Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) and Rule 19b-4 thereunder, notice is hereby given that on December 29, 2003, the National Association of Securities Dealers, Inc. (“NASD”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the NASD. NASD has designated the proposed rule change as one constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule under Section 19(b)(3)(A)(i) of the Act and Rule 19b-4(f)(1) thereunder and as establishing or changing a due, fee, or other charge under Section 19(b)(3)(A)(ii) of the Act and Rule 19b-4(f)(2) thereunder, which render the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
17 CFR 240.19b-4.
17 CFR 240.19b-4(f)(1).
17 CFR 240.19b-4(f)(2).
NASD clarified that it filed the proposed rule change pursuant to both Section 19(b)(3)(A)(i) and Section 19(b)(3)(A)(ii) of the Act, as discussed in the purpose section of the notice and in the body of NASD's Form 19b-4 filing. Telephone conversation between Shirley H. Weiss, Associate General Counsel, NASD, and David A. Hsu, Attorney, Division of Market Regulation, Commission, on January 6, 2004.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
NASD is proposing to amend Section 5 of Schedule A to the NASD By-Laws (“Section 5”) to clarify that two or more members that are under substantially the same ownership or control (commonly referred to as a “simultaneous filing group” or “SFG”) may eliminate certain duplicate fees and assessments and to remind members to provide NASD with prior notice in the format specified by NASD if they wish to establish eligibility for the reduced fees. Below is the text of the proposed rule change. Proposed new language is in italic; proposed deletions are in brackets.
Schedule A to NASD By-Laws
Assessments and fees pursuant to the provisions of Article VI of the By-Laws of NASD shall be determined on the following basis.
Sections 1 through 4. No change.
Section 5—Elimination of Duplicate Assessments and Fees
Two or more members under substantially the same ownership or control shall be required to pay (1) only one personnel assessment and one [registration renewal] system processing fee annually for those individuals employed by more than one of the members; [and] (2) only one fee annually for each branch office registered at the same location by more than one of the members[.]; and (3) [There shall be] only one registration fee , one fingerprint processing fee, and one termination fee applicable to each applicant registered or terminated simultaneously with two or more members under substantially the same ownership or control. To establish their eligibility to receive the reduction in fees described herein, members must provide NASD with information as requested by NASD and in the format specified by NASD prior to NASD's assessment of such fees.
II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASD 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. NASD 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
Section 5 addresses the elimination of certain duplicate assessments and fees for two or more members under substantially the same ownership or control. The proposed rule change will amend Section 5 to codify NASD's stated policies and practices with respect to the availability of these reduced fees to simultaneous filing groups. First, the proposed rule change will change the reference to a “registration renewal fee” to “system processing fee,” to conform the terminology to an amendment to Section 5 made in 1999. Second, the proposed rule change will clarify that, in addition to being able to pay only one system processing fee, a simultaneous filing group, as described in Section 5, may pay only one fingerprint processing fee and one termination fee. Third, the proposed rule change will add language reminding members that, as a procedural matter, they must provide NASD with certain information as requested by NASD and in the format specified by NASD in order to receive the reduced fees prior to NASD's assessment of such fees.
The “registration renewal fee” was replaced with a “system processing fee” in 1999. See Exchange Act Release No. 41937 (Sept. 28, 1999). The reference in Section 5 to “registration renewal fee” should have been, but was not, changed at that time.
NASD notes that this language will codify existing long-standing practice, which requires members to follow certain procedures to obtain the benefits of NASD's simultaneous filing group program and the reduced registration fees associated therewith, including establishing an simultaneous filing group, notifying NASD staff of the affiliated firms included in the simultaneous filing group, and requesting and completing an SFG Participation Agreement.
NASD is in the process of posting a description of the Simultaneous Form Filing Program on its Web site. In the interim, and thereafter, members may call NASD's Gateway Call Center (301-590-6500) for information about the program.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act, which requires, among other things, that NASD rules provide for the equitable allocation of reasonable dues, fees, and other charges among members, issuers and other persons using any facility or system that NASD operates or controls. NASD also believes that the proposed rule change to amend Section 5 will more accurately reflect its long-standing policies and practices with respect to assessing certain reduced fees to simultaneous filing groups that establish their eligibility for such reductions.
15 U.S.C. 78 o-3(b)(5).
B. Self-Regulatory Organization's Statement on Burden on Competition
NASD does not believe that the proposed rule change will result in 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change has become effective pursuant to Sections 19(b)(3)(A)(i) and (ii) of the Act and subparagraphs (f)(1) and (f)(2) of Rule 19b-4 thereunder because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule and establishes or changes a due, fee, or other charge. At any time within 60 days of this filing, the Commission may summarily abrogate this proposal 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.
15 U.S.C. 78s(b)(3)(A)(i) and (ii).
17 CFR 240.19b-4(f)(1) and (2).
See supra note 7.
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, NW, Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. SR-NASD-2003-194. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, comments should be sent in hard copy or by e-mail but not by both methods. 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 NASD. All submissions should refer to File No. SR-NASD-2003-194 and should be submitted by February 3, 2004.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-610 Filed 1-12-04; 8:45 am]
BILLING CODE 8010-01-P