[Federal Register Volume 61, Number 140 (Friday, July 19, 1996)]
[Proposed Rules]
[Pages 37701-37713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18353]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 61, No. 140 / Friday, July 19, 1996 / 
Proposed Rules  

[[Page 37701]]



SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 249

[Release No. 34-37432; File No. S7-17-96]
RIN 3235-AG69


Broker-Dealer Registration and Reporting

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission is publishing for 
comment proposed amendments to Form BDW, the uniform request for 
withdrawal from broker-dealer registration under the Securities 
Exchange Act of 1934. The proposed amendments are designed to implement 
recommended changes to the Central Registration Depository system, a 
computer system operated by the National Association of Securities 
Dealers, Inc. that maintains registration information regarding 
registered broker-dealers and their registered personnel for use by the 
Commission, the self-regulatory organizations, and state securities 
regulators. The amendments include certain clarifying amendments to 
Form BDW and its filing requirements. The Commission also is publishing 
for comment proposed amendments to rules governing the withdrawal of 
broker-dealer registration under the Securities Exchange Act of 1934. 
Specifically, the proposed amendments would permit broker-dealers that 
are withdrawing from registration to consent to an extension of the 
effective date of their withdrawal. The proposed amendments also would 
permit the Commission to extend the effective date for such period as 
the Commission by order may determine. In addition, the Commission is 
publishing for comment proposed revisions to rules under the Securities 
Exchange Act of 1934 governing the filing of Form BD and Form BDW to 
provide for electronic filing of these forms and to accommodate the 
conversion of existing registration information to the redesigned 
Central Registration Depository system.

DATES: Comments should be submitted on or before August 19, 1996.

ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, Mail Stop 6-9, 450 
Fifth Street, NW., Washington, DC. 20549. Comments also may be 
submitted electronically at the following E-mail address: rule-
[email protected]. All comment letters should refer to File No. S7-17-
96. This file number should be included on the subject line if E-mail 
is used. Comment letters received will be available for public 
inspection and copying in the Commission's Public Reference Room, 450 
Fifth Street, NW., Washington, DC. 20549. Comment letters that are 
submitted electronically will be posted on the Commission's Internet 
web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: Glenn J. Jessee, Special Counsel, 
(202) 942-0073, Office of Chief Counsel, Division of Market Regulation, 
Securities and Exchange Commission, 450 Fifth Street, NW., Mail Stop 5-
10, Washington, DC. 20549.

SUPPLEMENTARY INFORMATION:

I. Introduction

    As part of its continuing effort to simplify the registration forms 
used by broker-dealers, the Securities and Exchange Commission 
(``Commission'') is proposing revisions to Form BDW,1 the uniform 
request for broker-dealer withdrawal under the Securities Exchange Act 
of 1934 (``Exchange Act'').2 The proposed amendments are designed 
to reduce the regulatory burden on broker-dealers and to improve the 
usefulness of the information contained in Form BDW to the Commission, 
self-regulatory organizations (``SROs''), and state securities 
regulators by simplifying the form and clarifying its requirements. The 
proposed amendments also are designed to implement recommended changes 
to the Central Registration Depository (``CRD''), a computer system 
operated by the National Association of Securities Dealers, Inc. 
(``NASD'') that maintains registration information regarding broker-
dealers and their registered personnel for use by federal and state 
securities regulators. In this regard, the proposed amendments, if 
adopted, would conform Form BDW in certain respects to analogous 
amendments to Form BD adopted today by the Commission.3
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    \1\  17 CFR 240.15b6-1; 17 CFR 249.501a.
    \2\ 15 U.S.C. 78a et seq.
    \3\ See Securities Exchange Act Release No. 37431 (``Form BD 
Release''). In the Form BD Release, the Commission is adopting 
amendments to Form BD that are designed to implement changes to the 
CRD, including electronic filing of Form BD with the redesigned CRD 
system. The amendments also are expected to provide the Commission, 
SROs, and state securities regulators with better information about 
a registrant's disciplinary history by grouping disciplinary 
information into related categories and by customizing the 
corresponding Disclosure Reporting Pages used to disclose details of 
the registrant's disciplinary history.
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    The amendments to Form BDW are being proposed in connection with 
the NASD's implementation of comprehensive changes to the CRD system. 
The redesigned CRD system, which is currently scheduled to be 
operational by September 9, 1996, is expected to enhance its use by the 
Commission, SROs, and state securities regulators by providing for (i) 
streamlined capture and display of data; (ii) better access to 
information through the use of standardized and specialized computer 
searches; and (iii) electronic filing by broker-dealers of uniform 
forms, including Forms BD, BDW, U-4, and U-5.4 The amendments to 
Form BDW proposed today by the Commission are the result of discussions 
held among the Commission staff, the Forms Revision and CRD Committee 
of the North American Securities Administrators Association, Inc. 
(``NASAA''), the NASD, the New York Stock Exchange, and representatives 
of the securities industry.
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    \4\ Forms BD and BDW are joint forms used by the Commission, 
certain SROs, and all of the states to register and terminate 
broker-dealers. Forms U-4 and U-5 are used by the SROs and states to 
register, and terminate the employment of, broker-dealer personnel. 
For further discussion of the CRD redesign and electronic filing, 
see discussion infra at Section IV. See also Form BD Release, supra 
note 3; Notice of Filing of Proposed Rule Change by National 
Association of Securities Dealers, Inc. Relating to Proposed 
Amendments to Forms U-4 and U-5, Securities Exchange Act Release No. 
37289 (Jun. 7, 1996), 61 FR 30272 (File No. SR-NASD-96-19).
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    The Commission also is proposing to amend Exchange Act Rule 15b6-1 
to permit broker-dealers that are withdrawing from registration to 
consent to a delay in the effectiveness of their notice of withdrawal. 
The

[[Page 37702]]

proposed amendments also would permit the Commission to extend the 
effective date for such period as the Commission by order may determine 
as necessary or appropriate in the public interest or for the 
protection of investors.5 These amendments are being proposed, in 
part, to provide broker-dealers adequate flexibility to bring their 
business operations to an orderly close in circumstances in which the 
60-day period currently provided under Rule 15b6-1 would not be 
sufficient. These amendments also are being proposed to provide the 
Commission greater flexibility in concluding investigations of broker-
dealers prior to such broker-dealers effecting a withdrawal from 
registration.
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    \5\ 17 CFR 240.15b6-1. The proposed amendment to Rule 15b6-1 
also would be made to the analogous rules governing the withdrawal 
from registration of municipal securities dealers and government 
securities brokers and government securities dealers. See 17 CFR 
240.15Bc3-1 and 17 CFR 240.15Cc1-1.
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    In addition, the Commission is proposing to amend Form BD filing 
procedures under Rules 15b1-1, 15b3-1, 15Ba2-2, 15Ca1-1, and 15Ca2-1 of 
the Exchange Act 6 to implement the electronic filing of revised 
Form BD with the redesigned CRD system. These amendments would include 
temporary filing procedures in connection with the conversion of 
existing registration information to the redesigned CRD system. 
Amendments to implement electronic filing procedures for Form BDW under 
Rules 15b6-1, 15Bc3-1, and 15Cc1-1 of the Exchange Act also are being 
proposed.7 The proposed amendments to these filing rules, together 
with proposed amendments to Form BDW, are discussed further below.
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    \6\ 17 CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15Ba2-2, 17 
CFR 240.Ca1-1, and 17 CFR 240.15Ca2-1.
    \7\ 17 CFR 240.15b6-1, 17 CFR 240.15Bc3-1, and 17 CFR 240.15Cc1-
1.
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II. Form BDW

A. Items 4, 5, 6, and 8

    The Commission is proposing to amend Items 4, 5, 6, and 8 of Form 
BDW. Item 4 elicits disclosure of the date on which the withdrawing 
broker-dealer has ceased conducting business and, in the case of 
partial withdrawals from registration,8 the date on which the 
broker-dealer has ceased business in the states designated in Item 3. 
As currently drafted, Item 4 presumes that broker-dealers filing Form 
BDW are registered entities. Certain states, however, also require 
broker-dealers with pending applications for registration on Form BD to 
file Form BDW to effect a withdrawal of their pending 
applications.9 In order to accommodate those states in which Form 
BDW is filed to withdraw a pending registration application, Item 4 
would be amended to elicit disclosure of the date on which the broker-
dealer had withdrawn its request for registration.
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    \8\ The instructions to the form have been revised to explain 
that a partial withdrawal terminates registration only with 
designated states and SROs, but does not terminate registration with 
the Commission and at least one SRO and state.
    \9\ The Commission, however, does not require a broker-dealer 
that has an application for registration pending to file Form BDW in 
order to withdraw its pending application. Broker-dealers may 
withdraw a pending application simply by providing notice in writing 
to the Commission and the applicable SRO.
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    The Commission also is proposing to amend Item 5, which requests 
information concerning any funds and securities that withdrawing 
broker-dealers may owe to their customers or to other broker-dealers. 
Specifically, Item 5 requires a broker-dealer that seeks to withdraw 
from registration while still owing money or securities to customers or 
to other broker-dealers to identify the number of customers to which 
funds or securities are owed, and the amount of money and the market 
value of securities owed to customers and to broker-dealers. As 
amended, Item 5 would require a broker-dealer that files a partial 
withdrawal (i.e., a withdrawal from registration with a specific state 
or SRO) to provide the names of the states from which the broker-dealer 
is requesting withdrawal and in which the broker-dealer still owes 
customer funds or securities. This amendment would assist state 
securities regulators in monitoring the amount of funds or securities 
owed to customers in their states.
    The proposed revisions to Item 5 also would change the requirement 
that broker-dealers submit a FOCUS report or a statement of financial 
condition when filing Form BDW. Currently, a broker-dealer is required 
to file with Form BDW a FOCUS report or, if the broker-dealer is not 
subject to the FOCUS filing requirement, a statement of financial 
condition, whether or not the broker-dealer owes funds or securities to 
customers or to other broker-dealers. The Commission is proposing to 
reduce the filing burden on broker-dealers by requiring only that a 
FOCUS report or a statement of financial condition be filed with Form 
BDW when a broker-dealer is requesting full withdrawal from 
registration (i.e., a withdrawal from registration with the Commission, 
all SROs, and all states) and the broker-dealer owes money or 
securities to any customer or to any other broker-dealer.
    In addition, the Commission is proposing to amend Item 6 of Form 
BDW, which requires disclosure of certain regulatory and other 
disciplinary matters that also are reportable on Form BD. As proposed, 
Item 6 would be amended to delete the requirement that broker-dealers 
reiterate information already required to be disclosed on Form BD or 
elsewhere on Form BDW.10 Instead, Item 6 would provide a reminder 
that broker-dealers are required to update any incomplete or inaccurate 
disciplinary information on Form BD prior to filing Form BDW.11 
Item 6 also would be amended to ask whether the broker-dealer is the 
subject of, or is named in, any investment-related investigation, 
consumer-initiated complaint, or private civil litigation. Item 6 
currently requires disclosure if the broker-dealer is the subject of 
any ``proceeding'' not reported on Form BD, or any complaint or 
investigation. The question, therefore, would be revised to elicit more 
precise information by using specific, rather than general, terms.
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    \10\ Specifically, the question ``is broker-dealer now the 
subject of any unsatisfied claims for funds or securities not 
reported under Item 5'' would be deleted. These claims generally are 
already reportable under Item 5.
    \11\ Exchange Act Rule 15b3-1 (17 CFR 240.15b3-1) requires 
broker-dealers to amend any information on Form BD whenever it 
becomes inaccurate.
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    Finally, the Commission is proposing to expand Item 8, the 
execution paragraph, to require the registrant's agent to certify that 
the information contained on Form BDW is complete and current, and to 
certify further that all of the information on Form BD is accurate and 
complete at the time Form BDW is filed.

B. Instructions

    The Commission also is proposing changes to the general filing 
instructions to Form BDW. Under the proposal, the filing instructions 
would be expanded to provide greater guidance to broker-dealers filing 
Form BDW and to clarify attendant requirements that may arise out of 
filing Form BDW, particularly those raised by filing the form 
electronically with the redesigned CRD.12 In addition, the 
instructions would be revised to include an explanation of the 
following terms: jurisdiction, investment-related, and 
investigation.13 These definitions are

[[Page 37703]]

intended to assist broker-dealers in responding to questions about 
their disciplinary history and are consistent with the definitions 
contained in Form BD that are being adopted today by the 
Commission.14
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    \12\ For further discussion of electronic filing of uniform 
forms, including Form BDW, see discussion infra Section IV.
    \13\ E.g., the definition of the term ``investigation'' includes 
grand jury investigations, Commission investigations after the 
``Wells'' notice has been given, formal investigations by SROs, or 
actions or procedures designated as investigations by states, but 
does not include subpoenas, preliminary or routine regulatory 
inquiries or requests for information, deficiency letters, ``blue 
sheet'' requests or other trading questionnaires, or examinations.
    \14\ See Form BD Release, supra note 3.
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C. Clarifying Amendments

    In addition to the substantive amendments to Form BDW discussed 
above, the Commission is proposing several clarifying amendments to 
Form BDW. Item 3, for example, would be revised to inform the applicant 
broker-dealer that the SEC box should be checked only if the broker-
dealer is intending to conduct an intrastate brokerage business and is 
not a municipal securities dealer.15
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    \15\ Exchange Act Rule 15Ba2-2 (17 CFR 240.15Ba2-2) requires a 
non-bank municipal securities dealer whose business is exclusively 
intrastate to file with its application on Form BD a statement that 
it is filing for registration as an intrastate dealer. Thus, a non-
bank municipal securities dealer cannot conduct an intrastate 
municipal securities business without being registered with the 
Commission.
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III. Rule 15b6-1

    The Commission also is proposing to amend Exchange Act Rule 15b6-
1.16 Rule 15b6-1 requires broker-dealers to file a notice of 
withdrawal on Form BDW in accordance with the instructions contained 
therein. The rule also provides generally that withdrawal from broker-
dealer registration automatically becomes effective 60 days after the 
filing date of the Form BDW, unless the Commission institutes a 
proceeding to impose terms or conditions upon such withdrawal.17
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    \16\ See supra note 5 and accompanying text. The Commission also 
is proposing further amendments to Rules 15b6-1, 15Bc3-1, and 15Cc1-
1 (17 CFR 240.15b6-1, 17 CFR 15Bc3-1, and 17 CFR 15Cc1-1) to provide 
for electronic filing of Form BDW with the redesigned CRD system. 
See discussion infra Section IV.
    \17\ The proposed amendment to Rule 15b6-1 (17 CFR 240.15b6-1) 
would be consistent with a similar provision under section 15(b)(1) 
of the Exchange Act (15 U.S.C. Sec. 78o(b)). Section 15(b)(1) 
generally requires that broker-dealer registration be granted within 
45 days after the filing of Form BD, unless the applicant consents 
to a longer period of time.
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    The Commission has determined that there may be circumstances in 
which it would be advisable to provide broker-dealers seeking to 
withdraw from registration greater flexibility in scheduling the 
termination of their business operations. While a broker-dealer must 
cease all securities activities when it files a request for withdrawal 
on Form BDW, it may need additional time to unwind its non-securities 
business operations before its Form BDW becomes effective. The 
Commission, too, may determine that it would be appropriate for a 
broker-dealer that is under investigation by the Commission to maintain 
its registered status in order to allow the Commission to conclude its 
pending investigation without prematurely instituting a proceeding to 
impose conditions on the broker-dealer's withdrawal. In such instances, 
the interests of the Commission may be served by having the broker-
dealer consent to an extension of the period between filing Form BDW 
and the effective date of the broker-dealer's withdrawal from 
registration beyond the 60-day period currently provided under Rule 
15b6-1. The Commission's interests also may be served by permitting the 
Commission to extend the effective date for such period as it by order 
may determine as necessary or appropriate in the public interest or for 
the protection of investors. Absent express consent by the broker-
dealer, the issuance of a Commission order extending the effective date 
of withdrawal, or the initiation of a proceeding by the Commission, a 
request for broker-dealer withdrawal would continue to become effective 
for all matters on the 60th day after filing Form BDW with the 
Commission or within the time period specified in a Commission 
proceeding.

IV. Electronic Filing and Procedures for Filing Forms BD and BDW

A. Amendments to Filing Procedures for Forms BD and BDW

    To implement electronic filing of revised Form BD with the 
redesigned CRD system, the Commission is proposing amendments to the 
filing procedures for Form BD under Rules 15b1-1, 15b3-1, 15Ba2-2, 
15Ca1-1, and 15Ca2-1 of the Exchange Act.18 In a separate release, 
the Commission is adopting amendments to Form BD that, among other 
things, provide instructions for filing Form BD electronically with the 
CRD.19 The Commission also is proposing similar amendments to the 
filing procedures for Form BDW under Exchange Act Rules 15b6-1, 15Bc3-
1, and 15Cc1-1.20 The proposed procedures for electronic filing of 
Form BD and Form BDW are discussed below.
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    \18\ 17 CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15Ba2-2, 
17 CFR 240.Ca1-1, and 17 CFR 240.15Ca2-1.
    \19\ See Form BD Release, supra note 3.
    \20\ 17 CFR 240.15b6-1, 17 CFR 240.15Bc3-1, and 17 CFR 
240.15Cc1-1.
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1. Phase I
    a. Registered Broker-Dealers. The filing of both revised Form BD 
and revised Form BDW is intended to coincide with the implementation of 
the redesigned CRD, which will be conducted by the NASD in 
phases.21 With the voluntary participation of several NASD member 
firms and one service bureau, the NASD began conducting a two-month 
test of the redesigned CRD on May 20, 1996. During this two-month 
period, the NASD will test the software that will enable broker-dealers 
to file Forms BD and Form BDW (and other uniform forms) with the 
redesigned CRD system and carry out other quality assurance testing. 
The NASD anticipates that on July 29, 1996, broker-dealers 
participating in the test will begin filing all of their registration 
and licensing information electronically with the redesigned CRD on a 
pilot basis.
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    \21\ The NASD expects to implement the redesigned CRD system in 
three Phases. This release, however, discusses generally only Phase 
I and Phase II of the redesigned CRD implementation process. The 
NASD anticipates that Phase III of the implementation process, among 
other things, will provide for large transactions relating to 
mergers and acquisitions of NASD member firms, and a new state 
annual registration and renewal process for associated persons of 
member firms. In connection with the implementation of electronic 
filing, the NASD has proposed amendments to its By-Laws and Rules of 
Fair Practice to require, among other things, that its members 
develop written supervisory procedures governing the electronic 
filing of registration information with the redesigned CRD. See 
Securities Exchange Act Release No. 37291 (Jun. 7, 1996), 61 FR 
30272 (File No. SR-NASD-96-21).
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    On September 9, 1996, the NASD plans to implement Phase I of the 
transition to the redesigned CRD. During Phase I, the NASD will convert 
existing information about registered broker-dealers now contained in 
the old CRD system to the redesigned CRD system. In order to facilitate 
the conversion of this information to the redesigned CRD, the NASD will 
provide broker-dealers with advance notice of the specific dates for 
the conversion of their registration information and will assign 
broker-dealers to one of five NASD Quality and Service Teams. Through 
the use of manual and computer assisted procedures, these Quality and 
Service Teams will be responsible for converting the information for 
the broker-dealers assigned to them to the redesigned CRD. As part of 
this process, each broker-dealer also will be provided with a printout 
containing its disclosure information that is being converted to the 
redesigned CRD. The NASD will request that each broker-dealer review 
the information for accuracy and notify

[[Page 37704]]

the NASD of any errors.22 Details correcting inaccurate disclosure 
information will be submitted electronically through the redesigned 
CRD.
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    \22\ Similar procedures will be implemented for non-NASD members 
to ensure that non-NASD members also are converted to the new system 
during Phase I.
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    Before a broker-dealer's registration information is converted to 
the new CRD system, the NASD will provide each broker-dealer access for 
30 days to its ``test database'' to allow the broker-dealer to gain 
familiarity with the operation of the redesigned CRD system. During 
this 30-day test period, each broker-dealer will execute a series of 
simulated electronic filings using the new CRD system. Each broker-
dealer also will complete the computer-based training module that will 
be available on-line through the new CRD system.
    After a registered broker-dealer's existing registration 
information has been converted to the redesigned CRD system, the 
broker-dealer will be required to file electronically with the 
redesigned CRD (i) new information elicited by revised Form BD and the 
corresponding Disclosure Reporting Pages and Schedules that it has not 
previously provided and (ii) existing registration information that was 
not converted to the redesigned CRD system. A broker-dealer will be 
required to file this information at the time it files its first 
amendment to Form BD after its registration information has been 
converted to the redesigned CRD, but, in any event, no later than six 
months from its date of conversion to the redesigned CRD. The broker-
dealer must then file all future registration information 
electronically with the CRD. The mechanics of electronic filing are 
discussed in Subsection IV.B, below.
    Until a broker-dealer's existing registration information has been 
converted to the redesigned CRD system, the broker-dealer must continue 
to file amendments to its registration on Form BD (as revised November 
16, 1992) in paper form with the CRD. Similarly, unless a broker-
dealer's existing registration information has been converted to the 
redesigned CRD system, any notice of withdrawal filed by the broker-
dealer must be filed on Form BDW (as revised April 21, 1987) in paper 
form with the CRD system. Following the conversion of a broker-dealer's 
existing registration information to the redesigned CRD system, the 
broker-dealer would then file any notice of withdrawal on revised Form 
BDW electronically with the redesigned CRD system. The NASD expects 
Phase I to be completed by the end of 1996, with the registration 
information of non-NASD member broker-dealers being converted to the 
redesigned CRD system toward the end of Phase I.
    b. Broker-Dealer Applicants. During Phase I, the NASD intends to 
enter manually initial broker-dealer registration information into the 
redesigned CRD system. Accordingly, on or after September 9, 1996, 
initial broker-dealer applicants will be required to file revised Form 
BD in paper form until their applications are granted by the 
Commission. Once registration is granted, the broker-dealer will be 
required to file all future registration information electronically 
with the redesigned CRD, including amendments to Form BD, as well as 
requests for withdrawal from registration on Form BDW.
2. Phase II
    Phase II currently is scheduled to begin during the spring of 1997. 
During Phase II of the implementation process, the Commission, the 
SROs, and state securities regulators will be provided with direct 
access to broker-dealer registration information contained in the 
redesigned CRD system.23 Among other things, federal and state 
securities regulators and the SROs will be provided with the ability to 
search through hundreds of thousands of records to identify problem 
brokers, flag problem brokers who have left the industry so that they 
can be reviewed should they attempt to return to the business, and 
target firms and branches for examination in a more effective way. The 
Commission staff, as well as representatives of the SROs and state 
securities regulators, currently are working with the NASD to develop 
final requirements for the implementation of Phase II.
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    \23\ Prior to Phase II implementation, the Commission, the SROs, 
and state securities regulators will continue to gain access to 
broker-dealer registration information, including information filed 
on revised Form BD, through the old CRD system.
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    The NASD also anticipates that broker-dealer applicants will be 
able to file initial applications electronically with the redesigned 
CRD as part of the implementation of Phase II. In the meantime, 
however, the Commission is proposing to amend Exchange Act Rules 15b1-
1, 15Ba2-2, and 15Ca2-1 24 to provide for the filing of initial 
applications for registration on revised Form BD in paper form with the 
CRD.25 At such time as the redesigned CRD is capable of receiving 
initial applications for registration that are filed electronically, 
the Commission intends to adopt further amendments to Rules 15b1-1, 
15Ba2-2, and 15Ca2-1, which also are being proposed today for public 
comment.26
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    \24\ 17 CFR 240.15b1-1, 17 CFR 240.15Ba2-2, and 17 CFR 
240.15Ca2-1.
    \25\ Provisions requiring the filing of initial applications in 
paper form on revised Form BD are designated as ``Alternative 1 for 
paragraph (b)'' under Rules 15b1-1, 15Ba2-2, and 15Ca2-1 under the 
Exchange Act. (17 CFR 240.15b1-1, 17 CFR 240.15Ba2-2, and 17 CFR 
240.15Ca2-1).
    \26\ 17 CFR 240.15b1-1, 17 CFR 240.15Ba2-2, and 17 CFR 
240.15Ca2-1. Provisions requiring the electronic filing of initial 
applications on Form BD are designated as ``Alternative 2 for 
paragraph (b)'' under Exchange Act Rules 15b1-1, 15Ba2-2, and 15Ca2-
1.
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B. Mechanics of Electronic Filing

    As noted above, the redesign of the CRD system will allow broker-
dealers to file Forms BD and BDW electronically.27 Because the 
redesigned CRD system is intended to operate in an electronic 
environment, the NASD anticipates that eventually paper filings no 
longer will be submitted by broker-dealer applicants, nor will data 
continue to be entered manually into the CRD system by the NASD.28 
Rather, once the redesigned CRD has been tested and fully implemented, 
broker-dealers will file registration and licensing information with 
the NASD electronically by direct link with the CRD system through 
standard dial-up access and other electronic means. To effect 
electronic filing with the CRD system, the NASD has developed software 
that will support the submission of registration information using a 
personal computer. Broker-dealers that elect to file their own 
registration information electronically with the redesigned CRD will be

[[Page 37705]]

required to purchase this software from the NASD. Alternatively, 
broker-dealers may elect to employ a third party, such as a service 
bureau, to make electronic filings of registration forms on their 
behalf.
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    \27\ At the time the Commission joined the CRD, it noted that 
all applications, amendments, and withdrawals from registration that 
are filed with the CRD will be deemed to be filed with the 
Commission. Securities Exchange Act Release No. 31661 (Dec. 28, 
1992), 58 FR 11 (Jan. 4, 1993), n.5. However, an application, 
amendment, or withdrawal from registration shall be considered filed 
on the date it is filed with the CRD only if the filing is complete 
in all respects. Any application, amendment, or withdrawal from 
registration that is incomplete at the time it is filed with the CRD 
shall not be deemed to be filed with the Commission until such time 
as any deficiency in the filing is corrected and the Commission has 
determined that the filing is complete. See Exchange Act Rule 0-3 
(17 CFR 240.0-3); In the Matter of First Jersey Securities, Inc., 
Securities Exchange Act Release No. 37259 (May 30, 1996), 62 SEC 
Docket 37; In the Matter of F.N. Wolf & Co., Inc., Administrative 
Proceedings Rulings Release No. 470 (May 3, 1995), 59 SEC Docket 
719.
    \28\ Currently, applicant broker-dealers seeking to register 
with the Commission and the various states file a single Form BD 
with the NASD, which manually enters the information into the CRD 
system and then electronically forwards the information to the 
Commission and appropriate states for review.
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    Electronic filings submitted by or on behalf of a broker-dealer 
will be transmitted to the CRD either in batch transfers or in an on-
line mode.29 After the information has been transmitted 
electronically, the CRD system will disseminate the registration 
requests or updated information to the Commission, the SROs, and any 
states in which the broker-dealer is registering or has registered. 
After an electronic filing is processed, the CRD system will send the 
filer an electronic message or identification number indicating whether 
the filing has been accepted. In addition, the results of Commission, 
SRO, and state review of broker-dealer filings also will be handled 
electronically and will be transmitted directly to the broker-dealer 
applicant via the redesigned CRD system.
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    \29\ The redesigned CRD will provide for batch filings of 
registration and licensing information. Under the redesigned CRD, 
broker-dealers will be able to download data from their internal 
data bases into programmed formats for the CRD to process. In this 
regard, broker-dealers or persons acting on their behalf, such as 
service bureaus, will be able to create several CRD filings off-line 
and, when ready, transmit them collectively to the CRD. In 
comparison, in an on-line mode, broker-dealers or persons acting on 
their behalf, such as service bureaus, will enter information 
directly into the redesigned CRD through a windows-based interactive 
session.
---------------------------------------------------------------------------

    The NASD recently determined that it would not be feasible for all 
of its members to migrate to a fully electronic filing environment 
during Phase I, and that certain of its members may require additional 
time to adapt their current registration and licensing systems to the 
redesigned CRD system. As a result, approximately 4,600 NASD member 
firms having fewer than 50 registered representatives initially will be 
given the option of using an electronic filing service that will be 
provided by the NASD.30 This service will allow broker-dealers to 
forward their registration and licensing forms in paper form to an 
internal processing unit of the NASD, which then will file these forms 
with the redesigned CRD system on the broker-dealer's behalf.31 
This service will be available for up to one year from the time a 
firm's registration information is converted to the redesigned CRD, and 
will afford a substantial number of NASD member firms sufficient time 
to adapt their systems to the redesigned CRD.32 At the end of this 
one-year period, firms will be required either to purchase software 
that would allow them to file registration information directly with 
the CRD, or to use a third party service bureau to file such 
information electronically on their behalf. The NASD also plans to make 
its processing service available to non-NASD member broker-dealers for 
a one-year period.
---------------------------------------------------------------------------

    \30\ The 819 NASD member firms having 50 or more registered 
representatives account for more than 90 percent of current CRD 
filing activity. These firms will be required to electronically file 
registration information with the redesigned CRD, either by filing 
such information directly using software purchased from the NASD or 
by employing the services of a service bureau.
    \31\ Each broker-dealer will be required to inform the NASD of 
the method through which it will initially file information with the 
redesigned CRD (i.e., directly through the use of the NASD's 
software, indirectly through a service provider, or through the 
NASD's electronic filing service) at least 30 days before the 
broker-dealer is given access to the NASD's test database prior to 
the conversion of the broker-dealer's registration information to 
the redesigned CRD system.
    \32\ This service also will be made available to non-NASD 
members firms. The NASD currently intends to charge only member 
firms a fee for the use of this service. The NASD has no current 
plans to charge non-NASD member firms for the use of the filing 
service.
---------------------------------------------------------------------------

C. Conforming Amendments

    The Commission is proposing an amendment to Exchange Act Rule 15b1-
1 33 that would clarify that an application for registration filed 
on Form BD with the Central Registration Depository shall be considered 
a ``report'' filed with the Commission for purposes of Section 15(b) of 
the Exchange Act.34 This amendment is intended to conform the 
language in Rule 15b1-1 with language already contained in 
corresponding filing rules applicable to municipal securities dealers 
and government securities brokers and government securities dealers. 
The Commission also is proposing amendments to Rules 15b1-1, 15b3-1, 
15b6-1, 15Ba2-2, 15Bc3-1, 15Ca2-1, and 15Cc1-1 under the Exchange Act 
35 to clarify that the filing of Form BD or Form BDW by broker-
dealers, municipal securities dealers, and government securities 
brokers and government securities dealers would, in each instance, 
constitute a ``report'' filed with the Commission within the meaning of 
sections 15(b),15B(c), 15C(c) 17(a), 18(a), and 32(a) of the Exchange 
Act.36
---------------------------------------------------------------------------

    \33\ 17 CFR 240.15b1-1.
    \34\ 15 U.S.C. 78o(b).
    \35\ 17 CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15b6-1, 17 
CFR 240.15Ba2-2, 17 CFR 240.15Bc3-1, 17 CFR 240.15Ca2-1, and 17 CFR 
240.15Cc1-1.
    \36\ 15 U.S.C. 78o(b), 78o-4(c), 78o-5(c), 78q(a), 78r(a), and 
78ff(a).
---------------------------------------------------------------------------

V. Request for Comment

    The Commission is soliciting comment on whether the changes to Form 
BDW described above will provide more meaningful information to the 
Commission and other securities regulators without increasing the 
regulatory burden on broker-dealers. The Commission further requests 
comment on each of the proposed changes to Form BDW, including 
electronic filing of Form BDW. The Commission also is requesting 
comment on the proposed amendments to Rules 15b6-1, 15Bc3-1, and 15Cc1-
1 under the Exchange Act 37 that would permit broker-dealers 
withdrawing from registration to consent to a delay in the 
effectiveness of their request for withdrawal, and that would permit 
the Commission to extend the effective date for such period as it by 
order may determine.
---------------------------------------------------------------------------

    \37\ 17 CFR 240.15b6-1, 17 CFR 240.15Bc3-1, and 17 CFR 
240.15Cc1-1.
---------------------------------------------------------------------------

    In addition, the Commission is requesting comment on the proposal 
to amend the filing procedures for revised Form BD under Rules 15b1-1, 
15b3-1, 15Ba2-2, 15Ca1-1, and 15Ca2-1 of the Exchange Act,38 as 
well as the filing procedures for Form BDW under Exchange Act Rules 
15b6-1, 15Bc3-1, and 15Cc1-1.39 Comment is solicited with regard 
to not only the electronic filing of Forms BD and BDW, but also 
concerning proposed temporary filing instructions for broker-dealers in 
connection with the conversion of existing registration information to 
the redesigned CRD, and the proposal for electronic filing of initial 
applications for registration as part of the implementation of Phase 
II.
---------------------------------------------------------------------------

    \38\ 17 CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15Ba2-2, 
17 CFR 240.Ca1-1, and 17 CFR 240.15Ca2-1.
    \39\ 17 CFR 240.15b6-1, 17 CFR 240.15Bc3-1, and 17 CFR 
240.15Cc1-1.
---------------------------------------------------------------------------

    Comment is requested not only on the specific subjects and issues 
discussed in the release, but on any other approaches or issues that 
should be considered in connection with facilitating the use of 
electronic media to further the broker-dealer registration and 
withdrawal provisions under the federal securities laws.

VI. Proposed Effective Date

    The Commission anticipates that, if adopted, the proposed 
amendments will become effective on or about September 9, 1996.

[[Page 37706]]

VII. Effects on Competition and Regulatory Flexibility Act 
Considerations

    Section 23(a)(2) of the Exchange Act 40 requires the 
Commission, in adopting rules under the Exchange Act, to consider the 
anticompetitive effects of such rules, if any, and to balance any 
anticompetitive impact against the regulatory benefits gained in terms 
of furthering the purposes of the Exchange Act. The Commission is of 
the view that the proposed amendments to Form BDW, and the amendments 
to Rules 15b1-1, 15b3-1, 15b6-1, 15Ba2-2, 15Bc3-1, 15Ca1-1, and 15Cc1-1 
under the Exchange Act 41 would not result in any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Exchange Act. As noted above, the form revisions and 
rule amendments proposed today would reduce the regulatory burden on 
broker-dealers by clarifying the information required to be filed on 
Form BDW and by facilitating the filing of Form BD and Form BDW 
electronically with the CRD.
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78w(a)(2).
    \41\ 17 CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15b6-1, 17 
CFR 240.15Ba2-2, 17 CFR 240.15Bc3-1, 17 CFR 240.15Ca1-1, and 17 CFR 
240.15Cc1-1.
---------------------------------------------------------------------------

    The Commission requests comment, however, on any competitive 
burdens that might result from adoption of the form revisions and rule 
amendments described in this release.
    In addition, the Commission has prepared an Initial Regulatory 
Flexibility Analysis (``IRFA''), pursuant to the requirements of the 
Regulatory Flexibility Act,42 regarding the proposed revisions to 
Form BDW and proposed amendments to the Form BD and Form BDW filing 
rules under the Exchange Act.
---------------------------------------------------------------------------

    \42\ 5 U.S.C. 603 (1990).
---------------------------------------------------------------------------

    A copy of the IRFA may be obtained from Glenn J. Jessee, Special 
Counsel, Office of Chief Counsel, Division of Market Regulation, 
Securities and Exchange Commission, 450 Fifth Street, NW., Mail Stop 5-
10, Washington, DC 20549; (202) 942-0073.

VIII. Paperwork Reduction Act Analysis

    Certain provisions of the proposal to amend Form BDW may contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The 
Commission has submitted the proposal to the Office of Management and 
Budget (``OMB'') for review in accordance with 44 U.S.C. 3507(d). The 
title for this collection of information is: ``Proposed Amendments to 
Form BDW.''
    The Commission is proposing amendments to Form BDW that are 
designed to reduce the regulatory burden on broker-dealers and to 
improve the usefulness of the information to federal and state 
securities regulators by simplifying the form and clarifying its 
requirements. The proposed amendments also are designed to implement 
changes to the CRD system, including providing for electronic filing of 
Form BDW.43
---------------------------------------------------------------------------

    \43\ Rules 15b6-1, 15Bc3-1, and 15Cc1-1 under the Exchange Act 
(17 CFR 240.15b6-1, 17 CFR 240.15B3-1, and 17 CFR 240.15Cc1-1) 
require broker-dealers to file a notice of withdrawal on Form BDW in 
accordance with the instructions contained therein. The collection 
of information on Form BDW is necessary for the Commission to 
determine whether it is in the public interest to permit a broker-
dealer to withdraw its registration. The proposed amendments to 
Exchange Act Rules 15b1-1, 15b3-1, 15Ba2-2, 15Ca1-1, and 15Ca2-1 (17 
CFR 240.15b1-1, 17 CFR 240.15b3-1, 17 CFR 240.15Ba2-2, 17 CFR 
240.15Ca1-1, and 17 CFR 240.15Ca2-1) governing Form BD filing 
procedures do not require a collection of information.
---------------------------------------------------------------------------

    This collection of information will be used by the Commission to 
determine whether it is in the public interest to permit a broker-
dealer to withdraw its registration. This collection of information 
also is important to a withdrawing broker-dealer's customers and to the 
general public because it provides, among other things, the name and 
address of the broker-dealer's agent to contact regarding the broker-
dealer's unfinished business.
    The likely respondents to the proposed collection of information 
will be the 900 or fewer broker-dealers that withdraw from registration 
annually. They will be required to respond to the proposed collection 
of information before being allowed to withdraw their registration with 
the Commission. The Commission expects that the proposed collection of 
information on revised Form BDW will result in no additional burdens to 
broker-dealers seeking to withdraw from registration on Form BDW. The 
Commission estimates that the average burden to complete Form BDW will 
be approximately 15 minutes, or 0.25 hours. (based on the Commission 
staff's experience in administering the form). Approximately 900 
respondents file one response per year, resulting in an estimated total 
annual reporting burden of 225 hours.
    As proposed, likely respondents would be required to retain the 
collection of information for a period of no less than six years and to 
make it available for inspection upon a regulatory request. Disclosure 
of data solicited in this proposed collection of information by the 
likely respondents is mandatory before a request for withdrawal from 
registration may become effective. Disclosure of social security 
numbers, however, is voluntary. The responses provided by the likely 
respondents would be made a matter of public record and would be 
available for inspection by any member of the public. Likely 
respondents, however, would not be required to provide a response to 
questions contained in this proposed collection of information unless a 
current OMB control number is displayed.
    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits 
comment to:
    (i) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information shall have practical utility;
    (ii) Evaluate the accuracy of the agency's estimate of the burden 
of the proposed collection of information;
    (iii) Enhance the quality, utility, and clarity of the information 
to be collected; and
    (iv) Minimize the burden of collection of information on those who 
are to respond, including through the use of automated collection 
techniques or other forms of information technology.
    Persons desiring to submit comments on the collection of 
information requirements should direct them to the Office of Management 
and Budget, Attention: Desk Office for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs of the OMB, 
Washington, DC 20503, and should also send a copy of their comments 
directly to the Commission. OMB is required to make a decision 
concerning the collection of information between 30 and 60 days after 
publication; thus, a comment to OMB is best assured of having its full 
affect if OMB receives it within 30 days of publication.

IX. List of Subjects in 17 CFR Parts 240 and 249

    Reporting and recordkeeping requirements, Securities, Broker-
Dealers

Statutory Basis and Text of Proposed Amendments

    In accordance with the foregoing, Title 17, Chapter II of the Code 
of Federal Regulations is proposed to be amended as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    1. The authority citation for part 240 continues to read in part as 
follows:


[[Page 37707]]


    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg, 
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p, 
78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
    2. By revising Sec. 240.15b1-1 to read as follows:


Sec. 240.15b1-1  Application for registration of brokers or dealers.

    (a) An application for registration of a broker or dealer filed 
pursuant to section 15(b) of the Act (15 U.S.C. 78o(b)) shall be filed 
on Form BD (17 CFR 249.501) in accordance with the instructions 
contained therein. Every application for registration of a broker or 
dealer shall be filed with the Central Registration Depository 
(operated by the National Association of Securities Dealers, Inc.) in 
accordance with applicable filing requirements.
[Alternative 1 for paragraph (b)]
    (b) Every application for registration of a broker or dealer filed 
pursuant to paragraph (a) of this section shall be filed on Form BD (17 
CFR 249.501) in paper form with the Central Registration Depository in 
accordance with applicable filing requirements.
[Alternative 2 for paragraph (b)]
    (b) Every application for registration of a broker or dealer filed 
pursuant to paragraph (a) of this section shall be filed on Form BD (17 
CFR 249.501) electronically with the Central Registration Depository in 
accordance with applicable filing requirements.
    (c) An application for registration that is filed with the Central 
Registration Depository pursuant to this section shall be considered a 
``report'' filed with the Commission for purposes of sections 15(b), 
17(a), 18(a), 32(a) (15 U.S.C. 78o(b), 78q(a), 78r(a), 78ff(a)) and 
other applicable provisions of the Act.
    3. By revising Sec. 240.15b3-1 to read as follows:


Sec. 240.15b3-1  Amendments to application.

    (a) If the information contained in any application for 
registration as a broker or dealer, or in any amendment thereto, is or 
becomes inaccurate for any reason, the broker or dealer shall promptly 
file with the Central Registration Depository (operated by the National 
Association of Securities Dealers, Inc.), in accordance with applicable 
filing requirements, an amendment on Form BD (17 CFR 249.501) 
correcting such information.
    (b) Temporary Filing Instructions: (1) Every broker or dealer who 
is registered with the Commission as of September 9, 1996 shall file as 
an amendment to its application a complete Form BD (17 CFR 249.501), 
and any subsequent amendments thereto pursuant to paragraph (a) of this 
section, electronically with the Central Registration Depository 
(operated by the National Association of Securities Dealers, Inc.) no 
later than six months following receipt of notification from the 
National Association of Securities Dealers, Inc. or the broker's or 
dealer's Designated Examining Authority (DEA) that the information 
contained in such broker's or dealer's application for registration has 
been converted to the redesigned Central Registration Depository 
system.
    (2) Notwithstanding paragraph (b)(1) of this section, if the 
information contained in any application for registration as a broker 
or dealer is or becomes inaccurate for any reason during the six months 
following receipt of notification from the National Association of 
Securities Dealers, Inc. or the broker's or dealer's DEA that the 
information contained in such broker's or dealer's application for 
registration has been converted to the redesigned Central Registration 
Depository system, the broker or dealer shall promptly file as an 
amendment to its application a complete Form BD (17 CFR 249.501) 
electronically with the Central Registration Depository.
    (3) If the information contained in any application for 
registration as a broker or dealer is or becomes inaccurate for any 
reason prior to receipt of notification from the National Association 
of Securities Dealers, Inc. or the broker's or dealer's DEA that the 
information contained in such broker's or dealer's application for 
registration has been converted to the redesigned Central Registration 
Depository system, the broker or dealer shall promptly file as an 
amendment to its application a complete Form BD (17 CFR 249.501) (as 
revised November 16, 1992) in paper form with the Central Registration 
Depository.
    (c) Every amendment filed with the Central Registration Depository 
pursuant to this section shall constitute a ``report'' filed with the 
Commission within the meaning of sections 15(b), 17(a), 18(a), 32(a) 
(15 U.S.C. 78o(b), 78q(a), 78r(a), 78ff(a)) and other applicable 
provisions of the Act.
    4. By revising Sec. 240.15b6-1 to read as follows:


Sec. 240.15b6-1  Withdrawal from registration.

    (a) Notice of withdrawal from registration as a broker or dealer 
pursuant to section 15(b) of the Act (15 U.S.C. 78o(b)) shall be filed 
on Form BDW (17 CFR 249.501a) in accordance with the instructions 
contained therein. Every notice of withdrawal from registration as a 
broker or dealer shall be filed with the Central Registration 
Depository (operated by the National Association of Securities Dealers, 
Inc.) in accordance with applicable filing requirements. Prior to 
filing a notice of withdrawal from registration on Form BDW (17 CFR 
249.501a), a broker or dealer shall amend Form BD (17 CFR 249.501) in 
accordance with Sec. 240.15b3-1(a) to update any inaccurate 
information.
    (b) Temporary filing instructions: Notwithstanding paragraph (a) of 
this section, a notice of withdrawal from registration filed by a 
broker or dealer on or after September 9, 1996 but prior to receipt of 
notification from the National Association of Securities Dealers, Inc. 
or the broker's or dealer's DEA that the information contained in such 
broker's or dealer's application for registration has been converted to 
the redesigned Central Registration Depository system, shall be filed 
on Form BDW (17 CFR 249.501a) (as revised April 21, 1987) in paper form 
with the Central Registration Depository.
    (c) A notice of withdrawal from registration filed by a broker or 
dealer pursuant to section 15(b) of the Act (15 U.S.C. 78o(b)) shall 
become effective for all matters (except as provided in this paragraph 
(c) and in paragraph (d) of this section) on the 60th day after the 
filing thereof with the Commission, within such longer period of time 
as to which such broker or dealer consents or the Commission by order 
may determine as necessary or appropriate in the public interest or for 
the protection of investors, or within such shorter period of time as 
the Commission may determine. If a notice of withdrawal from 
registration is filed with the Commission at any time subsequent to the 
date of the issuance of a Commission order instituting proceedings 
pursuant to section 15(b) of the Act (15 U.S.C. 78o(b)) to censure, 
place limitations on the activities, functions or operations of, or 
suspend or revoke the registration of, such broker or dealer, or if 
prior to the effective date of the notice of withdrawal pursuant to 
this paragraph (c), the Commission institutes such a proceeding or a 
proceeding to impose terms or conditions upon such withdrawal, the 
notice of withdrawal shall not become effective pursuant to this 
paragraph (c) except at such time and upon such terms and conditions as 
the Commission deems necessary or appropriate in the public interest or 
for the protection of investors.

[[Page 37708]]

    (d) With respect to a broker's or dealer's registration status as a 
member within the meaning of section 3(a)(2) of the Securities Investor 
Protection Act of 1970 (15 U.S.C. 78ccc(a)(2)) for purposes of the 
application of sections 5, 6, and 7 (15 U.S.C. 78eee, 78fff, and 78fff-
1) thereof to customer claims arising prior to the effective date of 
withdrawal pursuant to paragraph (c) of this section, the effective 
date of a broker's or dealer's withdrawal from registration pursuant to 
this paragraph (d) shall be six months after the effective date of 
withdrawal pursuant to paragraph (c) of this section or such shorter 
period of time as the Commission may determine.
    (e) Every notice of withdrawal filed with the Central Registration 
Depository pursuant to this section shall constitute a ``report'' filed 
with the Commission within the meaning of sections 15(b), 17(a), 18(a), 
32(a) (15 U.S.C. 78o(b), 78q(a), 78r(a), 78ff(a)) and other applicable 
provisions of the Act.
    5. By revising Sec. 240.15Ba2-2 to read as follows:


Sec. 240.15Ba2-2  Application for registration of non-bank municipal 
securities dealers whose business is exclusively intrastate.

    (a) An application for registration, pursuant to Section 15B(a) of 
the Act (15 U.S.C. 78o-4(a), of a municipal securities dealer who is 
not subject to the requirements of Sec. 240.15Ba2-1, shall be filed on 
Form BD (17 CFR 249.501) in accordance with the instructions contained 
therein. Every application for registration of a municipal securities 
dealer who is not subject to the requirements of Sec. 240.15Ba2-1 shall 
be filed with the Central Registration Depository (operated by the 
National Association of Securities Dealers, Inc.) in accordance with 
applicable filing requirements.
[Alternative 1 for paragraph (b)]
    (b) Every application for registration of a municipal securities 
dealer who is not subject to the requirements of Sec. 240.15Ba2-1 shall 
be filed on Form BD (17 CFR 249.501) in paper form with the Central 
Registration Depository in accordance with applicable filing 
requirements.
[Alternative 2 for paragraph (b)]
    (b) Every application for registration of a municipal securities 
dealer filed pursuant to paragraph (a) of this section shall be filed 
on Form BD (17 CFR 249.501) electronically with the Central 
Registration Depository in accordance with applicable filing 
requirements.
    (c) If the information contained in any application for 
registration filed pursuant to paragraph (a) of this section, or in any 
amendment to such application, is or becomes inaccurate for any reason, 
the dealer shall promptly file with the Central Registration 
Depository, in accordance with applicable filing requirements, an 
amendment on Form BD (17 CFR 249.501) correcting such information.
    (d) Temporary Filing Instructions: (1) Every municipal securities 
dealer who is registered with the Commission as of September 9, 1996 
shall file as an amendment to its application a complete Form BD (17 
CFR 249.501), and any subsequent amendments thereto pursuant to 
paragraph (c) of this section, electronically with the Central 
Registration Depository no later than six months following receipt of 
notification from the National Association of Securities Dealers, Inc. 
that the information contained in such municipal securities dealer's 
application for registration has been converted to the redesigned 
Central Registration Depository system.
    (2) Notwithstanding paragraph (d)(1) of this section, if the 
information contained in any application for registration as a 
municipal securities dealer is or becomes inaccurate for any reason 
during the six months following receipt of notification from the 
National Association of Securities Dealers, Inc. that the information 
contained in such municipal securities dealer's application for 
registration has been converted to the redesigned Central Registration 
Depository system, the municipal securities dealer shall promptly file 
as an amendment to its application a complete Form BD (17 CFR 249.501) 
electronically with the Central Registration Depository.
    (3) If the information contained in any application for 
registration as a municipal securities dealer is or becomes inaccurate 
for any reason prior to receiving notification from the National 
Association of Securities Dealers, Inc. that the information contained 
in such municipal securities dealer's application for registration has 
been converted to the redesigned Central Registration Depository 
system, the municipal securities dealer shall promptly file as an 
amendment to its application a complete Form BD (17 CFR 249.501) (as 
revised November 16, 1992) in paper form with the Central Registration 
Depository.
    (e) Every application or amendment filed with the Central 
Registration Depository pursuant to this section shall constitute a 
``report'' filed with the Commission within the meaning of sections 
15(b), 15B(c), 17(a), 18(a), 32(a) (15 U.S.C. 78o(b), 78o-4(c), 78q(a), 
78r(a), 78ff(a)) and other applicable provisions of the Act.
    6. By revising Sec. 240.15Bc3-1 to read as follows:


Sec. 240.15Bc3-1  Withdrawal from registration of municipal securities 
dealers.

    (a) Notice of withdrawal from registration as a municipal 
securities dealer pursuant to section 15B(c) (15 U.S.C. 78o-4(c)) shall 
be filed on Form MSDW (17 CFR 249.1110), in the case of a municipal 
securities dealer which is a bank or a separately identifiable 
department or division of a bank, or Form BDW (17 CFR 249.501a), in the 
case of any other municipal securities dealer, in accordance with the 
instructions contained therein. Prior to filing a notice of withdrawal 
from registration on Form MSDW (17 CFR 249.1110) or Form BDW (17 CFR 
249.501a), a municipal securities dealer shall amend Form MSD (17 CFR 
249.1100) in accordance with Sec. 240.15Ba2-1(b) or amend Form BD (17 
CFR 249.501) in accordance with Sec. 240.15Ba2-2(c) to update any 
inaccurate information.
    (b) Every notice of withdrawal from registration as a municipal 
securities dealer that is filed on Form BDW (17 CFR 249.501a) shall be 
filed with the Central Registration Depository (operated by the 
National Association of Securities Dealers, Inc.) in accordance with 
applicable filing requirements. Every notice of withdrawal on Form MSDW 
(17 CFR 249.1110) shall be filed with the Commission.
    (c) Temporary filing instructions: Notwithstanding paragraph (a) of 
this section, a notice of withdrawal from registration filed by a 
municipal securities dealer (other than a municipal securities dealer 
which is a bank or a separately identifiable department or division of 
a bank) on or after September 9, 1996 but prior to receipt of 
notification from the National Association of Securities Dealers, Inc. 
that the information contained in such municipal securities dealer's 
application for registration has been converted to the redesigned 
Central Registration Depository system, shall be filed on Form BDW (17 
CFR 249.501a) (as revised April 21, 1987) in paper form with the 
Central Registration Depository.
    (d) A notice of withdrawal from registration filed by a municipal 
securities dealer pursuant to Section 15B(c) (15 U.S.C. 78o-4(c)) shall 
become effective for all matters on the 60th day after the filing 
thereof with the Commission, within such longer period of time as to 
which such municipal securities dealer consents or the

[[Page 37709]]

Commission by order may determine as necessary or appropriate in the 
public interest or for the protection of investors, or within such 
shorter period of time as the Commission may determine. If a notice of 
withdrawal from registration is filed with the Commission at any time 
subsequent to the date of the issuance of a Commission order 
instituting proceedings pursuant to section 15B(c) (15 U.S.C. 78o-4(c)) 
to censure, place limitations on the activities, functions or 
operations of, or suspend or revoke the registration of, such municipal 
securities dealer, or if prior to the effective date of the notice of 
withdrawal pursuant to this paragraph (d), the Commission institutes 
such a proceeding or a proceeding to impose terms or conditions upon 
such withdrawal, the notice of withdrawal shall not become effective 
pursuant to this paragraph (d) except at such time and upon such terms 
and conditions as the Commission deems necessary or appropriate in the 
public interest or for the protection of investors.
    (e) Every notice of withdrawal filed with the Central Registration 
Depository pursuant to this section shall constitute a ``report'' filed 
with the Commission within the meaning of sections 15B(c), 17(a), 
18(a), 32(a) (15 U.S.C. 78o-4(c), 78q(a), 78r(a), 78ff(a)) and other 
applicable provisions of the Act.
    7. By amending Sec. 240.15Ca1-1 by revising paragraph (c) to read 
as follows:


Sec. 240.15Ca1-1  Notice of government securities broker-dealer 
activities.

* * * * *
    (c) Any notice required pursuant to this section shall be 
considered filed with the Commission if it is filed with the Central 
Registration Depository (operated by the National Association of 
Securities Dealers, Inc.) in accordance with applicable filing 
requirements.
    8. By revising Sec. 240.15Ca2-1 to read as follows:


Sec. 240.15Ca2-1  Application for registration as a government 
securities broker or government securities dealer.

    (a) An application for registration, pursuant to section 
15C(a)(1)(A) of the Act (15 U.S.C. 78o-5(a)(1)(A)), of a government 
securities broker or government securities dealer shall be filed on 
Form BD (17 CFR 249.501) in accordance with the instructions contained 
therein. Every application for registration of a government securities 
broker or government securities dealer shall be filed with the Central 
Registration Depository (operated by the National Association of 
Securities Dealers, Inc.) in accordance with applicable filing 
requirements.
[Alternative 1 for paragraph (b)]
    (b) Every application for registration of a government securities 
broker or government securities dealer pursuant to paragraph (a) of 
this section shall be filed on Form BD (17 CFR 249.501) in paper form 
with the Central Registration Depository in accordance with applicable 
filing requirements.
[Alternative 2 for paragraph (b)]
    (b) Every application for registration of a government securities 
broker or government securities dealer filed pursuant to paragraph (a) 
of this section shall be filed on Form BD (17 CFR 249.501) 
electronically with the Central Registration Depository in accordance 
with applicable filing requirements.
    (c) Temporary Filing Instructions: (1) Every government securities 
broker or government securities dealer who is registered with the 
Commission as of September 9, 1996 shall file as an amendment to its 
application a complete Form BD (17 CFR 249.501), and any subsequent 
amendments thereto, electronically with the Central Registration 
Depository no later than six months following receipt of notification 
from the National Association of Securities Dealers, Inc. that the 
information contained in such government securities broker's or 
government securities dealer's application for registration has been 
converted to the redesigned Central Depository Registration system.
    (2) Notwithstanding paragraph (c)(1) of this section, if the 
information contained in any application for registration as a 
government securities broker or government securities dealer is or 
becomes inaccurate for any reason during the six months following 
receipt of notification from the National Association of Securities 
Dealers, Inc. that the information contained in such government 
securities broker's or government securities dealer's application for 
registration has been converted to the redesigned Central Registration 
Depository system, the broker or dealer shall promptly file as an 
amendment to its application a complete Form BD (17 CFR 249.501) 
electronically with the Central Registration Depository.
    (3) If the information contained in any application for 
registration as a government securities broker or government securities 
dealer is or becomes inaccurate for any reason prior to receiving 
notification by the National Association of Securities Dealers, Inc. 
such government securities broker or government securities dealer shall 
promptly file as an amendment to its application a complete Form BD (17 
CFR 249.501) (as revised November 16, 1992) in paper form with the 
Central Registration Depository.
    (d) Every application or amendment filed with the Central 
Registration Depository pursuant to this section shall constitute a 
``report'' filed with the Commission within the meaning of sections 15, 
15C(c), 17(a), 18(a), 32(a) (15 U.S.C. 78o, 78o-5(c), 78q(a), 78r(a), 
78ff(a)) and other applicable provisions of the Act.
    9. By revising Sec. 240.15Cc1-1 to read as follows:


Sec. 240.15Cc1-1  Withdrawal from registration of government securities 
brokers or government securities dealers.

    (a) Notice of withdrawal from registration as a government 
securities broker or government securities dealer pursuant to section 
15C(a)(1)(A) of the Act (15 U.S.C. 78o-5(a)(1)(A)) shall be filed on 
Form BDW (17 CFR 249.501a) in accordance with the instructions 
contained therein. Every notice of withdrawal from registration as a 
government securities broker or dealer shall be filed with the Central 
Registration Depository (operated by the National Association of 
Securities Dealers, Inc.) in accordance with applicable filing 
requirements. Prior to filing a notice of withdrawal from registration 
on Form BDW (17 CFR 249.501a), a government securities broker or 
government securities dealer shall amend Form BD (17 CFR 249.501) in 
accordance with Sec. 400.5(a) to update any inaccurate information.
    (b) Temporary filing instructions: Notwithstanding paragraph (a) of 
this section, a notice of withdrawal from registration filed by a 
government securities broker or government securities dealer on or 
after September 9, 1996 but prior to receipt of notification from the 
National Association of Securities Dealers, Inc. that the information 
contained in such government securities broker's or government 
securities dealer's application for registration has been converted to 
the redesigned Central Registration Depository system, shall be filed 
on Form BDW (17 CFR 249.501a) (as revised April 21, 1987) in paper form 
with the Central Registration Depository.
    (c) A notice of withdrawal from registration filed by a government 
securities broker or government securities dealer shall become 
effective for all matters on the 60th day after the filing thereof with 
the Commission, within such longer period of time as to

[[Page 37710]]

which such government securities broker or government securities dealer 
consents or the Commission by order may determine as necessary or 
appropriate in the public interest or for the protection of investors, 
or within such shorter period of time as the Commission may determine. 
If a notice of withdrawal from registration is filed with the 
Commission at any time subsequent to the date of the issuance of a 
Commission order instituting proceedings pursuant to section 15C(c) (15 
U.S.C. 78o-5(c)) to censure, place limitations on the activities, 
functions or operations of, or suspend or revoke the registration of 
such government securities broker or government securities dealer, or 
if prior to the effective date of the notice of withdrawal pursuant to 
this paragraph (c), the Commission institutes such a proceeding or a 
proceeding to impose terms or conditions upon such withdrawal, the 
notice of withdrawal shall not become effective pursuant to this 
paragraph (c) except at such time and upon such terms and conditions as 
the Commission deems necessary or appropriate in the public interest or 
for the protection of investors.
    (d) Every notice of withdrawal filed with the Central Registration 
Depository pursuant to this section shall constitute a ``report'' filed 
with the Commission within the meaning of sections 15(b), 15C(c), 
17(a), 18(a), 32(a) (15 U.S.C. 78o(b), 78o-5(c), 78q(a), 78r(a), 
78ff(a)) and other applicable provisions of the Act.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    10. The authority citation for part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;
* * * * *
    11. By revising Form BDW (referenced in Sec. 249.501a) to read as 
set forth below:

    Note: Form BDW does not and the revisions will not appear in the 
Code of Federal Regulations. Revised Form BDW is attached as an 
Appendix to this document.

    Dated: July 12, 1996.

    By the Commission.
Jonathan G. Katz,
Secretary.

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[FR Doc. 96-18353 Filed 7-18-96; 8:45 am]
BILLING CODE 8010-01-C