[Federal Register Volume 62, Number 170 (Wednesday, September 3, 1997)]
[Notices]
[Page 46535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23259]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38969; File No. SR-NASD-97-23]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
Registration Category, Study Outline and Specification for Series 72
Examination, Government Securities Representative
August 25, 1997.
On April 11, 1997, the NASD Regulation, Inc. (``NASD Regulation'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ to create a new
category of representative registration, the Government Securities
Representative (Series 72), and to conform the registration
requirements of the existing Registered Options Representative (Series
42) category to take into consideration this new category.\2\ Notice of
the proposed rule change, together with the substance of the proposal,
was published in the Federal Register.\3\ No comment letters were
received. This order approves the proposed rule change.
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\1\ 15 U.S.C. Sec. 78s(b)(1) (1994).
\2\ On July 1, the NASD submitted a technical amendment.
Technical amendments do not need to be published in the Federal
Register. Letter from Craig L. Landauer, Associate General Counsel,
NASD, to Karl J. Varner, Esq., SEC, dated July 1, 1997.
\3\ Securities Exchange Act Release No. 38566 (May 1, 1997), 62
FR 25683 (May 9, 1997).
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I. Background
The Government Securities Act of 1986 (``1986 Act''), an amendment
to the Act, required sole government securities broker-dealers to
register with the SEC for the first time. The 1986 Act also granted the
NASD authority to require associated persons of such firms to register
with the NASD. However, the 1986 Act did not allow the NASD to apply
its qualification examination standards to associated persons of
government securities broker-dealers. Since January 1989, such
associated persons have been required to register as Government
Securities Representatives or Government Securities Principals, but
have not been required to pass a qualification examination. Under a
1993 amendment to the Act, the NASD was given authority to apply its
qualification standards to Government Securities Representatives and
Government Securities Principals.
The proposed rule change will establish an examination
qualification requirement for government securities representatives. A
person may qualify to sell government securities by passing the
existing Series 7 examination or the new Series 72 examination. The
proposed rule change replaces current Rule 1112, which was adopted in
1989.
NASD Regulation has determined to permit persons who have been
registered with the NASD as a government securities representative for
two years prior to the effective date of the rule will not have to take
the examination unless they are subject to a statutory disqualification
as defined in Section 3(a)(39) of the Act or in the last years have
been subject to a suspension or fine of $5,000 or more imposed by a
securities or commodities regulator.
Currently, individuals who sell OTC options on government
securities are not required to pass a qualification examination. The
proposed rule change also will amend Rule 1032(d) for Registered
Options Representatives to establish registration and qualification
requirements for such individuals, and to add the Series 72 Examination
to the list of the those examinations which prequalify an individual to
take the Limited Representative--Options (Series 42) Examination. A
person selling OTC options on government securities would be required
to pass the new Series 72 examination and the existing Series 42
examination.
The Series 72 examination will consist of one hundred (100)
questions. Candidates will have three hours to complete the
examination. The passing score for the examination will be 70%. The
NASD will not begin using the examination until September of 1997.
II. Discussion
The Commission believes that the proposed rule change is consistent
with the provisions of Sections 15A(b)(6) and 15A(g)(3) of the Act in
that the NASD is required to prescribe standards of training,
experience and competence for persons associated with NASD members.
Pursuant to this statutory obligation, the NASD develops and
administers examinations to establish that persons associated with NASD
members have attained specified levels of competence and knowledge.
Pursuant to this statutory obligation, NASD Regulation administers
examinations developed by NASD Regulation and other self-regulatory
organizations Section 15A(g)(3) of the Act to prescribe standards of
training, experience and competence for persons associated with NASD
members.
The proposed rule change is consistent with the format of the other
NASD limited registration categories. This proposed rule change will
change the language of Rule 1032(d) Registered Option Representative so
that it is similar to the language used in the other registration
categories in Rule 1032.
This provision is consistent with previous practice in permitting
persons who have achieved a certain level of experience in a segment of
the securities industry to be ``grandfathered'' if a new qualification
examination is adopted for that particular industry segment.
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change, SR-NASD-97-23, be, and hereby is,
approved.
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)(1997).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-23259 Filed 9-2-97; 8:45 am]
BILLING CODE 8010-01-M