[Federal Register Volume 65, Number 25 (Monday, February 7, 2000)]
[Notices]
[Pages 5922-5924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2662]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42365; File No. SR-Phlx-99-46]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. Relating to 
Registration of Trading Floor Personnel

January 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 November 19, 1999, the Philadelphia Stock Exchange, Inc. (``Phlx'' 
or ``Exchange'')

[[Page 5923]]

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 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Phlx proposes to adopt new Phlx Rule 620, Trading Floor 
Registration. The proposed rule requires that all trading floor 
personnel be registered with the Exchange; trading floor personnel 
successfully complete specified examinations,\3\ and all member/
participant organizations notify the Exchange of any change in the 
status of such personnel. The Exchange also is proposing to amend 
Regulation 7(b), Required Filing for Floor Member Firm Employee Status 
Notices with the Exchange, to include members, non-members and clerks 
to be consistent with the test of new Phlx Rules 620.\4\ Proposed new 
language is in italics; proposed deletions are in brackets.
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    \3\ The Phlx's current practice is to administer an examination 
to specialists, market makers and other floor trading personnel 
before giving them access to the trading floor. This examination, 
developed by the Phlx, is undergoing conversion from a paper test to 
a computer-generated test of 100 random questions covering Phlx 
trading rules. Although the Phlx does not currently administer an 
examination to clerks and other ``non-member'' floor personnel, the 
Phlx will explore the feasibility of such a test during the current 
year. Telephone conversion among Adrienne Hart, First Vice 
President, Regulatory Group, Cynthia Hoekstra, Counsel, Phlx, and 
Joseph Morra and Geoffrey Pemble, Attorneys, Division of Market 
Regulations, SEC, December 10, 1999.
    \4\ Regulation 7 was enacted pursuant to Phlx Rule 60, 
Assessments for Breach of Regulations. See Securities Exchange Act 
Release No. 27629 (January 16, 1990), 55 FR 2469 (Jan. 24, 1990) 
(File No. SR-Phlx-90-1).
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* * * * *
Rule 620. Trading Floor Registration
    (a) Trading Floor Member Registration--Registered Options Trader on 
any Exchange trading floor must register as such with the Exchange by 
completing the appropriate form(s) (with period updates submitted by 
the firm, as determined by the Exchange) and successfully complete the 
appropriate floor trading examination(s), if prescribed by the 
Exchange, in addition to requirements imposed by other Exchange rules. 
The Exchange may also require periodic examinations due to changes in 
trading rules, products or automated systems. Following the termination 
of, or the initiation of a change in the trading status of any such 
members/participant who has been issued an Exchange access card and a 
trading floor badge, the appropriate Exchange form must be completed, 
approved and dated by a firm principal, officer, or member of the firm 
with authority to do so, and submitted to the appropriate Exchange 
department as soon as possible, but no later than 9:30 A.M. the next 
business day by the member/participant organization employer. Every 
effort should be made to obtain the person's access card and trading 
floor badge and to submit these to the appropriate Exchange department.
    (b) Non-member/Clerk Registration--All trading floor personnel, 
including clerks, interns, stock execution clerks and any other 
associated person, of member/participant organizations not required to 
register pursuant to Rule 620(a) must register as such with the 
Exchange by completing the appropriate form(s) for non-registered 
persons (with periodic updates submitted by the firm, as determined by 
the Exchange). Further, the Exchange may require successful completion 
of an examination, in addition to requirements imposed by other 
Exchange rules. The Exchange may also require periodic examinations due 
to changes in trading rules, products or automated systems. Following 
the termination of, or the initiation of a change in the status of any 
such personnel of a member/participant organization who has been issued 
an Exchange access card and a trading floor badge, the appropriate 
Exchange form must be completed, approved and dated by a firm 
principal, officer, or member of the firm with authority to do so, and 
submitted to the appropriate Exchange department as soon as possible, 
but no later than 9:30 A.M. the next business day by the member/
participant organization employer. Every effort should be made to 
obtain the person's access card and trading floor badge and to submit 
these to the appropriate Exchange department.
* * * * *
Regulation 7
    (a) No Change
    (b) Required Filing for Floor Member Firm Employee Status Notices 
with the Exchange
    Following the termination of, or the initiation of a change in the 
trading status of any member/participant or any non-member/clerk and 
trading floor personnel including clerks, interns, stock execution 
clerks and any other associated person, of member/participant 
organizations [employee of a member/participant firm] who have been 
issued an Exchange access card and trading floor badge, the appropriate 
Exchange form must be completed, approved and dated by a firm 
principal, officer, or member of the firm with authority to do so, and 
[a completed ``Status Notice'' must be] submitted to the appropriate 
Exchange Department [Director of Regulatory Services of the exchange] 
as soon as possible, but no later than 9:30 A.M. the next business day 
by the member/participant organization employer. Further, every effort 
should be made to obtain the employee's access card and trading floor 
badge and to submit these to the appropriate Exchange Department 
[Security Department].

1st Occurrence..........................  $100.00
2nd Occurrence..........................  $200.00
3rd Occurrence and Thereafter...........  Sanction is discretionary with
                                           the Business Conduct
                                           Committee.
 

* * * * *

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

    In its filing with 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. The Exchange 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 proposed rule change requires, in a single Exchange rule, all 
floor personnel to be registered with the Exchange and all member/
participant organizations to notify the Exchange of any change in the 
status of such personnel. The Phlx believes that this will enable the 
Exchange to more efficiently monitor individuals on the Exchange's 
trading floors, as well as their current status.
    Currently, Regulation 7(b) governs the termination of, or the 
initiation of change in the trading status of, an employee of a member/
participant firm who has been issued an exchange access card and 
trading floor badge. New Phlx Rule 620 codifies Regulation 7(b) into a 
more comprehensive Exchange Rule. Phlx Rule 620(a) sets forth a 
comprehensive rule that addresses registration, examinations, 
termination

[[Page 5924]]

and change in status of trading floor members, which includes floor 
brokers, specialists, and market makers, including Registered Options 
Traders on any Exchange trading floor. Phlx Rule 620(b) addresses non-
member/clerk registration of all trading floor personnel, including 
clerks, interns, stock execution clerks and any other associated 
persons of member/participant organizations who are not required to be 
registered pursuant to Phlx Rule 620(a).\5\
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    \5\ The Exchange presently requires the completion of forms and 
procedures for registering new floor members pursuant to various 
Phlx Rules, including Rule 202, Registrant (Specialists); Rule 214, 
Violations of Rules (Specialists); Rule 604, Registration and 
Termination of Registered Person; Rule 623, Fingerprinting; Rule 
1020, Registration and Functions of Options Specialists; Rule 1014, 
Obligations and Restrictions Applicable to Specialists and 
Registered Options Traders; and Rule 1061, Registration of Floor 
Brokers.
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    The exchange believes that the proposal to require all floor 
personnel to be registered with the Exchange and to require all member/
participant organizations to notify the exchange of any change in the 
status of such personnel is consistent with Section 6 of the Act,\6\ in 
general, and with Sections 6(b)(5) \7\ and 6(c)(3)(B),\8\ in 
particular. Specifically, new Phlx Rule 620 is 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 by 
ensuring that all trading floor personnel are properly registered and, 
thus, monitored. In addition, Section 6(c)(3)(B) \9\ 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 
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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(c)(3)(B).
    \9\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule will impose 
any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were either solicited or 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 the 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 20540-0609. 
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-Phlx-99-46 and 
should be submitted by February 28, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-2662 Filed 2-4-00; 8:45 am]
BILLING CODE 8010-01-M