[Federal Register Volume 59, Number 175 (Monday, September 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22467]


[[Page Unknown]]

[Federal Register: September 12, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34639; File No. SR-NASD-94-34]

 

Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the National Association of Securities Dealers, Inc., 
Relating to Fees for the Late Payment of Service Charges

September 2, 1994.

I. Introduction

    On May 27, 1994, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association'') filed with the Securities and 
Exchange Commission (``Commission'' or ``SEC'') 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 adopt a uniform and 
consistent methodology for assessing fees for late payment of Nasdaq 
Stock Market service charges. On July 29, 1994, the NASD filed with the 
Commission Amendment No. 1 to the proposed rule change.\3\
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    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1991).
    \3\Amendment No. 1 to the proposal corrects a mathematical error 
in an example provided in the language of the proposed rule change, 
and explains that the new late fee established by the proposal will 
be assessed to accounts that are in arrears prior to the 
implementation of the new late fee charge. Letter from Joan Conley, 
Corporate Secretary, NASD, to Elizabeth MacGregor, Branch Chief, 
Commission, dated July 28, 1994.
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    The proposed rule change, as amended, was published for comment in 
Securities Exchange Act Release No. 34479 (August 2, 1994), 59 FR 40632 
(August 9, 1994). No comments were received on the proposal.

II. Description of the Proposal

    The NASD proposal amends Part IX of Schedule D to the NASD By-Laws 
to establish a uniform and consistent methodology for assessing fees 
for the late payment of The Nasdaq Stock Market, Inc. (``NSM'') 
charges. The late fee will be applied to all charges imposed by NSM 
that are past due 45 days or more. The late fee will be computed by 
taking the summation of one and one-half percent (1\1/2\%) of the 
amount past due for the first month, plus one and one-half percent 
(1\1/2\%) of the amount past due for any month thereafter, compounded 
by late fees assessed for previous months. For example, if an account 
is past due $1,000 for 45 days, the late fee would be $30.22. This 
charge reflects a charge of $15 for the first month past due ($1,000 
x  1\1/2\%) and $15.22 for the second month past due ($1,015  x  1\1/
2\%).
    The new late fee structure will replace the existing structure 
(found in section H of Part IX of Schedule D to the By-Laws) which 
provides that charges for Nasdaq Level 1 and Nasdaq/NMS Last Sale 
services which are past due 45 days will be assessed a fee equal to 
1\1/2\% per months of the unpaid balance. For all other Nasdaq charges, 
namely, charges for the Nasdaq Level \2/3\ service, Over-the-Counter 
Bulletin Board (``OTCBB''), Mutual Fund Quotation Program, and Nasdaq 
Workstation service (collectively referred to hereinafter as ``Nasdaq 
charges''), the late payment fee presently is equal to 10% of the 
amount past due for 60 days or more. By eliminating the current 
practice of using these two different methods to assess late fees for 
various NSM charges, the NASD believes its operational efficiency will 
be enhanced and public confusion concerning the NASD's late fee policy 
likely will be diminished.
    The proposal also will amend Section H of Part IX of Schedule D to 
the By-Laws to provide that the section governs fees for the late 
payment of NSM charges instead of ``NASDAQ charges.'' This amendment 
reflects the merger, effective June 30, 1993, of two of the NASD's 
corporate subsidiaries, Nasdaq, Inc. and NASD Market Services, Inc. 
(``MSI'') into one consolidated subsidiary called The Nasdaq Stock 
Market, Inc. In addition, this amendment serves to subject charges for 
services provided by MSI (the NSM after the merger) to late payment 
fees (e.g., SOES, SelectNet, and ACT charges). Currently, other than 
for Nasdaq/NMS Last Sale service charges, there is no fee for the alter 
payment of service charges that previously were assessed by MSI but now 
are assessed by the NSM after the merger.

III. Commission's Findings

    The Commission believes that the proposed rule change is consistent 
with Section 15A(b)(5) of the Act. Section 15A(b)(5) requires that the 
rules of a national securities association provide for the equitable 
allocation of reasonable dues, fees and other charges among members and 
issuers and other persons using any facility or system which the 
association operates or controls. Specifically, by instituting a 
uniform and consistent policy for assessing fees for the late payment 
of service charges, to be imposed as described above, the Commission 
believes the late payment of fees is reasonable and equitably 
allocated.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\4\ that the proposed rule change (SR-NASD-94-34) is approved.
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    \4\15 U.S.C. Sec. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\17 CFR 200.30-4(a)(12) (1991).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-22467 Filed 9-9-94; 8:45 am]
BILLING CODE 8010-01-M