[Federal Register Volume 65, Number 113 (Monday, June 12, 2000)]
[Notices]
[Pages 36857-36859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-14723]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42891; File No. SR-CHX-00-07]


Self Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Chicago Stock Exchange, Inc. to Eliminate the Series 7B 
Qualification Examination for Floor Clerks Who May Accept Orders From 
Professional Customers for Execution on the Exchange's Trading Floor

June 1, 2000.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 36858]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 17, 2000, the Chicago Stock Exchange, Inc. (``CHX'' 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

1. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its Interpretation .01(d) of CHX 
Article VI, Rule 3 by eliminating the Series 7B Qualification 
Examination \3\ for Exchange floor clerks who may, among other 
functions, accept orders from professional customers \4\ for execution 
on the Exchange's complete the Exchange's Floor Membership Examination 
and either the Series 7 Examination or the Series 7A Qualification 
Examination.\5\ Proposed new language is in italics; proposed deletions 
are in brackets.
---------------------------------------------------------------------------

    \3\ The Series 7B Qualification Examination (``Series 7B 
Examination'') was originally implemented by the NYSE in 1994, to 
serve as an alternative qualification examination to the General 
Securities Registered Representative Examination (``Series 7 
Examination''). See Securities Exchange Act Release No. 34334 (July 
8, 1994), 59 FR 35964 (July 14, 1994).
    \4\ The Exchange's proposed rule change defines the term 
``professional customer'' to include a bank; trust company; 
insurance company; investment trust; a state or political 
subdivision thereof; a charitable or nonprofit education institution 
regulated under the laws of the United States, or any state; a 
pension or profit sharing plan subject to ERISA, or of an agency of 
the United States or of a state or political subdivision thereof; or 
any person (other than a natural person) who has, or who has under 
management, net tangible assets of at least sixteen million dollars.
    \5\ The Series 7A Qualification Examination (``Series 7A 
Examination'') was originally implemented by the NYSE in 1993, to 
serve as an alternative qualification exam to the Series 7 
Examination. See Securities Exchange Act Release No. 32698 (July 29, 
1993), 58 FR 41539 (August 4, 1993).
---------------------------------------------------------------------------

* * * * *

ARTICLE VI

RESTRICTIONS AND REQUIREMENTS

* * * * *

Training and Examination of Registrants

    Rule 3. The Exchange may require the successful completion of a 
training course or an examination, or both, in connection with 
registration of members and persons associated with a member or member 
organization, and may charge fees for such registration and 
examination. This provision shall apply to all members[,] and member 
organizations, including members and member organizations which are to 
be solely on the Floor of the Exchange.
    Interpretations and Policies:
    .01 (a) No change.
    (b) No change.
    (c) No change.
    (d) Public Business Exam
    Floor members who successfully complete the Series 7 Examination 
may conduct a public business which is limited to accepting orders 
while on the floor directly from non-broker-dealer customers. In lieu 
of the Series 7 Examination, Floor members who successfully complete 
the Series 7A examination may conduct a public business which is 
limited to accepting orders directly from professional customers for 
execution on trading floor. Floor clerks of floor members that have 
successfully completed the
    Series 7 or Series 7A examination may accept orders from 
professional customers for execution on the trading floor so long as 
such clerks successfully complete both the Floor Membership Exam and 
either the Series 7 Examination or the Series 7A[7B]E[e]xamination. For 
purposes of this interpretation and policy, a ``professional customer'' 
includes a bank; trust company; insurance company; investment trust; a 
state or political subdivision thereof; a charitable or nonprofit 
educational institution regulated under the laws of the United States, 
or any state;[,] a [or] pension or profit sharing plan subject to 
ERISA, or of any agency of the Untied States or [as] of a state or 
political subdivision thereof; or any person (other than a natural 
person) who has, or who has under management, net tangible assets of at 
least sixteen million dollars.
    .02 No change.
* * * * *

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

    In this filing with the Commission, the CHX 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 Exchange has prepared summaries, set forth in 
Section 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
    The Exchange proposes to amend its Interpretation .01(d) of CHX 
Article VI, Rule 3 to eliminate the Series 7B Examination for Exchange 
floor clerks. Under existing Exchange rules, a floor clerk of a 
qualified floor member may accept orders from professional customers 
for execution on the Exchange's trading floor, so long as the floor 
clerk has successfully completed either the Series 7 Examination or the 
Series 7B Examination.\6\ The Exchange's proposed rule change would 
require that Exchange floor clerks who will accept professional orders 
pass (i) the Floor Membership Examination \7\ already administered by 
the Exchange to prospective floor members and (ii) either the Series 7 
or the Series 7A Examination. The CHX's Floor Membership Examination 
addresses the rules and practices of the Exchange's trading floor but 
has broader coverage than the Series 7B Examination.\8\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 37690 (September 17, 
1996), 61 FR 49803 (September 23, 1996).
    \7\ The Exchange adopted the Floor Membership Exam in 1996. See 
Securities Exchange Act Release No. 37690 (September 17, 1996), 61 
FR 49803 (September 23, 1996).
    \8\ Telephone conversation between Michael Cardin, Market 
Regulation Department, CHX, and Susie Cho, Attorney, Division of 
Market Regulation, Commission, on April 5, 2000.
---------------------------------------------------------------------------

    The Exchange notes that the New York Stock Exchange, Inc. 
(``NYSE'') recently eliminated the Series 7B Examination and now 
requires its floor clerks to pass both a new Trading Assistant 
Examination (``Series 25 Examination``) \9\ and either the Series 7 
Examination or the Series 7A Examination before becoming eligible to 
accept professional orders.\10\ Like the CHX's Floor Membership 
Examination, the NYSE's new Trading Assistant Examination contains 
questions relating to its floor rules and policies but has broader 
coverage that the questions formerly included in the Series 7B 
Examination. The CHX therefore proposes to change its examination 
requirements to correspond to the recent NYSE changes that have been 
approved by the Commission. The CHX represents

[[Page 36859]]

that successful completion of the Exchange's Floor Membership 
Examination would ensure that clerks wishing to perform certain 
functions on the floor, such as accepting professional orders, are 
sufficiently familiar with the rules and practices of the Exchange's 
trading floor.
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 40943 (January 13, 
1999), 64 FR 3330 (January 21, 1999) (order approving the Series 25 
Examination).
    \10\ See Securities Exchange Act Release No. 42092 (November 2, 
1999), 64 FR 61375 (November 10, 1999) (order approving the 
elimination of the Series 7B Examination and establishing the Series 
7A Examination as the appropriate qualification examination for NYSE 
floor clerks).
---------------------------------------------------------------------------

2. Statutory Basis
    The CHX believes that the proposed rule change is consistent with 
Section 6(b) of the Act \11\ in general and furthers the objectives of 
Section 6(b)(5) \12\ in particular in that it is designed to promote 
just and equitable principles of trade, to remove impediments and to 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange did not solicit or receive written comments on the 
proposed rule change.

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 Exchange 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, N.W., Washington, D.C. 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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-CHX-00-07 and 
should be submitted by July 3, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-14723 Filed 6-9-00; 8:45 am]
BILLING CODE 8010-01-M