Self-Regulatory Organizations; The New York Stock Exchange LLC; Order Approving Proposed Rule Change, as Modified by Amendments Nos. 1 and 2 Thereto, To Amend NYSE Rule 342.13 (“Acceptability of Supervisors”), 68613-68614 [E7-23532]
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Federal Register / Vol. 72, No. 233 / Wednesday, December 5, 2007 / Notices
mstockstill on PROD1PC66 with NOTICES
Pursuant to Rule 9b–1(a)(4), the
Commission may, by order, designate as
‘‘standardized options’’ securities that
do not otherwise meet the definition of
‘‘standardized options’’ but which ‘‘the
Commission believes should be
included within the [options] disclosure
framework.’’ 19 The Commission has
used this authority in the past, for
example, in connection with the listing
and trading of Index Participations,20
FLEX options,21 credit default
options,22 and credit default basket
options.23 CBOE has requested that the
Commission designate DSOs as
standardized options so that the ODD
may be used for DSOs.24
The Commission hereby designates
DSOs, as separately defined in the
Options Clearing Corporation’s (‘‘OCC’’)
proposal,25 as standardized options for
purposes of Rule 9b–1 under the Act.
DSOs do not meet the definition of
standardized options because they do
not have a specific exercise price.
Whereas the exercise price of a
on behalf of the issuer of the underlying security
or securities, an affiliate of the issuer, or an
underwriter, will constitute an offer or sale of the
underlying security or securities as defined in
Section 2(a)(3) of the Securities Act, 15 U.S.C.
77b(a)(3). See also Securities Act Release No. 8171
(December 23, 2002), 68 FR 188 (January 2, 2003)
(Exemption for Standardized Options From
Provisions of the Securities Act of 1933 and From
Registration Requirements of the Exchange Act of
1934).
19 See Securities Exchange Act Release No. 19055
(September 16, 1982), 47 FR 41950, 41954
(September 23, 1982).
20 See Securities Exchange Act Release No. 26709
(April 11, 1989), 54 FR 15280 (April 17, 1989) (SR–
Phlx–88–07; SR–Amex–88–10; SR–CBOE–88–09).
21 See Securities Exchange Act Nos. 31910
(February 23, 1993), 58 FR 12056 (March 2, 1993)
(SR–CBOE–92–17; SR–OCC–92–33; ODD 93–1)
(order designating FLEX index options as
standardized options under Rule 9b–1); and 36841
(February 14, 1996), 61 FR 6666 (February 21, 1996)
(SR–CBOE–95–43 and SR–PSE–95–24) and 37336
(June 19, 1996), 61 FR 33558 (June 27, 1996) (SR–
Amex–95–57) (orders approving the listing and
trading of FLEX equity options, and designating
them as standardized options pursuant to Rule 9b–
1 under the Act).
22 See Securities Exchange Act Release No. 55871
(June 6, 2007), 72 FR 32372 (June 12, 2007) (SR–
CBOE–2006–84).
23 See Securities Exchange Act Release No. 56275
(August 17, 2007), 72 FR 47097 (August 22, 2007)
(SR–CBOE–2007–26).
24 See Notice, supra note 3, at 52947.
25 The OCC has filed with the Commission a
proposed rule change to enable it to clear and settle
DSOs proposed to be listed by CBOE (the ‘‘OCC
Proposal’’). See Securities Exchange Act Release
No. 56856 (November 28, 2007) (SR–OCC–2007–13)
(order noticing and granting accelerated approval).
The OCC Proposal defines the term ‘‘delayed start
option’’ to mean ‘‘an option that at the
commencement of trading does not have an exercise
price but instead has an exercise price setting
formula pursuant to which the exercise price will
be fixed on the exercise price setting date for the
series of delayed start option.’’ This definition of
DSOs is being added to Article 1, Section 1 of the
OCC’s By-Laws.
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19:05 Dec 04, 2007
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conventional standardized option is
determined when the option series is
first listed for trading, the exercise price
for a DSO would not be determined
until the strike setting date. Instead,
prior to the listing of the particular DSO
series, the Exchange will specify a
formula to determine the strike price of
the DSO on the pre-determined strike
setting date according to the terms of the
formula.26 No changes to any terms of
existing DSO series could be made once
the series begins trading.
Aside from the determination of the
exercise price, DSOs resemble
standardized options in other significant
respects. DSOs have an underlying
security index and a specific expiration
date. Like other standardized options,
they also have standardized terms
pertaining to the rights and obligations
of holders and writers. The fact that
DSOs lack a specified exercise price at
the commencement of trading does not
detract from their character as options.
Compared with FLEX options, which
the Commission has also declared to be
‘‘standardized options,’’ 27 the terms of
DSOs would be even more standardized
in that a strike price formula,
settlement, expiration date, and exercise
style would be fixed by the Exchange for
each DSO series. In addition, similar to
DSOs, credit default options and credit
default basket options, which were
recently designated by the Commission
as ‘‘standardized options,’’ also have
many characteristics of standardized
options, except for exercise price.28
The Commission also believes that the
fact that the OCC, the clearing agency
for standardized options, is willing to
serve as issuer of DSOs supports the
view that adding DSOs to the
standardized option disclosure
framework is reasonable.29
Therefore, the Commission herein
designates DSOs, such as those
proposed by CBOE, as standardized
options for purposes of Rule 9b–1 under
the Act.30
26 Prior to the opening of the particular DSO
series, the Exchange will announce the strike
setting date as well as the expiration date of the
DSO.
27 See supra note 21 (citing the applicable orders
regarding FLEX equity and index options).
28 See supra notes 22 and 23 (citing the approval
orders for credit default options and credit default
basket options, respectively).
29 The Commission notes that CBOE presently
intends to offer DSOs in early 2008, and has
represented that they will not introduce DSOs
before the supplement to the ODD has been
submitted to the Commission pursuant to Rule 9b–
1 under the Act. Telephone conversation between
Richard Holley III, Senior Special Counsel, Division
of Trading and Markets, Commission, and Jennifer
M. Lamie, Assistant General Counsel, CBOE, on
November 16, 2007.
30 17 CFR 240.9b–1.
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Frm 00061
Fmt 4703
Sfmt 4703
68613
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,31 that the
proposed rule change (SR–CBOE–2006–
90) as modified by Amendment No. 1
thereto, be, and hereby is, approved.
It is further ordered, pursuant to Rule
9b–1(a)(4) under the Act,32 that DSOs,
as defined in proposed rule change SR–
OCC–2007–13, are hereby designated as
standardized options.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23533 Filed 12–4–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–56854; File No. SR–NYSE–
2007–53]
Self-Regulatory Organizations; The
New York Stock Exchange LLC; Order
Approving Proposed Rule Change, as
Modified by Amendments Nos. 1 and 2
Thereto, To Amend NYSE Rule 342.13
(‘‘Acceptability of Supervisors’’)
November 28, 2007.
I. Introduction
On June 20, 2007, The New York
Stock Exchange LLC (‘‘NYSE’’ or
‘‘Exchange’’), filed with the Securities
and Exchange Commission
(‘‘Commission’’) pursuant to section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend NYSE Rule 342.13
(‘‘Acceptability of Supervisors’’) to
eliminate the current requirement in the
rule that the General Securities
Principal Examination (‘‘Series 24
Examination’’) be passed after July 1,
2001 in order to be recognized by the
Exchange as an acceptable alternative to
the General Securities Sales Supervisor
Qualification Examination (‘‘Series 9/10
Examination’’).
On September 27, 2007, NYSE filed
Amendment No. 1 to the proposed rule
change. On October 15, 2007, NYSE
filed Amendment No. 2 to the proposed
rule change. The proposed rule change,
as modified by Amendments Nos. 1 and
2, was published for comment in the
31 15
U.S.C. 78s(b)(2).
CFR 240.9b–1(a)(4).
33 17 CFR 200.30–3(a)(12) and 17 CFR 200.30–
3(a)(51).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
32 17
E:\FR\FM\05DEN1.SGM
05DEN1
68614
Federal Register / Vol. 72, No. 233 / Wednesday, December 5, 2007 / Notices
Federal Register on October 29, 2007.3
The Commission received one comment
letter, which expressed support for the
proposed rule change.4 This order
approves the proposed rule change, as
amended.
mstockstill on PROD1PC66 with NOTICES
II. Description of the Proposal
Rule 342 (‘‘Offices—Approval,
Supervision and Control’’) prescribes
the Exchange’s general supervisory
requirements for member organizations.
Among the requirements, Rule 342.13
(‘‘Acceptability of Supervisors’’) sets
forth the Exchange’s qualification
standards for personnel delegated
supervisory responsibility. Before 2001,
this provision provided, in part, that a
person delegated supervisory
responsibility must pass the General
Securities Sales Supervisor
Qualification Examination (‘‘Series 9/10
Examination’’) or an historical
equivalent (i.e., the Series 8
Examination).
In 2002, the Exchange amended Rule
342.13 5 to recognize the National
Association of Securities Dealers, Inc.
(‘‘NASD’’)’s 6 General Securities
Principal Examination (‘‘Series 24
Examination’’), if taken and passed after
July 1, 2001, as an alternative to the
Series 9/10 Examination requirement for
persons whose duties did not include
supervision of options or municipal
securities sales activities.7 At that time,
the Exchange represented that NASD, as
of July 2, 2001, had enhanced the Series
24 Examination by including test
questions sufficient to provide
appropriate coverage of the NYSE Rules.
The Commission approved the proposed
rule change on October 17, 2002.8 The
Exchange is now proposing to amend
Rule 342.13 to eliminate the
requirement that the Series 24
Examination be passed after July 1, 2001
in order for it to be an acceptable
alternative to the Series 9/10
Examination.9
3 See Securities Exchange Act Release No. 56686
(October 23, 2007), 72 FR 61193 (October 29, 2007)
(the ‘‘Notice’’).
4 See letter from Marian H. Desilets, President,
Association of Registration Management, Inc. to
Nancy M. Morris, Secretary, Commission, dated
November 15, 2007.
5 See Securities Exchange Act Release No. 46425
(August 28, 2002), 67 FR 56863 (September 5, 2002)
(SR–NYSE–2002–24).
6 NASD is now known as the Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’).
7 The Series 24 Examination does not address
these activities.
8 See Securities Exchange Act Release No. 46631
(October 9, 2002), 67 FR 64187 (October 17, 2002)
(order approving SR–NYSE–2002–24). See also
NYSE Information Memo 02–51 (November 12,
2002).
9 Prospectively, persons may continue to qualify
to supervise options or municipal securities sales
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19:05 Dec 04, 2007
Jkt 214001
III. Discussion and Commission
Findings
The Commission has carefully
reviewed the proposed rule change and
finds that it is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.10 In
particular, the Commission finds that
the proposed rule change is consistent
with section 6(b)(5) of the Act,11 which,
among other things, requires that the
rules of a national securities exchange
be designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating
transactions in securities, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest.
The Commission believes that the
proposed amendment to NYSE’s rules to
eliminate the requirement that the
Series 24 Examination be passed after
July 1, 2001 in order for it to be
recognized as an acceptable alternative
to the Series 9/10 Examination is
consistent with the Act. The
Commission notes that the NYSE and
the NASD rulebooks have converged
significantly in the last six years. Thus,
the persons who took the Series 24
before July 1, 2001 have been subject to
regulatory standards that have, to a large
degree, been harmonized.12 Further,
persons who took the Series 24
Examination before July 1, 2001 have
been subject to regulatory and firm
element continuing education,13 which
provides ongoing training with respect
to current regulatory requirements,
including NYSE Rules, applicable to
duties and responsibilities of those
persons.
In addition, the Commission believes
that the proposed amendment furthers
the goals of the Exchange’s and FINRA’s
continuing Rule Harmonization
Initiative 14 in that it should result in
activity by taking and passing the Series 24
Examination and also taking and passing the
Registered Options Principal (Series 4) and/or
Municipal Securities Principal (Series 53)
examinations.
10 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
11 15 U.S.C. 78f(b)(5).
12 Convergence between the NYSE Rules and
FINRA Rules has included, in part, standards
relating to anti-money laundering, supervision,
research and internal controls, etc.
13 See NYSE Rule 345A.
14 The purpose of the Rule Harmonization
Initiative is to achieve, to the extent practicable,
substantive harmonization of the two regulatory
PO 00000
Frm 00062
Fmt 4703
Sfmt 4703
more closely aligned requirements
under Rule 342.13 and the
corresponding supervisory requirements
under FINRA’s regulatory scheme.15
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,16 that the
proposed rule change, as amended (SR–
NYSE–2007–53), be, and hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–23532 Filed 12–4–07; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
Additional Designations, Foreign
Narcotics Kingpin Designation Act
Office of Foreign Assets
Control, Treasury.
ACTION: Notice.
AGENCY:
SUMMARY: The Treasury Department’s
Office of Foreign Assets Control
(‘‘OFAC’’) is publishing the names of
additional persons whose property and
interests in property have been blocked
pursuant to the Foreign Narcotics
Kingpin Designation Act (21 U.S.C.
1901–1908, 8 U.S.C. 1182). In addition,
OFAC is publishing a change to the
listing of one individual previously
designated pursuant to the Foreign
Narcotics Kingpin Designation Act.
DATES: The designation by the Secretary
of the Treasury of the nine individuals
and thirteen entities identified in this
notice pursuant to section 805(b) of the
Kingpin Act is effective on November
27, 2007. In addition, the change to the
listing of one individual previously
designated pursuant to section 804(b) of
the Kingpin Act is effective on
November 27, 2007.
FOR FURTHER INFORMATION CONTACT:
Assistant Director, Compliance
Outreach & Implementation, Office of
Foreign Assets Control, Department of
the Treasury, Washington, DC 20220,
tel.: 202/622–2490.
SUPPLEMENTARY INFORMATION:
schemes in an effort to reduce regulatory
duplication and streamline the rules of selfregulatory organizations.
15 See FINRA Rule 1022(a).
16 15 U.S.C. 78s(b)(2).
17 17 CFR 200.30–3(a)(12).
E:\FR\FM\05DEN1.SGM
05DEN1
]]>Agencies
[Federal Register Volume 72, Number 233 (Wednesday, December 5, 2007)]
[Notices]
[Pages 68613-68614]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-23532]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56854; File No. SR-NYSE-2007-53]
Self-Regulatory Organizations; The New York Stock Exchange LLC;
Order Approving Proposed Rule Change, as Modified by Amendments Nos. 1
and 2 Thereto, To Amend NYSE Rule 342.13 (``Acceptability of
Supervisors'')
November 28, 2007.
I. Introduction
On June 20, 2007, The New York Stock Exchange LLC (``NYSE'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'') pursuant to section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend NYSE Rule 342.13 (``Acceptability of
Supervisors'') to eliminate the current requirement in the rule that
the General Securities Principal Examination (``Series 24
Examination'') be passed after July 1, 2001 in order to be recognized
by the Exchange as an acceptable alternative to the General Securities
Sales Supervisor Qualification Examination (``Series 9/10
Examination'').
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
On September 27, 2007, NYSE filed Amendment No. 1 to the proposed
rule change. On October 15, 2007, NYSE filed Amendment No. 2 to the
proposed rule change. The proposed rule change, as modified by
Amendments Nos. 1 and 2, was published for comment in the
[[Page 68614]]
Federal Register on October 29, 2007.\3\ The Commission received one
comment letter, which expressed support for the proposed rule
change.\4\ This order approves the proposed rule change, as amended.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 56686 (October 23,
2007), 72 FR 61193 (October 29, 2007) (the ``Notice'').
\4\ See letter from Marian H. Desilets, President, Association
of Registration Management, Inc. to Nancy M. Morris, Secretary,
Commission, dated November 15, 2007.
---------------------------------------------------------------------------
II. Description of the Proposal
Rule 342 (``Offices--Approval, Supervision and Control'')
prescribes the Exchange's general supervisory requirements for member
organizations. Among the requirements, Rule 342.13 (``Acceptability of
Supervisors'') sets forth the Exchange's qualification standards for
personnel delegated supervisory responsibility. Before 2001, this
provision provided, in part, that a person delegated supervisory
responsibility must pass the General Securities Sales Supervisor
Qualification Examination (``Series 9/10 Examination'') or an
historical equivalent (i.e., the Series 8 Examination).
In 2002, the Exchange amended Rule 342.13 \5\ to recognize the
National Association of Securities Dealers, Inc. (``NASD'')'s \6\
General Securities Principal Examination (``Series 24 Examination''),
if taken and passed after July 1, 2001, as an alternative to the Series
9/10 Examination requirement for persons whose duties did not include
supervision of options or municipal securities sales activities.\7\ At
that time, the Exchange represented that NASD, as of July 2, 2001, had
enhanced the Series 24 Examination by including test questions
sufficient to provide appropriate coverage of the NYSE Rules. The
Commission approved the proposed rule change on October 17, 2002.\8\
The Exchange is now proposing to amend Rule 342.13 to eliminate the
requirement that the Series 24 Examination be passed after July 1, 2001
in order for it to be an acceptable alternative to the Series 9/10
Examination.\9\
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 46425 (August 28,
2002), 67 FR 56863 (September 5, 2002) (SR-NYSE-2002-24).
\6\ NASD is now known as the Financial Industry Regulatory
Authority, Inc. (``FINRA'').
\7\ The Series 24 Examination does not address these activities.
\8\ See Securities Exchange Act Release No. 46631 (October 9,
2002), 67 FR 64187 (October 17, 2002) (order approving SR-NYSE-2002-
24). See also NYSE Information Memo 02-51 (November 12, 2002).
\9\ Prospectively, persons may continue to qualify to supervise
options or municipal securities sales activity by taking and passing
the Series 24 Examination and also taking and passing the Registered
Options Principal (Series 4) and/or Municipal Securities Principal
(Series 53) examinations.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\10\ In particular, the Commission finds that the proposed
rule change is consistent with section 6(b)(5) of the Act,\11\ which,
among other things, requires that the rules of a national securities
exchange be designed to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\10\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission believes that the proposed amendment to NYSE's rules
to eliminate the requirement that the Series 24 Examination be passed
after July 1, 2001 in order for it to be recognized as an acceptable
alternative to the Series 9/10 Examination is consistent with the Act.
The Commission notes that the NYSE and the NASD rulebooks have
converged significantly in the last six years. Thus, the persons who
took the Series 24 before July 1, 2001 have been subject to regulatory
standards that have, to a large degree, been harmonized.\12\ Further,
persons who took the Series 24 Examination before July 1, 2001 have
been subject to regulatory and firm element continuing education,\13\
which provides ongoing training with respect to current regulatory
requirements, including NYSE Rules, applicable to duties and
responsibilities of those persons.
---------------------------------------------------------------------------
\12\ Convergence between the NYSE Rules and FINRA Rules has
included, in part, standards relating to anti-money laundering,
supervision, research and internal controls, etc.
\13\ See NYSE Rule 345A.
---------------------------------------------------------------------------
In addition, the Commission believes that the proposed amendment
furthers the goals of the Exchange's and FINRA's continuing Rule
Harmonization Initiative \14\ in that it should result in more closely
aligned requirements under Rule 342.13 and the corresponding
supervisory requirements under FINRA's regulatory scheme.\15\
---------------------------------------------------------------------------
\14\ The purpose of the Rule Harmonization Initiative is to
achieve, to the extent practicable, substantive harmonization of the
two regulatory schemes in an effort to reduce regulatory duplication
and streamline the rules of self-regulatory organizations.
\15\ See FINRA Rule 1022(a).
---------------------------------------------------------------------------
IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\16\ that the proposed rule change, as amended (SR-NYSE-2007-53),
be, and hereby is, approved.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------
\17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-23532 Filed 12-4-07; 8:45 am]
BILLING CODE 8011-01-P
