[Federal Register Volume 64, Number 206 (Tuesday, October 26, 1999)]
[Notices]
[Pages 57679-57680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27890]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42033; File No. SR-NYSE-99-23]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the New York Stock Exchange,
Inc. Relating to Revisions to the Exchange's Branch Office Application
October 19, 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 June 8, 1999, 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
Exchange. The proposal was amended on September 9, 1999,\3\ so as to be
filed as a ``non-controversial'' rule change under Rule 19b-4(f)(6).\4\
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.
\3\ See Letter to Belinda Blaine, Associate Director, Division
of Market Regulation, SEC, from James E. Buck, Senior Vice President
and Secretary, NYSE, dated September 8, 1999 (``Amendment No. 1'').
The NYSE originally filed the proposed rule change under Section
19(b)(3)(A)(iii) of the Act. 15 U.S.C. 78s(b)(3)(A)(iii). Amendment
No. 1 also includes a rearranged version of the revised Branch
Office Application Form. Additionally, in Amendment No. 1, the NYSE
further clarifies the intent of the proposal and describes the
implementation plan for the electronic filing program.
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule change
The NYSE proposes to revise its Branch Office Application form to
require more detailed information relating to the establishment of new
branch offices by Exchange members and member organizations and to
adopt a new Office Space Sharing form. The test of the proposed rule
change is available at the Office of the Secretary, the NYSE and at the
Commission.
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 NYSE 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 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.
1. Purpose
The purpose of this proposed rule change is to submit to the
Commission the following two forms: the revised Branch Office
Application and the new Office Space Sharing form. The Branch Office
Application is employed by Exchange members and member organizations
seeking Exchange approval of a new branch office in accordance with
Exchange Rule 342 (``Offices--Approval, Supervision and Control'').
Exchange Rule 342(c) requires that a member or member organization
obtain the Exchange's prior written consent for each office
established, other than a main office. Exchange Rule 343 (``Offices--
Sole Tenancy, Hours, Disply of Membership Certificates'') contains
criteria under which members or member organizations may share office
space with the securities-related individuals and organizations. The
NYSE proposes to adopt an Office Space Sharing form, which will be used
by members and member organizations seeking to share office space
pursuant to NYSE Rule 343.
The Exchange determined to revise its Branch Office Application so
that the form will provide more meaningful and detailed information
concerning the personnel and activities of a member's or member
organization's proposal branch office. Such additional information on
the Application will enable the Exchange to make a better-informed
decision concerning approval of the location.
Specifically, additional information required by the revised
Application includes:
(i) A description of the types of activities to be conducted and
the products to be offered at the branch office;
(ii) The estimated number of accounts to be serviced by the office;
(iii) Whether any persons assigned to the office are subject to
Statutory Disqualification or have reportable adverse disciplinary
histories;
(iv) Whether the office will have independent contractors assigned
to it;
(v) Whether the office has been acquired from another broker-dealer
or financial institution;
(vi) Where records pertaining to the office are maintained;
(vii) whether any person other than the member organization have a
financial interest in the office;
(viii) Whether the broker-dealer and the office's registered
representatives have required state registrations; and
(ix) Submission of the social security number and Central
Registration Depository (``CRD'') number of each registered person to
be assigned to the office.
If the office will be shared with another person or organization,
an Office Space Sharing form, which addresses compliance with the
Exchange's space sharing rule, NYSE Rule 343, will be completed as part
of the Branch Office Application.
Generally, NYSE Rule 343 prohibits Exchange members and member
organizations from sharing office space with other broker-dealers,
investment advisors or any other persons who conduct a securities or
commodities business with the public, without prior approval of the
Exchange. However, the rule sets forth certain conditions under which
Exchange members or member organizations may share office space with
securities-related individuals or organizations. If each of the
appropriate rule provision's enumerated conditions is met, the Exchange
may permit a space-sharing arrangement. The new Office Space Sharing
form will serve as an attestation by the member or member organization
that the conditions required by NYSE Rule 343 have been met. Exchange
approval of the branch office location will encompass, where
applicable, approval of the space
[[Page 57680]]
sharing arrangement; there will not be a separate approval of the space
sharing arrangement.
The Exchange intends that, commencing in or about the second
calendar quarter of 2000, the filing and processing of all Branch
Office Applications will be performed electronically by all member
firms that have Internet access via a software package that the
Exchange will provide free of charge to all member organizations.\5\
The NYSE has represented that, during December 1999, it will issue an
Information Memorandum informing all members and member organizations
that, as of February 1, 2000, all new branch office applications must
be submitted on the revised form.\6\ Electronic filings will be made by
firms who have had the appropriate software installed; all others will
manually file the revised form. By June 30, 2000, all members and
member organizations with Internet access will have the software
installed to enable electronic filing.
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\5\ In Amendment No. 1, the Exchange explains that
implementation will be gradual instead of immediate implementation
by all member organizations because the Exchange Technology staff
and all applicable member organization staff will be focusing
efforts and resources on overall Y2K compliance during the last
quarter of 1999. Installation of the software will be prioritized by
firms who are the most active in submitting new branch office
applications. See Amendment No. 1, supra note 3.
\6\ Id.
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As a security measure, member organizations will be required to
identify to the Exchange those persons who will become registered users
and who will have access to the program and the ability to transmit
information to the Exchange. Once submitted to the Exchange, the
application and its current status may be viewed at any time by the
authorized member organization personnel through the software program.
The Exchange has been testing this electronic program since April 1999.
This application is Internet-based and will be the sole method for
submission of Branch Office Applications to the Exchange, although
member organizations that do not have Internet access may submit the
applications in hard copy.
The Exchange believes that revisions to the Branch Office
Application will enhance the utility of the form in connection with the
Exchange's regulatory oversight responsibilities by providing more
detailed reporting and substantive disclosures. The revised form will
also aid in monitoring for compliance with NYSE Rule 342 which mandates
that each office, department and business activity of the member
organization be under the supervision and control of the member
organization establishing it and of the personnel delegated such
authority and responsibility.
2. Statutory Basis
The Exchange believes the proposed rule change in consistent with
Section 6(b)(5) of the Act \7\ which requires that the rules of the
Exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and, in
general, to protect investors and the public interest, in that it will
enhance the process of Exchange review and approval of new branch
offices established by Exchange members and member organizations.
Further, the revised Branch Office Application and new Office Space
Sharing forms will provide the Exchange with a centralized and
efficient means of maintaining information concerning member
organizations, their branch offices, and associated persons.
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\7\ 15 U.S.C. 78f(b)(5).
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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.
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
The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act,\8\ and Rule 19b-4(f)(6) thereunder,\9\
because the proposed rule change: (1) Does not significantly affect the
protection of investors or the public interest; (2) does not impose any
significant burden on competition; (3) does not become operative for 30
days from the date of filing, or such shorter time that the Commission
may designate if consistent with the protection of investors and the
public interest; and (4) the NYSE provided the Commission with written
notice of its intent to file the proposed rule change at least five
business days prior to the filing date.\10\ At any time within 60 days
of the filing of the proposed rule change, the Commission may summarily
abrogate such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act.\11\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). In reviewing this proposal, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78(c)f.
\10\ Although originally filed under Section 19(b)(3)(A)(iii) on
June 8, 1999, the Exchange refiled the proposed rule change under
Rule 19b-4(f)(6) on September 9, 1999, at the suggestion of the
Commission. See Amendment No. 1, supra note 3. Because the
Commission had the proposed rule filing for more than five business
days, because Amendment No. 1 did not substantively alter the
proposed rule change already before the Commission, and because the
Commission instructed the Exchange to refile the proposed rule
change under Rule 19b-4(f)(6), the Commission waives the five-day
written notice requirement for a proposed rule change under Rule
19b-4(f)(6).
\11\ 15 U.S.C. 78s(b)(3)(C).
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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-
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 at the
Commission's Public Reference Room. Copies of such filing also will be
available for inspection and copying at the principal office of the
NYSE. All submissions should refer to File No. SR-NYSE-99-23 and should
be submitted by November 16, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-27890 Filed 10-25-99; 8:45 am]
BILLING CODE 8010-01-M