[Federal Register: June 25, 2003 (Volume 68, Number 122)]
[Notices]
[Page 37882-37884]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn03-96]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48041; File No. SR-AMEX-2003-06]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 by the American Stock Exchange LLC Relating
to Mandatory Continuing Education for All Floor Members and Mandatory
Continuing Education and Initial Test Requirements for Floor Clerks of
Members and Member Firms
June 17, 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 February 3, 2003, the American Stock Exchange LLC (``Amex'' 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 Amex. On May 21,
2003, the Amex amended the proposed rule change.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Letter from Ivonne L. Natal, Associate General Counsel,
Amex, to Katherine A. England, Assistant Director, Division of
Market Regulation, Commission, dated May 20, 2003 (``Amendment No.
1''). In Amendment No. 1, the Exchange replaced the original filing
in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt Amex Rule 359 (Mandatory Continuing
Education for all Floor Members and Mandatory Continuing Education and
Initial Test Requirements for Floor Clerks of Members and Member Firms)
to ensure that Floor members are regularly apprised of critical
regulatory and operational issues affecting the Exchange and that all
other individuals affiliated with members or member organizations, and
necessary for the transaction of business on the Amex trading floor,
demonstrate a basic understanding of the auction market, as well as an
understanding of the critical regulatory and operational issues
affecting the Exchange in particular, and the securities industry in
general. Below is the text of the proposed rule change. Proposed new
text is italicized.
* * * * *
Mandatory Continuing Education for all Floor Members and Mandatory
Continuing Education and Initial Test Requirements for Floor Clerks of
Members and Member Firms.
Rule 359. All regular and options principal members, limited
trading permit holders, their clerks (post, booth and DK) active in the
business of the Exchange trading floor will be required to participate
in the Exchange-sponsored mandatory continuing education program to be
conducted annually and at such other times as the Exchange deems
appropriate. Any individual who fails to attend a mandatory continuing
education program will be subject to disciplinary action under the
Exchange's Minor Rule Violation Fine System.
Additionally, all floor clerks, with no previous trading floor
experience (other than those performing strictly ministerial functions)
who are employed after the adoption of this rule will be subject to the
training and are required to pass a qualifying exam; and all specialist
clerks, with no previous trading floor experience, who are employed
after the adoption of this rule, will be subject to additional training
and an additional qualifying exam.
The Exchange will levy a per program fee as indicated in its
Schedule of Fees for each participant (members and clerks) in any of
the continuing education and testing programs.
* * * * *
Amex Price List
Member Fees
I. Membership Dues
No change.
II. Initiation Fees
No change.
III. Membership Fees
No change.
IV. Examination Fees
No change.
V. Continuing Education Fees
$50.00 per participant/per year
Notes: No change.
* * * * *
[[Page 37883]]
Minor Rule Violation Fine System
Part 1
General Rule Violations
Rule 590. (a) through (f)--No change.
(g) The following is a list of the rule violations and applicable
fines that may be imposed by the Exchange's Enforcement Department
pursuant to Part 1 of this Rule.
1.-13. No change.
14. Failure to attend mandatory continuing education as required by
Rule 359.
(h) No change.
* * * * *
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 Amex 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
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
In order to protect public customers and maintain its competitive
position, the Exchange believes that it needs to ensure that all
individuals active in the transaction of business on the Amex trading
floor demonstrate a basic understanding of the auction market. While an
examination is required before an Exchange member may conduct business
on the Floor of the Exchange, no such initial requirement currently
exists for those members' clerks who perform a critical role in the
conduct of that business. For these same reasons, and particularly in
this age of rapid and continuous change and diversity in innovative
securities products, the Exchange states that it needs to ensure that
individuals on the Amex trading floor continue to possess this basic
understanding of the auction market, as well as an understanding of the
critical regulatory and operational issues affecting the Exchange in
particular, and the securities industry in general.
The continuing education needs of the securities industry were
studied in 1993 by the Securities Industry Task Force on Continuing
Education. The Task Force released a report recommending mandatory
continuing education for registered representatives. In 1999, the New
York Stock Exchange (the ``NYSE'') instituted a semiannual program of
continuing education for its floor members. That same year, with SEC
approval, the NYSE amended its Rule 35 implementing training and
qualification requirements for floor employees of members or member
organizations, including a new Trading Assistant Qualification
Examination (Series 25). The NYSE also required that Front Line
Specialist Clerk candidates submit to a six-month, specialist-
supervised, on-the-job training period and, thereafter, pass the Series
21 examination, before being permitted to function as a Front Line
Specialist Clerk. Most recently, in June 2000, the SEC approved
amendments to NYSE Rule 103A making mandatory the periodic (i.e.,
semiannual ``and at such other times as may be necessary'') training of
all NYSE floor members.
The Exchange believes that mandatory continuing education should be
an integral part of an efficient trading floor operation. Consequently,
we are proposing that newly hired floor clerks (other than those
performing strictly ministerial functions) with no previous floor
experience, be tested within a three-month on-the-job training period
to ensure that they can properly perform their functions on the trading
floor. The training period should be sufficient for an individual to
learn the basic systems and regulations needed to function effectively
as a member firm clerk.
The Exchange further proposes that an additional level of training
and testing be required for newly-hired specialist clerks, with no
previous experience as specialists or specialist clerks. In order to
qualify as a specialist clerk, a candidate must, first, have either
floor experience or be subject to the training and exam requirement of
a floor clerk. In addition, a specialist clerk candidate will be
required to have on-the-job and classroom training specifically related
to the job of specialist clerk. The specialist clerk training would not
exceed three months, which could be concurrent with or consecutive to
any floor clerk training required by the candidate.
Continuing education for members and their floor employees is both
necessary and beneficial. The needs of the Amex, however, are, in some
ways, unique. Accordingly, the Exchange is proposing an annual,
mandatory continuing education program for members and their employees.
However, Exchange staff would be authorized to schedule additional
mandatory educational sessions at such other times as it deems
necessary and/or appropriate. These additional mandatory sessions could
be of a general nature for all members and member firm personnel, or
they could be tailored to address the needs of a specific group, e.g.,
as with the introduction of a new product or in a specific situation
where only certain members could effect transactions and for which
particular expertise is required.
The Exchange proposes to include the failure to attend a mandatory
continuing education session in the General Rule Violations section of
the Exchange's Minor Rule Violation Fine Systems, under which a fine
may be imposed by the Exchange's Enforcement Department for failure to
attend a mandatory continuing education session.
In order to finance the development and implementation of an
effective continuing education and testing program, the Exchange
proposes to levy an annual fee for each participant (members and
clerks) in any of the programs. On approval of Amex Rule 359, the fee
will be set at $50. This fee will be incorporated in the Amex Fee
Schedule (Price List) and may be changed from time to time in the same
manner as other Amex fees are revised.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with section 6(b) of the Act \4\ in general and furthers the
objectives of sections 6(b)(4) and (5) in particular,\5\ in that it is
designed to (i) provide for the equitable allocation of reasonable
dues, fees, and other charges among its members and issuers and other
persons using its facilities, and (ii) remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
The proposed rule change is designed to ensure that Floor members are
regularly apprised of critical regulatory and operational issues
affecting the Exchange and that all other individuals affiliated with
members and member organizations, and necessary for the transaction of
business on the Exchange trading floor, demonstrate a basic
understanding of the auction market as well as the critical regulatory
and operational issues affecting the Exchange in particular, and the
securities industry in general.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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[[Page 37884]]
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 has neither solicited nor received 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 Amex consents, the Commission will:
(A) By order approve the 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, as amended, 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 such
filing will also be available for inspection and copying at the
principal office of the Amex. All submissions should refer to File No.
SR-AMEX-2003-06 and should be submitted by July 16, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-16011 Filed 6-24-03; 8:45 am]
BILLING CODE 8010-01-P