10884 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

1 15 U.S.C. 78s(b)(1) (1988).

2 17 CFR 240.19b–4 (1994).

3CBOE Rule 15.9(a) allows the Exchange to

‘‘enter into agreements with domestic and foreign

self-regulatory organizations, associations and

contract markets and the regulators of such markets

which provide for the exchange of information and

other forms of mutual assistance for market

surveillance, investigative, enforcement and other

regulatory purposes.’’

4See Securities Exchange Act Release No. 35035

(December 1, 1994), 59 FR 63397 (December 8,

1994).

5On February 15, 1995, the CBOE amended its

proposal to clarify that when the Exchange requests

information from a member pursuant to CBOE Rule

15.9(b), the member has the same rights and

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 self-regulatory organization 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

The purpose of the proposed rule

change is to seek permanent approval of

the Exchange’s Competing Specialist

Initiative (‘‘CSI’’) pilot program which is

scheduled to expire on May 18, 1995.

CSI permits competing specialists on

the floor of the Exchange in the form of

one regular specialist and one or more

competing specialists. Orders are

directed to either specialist based on

each customer’s independent decision,

but all orders in a stock are executed in

accordance with strict time priority.

Once all limit orders at a price level are

depleted, each specialist is responsible

for the market orders directed to them.

The regular specialist is responsible

for updating quotations and

coordinating openings and reopenings

to ensure they are unitary. All ITS

activity must be cleared through the

regular specialist. To all other markets

in the National Market System, there is

only one Boston market. Trading halts

are coordinated through the regular

specialist and apply to all competitors

in a stock.

In addition, all competitors will be

evaluated on competing stocks in the

Exchange’s Specialist Performance

Evaluation Program.

2. Statutory Basis

The BSE believes that the statutory

basis for this proposal is Section 6(b)(5)

of the Act in that it furthers the

objectives to promote just and equitable

principles of trade, to foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, 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, and is

not designed to permit unfair

discrimination between customers,

issuers, brokers, or dealers.

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

Comments were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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.

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. 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the BSE. All submissions

should refer to File No. SR–BSE–95–02

and should be submitted by March 21,

1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4857 Filed 2–27–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35403; File No. SR–CBOE–

94–39]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Notice of Filing and Order Granting

Accelerated Approval of Amendment

No. 1 to Proposed Rule Change by the

Chicago Board Options Exchange,

Inc., Relating to Obligations to Furnish

Information

February 22, 1995.

On November 7, 1994, the Chicago

Board Options Exchange, Inc. (‘‘CBOE’’

or ‘‘Exchange’’) filed with 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 proposal to amend CBOE

Rule 15.9, ‘‘Regulatory Cooperation,’’ 3

to delineate the obligation of CBOE

members and persons associated with

CBOE members to furnish information

in connection with inquiries arising

from regulatory agreements that the

Exchange has entered into with other

regulatory and market institutions even

in cases where the Exchange has not

otherwise initiated an investigation.

In addition, the CBOE proposes to

amend CBOE Rule 17.2, ‘‘Complaint and

Investigation,’’ to expand the set of

circumstances under which members or

persons associated with members are

obligated, upon request by the

Exchange, to appear and testify, respond

in writing to interrogatories and furnish

documentary materials and other

information.

The proposal was published for

comment in the Federal Register on

December 8, 1994.4 No comments were

received on the proposed rule change.5
Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices 10885

procedural protections in responding to the request

as the member would have in the case of any other

request for information initiated by the CBOE

pursuant to CBOE Rule 17.2(b). In addition, the

CBOE notes that the proposal authorizes the CBOE

to request information and compel testimony from

its members or associated persons whenever the

CBOE deems such a request to be appropriate and

consistent with its agreements to cooperate with

other regulatory organizations. The CBOE notes,

further, that when the CBOE requests any such

information or testimony on behalf of another

regulatory body, the CBOE continues to be the

requesting regulatory body in relation to the CBOE

member and all such requests are subject to the

CBOE’s rules. See Letter from James R. McDaniel,

Schiff Hardin & Waite, to Michael Walinskas,

Branch Chief, Options Regulation, Division of

Market Regulation, Commission, dated February 15,

1995 (‘‘Amendment No. 1’’).

6 Id.

7 15 U.S.C. 78f(b)(5) (1988).

8See Amendment No. 1, supra note 5.

9See Securities Exchange Act Release No. 28498

(October 1, 1990), 55 FR 41286 (October 10, 1990)

(order approving File No. SR–CBOE–90–23).

The CBOE proposes to amend CBOE

Rule 15.9 to provide that as long as a

CBOE member or person associated

with a CBOE member is subject to the

CBOE’s jurisdiction, the CBOE member

or person associated with a CBOE

member is obligated to furnish

testimony, documentary evidence or

other information to the full extent

provided in CBOE Rule 17.2(b),

‘‘Conduct of Investigation,’’ whether or

not the Exchange has initiated the

investigation, if the information is

requested by the Exchange in

connection with any inquiry resulting

from an agreement entered into by the

Exchange with a domestic or foreign

self-regulatory organization or regulator

pursuant to CBOE Rule 15.9. A CBOE

member or person associated with a

CBOE member from whom such

information is requested possesses the

same procedural protections which

would apply to a request made pursuant

to an investigation initiated by the

CBOE.6

According to the Exchange, the

amendments to CBOE Rule 15.9 are

designed to clarify the CBOE’s existing

rules, which do not clearly delineate the

obligation of CBOE members or persons

associated with CBOE members to

furnish information when the provision

of information is required in connection

with regulatory agreements where the

CBOE has not itself initiated an

investigation.

In addition, the CBOE proposes to

amend CBOE Rule 17.2 to state clearly

that each CBOE member and person

associated with a CBOE member is

obligated, upon the Exchange’s request,

to testify, respond in writing to

interrogatories, and furnish

documentary materials and other

information requested by the Exchange

in connection with an investigation

initiated pursuant to CBOE Rule 17.2(a),

a hearing or appeal conducted pursuant

to CBOE Chapter 17 or an inquiry

resulting from an agreement entered

into by the Exchange pursuant to CBOE

15.9.

The CBOE also proposes to amend

CBOE Rule 17.2, Interpretation and

Policy .01 to provide that the failure to

furnish testimony, documentary

evidence, or other information

requested by the CBOE in the course of

an Exchange inquiry within the time

period specified by the Exchange shall

be deemed to be a violation of CBOE

Rule 17.2.

The Exchange states that the

amendments to CBOE Rule 17.2

delineate clearly the obligation of CBOE

members and persons associated with

CBOE members to furnish information

in connection with an investigation

initiated by the CBOE itself, including

information requested in connection

with a hearing or appeal or the

Exchange’s preparation for a hearing or

appeal. The amendments to CBOE Rule

17.2 are designed to set forth the CBOE’s

longstanding interpretation of existing

CBOE rules.

The Commission believes 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, the

requirements of Section 6(b)(5) 7 in that

it is designed to prevent fraudulent and

manipulative acts and practices and to

protect investors and the public interest.

Specifically, the Commission believes

that the proposed amendment to CBOE

Rule 15.9 will strengthen CBOE Rule

15.9 and enhance the CBOE’s

disciplinary system by indicating

clearly that the Exchange may require

CBOE members and persons associated

with CBOE members to furnish

testimony, documentary evidence or

other information pursuant to regulatory

agreements entered into pursuant to

CBOE Rule 15.9(a). At the same time,

the Commission believes that the

proposal maintains procedural

safeguards for CBOE members by

providing that members from whom

such information is requested possess

the same procedural protections that

would apply to a request made pursuant

to an investigation initiated by the

CBOE.8

By clarifying the obligation of CBOE

members to furnish testimony and other

information in connection with such

investigations, the Commission believes

that the proposal will facilitate

investigations commenced pursuant to

CBOE Rule 15.9, thereby furthering the

protection of investors and the public

interest by helping to ensure the prompt

investigation of possible trading

violations and other regulatory

improprieties. In addition, the

Commission believes that the proposal

will help the Exchange to coordinate

with domestic and foreign selfregulatory organizations in

implementing a surveillance system

appropriate to today’s increasingly

linked and globalized markets.9 In

addition, the Commission believes that

the proposed amendments to CBOE

Rule 17.2(b) will clarify the obligation of

members to appear and testify, respond

in writing to interrogatories and furnish

information requested by the Exchange

in connection with an investigation

initiated pursuant to CBOE Rule 17.2(a),

a hearing or appeal conducted pursuant

to CBOE Chapter 17, or an inquiry

resulting from an agreement entered

into by the Exchange pursuant to CBOE

Rule 15.9. The Commission believes

that the amendments to CBOE Rule

17.2(b) and Interpretation and Policy .01

should protect investors and the public

interest by facilitating the prompt

resolution of disciplinary matters.

Specifically, by clearly stating

members’ obligation to testify and to

provide information requested by the

Exchange, and by making

noncompliance with such requests a

violation of CBOE Rule 17.2, the

Commission believes that the proposal

will encourage CBOE members to

comply fully with CBOE requests for

information and will enhance the

Exchange’s ability to conduct

investigations in a timely manner,

without burdening the members being

investigated. The Commission believes

that the CBOE must have the ability to

obtain such information so that the

Exchange will have access to all

relevant facts necessary for the

Exchange to act on a fully informed

basis when making decisions

concerning the disciplining of members.

At the same time, the Commission

believes that the proposal is consistent

with the CBOE’s maintenance of a fair

disciplinary process for its members. In

this regard, the Commission notes that

all existing due process safeguards

relating to CBOE disciplinary

proceedings remain in place.

The Commission finds good cause for

approving Amendment No. 1 to the

proposed rule change prior to the

thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register because

Amendment No. 1 clarifies the proposal

and helps to safeguard the procedural
10886 Federal Register / Vol. 60, No. 39 / Tuesday, February 28, 1995 / Notices

10 15 U.S.C. 78s(b)(2) (1988).

11 17 CFR 200.30–3(a)(12) (1994).

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

2The proposed rule change was originally filed

on January 26, 1995. In the amendment, filed on

February 13, 1995, the NASD provided both the

amended examination specifications and content

outline for the Series 7 exam. The examination

specifications were filed pursuant to a request by

the NASD for confidential treatment.

3OEX CAPS and SPX CAPS are new securities

based on the S&P 100 (OEX) and the S&P 500 (SPX)

that give investors the right to participate to a

predetermined level in upward or downward

movements in either index.

4See Securities Exchange Act Release No. 34853

(October 18, 1994), 59 FR 53694 (October 25, 1994)

(File Nos. SR–NYSE–94–26 (revised exam and exam

specifications for Series 7 exam), and SR–NYSE–

94–27 (revised content outline for Series 7 exam)).

rights of members from whom the

Exchange requests information pursuant

to CBOE Rule 15.9(b). Accordingly, the

Commission believes it is consistent

with Sections 6(b)(5) and 19(b)(2) of the

Act to approve Amendment No. 1 to the

proposed rule change on an accelerated

basis.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–CBOE–94–

39) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4858 Filed 2–27–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35401; File No. SR–NASD–

95–04]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Notice of Filing and

Order Granting Accelerated Approval

of Proposed Rule Change Relating to

Amendments to the Examination

Specifications and Content Outline for

the General Securities Registered

Representative (Series 7) Examination

February 22, 1995.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

February 13, 1995,2 the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) 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 NASD. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NASD is proposing amendments

to the examination specifications and

study outline for the General Securities

Registered Representative (‘‘Series 7’’)

qualification examination. The

amendments revise materials pertaining

to recently enacted federal and selfregulatory organization (‘‘SRO’’) rules

and regulations, new products and

changes in industry practices. The

number of questions per examination

and the examination time are unaffected

by the amendments.

The amendments described above do

not result in any textual changes to the

NASD By-Laws, Schedules to the ByLaws, Rules, practices or procedures.

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

NASD 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 NASD 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 Series 7 examination was created

in 1974 as an industry-wide

qualification examination for persons

seeking registration as general securities

representatives. The Series 7

examination is required under rules of

the SROs for persons who are engaged

in the solicitation, purchase and/or sale

of securities for the accounts of

customers. The purpose of the Series 7

examination is to ensure that registered

representatives have the basic

knowledge necessary to perform their

functions and responsibilities. The

Series 7 exam specifications detail the

ares covered by the examination and

break down the number of examination

questions drawn from each area. The

Series 7 content outline details the

subject coverage and question allocation

of the examination.

Revision of the Series 7 examination,

specifications and content outline was

initiated in April 1993 by an industry

committee of self-regulatory

organizations and broker-dealer

representatives in order to update the

examination in view of changes in the

securities industry including changes in

relevant rules and regulations, the

development of new securities products

and changes in the job of the registered

representative as firms offer an

increasingly wide range of financial

services. The specifications and content

outline for the Series 7 examination

have not been revised since 1986.

The industry committee updated the

existing statements of the critical

functions of registered representatives to

ensure current relevance and

appropriateness, drafted statements of

tasks expected to be performed by entrylevel registered representatives, and

conformed the existing content outline

to the task statements. The content

outline reflects the revised content of

the examination. The total number of

questions in the Series 7 examination

will remain 250. The revised

examination will cover all financial

product areas covered on the present

Series 7 examination as well as several

new products, including collateralized

mortgage obligations (‘‘CMOs’’), long

term equity participation securities

(‘‘LEAPS’’) and CAPS,3 with reduced

emphasis on direct participation

programs.

The Commission recently approved

two parallel filings of the New York

Stock Exchange (‘‘NYSE’’).4 No

comments were received on either

filing.

The NASD believes that the proposed

rule change is consistent with the

provisions of Section 15A(g)(3) of the

Act in that the proposed changes to the

examination are to ensure persons

seeking registration in the securities

industry have attained the requisite

levels of knowledge and competence.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD 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 of the

Proposed Rule Change Received From

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. 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. Copies of the