67384 Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices

38 15 U.S.C. 78s(b)(2).

39 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3PSE Rule 2.12(a) states: ‘‘Every member

organization which is not a member of another

national securities exchange or registered national

securities association which is the Designated

Examining Authority for that member organization

shall file with the Exchange answers to Financial

Questionnaires, Reports of Income and Expenses

and additional financial information in the type,

form, manner and time prescribed by the

Exchange.’’

The Exchange stated that Rule 2.12(a) does not

encompass the filing with the Exchange of either

periodic or annual FOCUS Reports required by SEC

Rules 17a–5 or 17a–10. Telephone conversation

between Michael D. Pierson, Senior Attorney, PSE,

and Jon Kroeper, Attorney, SEC, on December 19,

1995.

4For a discussion of the Exchange’s

Recommended Fine Schedule, see Securities

Exchange Act Release No. 34322 (July 6, 1994), 59

FR 35958 (July 14, 1994).

5The Exchange’s Plan filed pursuant to Rule 17a–

5(a)(4) under the Act requires PSE member

organizations that are not exempt from Rule 15c3–

1 under the Act (‘‘Net Capital Rule’’) to file periodic

FOCUS Reports with the Exchange if the PSE is

their designated examining authority (‘‘DEA’’). See

17 CFR 240.17a–5(a)(4); Securities Exchange Act

Release No. 11935 (December 17, 1975), 40 FR

59706 (December 30, 1975) (order approving the

PSE’s Plan pursuant to Rule 17a–5). In 1993, the

SEC approved certain changes to the Net Capital

Rule, including the elimination of an exemption for

certain equity exchange specialists, effective as of

April 1, 1994. See Securities Exchange Act Release

No. 32737 (August 11, 1993), 58 FR 43555 (August

17, 1993). Consequently, as of April 1, 1994, a

number of Exchange specialists became obligated to

file FOCUS reports with the Exchange. Prior to

April 1994, no PSE member organizations were

required to file such reports with the Exchange.

6 17 CFR 240.17a–10. The current ‘‘late charge’’

schedule found in PSE Rule 2.12(b)(1) is as follows:

1–30 days later—$200; 31–60 days late—$400; 61–

90 days late—$800. Any failure to file an annual

FOCUS Report longer than 90 days is referred to the

Ethics and Business Conduct Committee for

appropriate disciplinary action.

7 15 U.S.C. 78f(b).

8PSE Rule 10.3 governs the initiation of formal

disciplinary proceedings by the Exchange for

violations within the disciplinary jurisdiction of the

Exchange

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

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

CBOE. All submissions should refer to

the File Number SR–CBOE–95–51 and

should be submitted by January 19,

1996.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, 38 that the

proposed rule change (SR–CBOE–95–

51), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 39

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31506 Filed 12–28–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36622; File No. SR–PSE–

95–27]

Self-Regulatory Organizations; Pacific

Stock Exchange, Incorporated; Order

Granting Approval to Proposed Rule

Change Relating to the Amendment of

Its Minor Rule Plan To Include Certain

Rules on Financial Reporting and

Cooperation in Exchange

Investigations and the Establishment

of a Charge for the Late Filing of

Periodic FOCUS Reports

December 21, 1995.

On October 17, 1995, the Pacific Stock

Exchange, Incorporated (‘‘PSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission

(‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend its Minor Rule Plan to include

certain rules on financial reporting and

cooperation in Exchange investigations

and to establish an administrative

charge for the late filing of quarterly

FOCUS Reports.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 36474

(November 9, 1995), 60 FR 57611

(November 16, 1995). No comments

were received on the proposal.

The Exchange’s Minor Rule Plan

(‘‘MRP’’), set forth in PSE Rule 10.13,

provides that the Exchange may impose

a fine not to exceed $5,000 on any

member, member organization, or

person associated with a member or

member organization, for any violation

of an Exchange rule that has been

deemed to be minor in nature and

approved by the Commission for

inclusion in the MRP. PSE Rule 10.13,

subsections (h)–(j), sets forth the

specific Exchange rules deemed to be

minor in nature.

The Exchange is proposing to add the

following provision to the MRP as PSE

Rule 10.13(j)(5): ‘‘Failure to file a

financial report or financial information

in the type, form, manner and time

prescribed by the Exchange. (Rule

2.12(a)).’’ 3 The Exchange is also

proposing to amend its Recommended

Fine Schedule for rules listed in the

MRP to establish the following

recommended fines for violations of

PSE Rule 2.12(a): $100 for a first-time

violation; $250 for a second-time

violation; and $500 for a third-time

violation.4

The Exchange is also proposing to add

the following provision to the MRP as

PSE Rule 10.13(j)(6): ‘‘Delaying,

impeding or failing to cooperate in an

Exchange investigation. (Rule 10.2(b)).’’

The Exchange is also proposing to

amend its Recommended Fine Schedule

for rules listed in the MRP to establish

the following recommended fines for

violations of PSE Rule 10.2(b): $100 for

a first-time violation; $250 for a secondtime violation; and $500 for a third-time

violation.

In addition, the Exchange is

proposing to amend PSE Rule 2.12(b)(1)

to establish an administrative charge for

member organizations that are late in

filing their periodic FOCUS Reports

with the Exchange.5 The proposed rule

change would add a reference to Rule

17a–5 to the text of PSE Rule 2.12(b)(1),

making the late filing of periodic

FOCUS Reports subject to the same

‘‘late charge’’ schedule that currently

applies to the late filing of annual

FOCUS Reports required by Rule 17a–

10 under the Act.6

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act and the

rules and regulations thereunder

applicable to a national securities

exchange, and, in particular, with the

requirements of Section 6(b).7 In

particular, the Commission believes the

proposal is consistent with the Section

6(b)(5) requirements that the rules of an

exchange be designed to promote just

and equitable principles of trade, to

prevent fraudulent and manipulative

acts, and, in general, to protect investors

and the public, and with the Section

6(b)(6) requirement that the rules of an

exchange provide that its members be

appropriately disciplined for violations

of an exchange’s rules and the Act.

Specifically, the Commission believes

that adding the above-listed provisions

to the Exchange’s MRP is consistent

with Sections 6(b)(5) and 6(b)(6) in that

the purpose of the Exchange’s MRP is to

provide for a response to a violation of

Exchange rules when a meaningful

sanction is needed, but when initiation

of a formal disciplinary proceeding

pursuant to PSE Rule 10.3 8 is not

suitable because such a proceeding

would be more costly and timeconsuming than would be warranted
Federal Register / Vol. 60, No. 250 / Friday, December 29, 1995 / Notices 67385

9The inclusion of a rule in an exchange’s minor

rule plan should not be interpreted to mean that it

is not an important rule. On the contrary, the

Commission recognizes that the inclusion of minor

violations of particular rules under a minor rule

violation plan may make the exchange’s

disciplinary system more efficient in prosecuting

more egregious and/or repeated violations of these

rules, thereby furthering its mandates to protect

investors and the public interest.

10The MRP permits any person to contest the

Exchange’s imposition of a fine through submission

of a written answer, at which time the matter will

become a formal disciplinary proceeding.

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 36378 (Oct.

16, 1995), 60 FR 54401.

4Amendment No. 1 confirmed that the Exchange

has procedures in place that ensure the module

remains current in view of industry changes in the

United States as well as Canada, and it assigned

separate series numbers to the two examinations

contained in the module. See Letter dated

November 1, 1995, from James E. Buck, Senior Vice

President and Secretary, NYSE, to Glen Barrentine,

Team Leader, SEC.

5Amendment No. 2 broadened the scope of the

module slightly by adding some subtopics to it. See

letter dated December 15, 1995, from James E. Buck,

Senior Vice President and Secretary, NYSE, to Glen

Barrentine, Team Leader, SEC.

6 15 U.S.C. 78f(b)(5) and 78f(c)(3)(B).

7 15 U.S.C. 78f(b)(5).

given the nature of the violation. 9 PSE

Rule 10.13 provides for an appropriate

response to minor violations of certain

Exchange rules while preserving the due

process rights of the party accused

through specified required

procedures. 10

Moreover, the Commission finds that

violations of the provisions being added

to the MRP are objective and technical

in nature, and easily verifiable, thereby

lending themselves to the use of

expedited proceedings. Noncompliance

with the provisions may be determined

objectively and adjudicated quickly

without the complicated factual and

interpretive inquiries associated with

more sophisticated Exchange

disciplinary proceedings. If, however,

the Exchange determines that a

violation of one of these rules is not

minor in nature, the Exchange retains

the discretion to initiate full

disciplinary proceedings in accordance

with Exchange Rule 10.3.

The Commission also believes that the

establishment of an administrative

charge for the late filing of periodic

FOCUS Reports is consistent with

Section 6(b)(1) of the Act in that it will

enhance the Exchange’s ability to

enforce compliance with Rule 17a-5

under the Act and the rules of the

Exchange by providing the PSE with a

standardized response to such instances

and members with a clear incentive to

file their periodic FOCUS Reports on a

timely basis.

Finally, the Commission finds that,

consistent with Section 6(b)(6), the

imposition of both the recommended

fines for the above-listed additions to

the MRP and an administrative charge

for the late filing of periodic FOCUS

Reports should result in appropriate

discipline of members, in a manner that

is proportionate to the nature of such

violations. The Commission, however,

expects the PSE to bring full

disciplinary proceedings in appropriate

cases involving the additions to the

MRP and the late filing of periodic

FOCUS Reports (e.g., in cases where the

violation is egregious or where there is

a history or pattern of repeated

violations).

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (SR–PSE–95–27)

is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–31507 Filed 12–28–95;8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–36629; International Series

Release No. 909; File No. SR–NYSE–95–29]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change and Notice of Filing and Order

Granting Accelerated Approval of

Amendments No. 1 and 2 Relating to

the Specifications and Content Outline

for the Canadian Module of the General

Securities Registered Representative

Examination (Series 37 and Series 38)

December 21, 1995.

I. Introduction

On September 18, 1995, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

adopt a Canadian module of the General

Securities Registered Representative

Examination.

The proposed rule change was

published for comment in the Federal

Register on October 23, 1995.3 No

comments were received on the

proposal. Amendment No. 1 4 was filed

on November 2, 1995. Amendment No.

2 5 was filed on December 19, 1995. This

order approves the proposal, including

Amendments No. 1 and 2 on an

accelerated basis.

II. Description of the Proposal

Presently, registered representatives

who are already qualified to conduct

business in Canada and who wish to sell

securities in the United States must

qualify as registered representatives in

the U.S. by successfully completing the

General Securities Registered

Representative Examination (Series 7).

In an effort to reduce redundant

qualification requirements, the

Exchange has developed a Canadian

module of the Series 7 which consists

of two examinations, the Series 37 and

the Series 38. As a subset of the Series

7, these examinations cover subject

matter that is not covered, or is not

covered in sufficient detail, on the

Canadian qualification examinations.

The Series 37 is for Canadian registered

representatives who hold the additional

Canadian license to sell options. This

examination contains only 45 questions

because it excludes questions pertaining

to options. All other Canadian registered

representatives must pass the Series 38.

This is a 90 question examination that

includes questions concerning options.

To become registered with the

Exchange, qualified Canadian registered

representatives in good standing with

the Canadian securities authorities

would be required to obtain a passing

score on one of the two examinations

contained in the Canadian module.

Canadian representatives seeking to sell

municipal securities, however, would

be required to pass either the standard

Series 7 or a combination of the

applicable Canadian module

examination and the Series 52

(Municipal Securities Representative

Examination).

III. Discussion

After careful review, the Commission

finds that the proposed rule change is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities exchange, and, in particular,

with the requirements of Section 6(b)(5)

and Section 6(c)(3)(B).6

The Commission believes the

proposal is consistent with Section

6(b)(5)7 because it is designed to perfect

the mechanism of a free and open

market. The Canadian module of the

series 7 reduces duplicative

qualification requirements and, at the

same time, allows the Exchange to

ensure that the Canadian representatives

wishing to become registered with the

Exchange are fully qualified. In

addition, U.S. representatives currently

receive substantially reciprocal