Document ID: SEC-2005-0391-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2005-12-15T05:00Z

[Federal Register: December 15, 2005 (Volume 70, Number 240)]
[Notices]               
[Page 74395-74397]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de05-106]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52921; File No. SR-NYSE-2005-84]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Revisions to the Study Outline and Selection Specifications 
for the Limited Principal--Registered Options (Series 4) 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 30, 2005, the New York Stock Exchange, Inc. (``NYSE'' 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 Exchange has designated the proposed rule change as 
constituting a stated policy, practice, or interpretation with respect 
to the meaning,

[[Page 74396]]

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 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

    The Exchange is filing with the Commission revisions to the study 
outline and selection specifications for the Limited Principal--
Registered Options (Series 4) 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 4 Limited Principal.
    The revised study outline is available on the Exchange's Web site 
(http://www.nyse.com), at the NYSE, and at the Commission. However, the 

Exchange has omitted the Series 4 selection specifications from this 
filing and has submitted the specifications under separate cover to the 
Commission with a request for confidential treatment pursuant to Rule 
24b-2 \5\ under the Act.
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    \5\ 17 CFR 240.24b-2.
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    The Exchange will announce the proposed rule change and the 
implementation date to its members and member organizations in an 
Information Memo to be published no later than 30 days after SEC Notice 
of this filing.

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 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 IV 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

1. Purpose
    Pursuant to section 6(c)(3)(B) \6\ of the Act, which requires the 
Exchange to prescribe standards of training, experience, and competence 
for persons associated with Exchange members and member organizations, 
the Exchange has developed examinations, and administers examinations 
developed by other self-regulatory organizations (``SROs''), that are 
designed to establish that persons associated with Exchange members and 
member organizations have attained specified levels of competence and 
knowledge. The Exchange periodically reviews the content of the 
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)(B).
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    NYSE Rule 345 (``Employees--Registration, Approval, Records'') 
requires member firms to register with the NYSE any individuals who 
regularly perform duties customarily performed by a direct supervisor 
of a registered representative.
    NYSE Rule 720 (``Registration of Options Principals'') provides, in 
part, that no member organization may conduct a public options business 
unless those engaged in the management of the business pertaining to 
options are registered with and approved by the Exchange as Options 
Principals. Among other things, an Options Principal is required to 
successfully complete an examination prescribed by the Exchange for the 
purpose of demonstrating an adequate knowledge of options trading. The 
Series 4 examination is such an examination.
    The Series 4 examination, an industry-wide examination, qualifies 
an individual to function as a Registered Options and Security Futures 
Principal, but only for purposes of supervising a member firm's options 
activities.\7\
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    \7\ A Registered Options and Security Futures Principal also 
must complete a firm-element continuing education program that 
addresses security futures and a principal's responsibilities for 
security futures before such person can supervise security futures 
activities.
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    The Series 4 examination tests a candidate's knowledge of options 
trading generally, the industry rules applicable to trading of option 
contracts, and the rules of registered clearing agencies for options. 
The Series 4 examination covers, among other things, equity options, 
foreign currency options, index options, and options on government and 
mortgage-backed securities.
    The Series 4 examination program is shared by the Exchange and the 
following SROs: the National Association of Securities Dealers, Inc., 
the American Stock Exchange LLC, the Chicago Board Options Exchange, 
Inc., the Pacific Exchange, Inc., and the Philadelphia Stock Exchange, 
Inc. A committee of industry representatives, together with the staff 
of the Exchange and the other SROs, recently undertook a periodic 
review of the Series 4 examination program.
    As a result of this review and as part of an ongoing effort to 
align the examination more closely to the supervisory duties of a 
Series 4 Limited Principal, the Exchange is proposing to modify the 
content of the examination to track the functional workflow of a Series 
4 Limited Principal. More specifically, the Exchange is proposing to 
revise the main section headings and the number of questions on each 
section of the Series 4 study outline as follows: Options Investment 
Strategies, decreased from 35 to 34 questions; Supervision of Sales 
Activities and Trading Practices, increased from 71 to 75 questions; 
and Supervision of Employees, Business Conduct, and Recordkeeping and 
Reporting Requirements, decreased from 19 to 16 questions. The Exchange 
is further proposing revisions to the study outline to reflect the SEC 
short sale requirements. The revised examination continues to cover the 
areas of knowledge required to supervise options activities.
    The Exchange is proposing these changes to the entire content of 
the Series 4 examination, including the selection specifications and 
question bank. The number of questions on the Series 4 examination will 
remain at 125, and candidates will continue to have three hours to 
complete the exam. Also, each question will continue to count one 
point, and each candidate must correctly answer 70 percent of the 
questions to receive a passing grade.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(c)(3)(B) \8\ of the Act, in that it provides for the 
prescription by NYSE of standards of training, experience, and 
competence for persons associated with NYSE members and member 
organizations.
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    \8\ 15 U.S.C. 78f(c)(3)(B).

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[[Page 74397]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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.

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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(i) \9\ of the Act and Rule 19b-4(f)(1) thereunder,\10\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the self-regulatory organization. 
The Exchange will announce the implementation date to its members and 
member organizations in an Information Memo to be published no later 
than 30 days after SEC Notice of this filing.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(i).
    \10\ 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.

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. 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-NYSE-2005-84 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-NYSE-2005-84. 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 NYSE. 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-NYSE-2005-84 and should be submitted on or before 
January 5, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7367 Filed 12-14-05; 8:45 am]

BILLING CODE 8010-01-P