Federal Register: May 5, 2000 (Volume 65, Number 88)
DOCID: FR Doc 00-11255
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-42734; File No. SR-NASD-00-25]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by National Association of Securities Dealers, Inc. Relating to Extension of Time To Pass the Series 55 Examination, Equity Trader
DOCUMENT SUMMARY:
April 28, 2000.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on April 27, 2000, the National Association of
[[Page 26257]]
Securities Dealers, Inc. (``NASD'' or ``Association''), through its
whollyowned subsidiary, NASD Regulation, Inc. (``NASD Regulation'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by NASD Regulation. NASD
Regulation has designated this proposal as one constituting a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule under section
19(b)(3)(A)(i) of the Act and Rule 19b4(f)(1) thereunder, which
renders the rule effective upon the Commission's receipt of this
filing. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of The Terms of Substance of the Proposed Rule Change
NASD Regulation is proposing to amend NASD Rule 1032(f) to change
the date by which certain registered representatives who trade equity
securities in the Nasdaq Stock Market (``Nasdaq'') and/or overthe
counter must pass the Series 55 Examination. The text of the proposed
rule change is available at the offices of the NASD and at the Commission.
II. SelfRegulatory Organization's Statement of the Purpose of, And Statutory Basis for the Proposed Rule Change
In its filing with the Commission, NASD Regulation 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. NASD Regulation has prepared summaries, set
forth in sections A, B, and C below, of the most significant aspects of such statements.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 2, 1998, the SEC approved File No. SRNASD97221, which
proposed amending NASD Rule 1032 to add an additional category of
representative registration.\3\ Specifically, Rule 1032(f) requires
each registered representative who engages in proprietary or agency
trades of equities, preferred securities, or convertible debt
securities otherwise than on a securities exchange, or who directly
supervises such activities (i.e., functioning as an ``Equity Trader''),
to register as a Limited RepresentativeEquity Trader. In order to
register as a Limited RepresentativeEquity Trader, the representative
must be registered as a General Securities Representative (Series 7) or
as a Limited RepresentativeCorporate Securities (Series 62), and must
pass the Series 55 Examination.\4\ The rule contains an exemption for
representatives whose principal trading activities involve executing
orders on behalf of an affiliated investment company that is registered with the SEC under the Investment Company Act of 1940.
\3\ Securities Exchange Act Release No. 39516, 63 FR 1520 (January 9, 1998).
\4\ Representatives who have been ``grandfathered'' from taking
the Series 7 or the Series 62 Examinations will not be required to take either examination in order to take the Series 55.
Rule 1032 affords certain registered representatives a twoyear grace period, ending on May 1, 2000, to pass the Series 55 Examination. NASD Regulation believed this would provide such representatives sufficient time to pass the examination. Unfortunately, this has not been the case. It has come to NASD Regulation's attention that many registered representatives who are eligible for the twoyear grace period will not pass the Series 55 Examination by May 1, 2000. If the deadline is not extended, these registered persons will be forced to cease certain trading activities, which could cause disruptions at NASD member firms and could cause harm to customers. NASD Regulation does not believe the markets or customers will be served by a strict application of this deadline. Consequently, NASD Regulation is proposing to extend the grace period for passing the examination. NASD Regulation is proposing that registered representatives who were eligible for the twoyear grace period, but who failed to pass the Series 55 Examination, be given until October 1, 2000 to pass the examination. However, such representatives will not be permitted to function as Equity Traders after October 1, 2000 unless they receive passing scores on the Series 55 Examination.
2. Statutory Basis
NASD Regulation believes that the proposed rule change is
consistent with the provisions of section 15A(b)(6) of the Act,\5\
which requires, among other things, that the Association's rules must
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. NASD Regulation believes
that the failure to extend the deadline to pass the Series 55
Examination will cause disruptions at some NASD member firms and could
cause harm to customers. NASD Regulation does not believe the markets
or customers will be served by a strict application of this deadline. \5\ 17 CFR 240.15Aj1.
B. SelfRegulatory Organization's Statement on Burden on Competition
NASD Regulation represents that it does not believe that the
proposed rule change will result in any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act, as amended.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
NASD Regulation 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
The proposed rule change is effective upon filing pursuant to
section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)(1) \7\ thereunder,
in that the proposed rule change is a stated policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of an existing rule. At any time within 60 days of this
filing, the Commission may summarily abrogate this proposal if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f)(1).
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 205490609.
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
[[Page 26258]]
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 NASD. All
submissions should refer to File No. SRNASD0025 and should be submitted by May 26, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 0011255 Filed 50400; 8:45 am]
BILLING CODE 801001M
SUMMARY:
National Association of Securities Dealers, Inc.,
DOCUMENT BODY 2:
April 28, 2000.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b4 thereunder,\2\ notice is hereby given that on April 27, 2000, the National Association of
[[Page 26257]]
Securities Dealers, Inc. (``NASD'' or ``Association''), through its
whollyowned subsidiary, NASD Regulation, Inc. (``NASD Regulation'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by NASD Regulation. NASD
Regulation has designated this proposal as one constituting a stated
policy, practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule under section
19(b)(3)(A)(i) of the Act and Rule 19b4(f)(1) thereunder, which
renders the rule effective upon the Commission's receipt of this
filing. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of The Terms of Substance of the Proposed Rule Change
NASD Regulation is proposing to amend NASD Rule 1032(f) to change
the date by which certain registered representatives who trade equity
securities in the Nasdaq Stock Market (``Nasdaq'') and/or overthe
counter must pass the Series 55 Examination. The text of the proposed
rule change is available at the offices of the NASD and at the Commission.
II. SelfRegulatory Organization's Statement of the Purpose of, And Statutory Basis for the Proposed Rule Change
In its filing with the Commission, NASD Regulation 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. NASD Regulation has prepared summaries, set
forth in sections A, B, and C below, of the most significant aspects of such statements.
A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 2, 1998, the SEC approved File No. SRNASD97221, which
proposed amending NASD Rule 1032 to add an additional category of
representative registration.\3\ Specifically, Rule 1032(f) requires
each registered representative who engages in proprietary or agency
trades of equities, preferred securities, or convertible debt
securities otherwise than on a securities exchange, or who directly
supervises such activities (i.e., functioning as an ``Equity Trader''),
to register as a Limited RepresentativeEquity Trader. In order to
register as a Limited RepresentativeEquity Trader, the representative
must be registered as a General Securities Representative (Series 7) or
as a Limited RepresentativeCorporate Securities (Series 62), and must
pass the Series 55 Examination.\4\ The rule contains an exemption for
representatives whose principal trading activities involve executing
orders on behalf of an affiliated investment company that is registered with the SEC under the Investment Company Act of 1940.
\3\ Securities Exchange Act Release No. 39516, 63 FR 1520 (January 9, 1998).
\4\ Representatives who have been ``grandfathered'' from taking
the Series 7 or the Series 62 Examinations will not be required to take either examination in order to take the Series 55.
Rule 1032 affords certain registered representatives a twoyear grace period, ending on May 1, 2000, to pass the Series 55 Examination. NASD Regulation believed this would provide such representatives sufficient time to pass the examination. Unfortunately, this has not been the case. It has come to NASD Regulation's attention that many registered representatives who are eligible for the twoyear grace period will not pass the Series 55 Examination by May 1, 2000. If the deadline is not extended, these registered persons will be forced to cease certain trading activities, which could cause disruptions at NASD member firms and could cause harm to customers. NASD Regulation does not believe the markets or customers will be served by a strict application of this deadline. Consequently, NASD Regulation is proposing to extend the grace period for passing the examination. NASD Regulation is proposing that registered representatives who were eligible for the twoyear grace period, but who failed to pass the Series 55 Examination, be given until October 1, 2000 to pass the examination. However, such representatives will not be permitted to function as Equity Traders after October 1, 2000 unless they receive passing scores on the Series 55 Examination.
2. Statutory Basis
NASD Regulation believes that the proposed rule change is
consistent with the provisions of section 15A(b)(6) of the Act,\5\
which requires, among other things, that the Association's rules must
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. NASD Regulation believes
that the failure to extend the deadline to pass the Series 55
Examination will cause disruptions at some NASD member firms and could
cause harm to customers. NASD Regulation does not believe the markets
or customers will be served by a strict application of this deadline. \5\ 17 CFR 240.15Aj1.
B. SelfRegulatory Organization's Statement on Burden on Competition
NASD Regulation represents that it does not believe that the
proposed rule change will result in any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act, as amended.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
NASD Regulation 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
The proposed rule change is effective upon filing pursuant to
section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)(1) \7\ thereunder,
in that the proposed rule change is a stated policy, practice, or
interpretation with respect to the meaning, administration, or
enforcement of an existing rule. At any time within 60 days of this
filing, the Commission may summarily abrogate this proposal if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f)(1).
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 205490609.
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
[[Page 26258]]
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 NASD. All
submissions should refer to File No. SRNASD0025 and should be submitted by May 26, 2000.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 0011255 Filed 50400; 8:45 am]
BILLING CODE 801001M