[Federal Register: February 16, 1999 (Volume 64, Number 30)] [Notices] [Page 7680-7681] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr16fe99-116] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-41021; File No. SR-NYSE-98-44] Self-Regulatory Organizations; New York Stock Exchange, Incorporated; Order Approving Proposed Rule Change Regarding an Interpretation With Respect to Rule 344 (``Supervisory Analysts'') February 4, 1999. I. Introduction On December 3, 1998, the New York Stock Exchange, Inc. (``NYSE'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change amending an interpretation regarding the meaning and administration of NYSE Rule 344 (``Supervisory Analysts''). Notice of the proposal appeared in the Federal Register on December 30, 1998.\3\ The Commission received no comments on the proposal. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 17 CFR 240.19b-4. \2\ 15 U.S.C. 78s(b)(1). \3\ Securities Exchange Act Release No. 40812 (December 21, 1998), 63 FR 71991 (December 30, 1998). --------------------------------------------------------------------------- II. Description of Proposal The Exchange proposed to amend an interpretation concerning the meaning and administration of NYSE Rule 344. NYSE Rule 344 establishes standards for qualification of candidates for Supervisory Analyst designation at member organizations. The Exchange intends to publish the interpretation as an Interpretation Memorandum for inclusion in the Exchange's Interpretation Handbook. Research reports issued by a member organization must, under the provisions of NYSE Rule 472(b) (``Communications with the Public''), be prepared or approved by a Supervisory Analyst. NYSE Rule 344 requires that, to be approved by the Exchange, Supervisory Analysts must provide evidence of ``appropriate experience'' and pass the Supervisory Analyst (Examination (the ``Series 16 Examination'') or complete the Chartered Financial Analysts Level I Examination and pass Part I of the Series 16 Examination. The examination consists of two parts: Part I, Regulatory Administration, and Part II, Review of Security Analysis. Currently, the interpretation of NYSE Rule 344 requires Supervisory Analyst candidates to have ``at least three years prior experience as a securities analyst.'' The interpretation, as amended, requires Supervisory Analyst candidates to have ``at least three years experience, within the most recent six years, involving securities or financial analysis.'' The Exchange will continue to require candidates for the Supervisory Analyst designation to pass the Series 16 Examination. The Exchange also proposed to include in the interpretation the following as examples of appropriate experience: (1) Equity or fixed income research analyst; (2) credit analyst for a securities rating agency; (3) supervising preparation of materials prepared by financial/ securities analysts; (4) financial analytical experience gained at banks, insurance companies or other financial institutions; and (5) academic experience relating to the financial/securities markets/ industry. III. Discussion After careful review, 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 \4\ and, in particular, [[Page 7681]] the requirements of Section 6 and the rules and regulations thereunder.\5\ The Commission believes that the proposal is consistent with the provisions of Section 6(c)(3)(B) of the Act \6\ providing that an exchange may examine and verify the qualifications of an applicant to become a person associated with a member in accordance with procedures established by the rules of the exchange and that an exchange may bar a natural person from becoming a member or person associated with a member, if such person does not meet such standards of training, experience, and competence as are prescribed by the rules of the exchange. --------------------------------------------------------------------------- \4\ In approving this rule, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). \5\ 15 U.S.C. 78f. \6\ 15 U.S.C. 78f(c)(3)(B). --------------------------------------------------------------------------- The Commission believes the Exchange has developed standards to help ensure that persons associated with Exchange members and member organizations as Supervisory Analysts are appropriately qualified and experienced to approve communications with the public. The Exchange represents that requiring three years experience as a ``securities analyst'' is too restrictive in light of the current business environment. Because the role of Supervisory analyst has changed to consist primarily of reviewing research reports prepared by others, as opposed to, the preparation of research reports, ``appropriate experience'' need not be limited to exclusively experience as a ``securities analyst.'' The Commission believes that expanding the definition of industry experience as set forth in the proposal is consistent with the requirements of the Act. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\7\ that the proposed rule change (SR-NYSE-98-44) is approved. \7\ 15 U.S.C. 78s(b)(2). --------------------------------------------------------------------------- For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\ --------------------------------------------------------------------------- \8\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-3667 Filed 2-12-99; 8:45 am] BILLING CODE 8010-01-M