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Notice

Self Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Chicago Stock Exchange, Inc. to Eliminate the Series 7B Qualification Examination for Floor Clerks Who May Accept Orders From Professional Customers for Execution on the Exchange's Trading Floor

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Start Preamble June 1, 2000.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 Start Printed Page 36858(“Act”),[1] and Rule 19b-4 thereunder,[2] notice is hereby given that on March 17, 2000, the Chicago Stock Exchange, Inc. (“CHX” 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 Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to amend its Interpretation .01(d) of CHX Article VI, Rule 3 by eliminating the Series 7B Qualification Examination [3] for Exchange floor clerks who may, among other functions, accept orders from professional customers [4] for execution on the Exchange's complete the Exchange's Floor Membership Examination and either the Series 7 Examination or the Series 7A Qualification Examination.[5] Proposed new language is in italics; proposed deletions are in brackets.

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ARTICLE VI

RESTRICTIONS AND REQUIREMENTS

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Training and Examination of Registrants

Rule 3. The Exchange may require the successful completion of a training course or an examination, or both, in connection with registration of members and persons associated with a member or member organization, and may charge fees for such registration and examination. This provision shall apply to all members[,] and member organizations, including members and member organizations which are to be solely on the Floor of the Exchange.

Interpretations and Policies:

.01 (a) No change.

(b) No change.

(c) No change.

(d) Public Business Exam

Floor members who successfully complete the Series 7 Examination may conduct a public business which is limited to accepting orders while on the floor directly from non-broker-dealer customers. In lieu of the Series 7 Examination, Floor members who successfully complete the Series 7A examination may conduct a public business which is limited to accepting orders directly from professional customers for execution on trading floor. Floor clerks of floor members that have successfully completed the

Series 7 or Series 7A examination may accept orders from professional customers for execution on the trading floor so long as such clerks successfully complete both the Floor Membership Exam and either the Series 7 Examination or the Series 7A[7B]E[e]xamination. For purposes of this interpretation and policy, a “professional customer” includes a bank; trust company; insurance company; investment trust; a state or political subdivision thereof; a charitable or nonprofit educational institution regulated under the laws of the United States, or any state ;[,] a [or] pension or profit sharing plan subject to ERISA, or of any agency of the Untied States or [as] of a state or political subdivision thereof; or any person (other than a natural person) who has, or who has under management, net tangible assets of at least sixteen million dollars.

.02 No change.

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

In this filing with the Commission, the CHX 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 Section 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 proposes to amend its Interpretation .01(d) of CHX Article VI, Rule 3 to eliminate the Series 7B Examination for Exchange floor clerks. Under existing Exchange rules, a floor clerk of a qualified floor member may accept orders from professional customers for execution on the Exchange's trading floor, so long as the floor clerk has successfully completed either the Series 7 Examination or the Series 7B Examination.[6] The Exchange's proposed rule change would require that Exchange floor clerks who will accept professional orders pass (i) the Floor Membership Examination [7] already administered by the Exchange to prospective floor members and (ii) either the Series 7 or the Series 7A Examination. The CHX's Floor Membership Examination addresses the rules and practices of the Exchange's trading floor but has broader coverage than the Series 7B Examination.[8]

The Exchange notes that the New York Stock Exchange, Inc. (“NYSE”) recently eliminated the Series 7B Examination and now requires its floor clerks to pass both a new Trading Assistant Examination (“Series 25 Examination“) [9] and either the Series 7 Examination or the Series 7A Examination before becoming eligible to accept professional orders.[10] Like the CHX's Floor Membership Examination, the NYSE's new Trading Assistant Examination contains questions relating to its floor rules and policies but has broader coverage that the questions formerly included in the Series 7B Examination. The CHX therefore proposes to change its examination requirements to correspond to the recent NYSE changes that have been approved by the Commission. The CHX represents Start Printed Page 36859that successful completion of the Exchange's Floor Membership Examination would ensure that clerks wishing to perform certain functions on the floor, such as accepting professional orders, are sufficiently familiar with the rules and practices of the Exchange's trading floor.

2. Statutory Basis

The CHX believes that the proposed rule change is consistent with Section 6(b) of the Act [11] in general and furthers the objectives of Section 6(b)(5) [12] in particular in that it is designed to promote just and equitable principles of trade, to remove impediments and to perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.

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.

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

The Exchange did not solicit or receive written comments on the proposed rule change.

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

Within 35 days of the date of publication of this notice in the Federal Register or within such longer period(i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will:

(A) By order approve such proposed rule change, or

(B) Institute proceedings to determine whether the proposed rule change should be disapproved.

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 at the Commission's Public Reference Room. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-CHX-00-07 and should be submitted by July 3, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[13]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  The Series 7B Qualification Examination (“Series 7B Examination”) was originally implemented by the NYSE in 1994, to serve as an alternative qualification examination to the General Securities Registered Representative Examination (“Series 7 Examination”). See Securities Exchange Act Release No. 34334 (July 8, 1994), 59 FR 35964 (July 14, 1994).

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4.  The Exchange's proposed rule change defines the term “professional customer” to include a bank; trust company; insurance company; investment trust; a state or political subdivision thereof; a charitable or nonprofit education institution regulated under the laws of the United States, or any state; a pension or profit sharing plan subject to ERISA, or of an agency of the United States or of a state or political subdivision thereof; or any person (other than a natural person) who has, or who has under management, net tangible assets of at least sixteen million dollars.

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5.  The Series 7A Qualification Examination (“Series 7A Examination”) was originally implemented by the NYSE in 1993, to serve as an alternative qualification exam to the Series 7 Examination. See Securities Exchange Act Release No. 32698 (July 29, 1993), 58 FR 41539 (August 4, 1993).

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6.  See Securities Exchange Act Release No. 37690 (September 17, 1996), 61 FR 49803 (September 23, 1996).

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7.  The Exchange adopted the Floor Membership Exam in 1996. See Securities Exchange Act Release No. 37690 (September 17, 1996), 61 FR 49803 (September 23, 1996).

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8.  Telephone conversation between Michael Cardin, Market Regulation Department, CHX, and Susie Cho, Attorney, Division of Market Regulation, Commission, on April 5, 2000.

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9.  See Securities Exchange Act Release No. 40943 (January 13, 1999), 64 FR 3330 (January 21, 1999) (order approving the Series 25 Examination).

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10.  See Securities Exchange Act Release No. 42092 (November 2, 1999), 64 FR 61375 (November 10, 1999) (order approving the elimination of the Series 7B Examination and establishing the Series 7A Examination as the appropriate qualification examination for NYSE floor clerks).

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[FR Doc. 00-14723 Filed 6-9-00; 8:45 am]

BILLING CODE 8010-01-M