[Federal Register Volume 63, Number 146 (Thursday, July 30, 1998)]
[Notices]
[Pages 40759-40761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20363]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40252; File No. SR-NASD-98-46]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. Relating to Technical Corrections to
Delegation Plan and IM-1000-4
July 23, 1998.
On July 9, 1998, the National Association of Securities Dealers,
Inc. (``NASD'') through its regulatory subsidiary NASD Regulation, Inc.
(``NASD Regulation'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder.\2\ The proposed rule change is described in Items I, II,
and III below, which Items have been prepared by NASD Regulations. NASD
Regulation has designated this proposal as one constituting a stated
policy, practice, or interpretation with respect to the meaning of an
existing rule under Section 19(b)(3)(A)(i) of the Act, which
[[Page 40760]]
renders the proposal 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).
\2\ 17 CFR 240.19b-4.
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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 make a technical correction to NASD
Interpretive Material IM-1000-4 and a clarifying amendment to the Plan
of Allocation and Delegation of Functions by NASD to Subsidiaries
(``Delegation Plan'') regarding NASD Regulation's authority to inspect
the books and records of The Nasdaq Stock Market, Inc. (``Nasdaq'').
Below is the text of the proposed rule change. Proposed new language is
italicized; proposed deletions are in brackets.
IM-1000-4. [Appointment of Executive Representative] Branch Offices and
Offices of Supervisory Jurisdiction
[The term ``executive representative'' as found in Section 3 of
Article III of the By-Laws means that person designated by the member
to represent, vote and act for the member in all the affairs of the
Association. Pursuant to the provisions of Section 8 of Article III of
the By-Laws, every member who maintains a registered branch office in a
district of the Association other than the one in which its main office
is located, is entitled to one vote on all matters pertaining solely to
the district in which such registered branch office is located,
including the election of members of the Board of Governors from such
district. Should a member maintain more than one branch office in a
district, it is entitled to only one vote in that district. Therefore,
each member shall designate one executive representative and shall
designate one ``district executive representative'' for each district
other than the one in which the main office is located in which the
member maintains a registered branch office.]
Each member is under a duty to insure that its membership
application with the Association is kept current at all times by
supplementary amendments to its original application and that any
offices other than the main office are properly designated and
registered, if required, with the Association.
Each member must designate to the Association those offices of
supervisory jurisdiction, including the main office, and must register
those offices which are deemed to be branch offices in accordance with
the standards set forth in Rule 3010.
Plan of Allocation and Delegation of Functions by NASD to
Subsidiaries
I. NASD, Inc.
* * * * *
D. Access to and Status of Offices, Directors, Employees, Books,
Records, and Premises of Subsidiaries
Notwithstanding the delegation of authority to the Subsidiaries, as
set forth in Sections II.A. and III.A. below, the staff, books,
records, and premises of the Subsidiaries are the staff, books,
records, and premises of the NASD subject to oversight pursuant to the
Act, and all officers, directors, employees, and agents of the
Subsidiaries are officers, directors, employees, and agents of the NASD
for purposes of the Act. The books and records of Nasdaq shall be
subject at all times to inspection and copying by NASD Regulation.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASD Regulation 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. NASD Regulation 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
The proposed rule change makes a technical correction to
Interpretive Material 1000-4 by removing an obsolete provision
regarding election procedures and district executive representatives.
All regional nomination and district election procedures are now set
forth in Articles VI and VIII of the NASD Regulation By-Laws, which
permit only the Executive Representative of a member firm to cast a
vote for a nomination or election.
The proposed rule change also adds a clarifying provision to the
Delegation Plan specifically authorizing NASD Regulation to inspect and
copy Nasdaq records. Nasdaq has always provided NASD Regulation with
full access to its records. The clarification to the Delegation Plan
was recommended by the Independent Consultant retained by the NASD in
accordance with Securities Exchange Act Release No. 37538 (August 8,
1996), SEC's Order Instituting Public Proceedings Pursuant to Section
19(h)(1) of the Securities Exchange Act of 1934, Making Findings and
Imposing Remedial Sanctions, In the Matter of National Association of
Securities Dealers, Inc., Administrative Proceeding File No. 3-9056
(``Order''). Undertaking No. 2 of the Order requires that NASD
Regulation have full access to the records of Nasdaq.
(2) Statutory Basis
NASD Regulation believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(6) of the Act,\3\
which requires, among other things, that the Association's rules must
be designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. NASD Regulation believes
that the technical and clarifying corrections set forth in the proposed
rule change are consistent with the provisions of the Section
15A(b)(6).\4\
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\3\ 15 U.S.C. 78o-3(b)(6).
\4\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD Regulation does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(i) of the Act \5\ and subparagraph (e)(1) of Rule 19b-4
thereunder \6\ in that it constitutes a stated policy, practice, or
interpretation with respect to the meaning of an existing rule. At any
time within 60 days of the filing of a rule change pursuant to Section
19(b)(3)(A) of the Act, \7\ the Commission may summarily abrogate the
rule change if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors,
[[Page 40761]]
or otherwise in furtherance of the purposes of the Act. \8\
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\5\ 15 U.S.C. 78s(b)(3)(A)(i).
\6\ 17 CFR 240.19b-4(e)(1).
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ In reviewing this rule, the Commission has considered the
proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549. Copies
of the submission, all subsequent amendments, all written statements
with respect to the proposed rule change that are filed with the
Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File No. SR-NASD-98-46 and should
be submitted by August 20, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-20363 Filed 7-29-98; 8:45 am]
BILLING CODE 8010-01-M