Document ID: SEC-2007-1713-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2007-12-17T05:00Z

[Federal Register: December 17, 2007 (Volume 72, Number 241)]
[Notices]               
[Page 71467-71469]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17de07-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56936; File No. SR-FINRA-2007-022]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Order Granting Accelerated 
Approval of Proposed Rule Change Relating to FINRA's NYSE Rule 342.13 
and the General Securities Principal Examination

December 10, 2007.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 9, 2007, the Financial Industry Regulatory Authority, 
Inc. (``FINRA'') (f/k/a National Association of Securities Dealers, 
Inc. (``NASD'')) filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been substantially prepared by FINRA. This 
order provides notice of the proposed rule change and approves the 
proposed rule change on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to amend FINRA's New York Stock Exchange LLC 
(``NYSE'') Rule 342.13 (Acceptability of Supervisors) \3\ to eliminate 
the requirement that the General Securities Principal Examination 
(``Series 24 Examination'') be passed after July 1, 2001 in order to be 
recognized by NYSE as an acceptable alternative to the General 
Securities Sales Supervisor Qualification Examination (``Series 9/10 
Examination'') for persons whose duties do not include supervision of 
options or municipal securities sales activities. The proposed rule 
change is identical to a rule change by the NYSE to its version

[[Page 71468]]

of Rule 342.13, which was recently approved by the Commission.\4\
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    \3\ FINRA has incorporated certain NYSE rules into its rulebook, 
including NYSE Rule 342. This incorporated NYSE rule applies solely 
to those members of FINRA that also are members of NYSE on or after 
July 30, 2007 (``Dual Members''), and until the time FINRA adopts a 
consolidated rulebook applicable to all of its members. The 
incorporated NYSE rules apply to the same categories of persons to 
which they applied as of July 30, 2007. In applying the incorporated 
NYSE rules to Dual Members, FINRA also has incorporated the related 
interpretive positions set forth in the NYSE Rule Interpretations 
Handbook and NYSE Information Memos.
    \4\ See Securities Exchange Act Release No. 56854 (November 28, 
2007), 72 FR 68613 (December 5, 2007) (SR-NYSE-2007-53) (order 
approving an amendment to NYSE Rule 342.13 (Acceptability of 
Supervisors)).
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    The text of the proposed rule change is available at FINRA, the 
Commission's Public Reference Room, and on FINRA's Web site at http://www.finra.org
.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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. FINRA 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    FINRA is proposing a rule change to FINRA's NYSE Rule 342.13 that 
would eliminate the requirement that the Series 24 Examination be 
passed after July 1, 2001, in order to be recognized by the NYSE as an 
acceptable alternative to the Series 9/10 Examination requirement for 
persons whose duties do not include supervision of options or municipal 
securities sales activities.\5\ The proposed rule change is identical 
to a proposed rule change by NYSE to its version of Rule 342.13,\6\ 
which was recently approved.\7\
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    \5\ The Series 24 Examination does not address these activities. 
Prospectively, persons may continue to qualify to supervise options 
or municipal securities sales activity by taking and passing the 
Series 24 Examination and also taking and passing the Registered 
Options Principal (``Series 4'') and/or Municipal Securities 
Principal (``Series 53'') Examinations.
    \6\ Pursuant to Rule 17d-2 under the Act, 17 CFR 240.17d-2, 
NASD, NYSE, and NYSE Regulation, Inc. entered into an agreement 
(``Agreement'') to reduce regulatory duplication for firms that are 
Dual Members by allocating certain regulatory responsibilities for 
selected NYSE rules from NYSE Regulation, Inc. to FINRA. The 
Agreement includes a list of all of those rules (``Common Rules'') 
for which FINRA has assumed examination, enforcement and 
surveillance responsibilities under the Agreement relating to 
compliance by Dual Members to the extent that such responsibilities 
involve member firm regulation. See Securities Exchange Act Release 
No. 56148 (July 26, 2007), 72 FR 42146 (August 1, 2007) (approving a 
plan for allocating regulatory responsibilities). The Common Rules 
are the same NYSE rules that FINRA has incorporated into its 
rulebook. See Securities Exchange Act Release No. 56147 (July 26, 
2007), 72 FR 42166 (August 1, 2007) (SR-NASD-2007-054) (order 
approving incorporation of certain NYSE Rules relating to member 
firm conduct). Paragraph 2(b) of the Agreement sets forth procedures 
regarding proposed changes by either NYSE or FINRA to the substance 
of any of the Common Rules.
    \7\ See supra, note 4.
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    NYSE Rule 342 (Offices--Approval, Supervision and Control) 
prescribes the general supervisory requirements for NYSE member 
organizations. Among these requirements, Rule 342.13 (Acceptability of 
Supervisors) prescribes the NYSE's qualification standards for 
personnel delegated supervisory responsibility. Before 2001, this 
provision provided, in part, that a person delegated supervisory 
responsibility must pass the Series 9/10 Examination or an historical 
equivalent (i.e., the Series 8 Examination).
    In October 2002, NYSE amended Rule 342.13 \8\ to recognize FINRA's 
Series 24 Examination, if taken and passed after July 1, 2001, as an 
acceptable alternative to the Series 9/10 Examination requirement for 
persons whose duties do not include supervision of options or municipal 
securities sales activities. NYSE reasoned that, as of July 2, 2001, 
FINRA had enhanced the Series 24 Examination to include questions that 
provide appropriate coverage of NYSE Rules. As noted above, NYSE 
recently eliminated the requirement in Rule 342.13 that the Series 24 
Examination be taken and passed after July 1, 2001. FINRA is proposing 
an identical change to its version of Rule 342.13.
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    \8\ See Securities Exchange Act Release No. 46631 (October 9, 
2002), 67 FR 64187 (October 17, 2002) (order approving SR-NYSE-2002-
24). See also NYSE Information Memo 02-51 (November 12, 2002).
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    Further rationale for the proposed rule change is set forth in 
NYSE's filing.\9\ As noted in that filing, the NYSE and NASD rulebooks 
have converged significantly in the last six years, and individuals who 
took the Series 24 Examination before July 1, 2001 have been subject to 
regulatory standards that have, to a large degree, been harmonized.\10\ 
In addition, these individuals have been subject to regulatory and firm 
element continuing education, which provides ongoing training with 
respect to current regulatory requirements, including NYSE and NASD 
Rules, applicable to these persons' duties and responsibilities.
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    \9\ See Securities Exchange Act Release No. 56686 (October 23, 
2007), 72 FR 61193 (October 29, 2007) (SR-NYSE-2007-53) (notice of 
proposed rule change, as modified by amendments no. 1 and 2, to 
amend NYSE Rule 342.13 (Acceptability of Supervisors)).
    \10\ Id.
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    FINRA seeks accelerated approval of the proposed rule change and 
requests that the effective date of its proposed rule change be the 
same date as approval of the proposed rule change for the identical 
NYSE rule.\11\
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    \11\ The Commission notes that the comparable amendment to NYSE 
Rule 342.13 was approved on November 28, 2007. See supra, note 4. 
Thus, the Commission considers FINRA to be requesting a retroactive 
effective date of November 28, 2007, for this proposed rule change.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\12\ which requires, among 
other things, that FINRA rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. FINRA believes that the proposed rule change would 
reduce unnecessary regulatory burdens and provide greater harmonization 
between the NYSE and FINRA qualification and examination requirements 
by eliminating the requirement that the Series 24 Examination be taken 
and passed after July 1, 2001 in order to be recognized by the NYSE as 
an acceptable alternative to the Series 9/10 Examination for persons 
whose duties do not include supervision of options or municipal sales 
activities.
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    \12\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA 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

    Written comments were neither solicited nor received.

[[Page 71469]]

III. 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-FINRA-2007-022 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-FINRA-2007-022. 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 on official 
business days between the hours of 10 a.m. and 3 p.m. Copies of such 
filing also will be available for inspection and copying at the 
principal office of FINRA. 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-FINRA-2007-022 and should be submitted on or before January 7, 2008.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    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 association.\13\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 15A(b)(6) of the Act,\14\ which requires, among 
other things, that FINRA's rules be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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.
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    \13\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \14\ 15 U.S.C. 78o-3(b)(6).
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    The proposed rule change would make FINRA's NYSE Rule 342.13 
identical to the version of NYSE Rule 342.13 in the NYSE rulebook that 
was recently approved by the Commission.\15\ In addition, the 
Commission believes that the proposed rule change comports with the 
provisions of the 17d-2 Agreement, as approved by the Commission, in 
which FINRA and NYSE agreed to promptly propose conforming changes, 
absent a disagreement about the substance of a proposed rule change to 
one of the Common Rules, to ensure that such rules continue to be 
Common Rules under the Agreement. In this regard, the Commission 
believes it is appropriate for the proposed rule to be effective 
retroactively as of November 28, 2007, which is the date NYSE's 
amendment to NYSE Rule 342.13 was approved by the Commission.\16\
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    \15\ See supra, note 4.
    \16\ Id.
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    The Commission finds good cause, consistent with Section 19(b)(2) 
of the Act,\17\ for approving this proposed rule change before the 
thirtieth day after the publication of notice thereof in the Federal 
Register. This approval allows the proposed rule change to take effect 
without delay. NYSE's proposed revision to NYSE Rule 342.13 was 
published for comment and approved by the Commission.\18\ Interested 
persons were provided the opportunity to submit comments on rule text 
that is identical to FINRA's proposal, and no comments were received. 
The Commission believes FINRA's proposal raises no new regulatory or 
substantive issues.
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    \17\ 15 U.S.C. 78s(b)(2).
    \18\ Id.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\19\ that the proposed rule change (SR-FINRA-2007-022), be, and it 
hereby is, approved on an accelerated basis effective November 28, 
2007.
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    \19\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24309 Filed 12-14-07; 8:45 am]

BILLING CODE 8011-01-P