Document ID: SEC-2005-0368-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange, Inc.
Posted Date: 2005-12-14T05:00Z

[Federal Register: December 14, 2005 (Volume 70, Number 239)]
[Notices]               
[Page 74074-74076]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14de05-114]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52915; File No. SR-NYSE-2005-85]

 
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--General Securities Sales Supervisor (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 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, 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

[[Page 74075]]

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--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.
    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 9/10 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. 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.
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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, 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. Under NYSE Rule 342 (``Offices-
Approval, Supervision, and Control'') member firms are required to 
supervise themselves. Specifically, NYSE Rule 342.13 requires 
individuals who supervise general trading activities to have a 
creditable three-year record as a registered representative or 
equivalent experience and to pass the General Securities Sales 
Supervisor Qualification Examination (Series 9/10) or another 
examination acceptable to the Exchange that demonstrates competency 
relevant to assigned responsibilities.\7\
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    \7\ NYSE Rule 342.13 provides that the General Securities 
Principal Examination (Series 24), if taken and passed after July 1, 
2001, is an acceptable alternative for persons whose duties do not 
include the supervision of options or municipal securities sales 
activity. The examination requirement may be waived at the 
discretion of the Exchange.
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    The Series 9/10 examination, an industry-wide examination, 
qualifies an individual to function as a General Securities Sales 
Supervisor. It tests a candidate's knowledge of securities industry 
rules and regulations and certain statutory provisions pertinent to the 
supervision of sales activities. The Series 9/10 examination is 
primarily geared towards individuals who will act as the Branch 
Managers/Sales Supervisor of the firm's branch office locations. The 
Branch Manager is generally responsible for reviewing the activities of 
registered persons at the branch location and is also responsible for 
the review and approval of customer accounts that are opened through a 
registered representative at a branch.
    The Series 9/10 examination program is shared by NYSE and the 
following SROs: the American Stock Exchange LLC, the Chicago Board 
Options Exchange, Inc., the Municipal Securities Rule Making Board 
(``MSRB''), the National Association of Securities Dealers, Inc. 
(``NASD''), the Pacific Exchange, Inc., and the Philadelphia Stock 
Exchange, Inc. NYSE understands that the other SROs also will file with 
the Commission similar revisions to the Series 9/10 examination 
program.
    A committee of industry representatives, together with the staff of 
NYSE and the other SROs, recently undertook a periodic review of the 
Series 9/10 examination program. As a result of this review, NYSE 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. The study outline also reflects the 
new SEC short sale rule 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, NYSE is proposing to modify 
the content of the examination to track the functional workflow of a 
Series 9/10 Limited Principal. Also, NYSE is proposing to include 
questions related to the rules of the options exchanges and the MSRB 
and parallel NYSE and NASD rules in the same section of the exam.
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    \8\ 17 CFR. 248.1-18; 17 CFR.249.30; and 17 CFR.248, Appendix A.
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    As a result of the revisions, the main section headings and the 
number of questions on each section of the Series 9/10 study outline 
were modified 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--Record keeping 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.
    NYSE is proposing similar changes to the corresponding sections of 
the Series 9/10 selection specifications and question bank. The number 
of questions on the Series 9/10 examination will remain at 200 and 
candidates will have four hours to complete the Series 10 portion and 
one and half hour to complete the Series 9 portion. Also, each 
candidate must correctly answer 70 percent of the questions on each

[[Page 74076]]

series, 9 and 10, to receive a passing grade.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(c)(3)(B) \9\ 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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    \9\ 15 U.S.C. 78f(c)(3)(B).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NYSE 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) \10\ of the Act and Rule 19b-4(f)(1) thereunder,\11\ 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 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-2005-85 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-2005-85. 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-2005-85 and should be submitted on or before 
January 4, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
 [FR Doc. E5-7327 Filed 12-13-05; 8:45 am]

BILLING CODE 8010-01-P