Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the New York Stock Exchange, Inc. to Amend Rule 35 (``Floor Employees To Be Registered'') and Adopt a New Interpretation to Rule 35

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40720; File No. SR-NYSE-98-36]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the New York Stock Exchange, Inc. to Amend Rule 35 (``Floor

Employees To Be Registered'') and Adopt a New Interpretation to Rule 35

November 30, 1998.

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

1934,\1\ (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given

that on October 22, 1998, the New York Stock Exchange, Inc. (``NYSE''

or ``Exchange'') 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 the NYSE.

The Commission is publishing this notice to solicit comments on the

proposed rule change from interested persons.

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\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

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

Substance of the Proposed Rule Change

The proposed rule change consists of an amendment to Exchange Rule

35 (``Floor Employees to be Registered'') and a new interpretation with

respect to the administration of proposed amended Rule 35. The text of

the proposed rule is as follows. Additions are italicized; deletions

are [bracketed].

Proposed Amendments to Rule 35

Floor Employees To Be Registered

Rule 35. No employee of a member or member organization shall be

admitted to the Floor unless he is registered with, qualified by and

approved by the Exchange, and upon compliance of both the employer

and employee with such requirements as the Exchange may determine.

Supplementary Material

.10-.50 No Change

.60 Qualifications for Registration--Unless otherwise determined

by the Exchange, each candidate for registration shall qualify by

meeting the training requirements and by passing applicable

qualification examination(s) as prescribed by the Exchange.

[.60] .70 No Change in Text

Proposed New Interpretation to Rule 35

Rule 35--Floor Employees to be Registered

/01 Unless otherwise determined by the Exchange, all Floor

employees of members or member organizations (i.e., Trading

Assistants) shall pass the Trading Assistant Qualification

Examination (``Series 25'').

New Trading Assistant candidates must complete three months of

training, including on-the-job and classroom training, as prescribed

by the Exchange, prior to taking the Series 25 Examination. During

the three month training period, the Trading Assistant candidate may

perform the functions and duties of a Trading Assistant provided

that the candidate is properly supervised. However, a new Trading

Assistant candidate must complete required training and pass the

Series 25 Examination before functioning as an ``unsupervised''

Trading Assistant (i.e., functioning without the specialized

supervision required during the training period).

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 Exchange 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 and is set forth in sections A, B, and C below.

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

Statutory Basis for, the Prosed Rule Change

1. Purpose

The purpose of the rule change is to revise Rule 35 to require

Floor employees of members and member organizations to satisfy

prescribed training and qualification examination requirements before

being admitted to the Exchange Trading Floor. The proposed rule change

will also adopt a new interpretation to Rule 35 to implement the

qualification examination requirements for Floor Employees.

Exchange Rule 35 dictates the terms under which an employee of a

member or member organization may be admitted to the Exchange Trading

Floor. Currently, the registration process for such Floor employees

i.e., Post Clerks and Booth Clerks, also known as Trading Assistants,

consists of submission to the Exchange of a completed Form U-4

(``Uniform Application for Securities Industry Registration or

Transfer'') and the candidate's fingerprints. Under the proposed

amendments to Rule 35, these Trading Assistants, will have to be

qualified by taking and passing appropriate qualification

examination(s) and by meeting prescribed training requirements.

In order to qualify Trading Assistants, the Exchange, in

conjunction with a committee of Exchange Members and Trading

Assistants, developed a new qualification examination, the Trading

Assistant Qualification Examination (``Series 25 Examination''). The

Series 25 Examination will ensue that Trading Assistants have the basic

knowledge, skills and abilities necessary to perform the functions and

carry out the responsibilities of a Trading Assistant. The Series 25

Examination itself is the subject of a separate filing.\3\

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\3\ Securities Exchange Act Release No. 40721 (November 30,

1998).

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The requirement to take and pass the Series 25 examination in order

to qualify as a Trading Assistant will apply to all current and

prospective Trading Assistants. The proposed new interpretation to Rule

35 will establish that new Trading Assistants will be required to

undergo three months of training (including on-the-job and prescribed

classroom instruction provided by the Exchange) prior to taking the

examination. New Trading Assistants will not be permitted to perform

their functions without appropriate supervision until passing the

examination. Current Trading Assistants would have one year from

implementation of the qualification requirement to pass the examination

and do not have to complete classroom training. If a current Trading

Assistant fails the Series 25 examination twice, however, he or she

must complete classroom training before retaking the examination. The

NYSE intends to publish the new interpretation as an Interpretation

Memorandum for inclusion in the Exchange's Interpretation Handbook.

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with

the requirements of Section 6(c)(3)(B) of the Act.\4\ Under that

Section, it is the Exchange's responsibility to prescribe standards of

training, experience and

[[Page 67970]]

competence for persons associated with Exchange members and member

organizations.

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\4\ 15 U.S.C. 78f(c)(3)(B)

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In addition, under Section 6(c)(3)(B) of the Act, \5\ 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. Pursuant to this statutory obligation, the Exchange has

developed an examination that will be administered to establish that

Trading Assistants have attained specified levels of competence and

knowledge.

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\5\ Id.

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

The Exchange 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 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 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, including whether the proposed rule

change is consistent with the Act. 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 in the

Commission's Public Reference Room. Copies of the filing will also be

available for inspection and copying at the principal office of the

NYSE. All submissions should refer to the File No. SR-NYSE-98-36 and

should be submitted by December 30, 1998.

For the Commission, by the Division of Market Regulation,

pursuant to the delegated authority.\6\

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\6\ 17 CFR 200.30-3(a)(12).

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Margater H. McFarland,

Deputy Secretary.

[FR Doc. 98-32605 Filed 12-8-98; 8:45 am]

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