NYSE RULE 342.30 – ANNUAL REPORT; CHIEF COMPLIANCE OFFICER DESIGNATION; CHIEF EXECUTIVE OFFICER CERTIFICATION
 

Information Memo  06-08  is available for viewing or printing with Adobe Acrobat
   
Number 06-08 03/13/2006
 
ATTENTION:   CHIEF EXECUTIVE OFFICER/MANAGING PARTNER, COMPLIANCE AND LEGAL DEPARTMENTS
 
TO:   ALL MEMBER ORGANIZATIONS
 
SUBJECT:   NYSE RULE 342.30 – ANNUAL REPORT; CHIEF COMPLIANCE OFFICER DESIGNATION; CHIEF EXECUTIVE OFFICER CERTIFICATION
 



On December 16, 2005, the New York Stock Exchange (the “Exchange”) issued Information Memo 05-101, which sets forth guidelines by which a member organization should comply with the requirements of recently amended New York Stock Exchange Rule 342.30 (“Annual Report”). Under the amended rule, member organizations are required to file by April 1 of each year: 1) a report that addresses the member organization’s supervision and compliance efforts during the preceding calendar year, as well as ongoing compliance processes and procedures, and 2) a certification by the member organization’s Chief Executive Officer that processes are in place to establish, maintain, modify, test, and review policies and procedures reasonably designed to achieve compliance with applicable Exchange rules and federal securities laws and regulations.

In order to provide a mechanism for the automated filing of the annual report, the Exchange will be issuing a survey via the Electronic Filing Platform (“EFP”). The survey will require each member organization to identify the Chief Executive Officer (“CEO”) who will be attesting to the required certification and the designated Chief Compliance Officer (“CCO”). Member organizations are reminded that the CCO must be a principal executive officer or general partner of the member organization, which thus requires his or her designation as an allied member.1 If it has not done so already, the member organization should amend Schedule A of Form BD to reflect this change to the CCO’s status and should also update its profile information with the Exchange via EFP.2

In addition, the survey will require each member organization to attach an electronic copy of its Annual Compliance Report; the electronic copy should be in PDF format, although it will be accepted in any standard electronic format (e.g., Word document). April 1, 2006 is a non-business day, therefore the survey must be submitted via EFP no later than April 3, 2006. An email will be sent to the CEO and CCO of the member organization alerting them that the EFP survey is available; the filing window is open starting March 13. The Chief Executive Officer Certification, a sample of which was provided as Exhibit C of Information Memo 05-101, is required this year to be filed in hardcopy, addressed to your Finance Coordinator, and submitted no later than April 3, 2006.

Note that subsection (e)(iii) of Rule 342.30 refers to a report3 that must be reviewed by the CEO and others to support the certification that the firm has processes in place to establish, maintain, review, modify and test policies and procedures. Subsection (e)(iii) requires that this report be submitted to the organization’s board and audit committee (if such committee exists). A question has been raised as to whether submittal of the report must be prior to certification. Rule 342 requires that, while submittal of the report to the board and audit committee (if such committee exists) is required prior to certification, neither the board nor the audit committee is required to review or approve the report prior to certification. Further, the report need not be submitted pursuant to a formal meeting of the board or committee, as long as delivery to its members is made.

Any questions regarding the process should be directed to your Finance Coordinator.
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William J. Wollman
Vice President
Member Firm Regulation


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1 See NYSE Rule 304(b).
2 See Information Memo 04-61.
3 Note that the “report” referenced in subsection (e)(iii) is an internal report, not to be confused with the “Annual Report” required to be submitted to the Exchange.