Document ID: SEC-2007-1655-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-12-06T05:00Z

[Federal Register: December 6, 2007 (Volume 72, Number 234)]
[Notices]               
[Page 68932-68934]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de07-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56851; File No. SR-NYSE-2007-106]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change, 
as Modified by Amendment No. 2, Relating to Exchange Rule 103A(a)(3) To 
Address Changes in the Way the Exchange Delivers Education Programs to 
its Members and To Clarify That the Mandatory Education Requirement 
Applies to All Individuals Qualified To Use a Trading License

November 28, 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 16, 2007, the New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. The NYSE has designated the proposed rule change as one 
concerned solely with the administration of the Exchange pursuant to 
section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b-4(f)(3) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission. On November 26, 2007, the Exchange submitted Amendment 
No. 1 to the proposed rule change. The Exchange withdrew Amendment No. 
1 on November 27, 2007. The Exchange submitted Amendment No. 2 to the 
proposed rule change on November 27, 2007.\5\ 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(3).
    \5\ In Amendment No. 2, the Exchange made a technical change to 
the rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE is proposing to amend Rule 103A(a)(3) to address changes in 
the way the Exchange delivers education programs to its members and to 
clarify that the mandatory education requirement applies to all 
individuals qualified to use a trading license, and not just to members 
who are active on the trading Floor.

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

    In its filing with the Commission, NYSE 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. NYSE 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
    The Exchange is proposing to amend NYSE Rule 103A to reflect 
certain changes to how the Exchange delivers its continuing education 
program, and to reflect changes to the Exchange's membership structure, 
which affects who must complete the program.
    Since its inception, the Exchange's Floor Member Continuing 
Education Program (``FMCE Program''), which NYSE Regulation manages, 
has evolved from providing semi-annual stand-up presentations to 
delivering computer-based educational modules in a learning laboratory. 
Because of limitations associated with these delivery methods, NYSE 
Regulation is currently upgrading the FMCE Program to permit more 
efficient and cost-effective delivery to participants via the Internet.
    In connection with these changes, the Exchange is proposing to 
amend Rule 103A(a)(3) to remove the reference to ``semi-annual'' 
education programs, and is proposing to shorten the time in which 
program participants must complete the program elements. In addition, 
due to changes in the NYSE's membership structure, in which one trading 
license may be used by multiple qualified individuals over the course 
of a year, the Exchange is proposing to amend Rule 103A(a)(3) to 
clarify that the education requirement applies to all individuals 
qualified to use a trading license, not just those who are actively 
working as ``members'' on the Floor.
Background
    NYSE Rule 103A requires the Exchange to provide, and Exchange Floor 
members to take, continuing education. Over the years, the method by 
which the Exchange delivered the required education components has 
evolved from in-person lectures to large groups of members to 
individualized computer-assisted training in a learning laboratory 
setting. That evolution reflected an ongoing assessment by the Exchange 
of the most efficient way to deliver timely continuing education and 
training to a large group of Floor members.
    When the Exchange delivered the FMCE Program in person or in a 
learning laboratory, participants were required to participate in these 
meetings during extended business hours. The current language of Rule 
103A(a)(3) reflects meeting room and laboratory space limitations by 
requiring the Exchange to deliver the FMCE Program

[[Page 68933]]

twice a year and allowing participants 120 days from the time that they 
were originally scheduled to take continuing education to complete the 
requirement. To address the space and time limitations associated with 
the FMCE Program, NYSE Regulation is in the process of modernizing its 
method for delivering the FMCE Program. As redesigned, NYSE Regulation 
will offer the FMCE Program via a web-based interactive program that 
participants can access from an Internet-capable computer. Participants 
will no longer need to come to a learning laboratory at the Exchange 
facility or schedule specific times with the Exchange to complete the 
program. Instead, participants will be able to access the FMCE Program 
from their member organization offices, under the supervision of their 
member firm at a time that is mutually convenient for the participant 
and the member organization. Changes to Rule 103A are necessary in 
order to keep the rule consistent with the new delivery method.
    In addition to the changes necessitated by changes to the program 
delivery method, the Exchange is also proposing to amend Rule 103A to 
clarify who is required to complete the FMCE Program. Rule 103A 
currently applies to all Exchange ``members,'' which, until 2006, 
referred to individuals who owned or leased seats on the Exchange. In 
2006, the Exchange changed its membership structure from seats that 
were held by particular individuals within a member organization, to 
trading licenses that are not specific to particular individuals within 
a member organization.
    Under the new membership structure, in order to become a member 
organization, an incorporated entity must, among other things, purchase 
a trading license. Holders of a trading license may then designate one 
or more individuals to use the license, each of whom must complete the 
qualifications necessary to be ``members'' of the Exchange. Although 
one license holder may have more than one qualified member associated 
with it, only one such qualified individual may use the trading license 
on a given trading day. The individual using the license on a given day 
is the ``active member'' for that day.
    Substituting another qualified individual to use a license can 
happen on as little as one day's notice to the Exchange. Accordingly, 
all qualified individuals who could use the license, including those 
who are not regularly active on the Floor, must remain current with the 
FMCE Program requirements. As currently drafted, however, Rule 103A, 
which refers to ``members'' only, does not clearly articulate this 
requirement.
Proposed Amendments
    The Exchange proposes to amend Rule 103A(a)(3) by: (i) Updating the 
rule to reflect the Exchange's new delivery method; and (ii) clarifying 
that all individuals qualified to use a trading license must meet the 
mandatory education requirements under the rule.
    First, since the new delivery method will not require Floor members 
to physically attend Floor member continuing education sessions, the 
Exchange is proposing to amend Rule 103A(a)(3) by eliminating 
references to meetings in general.
    Second, the Exchange proposes to eliminate the requirement that the 
Exchange provide continuing member education on a semi-annual basis and 
instead amend the rule to reflect the versatility of the new delivery 
method. Going forward, the Exchange intends to annually provide an 
equivalent amount of education in terms of topics and participation 
time as it did when the FMCE Program was delivered semi-annually. In 
the semi-annual mode, the NYSE usually delivered six educational 
modules, in two sessions of three modules each. This would no longer be 
the case under the new program; instead, the Exchange plans to deliver 
education modules on a rolling basis over the course of the year. The 
Exchange believes that spacing the educational experience gradually 
over a year's time (an approach that is newly possible with the new 
delivery method) will be more effective as a learning experience, and 
enable the Exchange to provide training that is more timely in view of 
changes to the regulatory landscape.
    Third, the Exchange proposes to change the timeframe within which 
Floor members must complete continuing education. Currently, Rule 103A 
allows FMCE participants to complete their requirement within 120 days 
of being scheduled to attend an educational meeting. The 120-day window 
was predicated on certain physical constraints the Exchange faced in 
delivering previous versions of the program. Under the old delivery 
methods, the Exchange had to schedule sufficient original education 
meetings to accommodate over 1,300 participants. Given the size of 
available meeting rooms (maximum seating capacity 70 persons) for the 
in-person delivery method and later the seating capacity of the 
learning laboratory (maximum of 14 persons) and the additional need to 
provide make-up sessions for participants who could not attend their 
originally scheduled meeting, the Exchange needed a relatively large 
timeframe within which to provide educational opportunities. Because no 
such constraints will exist using the new delivery method, the Exchange 
proposes to change the time allowed for completion of an educational 
module from 120 to 60 days from the time that the module is assigned to 
the program participants.\6\
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    \6\ In order to ensure the integrity of the program, once the 
program is in place, firms will be required to certify pursuant to 
NYSE Rule 342.30(e) that the firm's Floor members (and qualified 
substitutes) have completed the educational requirements contained 
in Rule 103A. As a result, the Exchange expects firms will implement 
procedures for ensuring that their Floor members and qualified 
substitutes have completed the program, which procedures could 
include supervising individuals on firm premises while they complete 
the program. Given the generally small size of member firms' Floor 
staffs, the Exchange believes that 60 days should be ample time for 
a firm to ensure that its members and qualified substitutes have 
completed the program requirements. To assist compliance staff in 
this regard, the system being implemented by the Exchange contains 
tools for compliance officers to monitor the completion status of 
their firms' employees.
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    While anticipating the use of the 60-day deadline in most cases, 
the Exchange proposes to build flexibility into the rule by providing 
the option of designating a different timeframe where warranted. For 
example, training for Floor members in a certain regulatory topic may 
be deemed urgent and the Exchange could shorten the deadline 
accordingly.
    Finally, the Exchange proposes amending the rule to clarify that 
all qualified members, i.e., all members qualified to work on the Floor 
of the Exchange, regardless of whether they are active members, are 
required to complete the mandatory FMCE Program requirements.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \7\ that an Exchange have rules that 
are designed to promote the 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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    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

[[Page 68934]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

    The foregoing proposed rule change is effective upon filing 
pursuant to section 19(b)(3)(A)(iii) \8\ of the Act and Rule 19b-
4(f)(3) \9\ thereunder. The proposed rule change goes solely to the 
administration of the self-regulatory organization in that it is not a 
substantive change to NYSE Rule 103A (that is, it neither increases nor 
decreases the scope of the education requirement under NYSE Rule 103A), 
but merely updates the rule to reflect the introduction of a new method 
for delivering the educational material.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \9\ 17 CFR 240.19b-4(f)(3).
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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, 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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NYSE-2007-106 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-NYSE-2007-106. 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 will 
also 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-2007-106 and should be submitted on or before December 27, 2007.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-23587 Filed 12-5-07; 8:45 am]

BILLING CODE 8011-01-P