[Federal Register Volume 64, Number 127 (Friday, July 2, 1999)]
[Notices]
[Pages 36063-36064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16867]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41555; File No. SR-PCX-99-16]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Exchange, Inc. Relating to the Requirement for
Off-Floor Traders for Which the Exchange Is the Designated Examining
Authority To Successfully Complete the General Securities
Representative Examination Series 7
June 24. 1999.
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 June 1, 1999, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'')
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 Exchange. 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 204.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Exchange proposes to require that qualified off-floor traders
for which the PCX is the designated examining authority (``DEA'')
successfully complete the General Securities Representative Examination
Series 7 (``Series 7 Exam''). The text of the proposed rule change is
available at the Office of the Secretary, the Exchange, and at the
Commission.
[[Page 36064]]
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 Exchange 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 and is set forth in Sections A, B, and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Series 7 Exam Requirement
PCX Rule 1.7(b)(9) currently provides that the Exchange may deny
(or may condition) membership, or may prevent a natural person from
becoming associated (or may condition an association) with a member,
when an applicant, directly or indirectly, does not successfully
complete such written proficiency examinations as required by the
Exchange to enable it to examine and verify the applicant's
qualifications to function in one or more of the capacities applied
for. The Exchange is now proposing to amend PCX Rule 1.7(b)(9) to
expressly require designated off-floor traders to successfully complete
the Series 7 Exam. Specifically, the proposal provides that traders of
member organizations for which the Exchange is the DEA must
successfully complete the Series 7 Exam if the primary business of the
member organization involves the trading of securities which is
unrelated to the performance of the functions of a registered
specialist, a registered market maker or a registered floor broker. The
proposal further provides that the following are exempt from the
requirement to successfully complete the Series 7 Exam: Exchange
members who perform the function of a registered specialist, registered
market maker or registered floor broker (pursuant to PCX Rules 5.27(a),
6.33 or 6.44, respectively) and associated persons of member firms who
facilitate the execution of stock transactions for the accounts of
options market makers.
For purposes of PCX Rule 1.7(b)(9), the term ``trader'' is defined
as a person who is directly or indirectly compensated by an Exchange
member organization and who trades, makes trading decisions with
respect to, or otherwise engages in the proprietary or agency trading
of securities. In addition, the term ``primary business'' is defined as
greater than 50% of the member organization's business. The Exchange
notes that registered specialists, registered market makers and
registered floor brokers are required to pass written examinations of
the Exchange pursuant to PCS Rules 5.27(c), 6.33 and 6.44,
respectively.\3\
\3\ The Exchange notes that other exchanges have recently
adopted (or have proposed to adopt) a similar Series 7 Exam
requirement for off-floor traders. See Chicago Stock Exchange Rules,
Art. VI, Rule 3, Interpretation and Policy .02; Securities Exchange
Act Release No. 41306 (April 16, 1999), 64 FR 22665 (April 27, 1999)
(notice of filing of proposed rule change of the Philadelphia Stock
Exchange).
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Attestation Requirement
The proposed rule change further provides that each member
organization for which the Exchange is the DEA must complete, on an
annual basis, and on a form prescribed by the Exchange, a written
attestation as to whether the member organization's primary business is
performing the function of a registered specialist, a registered market
maker or a registered floor broker (pursuant to PCX Rules 5.27(a), 6.33
or 6.47, respectively).
Rule Application to Current Traders
Subsection (C) of the proposed rule provides that the requirement
to complete the Series 7 Exam will apply to current Traders of member
organizations that meet the criteria of subsection (A), above, as well
as to future Traders of member organizations that meet the criteria of
subsection (A), above, at a later date. It further provides that
Traders of member organizations that meet the criteria of subsection
(A), above, at the time of SEC approval of this Rule, must successfully
complete the Series 7 Exam within six months of notification by the
Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \4\ of the Act, in general, and further the
objectives of Section 6(b)(5),\5\ in particular, in that it is designed
to facilitate transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and to protect investors and the public interest.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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
Written comments on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer 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 such 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, including whether the proposed rule
change 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
PCX. All submissions should refer to File No. SR-PCX-99-16 and should
be submitted by July 23, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-16867 Filed 7-1-99; 8:45 am]
BILLING CODE 8010-01-M
