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Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the New York Stock Exchange, Inc. Relating to Amendment of Rule 342 (“Offices-Approval, Supervision and Control”)

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Start Preamble July 25, 2001.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)[1] , and Rule 19b-4 [2] thereunder, notice is hereby given that on May 15, 2001, the New York Stock Exchange, Inc. 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 prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

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

The proposed rule change consists of amendments with respect to the meaning and administration of existing Exchange Rule 342.13(b) (“Acceptability of Supervisors”). Amendments to Rule 342.13(b) will rescind the requirement that Compliance Official candidates take the General Securities Sales Supervisor Qualification Examination (Series 9/10), as a prerequisite to the Compliance Official Qualification Examination (Series 14), if the member or member organization does business with the public. It is believed that this is a duplicative requirement since both the Compliance Official Qualification Examination (Series 14) and the General Securities Sales Supervisor Qualification Examination (Series 9/10) contain similar material.

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 self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization 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 purpose of the proposed rule change is to amend Rule 342.13(b) to rescind the requirement that Compliance Official candidates take the General Securities Sales Supervisor Qualification Examination (Series 9/10), if the member or member organization does business with the public. Compliance Official candidates will continue to be required to take and pass the Compliance Official Qualification Examination (Series 14).

Background. In 1989, the Compliance Official Qualification Examination (Series 14) was adopted [3] as a qualification requirement for Compliance Supervisors. Rule 342.13(b) was amended to require that “each member not associated with a member organization and in the case of a member organization, the person (or persons) designated to direct day-to-day compliance activity (such as the Compliance Officer, Partner or Director) and each person at the member organization directly supervising ten or more persons engaged in compliance activity should have overall knowledge of the securities laws and Exchange rules and must pass the Compliance Official Qualification Examination.” In addition, if the member or member organization does business with the public, the Compliance Official candidate must also first pass the General Securities Sales Supervisor Qualification Examination (Series 9/10). The Series 9/10 examination was formerly known as the Series 8 examination.

Proposed Amendment of Rule 342.13(b). Recently, the Exchange sought industry input and recommendations with respect to various qualifications and examination requirements. One recommendation that emerged from this process is to amend Rule 342.13(b) to rescind the prerequisite that Compliance Official candidates from members or member organizations doing a public business be required to take the General Securities Sales Supervisor Qualification Examination.

The Exchange believes that requiring the prerequisite is a duplicative requirement since both the Compliance Official Qualification Examination (Series 14) and the General Securities Sales Supervisor Qualification Examination (Series 9/10) contain substantially similar material (e.g,) both exams cover sales practices, general supervision, credit regulation, capital requirements, trading practices and compliance responsibilities. The major difference is that the Series 9/10 contains more comprehensive coverage of options and municipal securities but these subjects are covered by other exams (e.g.,) Series 4—Registered Options Principal and Series 53—Municipal Securities Principal that would be required of personnel involved in supervising those activities.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, with the requirements of sections 6(b)(5) and 6(c)(3)(B) of the Act.[4] Section 6(b)(5) [5] requires, among other things, that the rules of an exchange be designed 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 prescribe standards of training, experience and competence for persons associated with Exchange members and member organizations.

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Under section 6(c)(3)(B) of the Act,[6] it is the Exchange's responsibility to prescribe standards of training, experience and competence for persons associated with Exchange members and member organizations.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange believes that the proposal does not impose any burden on competition 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 with respect to the proposed rule change were neither solicited nor received.

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

Within 35 days of the 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 self-regulatory organization 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, NW., Washington, DC 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 in the Commission's Public Reference Room. Copies of the filing will also be available for inspection and copying at the principal office of the NYSE. All submissions should refer to File No. SR-NYSE-2001-11 and should be submitted by August 22, 2001.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority, 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Securities Exchange Act Release No. 27019, July 11, 1989; 54 FR 30127 (July 18, 1989).

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4.  15 U.S.C. 78f(b)(5) and 15 U.S.C. 78f(c)(3)(B).

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[FR Doc. 01-19095 Filed 7-31-01; 8:45 am]

BILLING CODE 8010-01-M