[Federal Register Volume 60, Number 3 (Thursday, January 5, 1995)]
[Notices]
[Pages 1822-1823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-230]



-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35168; File No. SR-NASD-94-77]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by National Association of Securities Dealers, Inc. Relating To 
Granting the Director of Arbitration the Authority to Delegate Duties 
Under the Code of Arbitration Procedure

December 29, 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 December 
20, 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 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 to amend Section 3 of the Code of Arbitration 
Procedure\1\ to expressly provide that the Director of Arbitration may 
delegate decision making authority as appropriate. Below is the text of 
the proposed rule change. Proposed new language is in italics; proposed 
elections are in brackets.

    \1\NASD Manual, Code of Arbitration Procedure, (CCH)  3703.
---------------------------------------------------------------------------

Code of Arbitration Procedure

Director of Arbitration

    Sec. 3. The Board of Governors of the Association shall appoint a 
Director of Arbitration (``Director'') who shall be charged with the 
performance of all administrative duties and functions in connection 
with matters submitted for arbitration pursuant to this Code. The 
Director [He] shall be directly responsible to the National Arbitration 
Committee and shall report to it at periodic intervals established by 
the Committee and at such other times as called upon by the Committee 
to do so. The duties and functions of the Director may be delegated by 
the Director, as appropriate. In the event of the incapacitation, 
resignation, removal, or other permanent or indefinite inability of the 
Director to perform the duties and responsibilities of the Director, 
the President or an Executive Vice President of the Association may 
appoint an interim Director.
* * * * *

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 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 Statements of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    The current provisions of Section 3 of the Code provide for the 
appointment of a Director of Arbitration by the NASD Board of Governors 
to perform all administrative duties and functions in connection with 
matters submitted to the NASD for arbitration. The Director has found 
it necessary to delegate certain functions of the Director to senior 
management employees of the NASD's Arbitration Department, especially 
as a result of the significant growth in the Department's staff and 
workload. The NASD believes this delegation power is inherent in the 
authority of the Director to manage the functions of the NASD's 
Arbitration Department. Nevertheless, the NASD is proposing to amend 
Section 3 of the Code to expressly provide for such delegation.
    The proposed rule change to Section 3 provides that the duties and 
functions of the Director may be delegated by the Director as 
appropriate. Further, in the event that the Director is incapacitated, 
resigns, is removed or is permanently or indefinitely disabled from the 
performance of the duties and functions of the Director, the proposed 
rule change provides that the President of the Association or an 
Executive Vice President may appoint an interim Director to perform 
this functions and responsibilities of the Director.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b) of the Act\2\ in that the proposed 
rule change will protect investors and the public interest by avoiding 
disruptions and uncertainly about the authority to Act under the Code 
by permitting the duties and functions of the Director to be delegated 
by the Director and by permitting certain other NASD officers to 
appoint an interim Director if certain circumstances render the 
Director unable to discharge the duties vested in the Director.

    \2\15 U.S.C. Sec. 78o-3.
---------------------------------------------------------------------------

(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

    The proposed rule change was published for comment by the SEC as 
part of SR-NASD-93-51 in Securities Exchange Act Release No. 33108 
(October 26, 1993), 58 FR 58573 (November 2, 1993). No comments were 
received by the SEC specifically directed at the proposed amendment to 
Section 3.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 [[Page 1823]] Secretary, 
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 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. Copes 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 January 26, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-230 Filed 1-4-95; 8:45 am]
BILLING CODE 8010-01-M