[Federal Register Volume 65, Number 88 (Friday, May 5, 2000)]
[Notices]
[Pages 26256-26258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11255]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42734; File No. SR-NASD-00-25]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by National Association of 
Securities Dealers, Inc. Relating to Extension of Time To Pass the 
Series 55 Examination, Equity Trader

April 28, 2000.
    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 April 27, 2000, the National Association of

[[Page 26257]]

Securities Dealers, Inc. (``NASD'' or ``Association''), through its 
wholly-owned subsidiary, NASD Regulation, Inc. (``NASD Regulation'') 
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 NASD Regulation. NASD 
Regulation has designated this proposal as one constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule under section 
19(b)(3)(A)(i) of the Act and Rule 19b-4(f)(1) thereunder, which 
renders the rule effective upon the Commission's receipt of this 
filing. 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 240.19b-4.
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I. Self-Regulatory Organization's Statement of The Terms of 
Substance of the Proposed Rule Change

    NASD Regulation is proposing to amend NASD Rule 1032(f) to change 
the date by which certain registered representatives who trade equity 
securities in the Nasdaq Stock Market (``Nasdaq'') and/or over-the-
counter must pass the Series 55 Examination. The text of the proposed 
rule change is available at the offices of the NASD and at the 
Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, And 
Statutory Basis for the Proposed Rule Change

    In its filing with the Commission, NASD Regulation 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. NASD Regulation 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
    On January 2, 1998, the SEC approved File No. SR-NASD-97-221, which 
proposed amending NASD Rule 1032 to add an additional category of 
representative registration.\3\ Specifically, Rule 1032(f) requires 
each registered representative who engages in proprietary or agency 
trades of equities, preferred securities, or convertible debt 
securities otherwise than on a securities exchange, or who directly 
supervises such activities (i.e., functioning as an ``Equity Trader''), 
to register as a Limited Representative-Equity Trader. In order to 
register as a Limited Representative-Equity Trader, the representative 
must be registered as a General Securities Representative (Series 7) or 
as a Limited Representative-Corporate Securities (Series 62), and must 
pass the Series 55 Examination.\4\ The rule contains an exemption for 
representatives whose principal trading activities involve executing 
orders on behalf of an affiliated investment company that is registered 
with the SEC under the Investment Company Act of 1940.
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    \3\ Securities Exchange Act Release No. 39516, 63 FR 1520 
(January 9, 1998).
    \4\ Representatives who have been ``grandfathered'' from taking 
the Series 7 or the Series 62 Examinations will not be required to 
take either examination in order to take the Series 55.
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    Rule 1032 affords certain registered representatives a two-year 
grace period, ending on May 1, 2000, to pass the Series 55 Examination. 
NASD Regulation believed this would provide such representatives 
sufficient time to pass the examination. Unfortunately, this has not 
been the case. It has come to NASD Regulation's attention that many 
registered representatives who are eligible for the two-year grace 
period will not pass the Series 55 Examination by May 1, 2000. If the 
deadline is not extended, these registered persons will be forced to 
cease certain trading activities, which could cause disruptions at NASD 
member firms and could cause harm to customers. NASD Regulation does 
not believe the markets or customers will be served by a strict 
application of this deadline. Consequently, NASD Regulation is 
proposing to extend the grace period for passing the examination. NASD 
Regulation is proposing that registered representatives who were 
eligible for the two-year grace period, but who failed to pass the 
Series 55 Examination, be given until October 1, 2000 to pass the 
examination. However, such representatives will not be permitted to 
function as Equity Traders after October 1, 2000 unless they receive 
passing scores on the Series 55 Examination.
2. Statutory Basis
    NASD Regulation believes that the proposed rule change is 
consistent with the provisions of section 15A(b)(6) of the Act,\5\ 
which requires, among other things, that the Association's rules must 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest. NASD Regulation believes 
that the failure to extend the deadline to pass the Series 55 
Examination will cause disruptions at some NASD member firms and could 
cause harm to customers. NASD Regulation does not believe the markets 
or customers will be served by a strict application of this deadline.
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    \5\ 17 CFR 240.15Aj-1.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD Regulation represents that it 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 on the Proposed 
Rule Change Received From Members, Participants, or Others

    NASD Regulation has neither solicited nor received written comments 
on the proposed rule change.

III. Date of Effectiveness of The Proposed Rule Change And Timing 
for Commission Action

    The proposed rule change is effective upon filing pursuant to 
section 19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(1) \7\ thereunder, 
in that the proposed rule change is a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule. At any time within 60 days of this 
filing, the Commission may summarily abrogate this proposal if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(1).
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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 20549-0609. 
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

[[Page 26258]]

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 No. SR-NASD-00-25 and should be 
submitted by May 26, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-11255 Filed 5-04-00; 8:45 am]
BILLING CODE 8010-01-M