[Federal Register Volume 60, Number 39 (Tuesday, February 28, 1995)]
[Notices]
[Pages 10886-10887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4798]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35401; File No. SR-NASD-95-04]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change Relating to Amendments to the Examination
Specifications and Content Outline for the General Securities
Registered Representative (Series 7) Examination
February 22, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on February 13, 1995,\2\ the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') 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 the NASD.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
\1\15 U.S.C. Section 78s(b)(1).
\2\The proposed rule change was originally filed on January 26,
1995. In the amendment, filed on February 13, 1995, the NASD
provided both the amended examination specifications and content
outline for the Series 7 exam. The examination specifications were
filed pursuant to a request by the NASD for confidential treatment.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing amendments to the examination specifications
and study outline for the General Securities Registered Representative
(``Series 7'') qualification examination. The amendments revise
materials pertaining to recently enacted federal and self-regulatory
organization (``SRO'') rules and regulations, new products and changes
in industry practices. The number of questions per examination and the
examination time are unaffected by the amendments.
The amendments described above do not result in any textual changes
to the NASD By-Laws, Schedules to the By-Laws, Rules, practices or
procedures.
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 NASD 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 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
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 required under
rules of the SROs for persons who are engaged in the solicitation,
purchase and/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 exam specifications detail
the ares covered by the examination and break down the number of
examination questions drawn from each area. The Series 7 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 self-
regulatory organizations and broker-dealer representatives 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 the registered
representative as firms offer an increasingly wide range of financial
services. The specifications and content outline for the Series 7
examination have not been revised since 1986.
The industry committee updated the existing statements of the
critical functions of registered representatives to ensure current
relevance and appropriateness, 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. The total
number of questions in the Series 7 examination will remain 250. 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 participation securities (``LEAPS'') and CAPS,\3\ with reduced
emphasis on direct participation programs.
\3\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.
---------------------------------------------------------------------------
The Commission recently approved two parallel filings of the New
York Stock Exchange (``NYSE'').\4\ No comments were received on either
filing.
\4\See Securities Exchange Act Release No. 34853 (October 18,
1994), 59 FR 53694 (October 25, 1994) (File Nos. SR-NYSE-94-26
(revised exam and exam specifications for Series 7 exam), and SR-
NYSE-94-27 (revised content outline for Series 7 exam)).
---------------------------------------------------------------------------
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(g)(3) of the Act in that the proposed
changes to the examination are to ensure persons seeking registration
in the securities industry have attained the requisite levels of
knowledge and competence.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The 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 of 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. 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 [[Page 10887]] 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 NASD. All submissions should refer to file
number SR-NASD-95-04 and should be submitted by March 21, 1995.
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 requirements of the Act and the rules and regulations
thereunder applicable to the NASD and, in particular, with the
requirements of Sections 15(b)(7), 15A(b)(6), and 15A(g)(3) of the
Act.\5\ Section 15(b)(7) states that a registered broker or dealer may
not effect any transaction in, or induce the purchase or sale of, any
security unless such broker or dealer meets such standards of
operational capability and all those associated with such broker or
dealer 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.
Section 15A(b)(6) requires, in relevant part, that the rules of a
registered securities association be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and to protect investors and the public interest.
Section 15A(g)(3) provides that a registered securities association may
deny membership to, or condition the membership of, a registered broker
or dealer if such broker or dealer does not meet the requisite levels
of knowledge and competence.
\5\15 U.S.C. Sections 78o(b)(7), 78o-3(b)(6), 78o-3(g)(3).
---------------------------------------------------------------------------
The Commission believes that revising the Series 7 exam,
specifications, and content outline should help to ensure that only
those securities representatives with a comprehensive knowledge of
current NASD 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 topics covered by
the Series 7 examination, specifications and content outline are
appropriate and include a sufficiently broad range of subject matter to
ensure an appropriate level of expertise by general securities
registered representatives. The revised examination focuses on relevant
subject matter in view of changes in applicable laws, rules,
regulations, products, and industry practices. By ensuring this
requisite level of knowledge, the Commission anticipates that general
securities registered representatives will demonstrate an acceptable
level of securities knowledge to carry out their responsibilities.
The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof in the Federal Register. The Commission believes that
accelerated approval is appropriate given the recent approval of two
parallel and substantively identical filings by the NYSE,\6\ and the
importance of industry-wide implementation of the revised content
outline and Series 7 examination as soon as practicable.
\6\See note 4, supra.
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\that the proposed rule change SR-NASD-95-04 be, and hereby is,
approved.
\7\15 U.S.C. Section 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-4798 Filed 2-27-95; 8:45 am]
BILLING CODE 8010-01-M
