Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by New York Stock Exchange, Inc., Relating to Amendments to Rule 325

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34924; File No. SR-NYSE-94-31]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by New York Stock Exchange, Inc., Relating to Amendments to Rule

325

November 1, 1994.

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

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on

September 13, 1994, the New York Stock Exchange, Inc. (``NYSE'' or

``Exchange'') filed with the Securities and Exchange Commission

(``Commission'' or ``SEC'') the proposed rule change as described in

Items I, II and III below, which Items have been prepared by the self-

regulatory organization.\1\ The Commission is publishing this notice to

solicit comments on the proposed rule change from interested persons.

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\1\On October 27, 1994, the NYSE filed an amendment clarifying

the term ``tentative net capital.'' The amendment also referenced

Rule 15c3-1 under the Act.

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

of the Proposed Rule Change

The purpose of this proposed rule change is to amend Rule 325 to

require written notification to the Exchange within forty-eight hours

of significant decreases in tentative net capital of members and member

organizations. The text of the proposed rule follows (italics reflects

proposed additions to the Rules):

Capital Requirements for Individual Members and Member Organizations

General Provisions

Rule 325(a) Each member or member organization subject to Rule

15c3-1 promulgated under the Securities Exchange Act of 1934 shall

comply with the capital requirements prescribed therein and with the

additional requirements of this Rule 325.

(b)(1) Each member or member organization subject to this Rule

shall forthwith notify the Exchange if his or its net capital after

deduction of all capital withdrawals including maturities, if any

scheduled during the next six months, falls below the pertinent

percentage indicated below:

1. If the net capital minimum dollar amount requirement is

applicable--150 percent thereof or some greater percentage as may from

time to time be designated by the Exchange, or

2. If the ratio of aggregate indebtedness to net capital is

applicable--10 percent of aggregate indebtedness, or

3. If the alternative net capital requirement percentage is

applicable, the greater of 5% of the aggregate debit items in the

Formula for Determination of Reserve Requirements for Brokers and

Dealers under SEC Rule 15c3-3, or, if registered as a Futures

Commission Merchant, 7% of the funds required to be segregated pursuant

to the Commodity Exchange Act and the regulations thereunder.

(2) Each member or member organization shall within forty-eight

hours notify the Exchange, in writing, whenever tentative net capital

(net capital before application of haircuts and undue concentration

charges), as computed under Securities Exchange Act Rule 15c3-1 has

declined 20% or more from the amount reported in the most recent FOCUS

Report with the Exchange.

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 self-regulatory organization

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 self-regulatory organization

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

The proposed rule change concerns an amendment to Rule 325 that

requires members and member organizations to provide written

notification to the Exchange within forty-eight hours if tentative net

capital (net capital before application of haircuts and undue

concentration charges) has declined 20% or more from the amount

reported in the most recent FOCUS Report filed with the Exchange.

Currently, some member organizations (e.g., broker-dealers that

carry customer accounts) file financial reports on a monthly basis and

other member organizations file on a quarterly basis. In both

instances, the filing dates are several weeks after the date that the

financial information in the reports is prepared.

Consequently, the Exchange believes that there is a need for

monitoring of significant changes in an organization's financial

condition between the reporting dates through a requirement for more

immediate notification of significant declines in tentative net

capital.

2. Statutory Basis

The proposed rule change is consistent with Section 6(b)(5) of the

Securities Exchange Act of 1934 (``Act'') in that it protects investors

and the public interest by ensuring that member organizations comply

with certain prescribed minimum financial standards.

The proposed change is also consistent with Section 6(c)(3)(A) of

the Act which permits a national securities exchange to condition the

membership of a broker or dealer that does not meet such standards of

financial responsibility as are prescribed by the rules of the

Exchange.

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 publication of this notice in the Federal

Register or within such other 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 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, N.W., Washington, D.C. 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 at 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 NYSE. All

submissions should refer to File No. SR-NYSE-94-31 and should be

submitted by November 29, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-27563 Filed 11-7-94; 8:45 am]

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