[Federal Register Volume 59, Number 23 (Thursday, February 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2373]


[[Page Unknown]]

[Federal Register: February 3, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33533; File No. SR-NASD-94-5]

 

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by National Association of 
Securities Dealers, Inc. Relating to Application Fees for New Members

January 27, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on January 
21, 1994, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. The NASD has designated this proposal as one establishing 
or changing a fee under section 19(b)(3)(A)(ii) of the Act, which 
renders the rule effective upon the Commission's receipt of this 
filing. The Commission is publishing this notice to solicit comments on 
the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD is proposing a rule change to Schedule A to the By-Laws to 
amend the amount of new application fees assessed against firms other 
than self-clearing or introduction firms, from $1,500 to $3,000.

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 NASD included statements 
concerning the purpose of and the 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 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

    Article VI of the By-Laws of the NASD requires new members to pay 
an application fee based on reasonable expenses incurred in carrying 
out the work of processing new membership applications. Pursuant to 
Schedule A, Section 2 to the By-Laws, the NASD currently assesses a new 
application fee of $5,000 for self-clearing firms, $3,000 for 
introducing firms and $1,500 for all firms other than self-clearing or 
introducing firms (``other'' firms).\1\ The average cost of processing 
new applications for other firms exceeds the revenue generated by the 
fee for such applications. Currently, the NASD subsidizes the revenue 
shortfall for other firms from other fees and assessments.
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    \1\NASD Manual, Schedule A to the By-Laws, Sec. 2, (CCH)  1753.
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    Because there is no reasonable justification for subsidizing the 
initial entry of other firms into the industry, the NASD is proposing 
to amend the application fee assessed against other firms to reflect 
more closely the actual costs incurred in processing such applications. 
The average cost for processing new applications for other firms is 
approximately the same as that for introducing firms. Therefore, the 
NASD is proposing to amend the amount of the new application fee 
assessed against other firms in Schedule A, Section 2(i)(iii), which is 
currently $1,500, to $3,000.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(5) of the Act,\2\ which require that 
the rules of the Association provide for the equitable allocation of 
reasonable dues, fees, and other charges among members in that the 
proposed rule change equitably adjusts the initial application fee so 
that all new members are assessed their approximate entry costs.
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    \2\15 U.S.C. 78o-3 (1988).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    The 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, as amended.

(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 upon filing pursuant 
to section 19(b)(3)(A)(ii) of the Act and Rule 19b-4 promulgated 
thereunder in that it constitutes a due, fee, or other charge.
    At any time within 60 days of the filing of a rule change, the 
Commission may summarily abrogate the rule change pursuant to Section 
19(b)(3)(C) of the Act 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. 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 the 
NASD. All submissions should refer to the file number in the caption 
above and should be submitted by February 24, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-2373 Filed 2-2-94; 8:45 am]
BILLING CODE 8010-01-M