expertise, such as practicing registered
representatives, branch managers, compliance officers, training
personnel, and SRO representatives. The review will address any new
information that registered representatives need to know, information
currently specified in the examination that should be deleted and any
adjustments that need to be made in the emphasis on various topics.
The Commission anticipates that the other appropriate SRO
participants also will file the revised specifications for approval by
the Commission. The NYSE, and these other SROs, may use the revised
Examination, Specifications and Content Outline after the Commission
has approved the proposed rule changes of the other appropriate SRO
participants.
III. Discussion
After careful review, the Commission finds that the proposed rule
changes are consistent with the requirements of the Act and the rules
and regulations thereunder applicable to a national securities
exchange, and in particular, with the requirements of Sections 6(b)(5)
and 6(c)(3)(B) of the Act.\5\ Section 6(b)(5) requires, among other
things, that the rules of an exchange be designed to promote just and
equitable principles of trade, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Section
6(c)(3)(B) provides that a national securities exchange may examine and
verify the qualifications of an applicant to become a person associated
with a member in accordance with procedures established by the rules of
the exchange, and may require any person associated with a member, or
any class of such persons, to be registered with the exchange in
accordance with procedures so established.
---------------------------------------------------------------------------
\5\15 U.S.C. 78f(b)(5) and (c)(3)(B) (1988).
---------------------------------------------------------------------------
The Commission also believes that the proposed rule change is
consistent with Section 15(b)(7) of the Act\6\ which stipulates that
prior to effecting any transaction in, or inducing the purchase or sale
of any security, a registered broker or dealer must meet certain
standards of operational capability, and that such broker or dealer
must meet certain standards of training, experience, competence, and
such other qualifications as the Commission finds necessary or
appropriate in the public interest or for the protection of investors.
---------------------------------------------------------------------------
\6\15 U.S.C. 78o(b)(7) (1988).
---------------------------------------------------------------------------
The Commission believes that revising the Series 7 Examination,
Specifications and Content Outline should help to ensure that only
those securities representatives with a comprehensive knowledge of
current Exchange rules, as well as an understanding of the Act, will be
able to solicit, purchase or sell securities for the accounts of
customers. The Commission believes that the revised areas covered by
the Examination, Specifications and Content Outline are appropriate
subject matters and include a sufficiently broad range of topics to
ensure an appropriate level of expertise by representatives.
Additionally, the revised examination tests relevant subject
matters in view of changes in applicable laws, rules, regulations,
products, and industry practices. By ensuring this requisite level of
knowledge, the NYSE can remain confident that securities
representatives have demonstrated an acceptable level of securities
knowledge to carry out their responsibilities.
The Commission has determined that the Content Outline for the
revised Series 7 Examination is sufficiently detailed and covers
appropriate information so as to provide an adequate basis for studying
the new topics covered on the revised examination. The revised Content
Outline should help ensure that those persons taking the revised
examination understand the full range of subject matters included in
the examination.
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder.
IV. Conclusion
It is therefore ordered, Pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (File Nos. SR-NYSE-94-26 and SR-
NYSE-94-27) are approved contingent upon the filing of the Examination
Specifications and Content Outline by the order appropriate SROs and
the approval of those filings by the Commission.
\7\15 U.S.C. 78s(b)(2) (1988).
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\17 CFR 200.30-3(a)(12) (1994).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Security.
[FR Doc. 94-26434 Filed 10-24-94; 8:45 am]
BILLING CODE 8010-01-M
