Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of a Proposed Rule Change Relating to Examination Specifications for the General Securities Registered Representative (Series 7) Examination

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34341; File No. SR-NYSE-94-26]

Self-Regulatory Organizations; New York Stock Exchange, Inc.;

Notice of Filing of a Proposed Rule Change Relating to Examination

Specifications for the General Securities Registered Representative

(Series 7) Examination

July 8, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''),\1\ Notice is hereby given that on June 30, 1994, 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 primarily by NYSE. 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) (1988).

---------------------------------------------------------------------------

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

of the Proposed Rule Change

NYSE has filed the Examination Specifications for the General

Securities Registered Representative (Series 7) Examination (``Series

7'') and seeks approval for the Series 7 examination.

II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, NYSE included statements

concerning the purpose of and basis for the proposed rule change. The

text of these statements may be examined at the places specified in

Item IV below. 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

Statutory Basis for, the Proposed Rule Change

(a) Purpose

The purpose of the proposed rule change is to revise, update and

seek approval for the Series 7 examination and specifications. The

Series 7 examination was created in 1974 as an industry-wide

qualification examination for persons seeking registration as general

securities representatives. The Series 7 examination is generally

required under rules of the self-regulatory organizations (``SROs'')

for persons who are engaged in the solicitation, purchase and/or sale

of securities for the accounts of customers. The purpose of the Series

7 examination is to ensure that registered representatives have the

basic knowledge necessary to perform their functions and

responsibilities. The Series 7 examination specifications detail the

areas covered by the examination and break down the number of

examination questions culled from each area.

Revision of the Series 7 examination and specifications was

initiated in April 1993 by an industry committee of SROs and

representatives from broker-dealers in order to update the examination

in view of changes in the securities industry, including changes in

relevant rules and regulations, the development of new securities

products, and changes in the job of registered representatives as firms

offer an increasingly wide range of financial services.\2\ The

examination specifications for the Series 7 have not been revised since

1986.

---------------------------------------------------------------------------

\2\SROs on the committee include NYSE, American Stock Exchange,

Chicago Board Options Exchange, Municipal Securities Rulemaking

Board, National Association of Securities Dealers and Philadelphia

Stock Exchange. Broker-dealer representatives include branch office

managers, compliance officers, training personnel and registered

representatives.

---------------------------------------------------------------------------

The industry committee updated the existing statements of the

critical functions of registered representatives to ensure current

relevances and appropriateness and drafted statements of tasks expected

to be performed by entry-level registered representatives. Under the

proposed rule change, the total number of questions in the Series 7

examination will remain 250, and the revised examination will cover all

financial product areas covered by the present Series 7 examination as

well as several new products, including collateralized mortgage

obligations (``CMOs''), long term equity anticipation securities

(``LEAPS'') and CAPS, with reduced emphasis on direct participation

programs.

Under the proposed rule change, NYSE will appoint a committee to

review the Series 7 Content Outline and specifications periodically to

determine any adjustments that may be required. The committee will

represent a broad range of expertise, such as practicing registered

representatives, branch managers, compliance officers, training

personnel, and SRO representatives. The review will address any new

information that registered representatives need to know, information

currently specified in the examination that may require deletion and

any adjustments that need to be made in the emphasis on various topics.

The other SRO participants will also file the revised

specifications for approval by the Commission. NYSE intends to commence

use of the revised examination and specifications ninety days after

approval by the Commission.

(b) Statutory Basis

The statutory basis for the Series 7 examination lies in Section

6(c)(3)(B) 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. Pursuant to this statutory obligation, the Exchange has

developed examinations that are administered to establish that persons

associated with Exchange members and member organizations have attained

specified levels of competence and knowledge.

B. Self-Regulatory Organization's Statement on Burden on Competition

NYSE believes that the proposal does not 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 thirty-five 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 ninety 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 self-regulatory organization 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. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. 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 Section, 450 Fifth Street NW.,

Washington, DC 20549. Copies of such filing will also be available for

inspection and copying at the principal office of the above-referenced

self-regulatory organization. All submissions should refer to File No.

SR-NYSE-94-26 and should be submitted by August 4, 1994.

For the Commission by the Division of Market Regulation,

pursuant to delegated authority.3

---------------------------------------------------------------------------

\3\17 CFR 200.30-3(a)(12) (1992).

---------------------------------------------------------------------------

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-17097 Filed 7-13-94; 8:45 am]

BILLING CODE 8010-01-M