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Notice

Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto by the New York Stock Exchange, Inc. To Amend the Interpretation of NYSE Rule 345A (“Continuing Education for Registered Persons”)

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Information about this document as published in the Federal Register.

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Start Preamble July 10, 2003.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] notice is hereby given that on December 16, 2002, the New York Stock Exchange, Inc. (“NYSE” or “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 prepared by the Exchange. On June 11, 2003, the NYSE filed Amendment No. 1 to the proposed rule change. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.

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

The proposed Interpretation of NYSE Rule 345A (“Continuing Education for Registered Persons”) would require registered persons to complete a Firm Element Continuing Education Program, prior to December 31, 2006, or pass a qualification exam module prior to selling security futures contracts or Start Printed Page 42448supervising such activity. The text of the proposed rule change is available at the Office of the Secretary, the NYSE and at the Commission.

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 IV below. The 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 the Statutory Basis for, the Proposed Rule Change

1. Purpose

The Commodity Futures Modernization Act of 2000 permits the trading of security futures, subject to joint regulation by the Commission and the Commodity Futures Trading Commission. Since security futures contracts are new and unfamiliar to a majority of securities-registered persons, the Exchange, in coordination with other securities and futures self-regulatory organizations (“SROs”), is in the process of developing regulatory requirements for the registration and qualification of persons engaged in security futures contracts sales and supervision activities.

In order to engage in securities sales activity, a person must be registered and qualified as a General Securities Registered Representative (Series 7 Examination). Supervision of such activity requires registration and qualification as a General Securities Sales Supervisor (Series 9/10 Examination) or by way of another examination acceptable to the Exchange (e.g., the Series 24 Examination).

These qualification examinations do not, however, cover security futures contracts in sufficient depth or detail to provide an adequate level of competence for registrants who wish to effect transactions or supervise such transactions in the security futures market. A qualification examination specific to security futures is currently under development by the SROs. In the interim, staff of the SROs and the Commission have agreed upon an industry-wide requirement that completion of a prescribed continuing education program be prerequisite to the sale or supervision of security futures contracts.

Consistent with this initiative, the Exchange proposes an Interpretation to NYSE Rule 345A that would require completion of a Firm Element continuing education program, prior to December 31, 2006, as a prerequisite to either selling security futures contracts or supervising such activity. The Interpretation would require the program to impart sufficient knowledge of, and proficiency in, security futures contracts to enable the responsible conduct of assigned functions.

The program would be subject to the standard Firm Element requirements prescribed in NYSE Rule 345A, including a needs analysis, a content outline, and documentation of participants who attend and complete the program. Prescribed subject area coverage is provided in a Content Outline developed by the Exchange.

Upon the implementation of a Security Futures Contracts qualification examination module, persons not already qualified as General Securities Registered Representatives must pass the qualification examination module in order to engage in or supervise Security Futures Contracts activity. Persons qualified as General Securities Registered Representatives prior to the time such qualification examination module is implemented may, prior to December 31, 2006, complete an appropriate Firm Element continuing education program in lieu of passing the qualification examination.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the requirements of section 6(c)(3)(A) [3] of the Act. Under that section, it is the Exchange's responsibility to prescribe standards of training, experience and competence for persons associated with Exchange members and member organizations.

In addition, the Exchange believes that under section 6(c)(3)(B) of the Act,[4] the Exchange may bar a natural person from becoming a member or person associated with a member or member organization if such natural person does not meet such standards of training, experience and competence as are prescribed by the rules of the Exchange.

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

Comments were neither solicited nor received.

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, 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 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 NYSE. All submissions should refer to the File No. SR-NYSE-2002-64 and should be submitted by August 7, 2003.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[5]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

[FR Doc. 03-18127 Filed 7-16-03; 8:45 am]

BILLING CODE 8010-01-P