[Federal Register: July 28, 1999 (Volume 64, Number 144)] [Notices] [Page 40928-40929] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr28jy99-123] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-41626; File No. SR-NYSE-99-19] Self-Regulatory Organization; Order Approving Proposed Rule Change by the New York Stock Exchange, Inc. To Adopt a New Interpretation of Rule 35 (``Floor Employees To Be Registered'') July 20, 1999. I. Introduction On May 14, 1999, the New York Stock Exchange, Inc. (``Exchange'') filed with the Securities and Exchange Commission (``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 to adopt a new interpretation of Exchange Rule 35 (``Floor Employees to be Registered''). The proposed rule change was published for comment in the Federal Register on June 18, 1999.\3\ The Commission did not receive any comments on the proposal. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ Securities Exchange Act Release No. 41514 (June 10, 1999), 64 FR 32912 (June 18, 1999). --------------------------------------------------------------------------- II. Description of the Proposal The purpose of the proposed new interpretation of Rule 35 is to prescribe the qualification requirements (i.e., training and examination) for Front Line Specialist Clerks (``FLS Clerks''). In addition to dictating the terms under which employees of members or member organizations may be admitted to the Exchange Trading Floor, Rule 35 mandates compliance by both employer and employee with such requirements as the Exchange may determine. The proposed interpretation of Rule 35 will require FLS Clerks to pass a new examination, developed by the Exchange in cooperation with a committee of Floor representatives (members, Specialists, and FLS Clerks) called the Front Line Specialist Clerk Qualification Examination (``Series 21''). The examination is intended to ensure that FLS Clerks have the basic knowledge and skills necessary to perform their duties, which include assisting Floor Specialists. The Series 21 examination is a 90-minute test consisting of 65 questions. The examination covers such topics as preparing for the market opening, opening the display book, preparing for the market close, and generating trade reports. Though the requirement to take and pass the proposed Series 21 examination will apply to all prospective and current FLS Clerks, qualification requirements will differ as follows: Prospective FLS Clerks Individuals not currently functioning as FLS Clerks will be required to pass the Series 25 qualifying examination as a prerequisite to taking the Series 21 examination. Upon passing the Series 25, the prospective FLS Clerk must complete a training program to become eligible for the Series 21 examination. The training program shall consist of a minimum of six months of ``on-the-job'' experience with a Specialist under a supervisory program to be determined by the Specialist. All candidates must pass the Series 21 examination before functioning as an unsupervised FLS Clerk, i.e., functioning without the specialized supervision require during the training period. Current FLS Clerks Individuals who are currently functioning as FLS Clerks will be required to pass the Series 21 examination within one year of its implementation. The Series 25 examination (Trading Assistant Qualification Examination) is a prerequisite to taking the Series 21 examination, but no training program will be required for these individuals since they already are acting in the capacity of FLS Clerks. III. Discussion The Commission finds that the require is consistent with the requirements of the Act and the rules and required thereunder applicable to a national securities exchange.\4\ In particular, the Commission finds that the proposed rule change is consistent with the requirements of Section [[Page 40929]] 6(c)(3)(B) of the Act,\5\ which provides that the Exchange may bar a natural person from becoming a member or person associated with a member, if such natural person does not meet such standards of training, experience, and competence as are prescribed by the rules of the Exchange. The Commission finds that requiring the FLS Clerks to take the Series 21 examination and to under on-the-job training is consistent with Section 6(c)(3)(B) because it provides the Exchange with a means to measure an FLS Clerk's ability and qualifications and to ensure that the Clerks are trained in an on-the-job setting. The Series 21 Examination covers such topics as preparing for the market opening, operating the display book, preparing for the market close, and generating trade reports, all topics designed to measure the Clerk's ability to perform his or her assigned tasks. Requiring all current and future FLS Clerks to pass the Series 21 Examination will help ensure that they are adequately trained and qualified to perform their duties competently. --------------------------------------------------------------------------- \4\ In approving the proposed rule change, the Commission also has considered the proposal's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). \5\ 15 U.S.C. 78f(c)(3)(B). --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\6\ that the proposed rule change (SR-NYSE-99-19) is approved. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\7\ --------------------------------------------------------------------------- \7\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jonathan G. Katz, Secretary. [FR Doc. 99-19266 Filed 7-27-99; 8:45 am] BILLING CODE 8010-01-M