Document ID: SEC-2007-1311-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-09-25T04:00Z

[Federal Register: September 25, 2007 (Volume 72, Number 185)]
[Notices]               
[Page 54486-54488]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se07-83]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56457; File No. SR-Amex-2007-54]

 
Self-Regulatory Organizations; American Stock Exchange, LLC; 
Notice of Filing and Order Granting Accelerated Approval to Proposed 
Rule Change, as Modified by Amendment No. 1 Thereto, Relating to 
Amendments to Exchange Training and Examination Requirements

September 18, 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 June 1, 2007, the American Stock Exchange, LLC. (``Amex'' or 
``Exchange'') 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 the Exchange. 
On September 5, 2007, Amex filed Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change, as modified by Amendment No. 1 thereto, 
from interested persons and approve 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.
    \3\ Amendment No. 1 supersedes and replaces the original rule 
filing in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules governing training and 
examination requirements.
    The text of the proposed rule change is available at Amex, the 
Commission's Public Reference Room, and http://www.amex.com.

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 III 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
    Amex proposes certain clarifying changes to its rules governing its 
training and examination requirements. These changes are in connection 
with implementation of a mandatory annual training program for all 
floor members that addresses compliance with the federal securities 
laws and Amex rules to help prevent and deter unlawful trading by floor 
members, as well as to otherwise simplify and enhance the Exchange's 
existing training programs.\4\
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    \4\ Pursuant to an undertaking agreed to in connection with the 
recent settlement of a Commission administrative proceeding (the 
``Order''), Amex agreed to enhance its existing regulatory training 
programs for floor members and certain staff members that addresses 
compliance with the federal securities laws and Exchange rules to 
help prevent and deter unlawful trading by floor members. See 
Exchange Act Release No. 55507; Administrative Proceeding File No. 
3-12594 (March 22, 2007).
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    The Exchange's proposal would require all floor members to 
participate in a mandatory annual regulatory training program, which 
would include participation in any Exchange testing programs in 
connection with the mandatory training program. The Exchange 
anticipates that the mandatory training program would be organized and 
grouped by floor member function and therefore foresees holding 
separate sessions for specialists, floor brokers, and registered 
traders.
    The Exchange also proposes to enhance the new member qualification 
program. The new member qualification program currently in place 
requires all prospective new members to participate in a comprehensive 
training program and successfully complete a corresponding examination 
at the conclusion of the training. Members seeking to qualify as 
specialists must successfully complete a separate examination as well. 
The new program would retain the new member training program and 
examination as they currently exist, but would replace the specialist 
examination with an in-depth training program. The Exchange represents 
that it has found that new specialist applicants, in preparing for the 
specialist examination, focus primarily on the requirements necessary 
to pass the examination. The Exchange believes that a more effective 
method of training prospective specialists would involve training 
specifically related to specialists' particular activities and 
requirements. To this end, the Exchange proposes to eliminate the 
specialist

[[Page 54487]]

examination and instead institute an in-depth qualifying training 
program for specialist applicants.
    The specialist training sessions would be structured in a manner 
similar to the new member training program, which covers the federal 
securities laws and Amex rules applicable to the prospective members' 
proposed functions. Likewise, the specialist training sessions would be 
held in small group settings to foster interaction, and to ensure that 
all participants actively engage in the training to help the 
participants become fully cognizant of the rules governing their floor 
activities.\5\
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    \5\ The Exchange would offer the training programs on a periodic 
basis sufficiently frequent to reasonably accommodate demand and to 
ensure that all floor members receive training as required by the 
Order and in accordance with Amex rules.
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    Lastly, in connection with floor clerk training, the Exchange 
proposes to eliminate the initial test requirements for new floor 
clerks but would maintain the annual training requirement for all floor 
clerks (post, booth and DK) active in the business on the Exchange 
trading floor (other than those performing strictly ministerial 
functions).
    Accordingly, the Exchange proposes changes to the following rules:
Rule 50
    Exchange Rule 50, Commentary .01, currently governs examination 
requirements for regular members seeking to register as specialists and 
regular or options principal members seeking to register as registered 
traders. The Exchange notes that in recent years, the examination 
requirement for registered traders has been subsumed into the new 
member examination. As stated above, the Exchange is proposing to amend 
Rule 50 to replace the specialist qualifying examination with a 
mandatory qualifying training program, which would include 
participation in any Exchange testing in connection with these 
mandatory training programs. The requirement for registered trader 
applicants to pass an examination has been removed in this proposal, 
since such examination has been subsumed into the new member 
examination.
    Proposed Commentary .03 to Rule 50 describes the requirement that 
all floor members participate in a mandatory annual regulatory training 
program, which would include participation in any Exchange testing 
programs in connection with this mandatory training program. This 
proposed Commentary would subject members who fail to satisfactorily 
complete the program to a fine and, if warranted, preclusion from the 
trading floor until the requirement is met.
    Proposed Commentary .04 is similar to proposed Commentary .03, 
except that it describes the mandatory regulatory training program for 
clerks. This program is comparable to the mandatory continuing 
education program implemented through current Exchange Rule 359A. The 
Exchange proposes to incorporate this requirement into Rule 50, and to 
eliminate Rule 359A, since both govern training requirements. The 
Exchange believes that having only one rule would help to simplify and 
clarify these requirements. In this proposal, the proposed rule text 
clarifies that clerks who perform strictly ministerial functions would 
be exempted. Sanctions for noncompliance, which are similar to those 
applicable to members, are also described.
    Finally, the Exchange proposes to add new Commentary .05 to Rule 50 
to state that the Exchange will submit a rule filing with the 
Commission, pursuant to Section 19(b) of the Act, proposing any new, or 
deleting any current, testing requirements outlining the content of 
such exam. The Exchange also committed to issue a formal notice to its 
membership notifying it of any changes in the current testing 
requirements. In addition, the Exchange moved the reference to study 
guides as noted in Commentary .03 to proposed Commentary. 05.
Rule 110 and Rule 110-AEMI
    Exchange Rule 110 and Rule 110-AEMI govern requirements for 
Registered Traders. Members applying to register as Registered Traders 
are required to pass a Registered Trader Examination as prescribed by 
the Exchange. In recent years, the examination requirement for 
Registered Traders has been subsumed into the New Member Examination. 
The Exchange therefore proposes to amend both Rule 110 and Rule 110-
AEMI to eliminate this obsolete reference. Pursuant to proposed Rule 
50, Registered Traders would be required to participate in an Exchange-
sponsored mandatory training program, which would include participation 
in any Exchange testing in connection with this mandatory training 
program.
Rule 353
    Exchange Rule 353 governs regular and options principal membership 
and limited trading permit requirements and references relevant 
examination requirements. If a candidate is going to be active on the 
Floor, he or she must pass an examination before being permitted to 
execute orders on the Floor. Specialist candidates must pass an 
additional examination after a period of training. The Exchange 
proposes to eliminate the additional examination required of specialist 
candidates after a period of training as referenced in Rule 353. This 
proposed rule would instead reference the new mandatory qualifying 
training program for specialist applicants. The Exchange believes that 
the new mandatory qualifying training program for specialists will be 
more effective in training new specialist applicants on the 
requirements applicable to their respective member functions.
Rule 359A
    Exchange Rule 359A governs mandatory continuing education for all 
floor members and mandatory continuing education and initial test 
requirements for floor clerks of members and member firms. Rule 359A 
presently requires all floor members and floor clerks of members (post, 
booth and DK) to participate in the Exchange-sponsored mandatory 
continuing education program, which is conducted online. Rule 359A 
would be eliminated under this proposal. The rules governing mandatory 
continuing education and regulatory training would be incorporated into 
Rule 50, and the initial test requirements for new floor clerks would 
be eliminated.
    Finally, the Exchange notes that, pursuant to the Order, all floor 
members, as well as members of Amex's regulatory staff who are 
responsible for the surveillance, investigation, examination and 
discipline of floor members, would be required to participate in 
mandatory annual regulatory training.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \6\ of the 
Act in general and furthers the objectives of Section 6(b)(5) \7\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, remove impediments to and perfect the mechanisms of a free 
and open market and a national market system, and, in general, protect 
investors and the public interest. Furthermore, the proposed rule 
change is consistent with the objectives of Section 6(b)(6) \8\ in that 
it is designed to appropriately discipline or sanction members for 
violation of the provisions

[[Page 54488]]

of this title, the rules or regulations thereunder, or the rules of the 
Exchange.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will impose no 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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-Amex-2007-54 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-Amex-2007-54. 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, 100 F Street, NE., 
Washington, DC 20549, 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 Amex. 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-Amex-2007-54 and should be 
submitted on or before October 16, 2007.

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 exchange.\9\ In 
particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\10\ which requires, among 
other things, that the Exchange'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. The proposed 
rule change institutes a mandatory annual training program for Amex 
floor members. The Commission believes that this proposal should allow 
the Exchange to more effectively train its members to ensure compliance 
by its members with Exchange rules and the federal securities laws.
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    \9\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission believes the proposed rule change is 
consistent with the objectives of Section 6(b)(6) \11\ of the Act 
because it is designed to allow Amex to discipline or sanction members 
under its Minor Rule Violation Fine System for violation of the 
provisions of the rules of the Exchange.
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    \11\ 15 U.S.C. 78f(b)(6).
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    The Commission finds good cause, consistent with Section 19(b)(2) 
of the Act,\12\ to grant accelerated approval to the proposed rule 
change before the thirtieth day after the publication of notice thereof 
in the Federal Register. As noted above, the proposed rule change is in 
response to a Commission Order requiring Amex to enhance its training 
program to help ensure compliance by its members with Exchange rules 
and federal securities laws. The Commission believes that mandatory 
training of Amex floor members should be implemented as soon as 
possible so that floor members are made aware of their duties and 
obligations under the federal securities laws as well as the rules of 
the Amex.
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    \12\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (SR-Amex-2007-54), as modified 
by Amendment No. 1, be, and it hereby is, approved on an accelerated 
basis.
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    \13\ Id.

    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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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-18822 Filed 9-24-07; 8:45 am]

BILLING CODE 8010-01-P