[Federal Register Volume 62, Number 6 (Thursday, January 9, 1997)]
[Notices]
[Pages 1350-1351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-439]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38112; File No. SR-NASD-96-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc., Relating to Fees for Registering and 
Termination the Registration of Registered Individuals

January 3, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 19, 1996, NASD 
Regulation Inc. (``NASD Regulation'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the self-regulatory organization. NASD Regulation has designated 
this proposal as one constituting a rule through which the Association 
imposes dues, fees and other charges under Sec. 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.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD Regulation is proposing to amend Section 2 of Schedule A to 
the By-Laws of the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association''), to eliminate the scheduled fee rollbacks 
and to retain the current fee level for registration and termination of 
registration of individuals indefinitely. Below is the text of the 
proposed rule change. Proposed new language is in italics; proposed 
deletions are in brackets.

Schedule A

    Assessments and fees pursuant to the provisions of Article VI of 
the By-Laws of the Corporation, shall be determined on the following 
basis.

Fees

Sec. 2.
    (b) Each member shall be assessed a fee of $85.00 for each 
application filed with the Association for registration of a registered 
representative or registered principal [from August 1, 1995 through 
December 31, 1996. Such fee shall be $70.00 from January 1, 1997 
through December 31, 1997 and shall be $65.00 thereafter]. 
Additionally, each member shall be assessed a surcharge of $95.00 for 
registrations involving a special registration review filed with the 
Association [from August 1, 1995 through December 31, 1997 and shall be 
$85.00 thereafter]. The following shall apply to the filing of 
applications to register or transfer the registration of registered 
persons or registered principals in connection with acquisition of all 
or a part of a member's business by another member:

------------------------------------------------------------------------
                                                             Discount in
         Number of registered personnel transferred            percent  
------------------------------------------------------------------------
1,000-1,999................................................           10
2,000-2,999................................................           20
3,000-3,999................................................           30
4,000-4,999................................................           40
5,000 and over.............................................           50
------------------------------------------------------------------------

    (h) (i) Each member shall be assessed a fee of $40.00 for each 
notice of termination of a registered representative or registered 
principal filed with the Corporation as required by Section 3 of 
Article IV of the By-Laws [from August 1, 1995 through December 31, 
1996. Such fee shall be $35.00 from January 1, 1997 through December 
31, 1997 and shall be $25.00 thereafter].
    (ii) A late filing fee of $65.00 shall be assessed a member who 
fails to file with the Corporation written notice of termination of a 
registered representative or registered principal within thirty (30) 
calendar days of such termination [from August 1, 1995 through December 
31, 1996. Such fee shall be $60.00 from January 1, 1997 through 
December 31, 1997 and shall be $50.00 thereafter].

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 self-regulatory organization 
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 self-regulatory organization 
has prepared summaries, set forth in Section A, B, and C below, of the 
most significant aspects of such statements.

A Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASD Regulation has a major systems development project underway to 
completely redesign the Central Registration Depository (``CRD''). The 
CRD is a computerized system for one-stop registration and licensing of 
NASD members and their associated persons. The system was developed in 
1981 to standardize and streamline the registration process by 
accommodating a single filing and payment of fees for registration in 
multiple jurisdictions. Today the system processes filing on behalf of 
50 states, the District of Columbia and Puerto Rico, seven (7) self-
regulatory organizations and the Commission.
    The redesigned CRD, scheduled for a staged implementation in 1996 
and 1997, will feature electronic filings, re-engineered work 
processes, expedited relicensing and a highly structured, relational 
database to better serve the information requirements of regulators, 
members and investors. In addition, the new system will include 
investment adviser registration for the SEC and states, an E-mail 
communication capability for system participants and a document 
imaging/storage/retrieval service for support documents required in 
certain filing situations.
    NASD Regulation had originally intended to fund the CRD redesign 
effort from the current registration filing fees based on expected 
activity levels in the 1995-1997 period. In 1995 registration activity 
declined significantly, and the resulting lower revenue levels are now 
expected to continue through 1997. As a result, in 1995 the NASD 
adopted a temporary fee increase in order to continue the investment in 
this

[[Page 1351]]

important systems project.\2\ The temporary fees were implemented on 
August 1, 1995, and applied to all filings received on or after that 
date. The fee increase was to be reduced for most types of filings made 
in calendar year 1997 and was to return to the pre-1995 levels in 
calendar year 1998.
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    \2\ Securities Exchange Act Release No. 36025 (July 26, 1995), 
60 FR 39200 (Aug. 1, 1995).
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    NASD Regulation has added functionality to the new CRD system and 
improved the system's compatibility with various computer operating 
systems, such as Windows 95 and Windows NT. This has resulted in delays 
and cost increases in implementing the redesigned CRD. Accordingly, 
NASD Regulation is proposing to amend Schedule A, Section 2 to 
eliminate the scheduled fee rollbacks and to retain the current fee 
level indefinitely. This fee level will provide $4 million in extra 
revenue each year over the revenue produced by the pre-1995 fee levels.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(5) of the Act \3\ which requires that 
the rules of the Association provide for the equitable allocation of 
reasonable dues, fees, and other charges in that the proposed rule 
provides a consistent basis for assessments among member firms and 
fairly assesses a charge to cover the costs incurred by the Association 
in the implementation of the redesigned CRD System.
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    \3\ 15 U.S.C. Sec. 78o-3.
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2. Statutory Basis
    The proposed rule change is consistent with Section 15A of the Act 
\4\ in general and furthers the objectives of Section 15A(b) (5) \5\ in 
particular in that it provides for the equitable allocation of 
reasonable dues, fees, and other charges among the NASD's members and 
other persons using its facilities.
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    \4\ 15 U.S.C. 78o-3.
    \5\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The NASD has neither solicited nor received written comments on the 
proposed rule change.

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

    The foregoing rule change constitutes or changes a due, fee, or 
other charge imposed by the NASD and, therefore, has become effective 
pursuant to Section 19(b)(3)(A) of the Act \6\ and subparagraph (e) of 
Rule 19b-4 thereunder.\7\
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change 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, 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Room. Copies of such filing also will 
be available for inspection and copying at the principal office of the 
National Association of Securities Dealers. All submissions should 
refer to File No. SR-NASD-96-53 and should be submitted by January 30, 
1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-439 Filed 1-8-97; 8:45 am]
BILLING CODE 8010-01-M