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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41514; File No. SR-NYSE-99-19]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule

Change by the New York Stock Exchange, Inc. To Adopt a New

Interpretation to Rule 35 (``Floor Employees To Be Registered'')

June 10, 1999.

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 May 14, 1999, the New York Stock Exchange, Inc. (``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 Exchange. 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 a new interpretation with

respect to the administration of Exchange Rule 35 (``Floor Employees to

be Registered''). The new interpretation prescribes the requirements

for Front Line Specialist Clerks (``FLS Clerks''), which include a

qualifying examination (``Series 21'') for all current and prospective

FLS Clerk and a supervised training period requirement which will apply

only to prospective FLS Clerks.

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. 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

The purpose of the proposed new interpretation to Rule 35 is to

prescribe the qualification requirements (i.e., training and

examination) for Front Line Specialist Clerks. In addition to dictating

the terms under which employees of members or member organizations may

be admitted to the Exchange Trading Floor, Rule 35 mandates compliance

by both employer and employee with such requirements as the Exchange

may determine. The proposed interpretation to Rule 35 will require FLS

Clerks to pass a new examination, developed by the Exchange in

cooperation with a committee of Floor representatives (members,

Specialists, and FLS Clerks) called the Front Line Specialist Clerk

[[Page 32913]]

Qualification Examination (``Series 21''). The examination will ensure

that FLS Clerks have the basic knowledge and skills necessary to

perform their duties, which include assisting Floor Specialists. The

Series 21 examination is the second step in a program to ensure that

Floor employees are appropriately qualified. The first step was

implementation of the Series 25 Trading Assistant Qualification

Examination.\1\

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\1\ See Securities Exchange Act Release No. 40943 (January 13,

1999), 64 FR 3330 (January 21, 1999) (SR-NYSE-98-36); Securities

Exchange Act Release No. 40944 (January 13, 1999), 64 FR 3329

(January 21, 1999) (SR-NYSE-98-35).

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The Series 21 examination is a 90-minute test consisting of 65

questions. Implementation of the examination is scheduled to take place

90 days after its approval by the SEC. The examination specifications,

content and fee (i.e., $200 per exam administration) will be more

specifically addressed in separate filings. Though the requirements to

take and pass the proposed Series 21 examination will apply to all

prospective and current FLS Clerks, qualification requirements will

differ as follows:

Current FLS Clerks

Individuals who are currently functioning as FLS Clerks will be

required to pass the Series 21 examination within one year of its

implementation. The Series 25 qualification examination is a

prerequisite, but no training program will be required for these

individuals since they are already acting in the capacity of FLS

Clerks.

Prospective FLS Clerks

Individuals not currently functioning as FLS Clerks will also be

required to pass the Series 25 qualifying examination as a Series 21

prerequisite. Upon passing the Series 25, the prospective FLS Clerk

must complete a training program to become eligible for the Series 21

examination. The training program shall consist of a minimum of six

months ``on-the-job'' experience with a Specialist under a supervisory

program to be determined by the Specialist. All candidates must pass

the Series 21 examination before functioning as an ``unsupervised'' FLS

Clerk, i.e., functioning without the specialized supervision required

during the training period.

2. Statutory Basis

The proposed rule change is consistent with the requirements of

Section 6(c)(3)(B) of the Act.\3\ 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. In addition, under Section 6(c)(3)(B), 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 Front Line Specialist Clerks have attained specified

levels of competence and knowledge.

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

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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 (1) 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 proposal 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. 20549-0609. 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

Exchange. All submissions should refer to File No. SR-NYSE-99-19 and

should be submitted by July 9, 1999.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority.\4\

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\4\ 17 CFR 200.30-3(a)(12).

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Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 99-15486 Filed 6-17-99; 8:45 am]

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