Document ID: SEC-2005-0372-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Pacific Exchange, Inc.
Posted Date: 2005-12-14T05:00Z

[Federal Register: December 14, 2005 (Volume 70, Number 239)]
[Notices]               
[Page 74076-74078]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de05-115]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52918; File No. SR-PCX-2005-113]

 
Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change and 
Amendment No. 1 Thereto Relating to Revisions to the Series 9/10 
Examination Program

December 7, 2005.
    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 17, 2005, the Pacific Exchange, Inc. (``PCX'' 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 PCX. On 
November 22, 2005, PCX filed Amendment No. 1 to the proposed rule 
change. PCX has designated the proposed rule change as constituting a 
stated policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the self-
regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act 
\3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change, as 
amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX is filing revisions to the study outline and selection 
specifications for the Limited Principal--General Securities Sales 
Supervisor (Series 9/10) examination program. The proposed revisions 
update the material to reflect changes to the laws, rules, and 
regulations covered by the examination, as well as modify the content 
of the examination program to track more closely the functional 
workflow of a Series 9/10 limited principal. PCX is not proposing any 
textual changes to the existing PCX rules.
    The revised study outline is available on PCX's Web site (http://www.pacificex.com
), at PCX, and at the Commission. However, PCX has 

omitted the Series 9/10 selection specifications from this filing and 
has submitted the

[[Page 74077]]

specifications under separate cover to the Commission with a request 
for confidential treatment pursuant to Rule 24b-2 under the Act.\5\
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    \5\ 17 CFR 240.24b-2.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, PCX 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. PCX 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
    Pursuant to Section 6(c)(3) of the Act,\6\ which allows PCX to 
examine and verify the standards of training, experience, and 
competence for persons associated with Equities Trading Permit 
(``ETP'') Holders, PCX has developed examinations, and requires 
satisfaction of examinations developed by other SROs, that are designed 
to establish that persons associated with ETP Holders have attained 
specified levels of competence and knowledge. PCX periodically reviews 
the content of examinations to determine whether revisions are 
necessary or appropriate in view of changes pertaining to the subject 
matter covered by the examinations.
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    \6\ 15 U.S.C. 78f(c)(3).
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    PCXE Rule 6.18(d) states that if an ETP Holder does business with 
the public, the person (or persons) designated to direct day-to-day 
compliance activity and each other person directly supervising ten or 
more persons engaged in compliance activity must pass the General 
Securities Sales Supervisor Qualification Examination (Series 9/10). A 
General Securities Sales Supervisor is precluded from performing any of 
the following activities: supervision of the origination and 
structuring of underwritings; supervision of market making commitments; 
final approval of advertisements as these are defined in NASD Rule 
2210; supervision of the custody of firm or customer funds and/or 
securities for purposes of Rule 15c3-3 \7\ under the Act; or 
supervision of overall compliance with financial responsibility rules 
for broker-dealers promulgated pursuant to the provisions of the Act. 
The Series 9/10 examination, an industry-wide examination, qualifies an 
individual to function as a General Securities Sales Supervisor. The 
Series 9/10 examination tests a candidate's knowledge of securities 
industry rules and regulations and certain statutory provisions 
pertinent to the supervision of sales activities.
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    \7\ 17 CFR 240.15c3-3.
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    The Series 9/10 examination program is shared by PCX and the 
following SROs: the American Stock Exchange LLC, the Chicago Board 
Options Exchange, Inc., the Municipal Securities Rule Making Board 
(``MSRB''), the New York Stock Exchange, Inc. (``NYSE''), the National 
Association of Securities Dealers, Inc. (``NASD''), and the 
Philadelphia Stock Exchange, Inc.
    A committee of industry representatives, together with the staff of 
PCX and the other SROs, recently undertook a periodic review of the 
Series 9/10 examination program. As a result of this review, PCX is 
proposing to update the content of the examination to cover Regulation 
S-P,\8\ MSRB Rules G-37/G-38, SRO research analyst and anti-money 
laundering rules, municipal fund securities (e.g., 529 college savings 
plans), and exchange traded funds. PCX is further proposing revisions 
to the study outline to reflect the SEC short sale requirements. In 
addition, as part of an ongoing effort to align the examination more 
closely to the supervisory duties of a Series 9/10 limited principal, 
PCX is proposing to modify the content of the examination to track the 
functional workflow of a Series 9/10 limited principal. Also, PCX is 
proposing to include questions related to parallel rules of NASD, the 
options exchanges, the MSRB, and the NYSE in the same section of the 
exam.
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    \8\ 17 CFR 248.1-18; 17 CFR 248.30; and 17 CFR 248, Appendix A.
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    As a result of the revisions, PCX is proposing to modify the main 
section headings and the number of questions on each section of the 
Series 9/10 study outline as follows: Section 1--Hiring, 
Qualifications, and Continuing Education, 9 questions; Section 2--
Supervision of Accounts and Sales Activities, 94 questions; Section 3--
Conduct of Associated Persons, 14 questions; Section 4--Recordkeeping 
Requirements, 8 questions; Section 5--Municipal Securities Regulation, 
20 questions; Section 6--Options Regulation, 55 questions. Sections 1 
through 5 constitute the Series 10 portion of the examination. Section 
6 constitutes the Series 9 portion of the examination. Series 10 covers 
general securities and municipal securities, and Series 9 covers 
options. The revised examination continues to cover the areas of 
knowledge required for the supervision of sales activities.
    PCX is proposing these changes to the entire content of the Series 
9/10 examination, including the selection specifications and question 
bank. The number of questions on the Series 9/10 examination will 
remain at 200, and candidates will continue to have four hours to 
complete the Series 10 portion and one and one-half hours to complete 
the Series 9 portion. Also, each question will continue to count one 
point, and each candidate must correctly answer 70 percent of the 
questions on each series, 9 and 10, to receive a passing grade.
    As noted below, PCX understands that the other SROs also will file 
with the Commission similar proposed rule changes reflecting the 
revisions to the Series 9/10 examination program.
2. Statutory Basis
    PCX believes that the proposed revisions to the Series 9/10 
examination program are consistent with Section 6(b) of the Act,\9\ in 
general, and further the objectives of Section 6(b)(1) \10\ in 
particular, in that it is designed to enforce compliance by ETP Holders 
and persons associated with the rules of the Exchange.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(1).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    PCX does not believe that the proposed rule change, as amended, 
will result in 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

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change, as amended, has become effective pursuant 
to Section 19(b)(3)(A)(i) of the Act \11\ and Rule 19b-4(f)(1) 
thereunder,\12\ in that the proposed rule change constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an

[[Page 74078]]

existing rule of the self-regulatory organization. PCX will announce 
the implementation date in a Rule Adoption Notice to be published no 
later than 7 days after Notice of this filing.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(i).
    \12\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change 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.\13\
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    \13\ The effective date of the original proposed rule is 
November 17, 2005. The effective date of Amendment No. 1 is November 
22, 2005. For purposes of calculating the 60-day period within which 
the Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers the period 
to commence on November 22, 2005, the date on which PCX submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-PCX-2005-113 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-PCX-2005-113. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the PCX. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-PCX-2005-113 and should be submitted on or before 
January 4, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7325 Filed 12-13-05; 8:45 am]

BILLING CODE 8010-01-P