[Federal Register Volume 64, Number 89 (Monday, May 10, 1999)]
[Proposed Rules]
[Pages 25153-25188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11358]
Federal Register / Vol. 64, No. 89 / Monday, May 10, 1999 / Proposed
Rules
[[Page 25153]]
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240 and 249
[Release No. 34-41351; File No. S7-16-99]
RIN 3235-AH73
Broker-Dealer Registration and Reporting
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Securities and Exchange Commission is proposing technical
amendments to Form BD, the uniform broker-dealer registration form, and
related rules under the Securities Exchange Act of 1934. The proposed
amendments would modify the version of Form BD that was adopted in 1996
but never implemented. The primary purpose of the amendments is to aid
the implementation of electronic filing in the new, Internet-based
Central Registration Depository system. This computer system, which is
operated by the National Association of Securities Dealers, Inc.,
maintains registration information regarding broker-dealers and their
registered personnel. The formatting and technical changes proposed
today are needed to accommodate the shift from the network-based
architecture and proprietary software approach anticipated in the 1996
Central Registration Depository system to the new, Internet-based
system.
DATES:omments must be submitted on or before June 9, 1999.
ADDRESSES: All comments concerning the rule proposal should be
submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities
and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-
0609. Comments also may be submitted electronically at the following E-
mail address: [email protected]. All comment letters should refer
to File Number S7-16-99; this file number should be included on the
subject line if E-mail is used. Comment letters will be available for
inspection and copying in the public reference room at the same
address. Electronically submitted comment letters will be posted on the
Commission's Internet Web site (http://www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel or
Barbara A. Stettner, Special Counsel, (202) 942-0073, Office of Chief
Counsel, Division of Market Regulation, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-1001.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Securities and Exchange Commission (``Commission'') is
proposing technical amendments to Form BD, the uniform application for
broker-dealer registration, and related rules under the Securities
Exchange Act of 1934 (``Exchange Act'').\1\ The proposed amendments
would modify the version of Form BD that was adopted in 1996 but never
implemented (``1996 Form BD'').\2\ The amendments are necessary to
accommodate the shift from the proposed network-based and proprietary
software approach anticipated in the 1996 Central Registration
Depository (``CRD'') system (``Redesigned CRD'') to ``Web CRD,'' the
new, Internet-based CRD system. The CRD is operated and maintained by
the National Association of Securities Dealers, Inc. (``NASD'')\3\ and
is used by the Commission,\4\ self-regulatory organizations (``SROs''),
and state securities regulators in connection with registering and
licensing broker-dealers and their registered personnel. The 1996 Form
BD amendments were based upon the electronic filing approach of the
1996 Redesigned CRD, which differs significantly from the electronic
filing approach of Web CRD. Web CRD will replace the current CRD system
(``Legacy CRD''), which was created in 1981 as a cooperative effort
with the North American Securities Administrators Association
(``NASAA''), in order to facilitate the ``one-stop'' filing process for
broker-dealers and their associated persons.\5\
---------------------------------------------------------------------------
\1\ 17 CFR 240.15b1-1; 17 CFR 249.501; 15 U.S.C. Secs. 78a et
seq.
\2\ Securities Exchange Act Release No. 37431 (July 12, 1996),
61 FR 139 (July 18, 1996).
\3\ For purposes of this release, the term ``NASD'' will be sued
to encompass both the NASD and NASD Regulation, Inc. (``NASDR'')
unless specified otherwise. The NASDR is the regulatory subsidiary
of the NASD and is responsible for the operation of the CRD system.
\4\ In 1992, the Commission joined the CRD system and adopted
amendments to the broker-dealer registration process. Those
amendments required, among other things, that all broker-dealers
file Form BD with the Commission through the CRD. These changes were
made as part of the Commission's ongoing effort to reduce the costs
associated with broker-dealer registration. Securities Exchange Act
Release No. 31660 (Dec. 28, 1992), 58 FR 11 (Jan. 4, 1993).
\5\ Applicants seeking broker-dealer registration with the
Commission, the NASD, the Chicago Board Options Exchange (``CBOE''),
and the various states currently file a single Form BD with the
NASD. The NASD manually enters the information into the CRD system,
which then makes the information available (electronically) to the
Commission and the appropriate states for review. Applicants may
also seek registration with SROs other than the NASD and the CBOE
through Form BD, but they may also be required to submit a copy of
the paper Form BD to those SROs that do not participate in the CRD
system. The NASD anticipates more SROs to become full participants
in Web CRD after the system is operational.
---------------------------------------------------------------------------
Web CRD's Internet-based system is expected to further streamline
and lower the costs associated with the one-stop registration process
for broker-dealers and their associated persons. It is also expected to
provide the Commission, SROs, and state securities regulators with
enhanced access to registrant disciplinary and disclosure information.
Web CRD is scheduled to be operational beginning August 16, 1999.
The proposed amendments are the result of discussions between the
Commission staff, NASAA's CRD Project Committee (formerly the CRD/Forms
Revision Committee), the NASD, the New York Stock Exchange, Inc., and
representatives from the securities industry.
II. Background
On January 12, 1995, the Commission proposed amendments to Form BD
in order to respond to anticipated design updates (i.e., Redesigned
CRD) being developed for the Legacy CRD system.\6\ Redesigned CRD was a
comprehensive project undertaken by the NASD involving the creation of
proprietary software and a network-based architecture that would have
allowed broker-dealers to electronically file with the CRD. This system
would have required broker-dealers to obtain through a subscription
agreement the software developed by the NASD as well as computer
hardware that met minimum configuration requirements. Redesigned CRD
was intended to enable broker-dealers and their associated persons to
file Forms BD, BDW, U-4, and U-5\7\ electronically through a direct
link to the CRD.\8\ On July 18, 1996, the Commission adopted the
amendments to 1996 Form BD that were necessary to fully implement the
new system. These amendments, which elicited more precise disclosure
from applicants and reorganized disclosure items into related
categories, were intended to
[[Page 25154]]
become effective with the implementation of Redesigned CRD.
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 35224 (Jan. 12, 1995);
60 FR 4040 (Jan. 19, 1995).
\7\ Forms BD and BDW are joint forms used by the Commission,
SROs, and the states. The forms are used, respectively, to register,
and to terminate the registration of, broker-dealers. SROs and the
states use Forms U-4 and U-5 to register, and terminate the
registration of, associated persons of broker-dealers.
\8\ The direct link with the CRD would have been accomplished
through several methods, including computer-to-computer interface,
network access, and standard dial-up access.
---------------------------------------------------------------------------
At that time, the NASD expected to implement Redesigned CRD in
September 1996. However, a test of the system that began in May 1996
revealed that the NASD's proprietary software needed additional
changes. The NASD also determined that broker-dealers needed more time
to prepare their internal operations and infrastructure to support
electronic filings through Redesigned CRD. The NASD, therefore, delayed
the implementation of Redesigned CRD. Because of this delay, on
September 4, 1996, the Commission suspended the compliance date for the
1996 Form BD amendments.\9\ Applicants seeking broker-dealer
registration were instructed to continue filing the 1993 version of
Form BD until Redesigned CRD was fully operational.
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 37632 (September 4,
1996), 61 FR 47412 (September 9, 1996).
---------------------------------------------------------------------------
In February 1997, following a reassessment of the CRD technology,
the NASD decided to abandon the network-based, Redesigned CRD system
and proceed instead with the Internet-based, Web CRD system. Because
the implementation of 1996 Form BD was tied to the Redesigned CRD
system, the use of the Form was further delayed. Moreover, because Web
CRD would take additional time to fully develop, the substantive
disclosure questions adopted in the 1996 Form BD could not be
implemented immediately. As a result, the Commission adopted ``Interim
Form BD,'' effective March 16, 1998.\10\ Interim Form BD requires
registrants to file the same disclosure information called for by the
1996 Form BD amendments in a format that is compatible with the Legacy
CRD system.\11\ Thus, while Interim Form BD incorporated all of the
substantive changes of the 1996 Form BD amendments relating to
disclosure of disciplinary history, it did not incorporate the
formatting changes adopted in connection with the electronic filing
approach contemplated in Redesigned CRD. Interim Form BD remains in
effect today.
---------------------------------------------------------------------------
\10\ Securities Exchange Act Release No. 39677 (February 18,
1998), 63 FR 9413 (February 25, 1998).
\11\ One of the principal goals of Redesigned CRD, and the 1996
amendments to Form BD, was to make certain information regarding
broker-dealers and their associated persons, that is required to be
reported on the applicable registration forms, more readily
available to the public. Accordingly, pending the implementation of
Web CRD, Interim Form BD incorporated the enhanced disclosure
elicited by 1996 Form BD Question 11 into the existing Form BD
Question 7. Interim Form BD Question 7, therefore, requests
information about the disciplinary history of the applicant and its
control affiliates, including information relating to statutory
disqualifications, other relevant history, and the applicant's
financial soundness. In order to make the disclosures more organized
and complete, Question 7 is divided into broad categories: criminal,
civil, regulatory, and financial.
---------------------------------------------------------------------------
Today's proposed amendments would adapt 1996 Form BD to Web CRD's
Internet-based environment. Web CRD will be a secure Web-based system
that applicants will access through the NASD's Web site \12\ with
significantly less difficulty and at lower costs than would have been
possible under Redesigned CRD. Under Web CRD, a firm will need access
to the Internet through an account with an Internet Service Provider
(``ISP'') \13\ (e.g., AmericaOnLine, MCI WorldCom, Microsoft Network)
to submit filings electronically.\14\
---------------------------------------------------------------------------
\12\ Broker-dealers will submit filings through the NASDR's Web
site at <https://crd.nasdr.com/crdmain>.
\13\ A broker-dealer would also need access to an Internet
browser (e.g., Netscape, Internet Explorer) in order to submit
filings over the Internet. Internet browsers typically are provided
by the ISP or can be downloaded free of charge from the Internet.
\14\ In contrast, Redesigned CRD would have required firms to
obtain NASD-developed software under a subscription agreement as
well as computer hardware that met certain minimum configuration
requirements (which may have involved costly upgrades to existing
hardware). Broker-dealers would also have incurred costs associated
with on-line usage fees and reports derived from the Redesigned CRD
system.
---------------------------------------------------------------------------
Web CRD will streamline the registration process for broker-
dealers, and help broker-dealers submit more complete and accurate
filings. For example, Web CRD will employ completeness checks to alert
firms when required information is missing. If a firm files a form
containing incomplete information in a ``Mandatory Field,'' Web CRD
will automatically reject the submission and prompt the firm to re-
submit a completed form. Completeness checks should reduce costly
registration delays resulting from deficient filings. Web CRD also
categorizes disclosure information on the Disclosure Reporting Pages
(``DRPs'') through the use of pull-down menus \15\ that provide
specific options (``Pick Lists''), as well as ``Text Boxes.'' Pick
Lists are intended to elicit precise information about a registrant's
disclosure history and to capture standardized responses when possible.
Text Boxes are intended to provide applicants with the opportunity to
fully describe the details of a disclosable event in their own words.
The use of Pick Lists and Text Boxes is also expected to benefit
regulators by streamlining the capture and display of data, which
should enhance regulators' ability to use standardized and specialized
computer searches. By giving regulators better access to information,
Web CRD is expected to bolster the oversight of broker-dealers and
their registered personnel.
---------------------------------------------------------------------------
\15\ Pull-down menus are used to select options that are not
readily visible on the screen. Pull-down menus are used by clicking
the mouse and holding it on the option selected. The other choices
then appear in a menu (or list) format.
---------------------------------------------------------------------------
The amendments to Form BD proposed today consist mainly of
technical changes necessary to accommodate Web CRD's Internet
environment. The proposed amendments are intended to elicit the same
level of disclosure required by both the 1996 Form BD and the Interim
Form BD, but require the information to be submitted in a different
format than is required today. Other changes being proposed are
intended to clarify the current Form, to update references, or to
streamline the registration process. The amendments proposed to
Exchange Act Rules 15b3-1, 15Ba2-2, and 15Ca2-2 are necessary to
implement Web CRD.
III. Proposed Amendments to Form BD
The Commission is proposing to make technical and formatting
amendments to 1996 Form BD, to its general filing instructions and
terms, and to its Schedules DRP and E. These changes are necessary to
accommodate Web CRD's Internet-based environment. The proposed
amendments would correct oversights, replace outdated information, and
clarify instructions. They would also replace Legacy CRD references
with Web CRD references, establish certain information fields as
``read-only,'' \16\ and make conforming changes based on the
reorganization of the NASD manual in 1996 \17\ throughout Form BD. One
change proposed is intended to help eliminate incorrect succession
filings by requiring broker-dealers to discuss these filings with CRD
personnel prior to submission.\18\ Another proposed amendment would
make questions in the DRPs pertaining to sanctions consistent.\19\
---------------------------------------------------------------------------
\16\ Read only fields could not be altered by the applicants.
\17\ See NASD Notice to Members 96-26.
\18\ See discussion regarding Item 5 on Form BD in Appendix A.
\19\ See discussion regarding Civil Judicial Action DRP, Part
II, Question 13.C (Sanction Detail). Specifically, the proposed
amendments would change Question 13.C to ask, among other things,
whether any portion of a penalty assessed against the applicant was
waived.
---------------------------------------------------------------------------
As mentioned above, the Commission is also proposing amendments to
1996 Form BD's corresponding DRPs, which must be completed when an
applicant answers ``Yes'' to one of the disclosure questions in Item 11
of proposed Form BD. The proposed DRPs are designed to correspond to
DRPs that are proposed in
[[Page 25155]]
connection with Forms U-4 and U-5.\20\ While there are more technical
and formatting amendments proposed for the DRPs than for the main part
of Form BD, the proposed amendments primarily involve restructuring and
reformatting to facilitate electronic filing in the Web CRD
environment. They are not intended to make substantive changes to the
information requested, with the exception of Question 13 in the Civil
Judicial DRP which would now require the applicant to indicate whether
any portion of a penalty assessed against it was waived.
---------------------------------------------------------------------------
\20\ Release No. 34-41326 (April 22, 1999); File No. SR-NASD-98-
96.
---------------------------------------------------------------------------
By way of background, the DRPs that accompanied the 1996 Form BD
(``1996 DRPs'') elicited more detailed information about reportable
events than previously elicited on DRPs. Regulators had indicated that
they needed this additional detail in order to make informed licensing
and registration decisions. Consistent with the overall approach taken
in Redesigned CRD, the additional detail would have been entered into
many discrete fields. While this approach was intended to provide all
CRD users with maximum flexibility in making queries to and deriving
customized reports from the system, it had unanticipated practical
drawbacks. One significant drawback was the fragmentation of the
information once it was retrieved from the system.\21\ Another drawback
was that the numerous data fields and data tables demanded substantial
time to process queries, which in turn resulted in delays in system
response and other impediments to system performance.
---------------------------------------------------------------------------
\21\ The 1996 DRP data structure was designed to provide
regulators with the ability to sort information and create reports
using all of the discrete data fields. As a practical matter,
however, the NASD determined that the numerous data fields would
have resulted in the retrieval of information that was separated
from its context.
---------------------------------------------------------------------------
The DRPs proposed today would eliminate these practical problems
through the use of improved formatting. For example, the proposed DRPs
would reduce the number of data fields and add Text Boxes. These Text
Boxes would not only accommodate Web CRD, but would also allow
applicants to describe events in context. The proposed DRPs would also
contain Pick Lists in certain discrete fields. Pick Lists should create
more consistency in the data entered in those fields. In response to
concerns that the categories enumerated in the Pick Lists might not
completely or accurately describe an event, the category of ``Other''
would be included where applicable. Therefore, while the Pick Lists
would elicit more precise information, in a large percentage of
questions the availability of ``Other'' would continue to provide for
flexibility in response to DRP questions.
In sum, regulators should be able to use Web CRD to more
efficiently gather the information needed to make informed registration
and licensing decisions. Web CRD should also help regulators to process
registration-related filings more efficiently and effectively and
significantly enhance their ability to use the system for regulatory
purposes. Finally, Web CRD should make it easier for registrants to
comply with their filing obligations.\22\
---------------------------------------------------------------------------
\22\ In addition, by providing for Internet access, Web CRD is
expected to streamline the procedures to process and respond to
requests from the public for information about particular broker-
dealers and their associated persons.
---------------------------------------------------------------------------
A detailed textual description of the proposed amendments to Form
BD, its instructions and terms, Schedule E, and the DRPs (collectively,
``Appendix A'') is available on the Commission's Web site at http://
www.sec.gov \23\ or may be obtained from Barbara A. Stettner, Special
Counsel, Office of Chief Counsel, Division of Market Regulation,
Securities and Exchange Commission, 450 Fifth Street, NW, Washington,
DC 20549-1001; (202) 942-0073.\24\ Form BD as proposed to be amended is
attached as Appendix B to this document.
---------------------------------------------------------------------------
\23\ On the SEC Web site see ``Current SEC Rulemaking; Proposed
Rules; Release No. 34-41351, File No. S7-16-99.''
\24\ Appendix A will not be published in the Federal Register.
---------------------------------------------------------------------------
IV. Electronic Filing and Re-Filing
Web CRD is intended to expedite the electronic filing of
registration and licensing information for broker-dealers and their
associated persons. While initial applications for broker-dealer
registration on Form BD would continue to be filed on paper, the
proposed amendments provide that all subsequent amendments to the Form
would be made electronically through Web CRD.\25\ The proposed
amendments would also require registered broker-dealers to
electronically re-file certain information in Web CRD that is already
filed in Legacy CRD. The key dates and events associated with the
transition from Legacy CRD to Web CRD, including the proposed Web CRD
filing and re-filing requirements for broker-dealer applicants and
registered broker-dealers, are described below.
---------------------------------------------------------------------------
\25\ The NASD expects, however, that all filings for both
broker-dealers and their associated persons will eventually be
submitted exclusively through electronic means.
---------------------------------------------------------------------------
A. Key Dates
July 31, 1999 Through August 15, 1999
As the NASD transitions from Legacy CRD to Web CRD, there will be a
two-week period beginning July 31, 1999 and ending August 15, 1999
(``System Transition Period''), during which neither system will
process Form BD filings and amendments, or Form BDW filings. Initial
filings of Form BD received during this period will be held until
August 16, 1999 and then input into Web CRD by the NASD. Amendments to
Form BD received by the CRD during this period will be returned with
instructions to re-submit the amendments electronically after August
16, 1999. Forms BDW seeking withdrawal from registration with all
jurisdictions that are received during this period would be held by the
CRD until August 16, 1999, then input into Web CRD by the NASD. Forms
BDW seeking withdrawal from registration with only some jurisdictions
that are received by the CRD during this period will be returned with
instructions to re-submit the filing electronically after August 16,
1999. During the System Transition Period, the NASD will also transfer
certain information from Legacy CRD to Web CRD.\26\
---------------------------------------------------------------------------
\26\ Since March 1998, the NASD has been converting the
following broker-dealer information from Legacy CRD to Web CRD: Base
information (i.e., the broker-dealer's general CRD record
information including the broker-dealer's CRD number, name,
Commission number, IRS number, NASD district assignment, CRD
contact, and related telephone number), Registration Status, Current
Address (main and mailing), Types of Business (e.g., municipal
securities dealer, corporate debt securities broker), and Form U-6
Disclosure (e.g., Commission and NASD actions). This initial
conversion was done to accommodate the NASD's Public Disclosure
Program on the Internet. During the System Transition Period, the
NASD will transfer any remaining data described above. In addition,
it will convert the following information: Name Change History
(i.e., old name, new name, effective date of change), Mass Transfer
History (e.g., firm name and CRD number, pre- and post-merger,
acquisition), and Branch Information (Schedule E).
---------------------------------------------------------------------------
August 1, 1999
It is anticipated that the proposed amendments to Form BD will
become effective on August 1, 1999. Any filings submitted on Interim
Form BD after July 31, 1999 will be returned by CRD.
August 16, 1999
It is anticipated that Web CRD will be operational on August 16,
1999. The requirements for broker-dealer applicants filing initial Form
BD, for registered broker-dealers filing amendments to Form BD, or for
currently registered broker-dealers re-filing certain information in
Web CRD
[[Page 25156]]
on or after August 16, 1999, are described below.
B. Filings on or After August 16, 1999
1. Initial Filings of Form BD by Broker-Dealer Applicants
Under the proposed amendments, broker-dealer applicants would
continue to obtain the paper version of Form BD from the Commission
\27\ or from the NASD.\28\ They would also continue to mail the
completed initial Form BD to the CRD, which would manually input the
information into the Web CRD system. This manual process would allow
the NASD to establish a base record of information on broker-dealer
applicants as well as begin the process of establishing a unique Web
CRD user account for each broker-dealer.
---------------------------------------------------------------------------
\27\ Applicants can, and will continue to be able to, request
Form BD from the Commission's Publications Office at (202) 942-4040
or from any of the Commission's Regional or District Offices listed
at <http://www.sec.gov/asec/secaddr.htm>. In addition, Form BD will
be available from the Commission's Web site at <http://www.sec.gov>
(under ``Current SEC Rulemaking; Proposed Rules; Release No. 34-
41351, File No. S7-16-99'').
\28\ Form BD will also be available from the NASD's Publications
Office at (301) 590-6201 or can be downloaded from NASD's Web site
at <http://www.nasdr.com>.
---------------------------------------------------------------------------
Before a broker-dealer could access Web CRD, it would first need to
designate an ``account administrator.'' This person, who may be someone
within the firm or a third-party,\29\ would serve as the point-of-
contact between the broker-dealer and Web CRD.\30\ The NASD would
establish a user account for the broker-dealer's account administrator
and send a letter of confirmation to the broker-dealer containing the
account administrator's user name and initial password. Among other
things, the account administrator would be responsible for identifying
any additional persons who would need access to Web CRD \31\ to submit
filings on the firm's behalf . Designated persons would then be given
passwords and the authorization to use Web CRD as determined by the
account administrator.
---------------------------------------------------------------------------
\29\ Broker-dealers would have the option to designate a third
party (e.g., a service bureau or clearing firm) as its account
administrator. However, if a broker-dealer opts for a third-party
account administrator, it must acknowledge that the broker-dealer is
responsible for filings made by those designated persons on behalf
of the firm.
\30\ The NASD anticipates that information packages on how to
establish a Web CRD user account would be made available
concurrently with Form BD.
\31\ The account administrator would be responsible for
determining who would have access to Web CRD and could limit such
access in any manner. For example, a person responsible for Form U-4
filings might not have access to Form BD on Web CRD. In addition,
the account administrator could choose to allow read-only access to
many individuals within the broker-dealer.
---------------------------------------------------------------------------
Each broker-dealer would have a separate, unique account with the
NASD that would enable it to access its own records and file subsequent
amendments to its Form BD in Web CRD. Once the CRD has established an
account for a broker-dealer, it would manually input the information
from the broker-dealer into Web CRD, and it would then disseminate the
information to the Commission, SROs, and state securities regulators
with which the broker-dealer is requesting registration. Thus, except
for the establishment of an account and account administrator, the
processing of the initial Form BD would not significantly differ from
the filing procedures currently in place under Legacy CRD.
2. Re-Filing and Amendments to Form BD by Registered Broker-Dealers
The proposed amendments would also require registered broker-
dealers to establish Web CRD accounts to accommodate both the transfer
of existing Form BD information from Legacy CRD to Web CRD and the
electronic filing of Form BD amendments in Web CRD. Beginning August
16, 1999, all Form BD amendments and re-filings would be submitted
electronically through the NASD's Web site at https://crd.nasdr.com/
crdmain.
Due to technical issues identified by the NASD, certain broker-
dealer information currently contained in Legacy CRD will not be
transferred by the NASD to Web CRD.\32\ Therefore, beginning on August
16, 1999, broker-dealers would be required to re-file the following
information: Item 11 Disclosure (Schedule DRP), Direct/Indirect Owners
(Schedules A and B), Control/Financial Information (i.e., direct
owners, executive officers, and indirect owners), Industry Arrangements
(e.g., custodial arrangements, holding company status), and Affiliated
Firms. The proposed amendments would require a registered broker-dealer
to re-file this information when it files its first amendment in Web
CRD but, in any event, no later than December 15, 1999.\33\
---------------------------------------------------------------------------
\32\ Large portions of Form BD data are currently stored as text
fields in Legacy CRD. It is not technology possible for the NASD to
convert this data to the counterpart text fields of Web CRD.
\33\ The December 15, 1999 date was chosen to ensure that re-
filing would take place prior to the annual shutdown of CRD for
renewals and to have the re-filing complete before the Year 2000.
---------------------------------------------------------------------------
V. Other Proposed Amendments
The Commission is also proposing to amend Rules 15b3-1, 15Ba2-2,
and 15Ca2-1 under the Exchange Act. Rules 15b3-1 and 15Ca2-1 both
contain ``Temporary Filing Instructions'' for Form BD that are now
outdated. The proposed amendments would delete the outdated
instructions and add ``Temporary Re-Filing Instructions'' for Form BD
to all three rules.
VI. Effective Date
The Commission anticipates that the proposed amendments to Form BD
would become effective on August 1, 1999. Initial Forms BD that are
completed and submitted to CRD during the System Transition Period
would be accepted by the CRD and entered into Web CRD by the NASD
beginning on August 16, 1999.\34\ Any Form BD amendments submitted to
Web CRD during the System Transition Period, however, would be returned
with instructions to re-submit on or after August 16, 1999. Broker-
dealers may have difficulty complying with the requirement in Exchange
Act Rule 15b3-1 to promptly file amendments because (1) they will not
be able to file amendments to their Form BDs during the System
Transition Period, and (2) they must re-file certain information from
their Forms BD in Web CRD at the same time they are required to file
their first amendment in Web CRD. Therefore, the proposed amendments
would provide that broker-dealers will be considered to have met this
requirement if they file an amendment that should have been filed
during the System Transition Period no later than September 14, 1999
(i.e., 30 days from August 16, 1999).\35\ In addition, during the
period from August 16 to December 15, 1999, the staff of the Division
of Market Regulation will not recommend
[[Page 25157]]
enforcement action for filings of any amendment to Form BD that would
also trigger the re-filing obligation, if the amendment was filed
within 30 days from when the disclosable event occurred. In any event,
however, all re-filings would have to be completed on or before
December 15, 1999.
---------------------------------------------------------------------------
\34\ As already described in Section IV.A., Forms BDW seeking
withdrawal from registration with all jurisdictions that are
received during this period would be held by the CRD until August
16, 1999, then input into Web CRD by the NASD. Forms BDW seeking
withdrawal from registration with only some jurisdictions that are
received by the CRD during this period would be returned with
instructions to re-submit the filing electronically after August 16,
1999. In addition, the NASD also would accept a paper-filed Form BDW
seeking withdrawal from registration in all jurisdictions after
August 16, 1999 if it was the first filing made by broker-dealer in
the Web CRD system.
\35\ The Commission has not defined with constitutes ``prompt''
filing for purposes of Rule 15B3-1 because whether a filing is
deemed ``promptly filed'' needs to be determined on a facts-and-
circumstances basis. Moreover, the concept of ``promptness'' changes
with the evolution of technology. However, in no event would filing
an amendment after 30 days be considered ``prompt'' at a time other
than during the System Transition Period.
---------------------------------------------------------------------------
VII. Request for Comment
The Commission is soliciting comment on whether the changes to Form
BD and the related rules described above will provide more meaningful
information to the Commission and other securities regulators without
increasing the regulatory burden on broker-dealers. In particular, the
Commission requests comment on whether the restructuring of Form BD to
accommodate Web CRD would create additional burdens on broker-dealers
and whether the restructuring will result in ultimate cost savings to
broker-dealers. The Commission is preliminarily of the view that the
costs associated with filing in Web CRD are minimal and will ultimately
decrease. The Commission is also preliminarily of the view that most
broker-dealers either already have Internet access or would be able to
obtain Internet access at a minimal cost. However, the Commission
requests comment as to whether ``hardship exemptions,'' such as is
provided for the Commission's EDGAR system would be appropriate for Web
CRD.\36\
---------------------------------------------------------------------------
\36\ See ``Temporary'' and ``Continuing'' Hardship Exemptions at
17 CFR 232.201 and 17 CFR 232.202, respectively.
---------------------------------------------------------------------------
VIII. Cost Benefit Analysis
No statutory mandate directs the Commission to undertake a specific
cost-benefit analysis of a rule. Instead, pursuant to Section 23(a)(2)
of the Exchange Act, the Commission is directed to consider, among
other matters, the impact any rule would have on competition. The
Commission may not adopt a rule which would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act.
The Commission preliminarily believes that the benefits of Web CRD
to the industry outweigh the costs associated with the one-time re-
filing requirement \37\ for registered broker-dealers. Based on
discussions with industry representatives, the Commission expects that
when Web CRD is fully implemented, it will minimize future regulatory
burdens on broker-dealers for filing Form BD and related amendments.
Specifically, postage, duplication costs, and staff time would be
reduced by using the Internet to file Form BD amendments. The
Commission estimates that broker-dealers filed approximately 15,350
Form BD amendments in Legacy CRD for fiscal year 1998. Industry
representatives estimate that each amendment in Legacy CRD typically
requires $.60 for duplication costs (i.e., $.05 per page at
approximately 12 pages), $180 for postage (i.e., $12 x approximately
15 next-day mailings to the CRD, SROs, and relevant states), and $140
of staff time required to fill out the amendment to Form BD and submit
it to the appropriate regulators (i.e., 4 hours of staff time per
amendment x an average compensation rate of $35 per hour). Thus, the
total annual cost burden to the industry to amend Form BD in Legacy CRD
is approximately $4,921,210 (i.e., [$.60 + $180 + $140] x a yearly
average of 15,350 amendments).
---------------------------------------------------------------------------
\37\ See discussion in Section XI (Paperwork Reduction Analysis)
regarding the burden hours for the one-time re-filing of certain
information on Form BD.
---------------------------------------------------------------------------
In contrast, industry representatives estimate that the average
time necessary to complete an amendment on Web CRD will be
approximately 20 minutes (i.e., 5 minutes for simple amendments and up
to 30 minutes for more complicated amendments). Therefore, the
Commission estimates that the annual cost burden to the industry to
amend Form BD under Web CRD will be approximately $177,293 (i.e., .33
hours x a yearly average of 15,350 amendments x an average
compensation rate of $35 per hour).\38\ This would result in a total
annual cost savings of over $4.5 million for all broker-dealers
amending Form BD.
---------------------------------------------------------------------------
\38\ Broker-dealers that employ third-party filers account for
approximately 3,009 (See Footnote No. 44 infra) of the Form BD
amendments (i.e., an approximate cost burden of $34,754). See
discussion in Section XI (Paperwork Reduction Act Analysis)
regarding the cost burdens on these broker-dealers.
---------------------------------------------------------------------------
Because the Form would still be filed initially on paper, the
proposed amendments do not alter the current burden on initial filers
of Form BD. In addition, the proposed amendments requiring broker-
dealers to designate an account administrator and establish an ISP
account are not expected to significantly alter the current burden on
broker-dealers. As described above, the account administrator will be
the point-of-contact between the broker-dealer and the CRD. According
to industry representatives, the account administrator will most likely
be the person who already performs filing and reporting functions for
the firm (either internally or as a third-party filer). It is
anticipated, therefore, that this person will continue to be the point-
of-contact with the CRD and continue to perform similar reporting and
administrative tasks for the firm. The Commission seeks comment,
however, on any additional burden that will be placed on broker-dealers
due to the requirement of designating an account administrator.
With respect to ISP accounts, the Commission is preliminarily of
the view that the requirement that broker-dealers have Internet access
(either internally or through a third-party filer) would not
significantly alter the current burden on broker-dealers. Most broker-
dealers already have Internet access and, for those that do not, the
cost of obtaining an ISP account averages approximately $20 per month.
In addition, many broker-dealers use the Internet for other business
purposes such as sending and receiving e-mail, maintaining a Web site,
or delivering documents. For these broker-dealers, the additional
burden to file amendments to Form BD through the Internet would be only
a fraction of their total costs associated with their use of the
Internet. The Commission requests comment, however, on the percentage
of brokers who do not currently have Internet access as well as the
marginal costs associated with filing amendments to Form BD through an
existing ISP account.
The Commission also preliminarily believes that Web CRD will
benefit regulators and the public by streamlining the capture of
relevant information pertaining to broker-dealers and their associated
persons. Precise information regarding a broker-dealer's activities and
disciplinary history is needed for investigations and examinations by
regulators. It also is a valuable informational resource for investors
in deciding whether to entrust their financial assets to a particular
broker-dealer.\39\ While it is impossible to quantify these benefits,
the Commission believes that these benefits exceed the recordkeeping
and reporting burden imposed on broker-dealers.
---------------------------------------------------------------------------
\39\ The NASD receives approximately 525,000 inquiries each year
from the public requesting information about broker-dealers or their
associated persons.
---------------------------------------------------------------------------
IX. Effects on Competition, Efficiency, and Capital Formation
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 refrain from
adopting a rule that would impose a burden on competition not
necessarily
[[Page 25158]]
or appropriate in furthering the purpose of the Exchange Act.
---------------------------------------------------------------------------
\40\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------
Moreover, Section 3 of the Exchange Act as amended by the National
Securities Markets Improvement Act of 1996, provides that whenever the
Commission is engaged in rulemaking and is required to consider or
determine whether an action is necessary or appropriate in the public
interest, the Commission shall consider, in addition to the protection
of investors, whether the action will promote efficiency, competition,
and capital formation.
The Commission is preliminarily of the view that the proposed
amendments to Form BD and the related rules under the Exchange Act
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 proposed today will reduce the
regulatory burden on broker-dealers by facilitating electronic filing
over the Internet, a more efficient and cost-effective means for
broker-dealers to meet their regulatory and reporting obligations. The
Commission requests comment, however, on any competitive burdens that
might result from adoption of the form revisions described in this
release. In addition, for purposes of the Small Business Regulatory
Enforcement Fairness Act of 1996, the Commission is also requesting
information regarding the potential impact of the proposed rules on the
economy an annual basis. Commentators should provide empirical data to
support their views.
X. Regulatory Flexibility Analysis
The Commission has prepared an Initial Regulatory Flexibility
Analysis (``IRFA''), pursuant to the requirements of the Regulatory
Flexibility Act,\41\ regarding the proposed amendments to Form BD. The
IRFA indicates that the proposed revisions are intended to respond to
the shift from the network-based architecture and proprietary software
approach anticipated in the 1996 CRD system to the Internet-based Web
CRD. The adoption of the proposed revisions to Form BD not only will
provide benefits to securities regulators in the retrieval of
information, but will also ease the burden of registration by future
registrants. The IRFA also indicates that, except for the one-time re-
filing requirement on registered broker-dealers, the proposed revisions
to Form BD will reduce aggregate cost and time burdens on broker-
dealers who are required to file, or make amendments to, Form BD. The
IRFA further indicates that because the proposed amendments generally
are intended to lessen the burden of registration, small broker-dealers
will be affected in the same manner as other registrants. Thus,
exempting small broker-dealers from Form BD disclosures would be
unwarranted.
---------------------------------------------------------------------------
\41\ 5 U.S.C. 603 (1990).
---------------------------------------------------------------------------
The Commission requests comment, however, on whether there would be
a significant economic impact on a substantial number of small entities
that might result from adoption of the Form BD revisions described in
this release.
A copy of the IRFA may be obtained from Barbara A. Stettner,
Special Counsel, Office of Chief Counsel, Division of Market
Regulation, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-1001; (202) 942-0073.
XI. Paperwork Reduction Act Analysis
Certain provisions of the proposal to amend Form BD contain
``collection of information'' requirements within the meaning of the
Paperwork Reduction Act of 1995 (44 U.S.C. Section 3501 et seq.). The
Commission has submitted the proposal to the Office of Management and
Budget (``OMB'') for review in accordance with PRA requirements in
effect at this time. The title for this collection of information:
``Application for Registration as a Broker or Dealer,'' which the
Commission is proposing to amend, contains a currently approved
collection of information under OMB control number 3235-0012. The
information received by Form BD is mandatory and the responses are not
kept confidential. An agency may not sponsor, conduct, or require
response to an information collection unless a currently valid OMB
control number is displayed.
The proposed amendments to Form BD are expected to provide
securities regulators with better information about a registrant's
disciplinary history by grouping disciplinary information into related
categories and by customizing the corresponding DRPs used to disclose
details of the registrant's disciplinary history. The proposed
amendments also are intended to elicit more precise information about
the business activities of broker-dealer applicants.\42\
---------------------------------------------------------------------------
\42\ The Commission uses the information disclosed by applicants
in Form BD to: (i) Determine whether broker-dealer applicants meet
the standards for registration set forth in the provisions of the
Exchange Act; (ii) develop and maintain a central information
resource where members of the public may obtain relevant, current
information about broker-dealers, municipal securities dealers, and
government securities brokers or government securities dealers, and
where the Commission and other securities regulators may obtain
information for investigatory purposes; and (iii) develop
statistical information concerning broker-dealers, municipal
securities dealers, and government securities brokers or government
securities dealers.
---------------------------------------------------------------------------
As discussed above, the proposed amendments to Form BD respond to
certain recommended changes to the CRD system that have led to its
redesign as an Internet-based system. Web CRD is expected to be more
useful to securities regulators. It will also allow broker-dealers to
file amendments to Form BD and other uniform registration forms
electronically. Because Web CRD is intended to operate in an electronic
environment, paper amendments to Form BD will no longer be submitted by
broker-dealers. Rather, broker-dealers will be able to access and
update their respective Forms BD through the NASD's Web site.
This should result in cost-savings related to copying, postage, and
staff time. Under Web CRD, broker-dealers will not have to obtain
dedicated computer systems or proprietary software as would have been
required under Redesigned CRD. Rather, a firm only needs access to the
Internet and an Internet browser through an account with an ISP to
submit filings electronically.
Broker-dealers already are required pursuant to Rule 15b1-1[ \43\
under the Exchange Act to file for registration on Form BD and,
pursuant to Rule 15b3-1(b),\44\ to promptly file an amendment to Form
BD if any information contained therein becomes inaccurate. The
proposed amendments are intended to adapt Form BD to Web CRD's
Internet-based environment. Therefore, except for the one-time re-
filing requirement, the proposed amendments to Form BD will not impose
any significant additional recordkeeping, reporting or other compliance
requirement on broker-dealers. Initial filings of Form BD will continue
to be made on paper and the electronic filing of Form BD amendments is
expected to reduce time and cost burdens on broker-dealers.
---------------------------------------------------------------------------
\43\ 17 CFR 240.15b1-1.
\44\ 17 CFR 240.15b3-1(b).
---------------------------------------------------------------------------
With respect to the one-time re-filing requirement, the Commission
staff estimates (based on discussions with industry representatives)
that the average time necessary to complete a re-filing will be as
follows: (1) approximately 30 large firms (total capital of more than
$500 billion) will require approximately 40 hours each to re-file, (2)
approximately 170 medium firms (total capital between $499 billion and
$20 million) will require approximately 24 hours each to re-file, and
(3) approximately 6,640 small
[[Page 25159]]
firms \45\ (total capital below $20 million) will require approximately
2 hours each to re-file. Thus, the total burden hours for the re-filing
of certain disclosure information into Web CRD is estimated as 18,560
hours [30 large firms x 40 (1,200) + 170 medium firms x 24 (4,080)
+ 6,640 small firms x 2 (13,280) = 18,560].
---------------------------------------------------------------------------
\45\ The Commission estimate that approximately 20% of the small
broker-dealer population (i.e., 1,660 [.20 x 8,300 small broker-
dealer]) employ third parties to file information related to their
respective Forms BD with the CRD. These broker-dealers would not
incur an hour burden and, therefore, for purposes of the Paperwork
Reduction Act, are removed from the hour-burden calculation for
small broker-dealers (i.e., 8,300 total small broker-dealers--1,660
small broker-dealers that employ third party filers = 6,640 small
broker-dealers that would incur hour burdens). As discussed below,
however, the 1,660 broker-dealers would incur a cost burden with
respect to re-filing and Form BD amendments.
---------------------------------------------------------------------------
Broker-dealer applicants are also subject to Form BD's initial
reporting obligation. Form BD is only submitted once and is updated by
amendment (see discussion on Form BD amendments below). For fiscal year
1998, the Commission received approximately 790 Form BDs for an initial
or successor application for registration as a broker-dealer, non-bank
municipal securities dealer, or non-bank government securities broker-
dealer (pursuant to Rules 15b1-1, 15b1-3, 15b1-4, 15Ba2-2(a), 15Ba2-4,
15Ba2-5, 15Ca2-1, 15Ca2-3, and 15Ca2-4). Although the time necessary to
complete Form BD will vary depending on the nature and complexity of
the applicant's securities business, Commission staff estimates that
the average time necessary to complete the initial form is
approximately 2.75 hours. Thus, the Commission estimates that total
annual burden hours required for the initial filing of a Form BD is
2,173 hours (2.75 x 790). It is important to note that the proposed
amendments do not alter the current burden on initial filers of Form BD
because a Form BD filed for the first time is still required to be
filed on paper.
Under Web CRD, all amendments to Form BD would be filed
electronically. For fiscal year 1998, the Commission received
approximately 15,350 amendments. Of these 15,350 amendments,
approximately 3,009 were from broker-dealers that employ third-party
filers.\46\ Because these broker-dealers would incur cost burdens
rather than hour burdens, they will be removed from the total annual
hour burden calculation (see discussion regarding cost burdens on
broker-dealers that employ third-party filers below). Therefore, for
purposes of the annual hour burden calculation, the total annual number
of amendments to Form BD would be 12,341 (i.e., 15,350 total
amendments--3,009 amendments filed by third-party filers). The staff
estimates that the average time necessary to complete an amendment on
Web CRD will be approximately 20 minutes (i.e., 5 minutes for simple
amendments and up to 30 minutes for more complicated amendments).
---------------------------------------------------------------------------
\46\ Out of the approximate 15,350 amendments filed each year,
approximately 15,043 are filed by small broker-dealer (i.e., 8,300
small broker-dealers = 98% of the broker-dealer community; 15,350
x .98 = 15,043). As discussed in footnote 43, supra, approximately
1,660 (20%) of small broker-dealers employ third-party filers and,
therefore, would be responsible for approximately 3,009 of the total
annual amendments to Form BD (i.e., 15,043 amendments by small
broker-dealer community x .20 = 3,009 amendments).
---------------------------------------------------------------------------
Thus, the total annual burden hours for the filing of Form BD
amendments is 4,073 hours (.33 hours x approximately 12,341
[15,350-3009] amendments per year).
The staff estimates that the total annual filing burden for Form BD
and Form BD amendments is 6,246 hours (2,173 for initial filings of
Form BD + 4,073 for amendments to Form BD). This is a reduction of
approximately 1,030 total burden hours from the annual regulatory
burden anticipated in Redesigned CRD. However, the total one-time re-
filing burden would be approximately 18,560 hours. Accordingly, for the
year when Web CRD is first implemented, the total hour burden will be
approximately 24,806 hours.
The Commission also anticipates that the burden hours discussed
above would apply similarly to broker-dealers who rely on third-party
filers. Instead of incurring the cost of staff time, however, these
broker-dealers would be billed by third-party filers at an average
compensation rate of $35 per hour. Therefore, a small broker-dealer
would pay a third-party filer $70 (2 hours for re-filing x $35 per
hour) to comply with its one-time re-filing obligation. This would
amount to a total, one-time cost burden of $58,100 ($70 x 1,660 small
broker-dealers that employ third-party filers).
Broker-dealers that employ third-party filers to file amendments to
Form BD would also incur a cost burden. As discussed above in Section
VIII (Cost Benefit Analysis), the Commission estimates that
approximately 15,350 amendments to Form BD are filed each year by
broker-dealers. Of these 15,350 amendments, approximately 3,009 are
from broker-dealers that employ third-party filers. The average time
necessary to complete an amendment on Web CRD is estimated to be
approximately 20 minutes. Therefore, the total annual cost burden to
broker-dealers that employ third-party filers to file amendments to
Form BD would be approximately $34,754 (i.e., .33 hours x 3,009
amendments x an average compensation rate of $35 per hour). The staff
estimates that the total annual cost burden to these broker-dealers for
re-filing and amending Form BD is approximately $92,854 (i.e., $58,100
+ $34,754).
With respect to ISP accounts, the Commission is preliminarily of
the view that most broker-dealers already have Internet access (either
internally or through a third-party filer), which they currently use to
send and receive e-mail, to maintain a Web site, or to deliver
documents. Therefore, the use of their existing Internet accounts for
filing in Web CRD would be incremental and would not significantly
alter their current burden. As discussed above in Section VIII (Cost
Benefit Analysis), for those broker-dealers that do not currently have
access to the Internet, the cost burden of obtaining an ISP account is
approximately $20 per month. The Commission preliminarily estimates
that approximately 5% of all broker-dealers (approximately 425 broker-
dealers) do not currently have access to the Internet either directly
or through the use of a third-party filer. Therefore, the total annual
cost burden for obtaining and maintaining an Internet account would be
approximately $102,000 [$20 x 12 months x (.05 x 8500)].
Accordingly, for the year when Web CRD is first implemented, the
total cost burden would be $194,854 (i.e., $102,000 for ISP accounts +
$92,854 for broker-dealers employing third-party filers to amend and
re-file Form BD).
It is important to note that regardless of whether a broker-dealer
employs a person internally or hires a third-party to file information
in CRD, ultimately the same costs would apply. The Commission seeks
comment, however, on the costs associated with third-party filers, and
in particular, whether broker-dealers employing third-party filers
would bear different cost burdens than their counterparts who file with
CRD internally. In addition, the Commission requests comment on the
total number of broker-dealers who employ third-party filers.
Pursuant to 44 USC 3506(c)(2)(B), the Commission solicits comments
to --
(i) Evaluate whether the proposed collections of information are
necessary for the proper performance of the functions of the agency,
including whether the information shall have practical utility;
[[Page 25160]]
(ii) Evaluate the accuracy of the agency's estimate of the burden
of the proposed collections of information;
(iii) Enhance the quality, utility, and clarity of the information
to be collected;
(iv) Minimize the burden of the collections 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 Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and should also send a copy of their comments to Jonathan G.
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549-0609 with reference to File No. S7-16-99. OMB
is required to make a decision concerning the collections of
information between 30 and 60 days after publication, so a comment to
OMB is best assured of having its full affect if OMB receives it within
30 days of publication.
XII. Statutory Basis
The foregoing amendments are being proposed pursuant to the
Exchange Act and particularly to Sections 15(a), 15(b), 15B, 15C, and
23(a) therein.\47\
---------------------------------------------------------------------------
\47\ 15 U.S.C. 78o(a), 78o(b), 78o-4(a)(2), 78o-5(a)(2), and
78w(a).
---------------------------------------------------------------------------
List of Subjects in 17 CFR Parts 240 and 249
Broker-dealers, Reporting and recordkeeping requirements,
Securities.
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:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.
* * * * *
2. By amending Sec. 240.15b3-1 by removing paragraph (b),
redesignating paragraph (c) as paragraph (b), and adding paragraph (c)
to read as follows:
Sec. 240.15b3-1 Amendments to application.
* * * * *
(c) Temporary re-filing instructions. (1) Every registered broker-
dealer shall re-file with the Central Registration Depository, at the
time the broker-dealer submits its first amendment on or after August
16, 1999 but, in any event, no later than December 15, 1999, the
following information from its current Form BD:
(i) Question 8 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section V of Schedule D);
(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section VI of Schedule D);
(v) Question 11 (if any item in Question 11 is answered ``Yes,''
the broker-dealer must also complete the relevant DRP(s)); and
(vi) Schedules A and B.
(2) Every registered broker-dealer, at the time it re-files the
information required by paragraph (c)(1) of this section, shall review,
and amend as necessary, the information in Form BD that was transferred
by the National Association of Securities Dealers to the Central
Registration Depository prior to August 16, 1999.
3. By amending Sec. 240.15Ba2-2 by adding paragraph (e) to read as
follows:
Sec. 240.15Ba2-2. Application for registration of non-bank municipal
securities dealers whose business is exclusively intrastate.
* * * * *
(e) Temporary re-filing instructions. (1) Every registered broker-
dealer shall re-file with the Central Registration Depository, at the
time the broker-dealer submits its first amendment on or after August
16, 1999 but, in any event, no later than December 15, 1999, the
following information from its current Form BD:
(i) Question 8 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section V of Schedule D);
(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section VI of Schedule D);
(v) Question 11 (if any item in Question 11 is answered ``Yes,''
the broker-dealer must also complete the relevant DRP(s)); and
(vi) Schedules A and B.
(2) Every registered broker-dealer, at the time it re-files the
information required by paragraph (e)(1) of this section, shall review,
and amend as necessary, the information in Form BD that was transferred
by the National Association of Securities Dealers to the Central
Registration Depository prior to August 16, 1999.
4. By amending Sec. 240.15Ca2-1 by removing paragraph (b),
redesignating paragraph (c) as paragraph (b), and adding a new
paragraph (c) to read as follows:
Sec. 240.15Ca2-1 Application for registration as a government
securities broker or government securities dealer.
* * * * *
(c) Temporary re-filing instructions. (1) Every registered broker-
dealer shall re-file with the Central Registration Depository, at the
time the broker-dealer submits its first amendment on or after August
16, 1999 but, in any event, no later than December 15, 1999, the
following information from its current Form BD:
(i) Question 8 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also
complete relevant items in Section IV of Schedule D);
(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section V of Schedule D);
(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must
also complete relevant items in Section VI of Schedule D);
(v) Question 11 (if any item in Question 11 is answered ``Yes,''
the broker-dealer must also complete the relevant DRP(s)); and
(vi) Schedules A and B.
(2) Every registered broker-dealer, at the time it re-files the
information required by paragraph (c)(1) of this section, shall review,
and amend as necessary, the information in Form BD that was transferred
by the National Association of Securities Dealers to the Central
Registration Depository prior to August 16, 1999.
[[Page 25161]]
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 BD (referenced in Sec. 249.501) to read as set
forth in Appendix B below:
Note: Form BD does not and the revisions will not appear in the
Code of Federal Regulations. Revised Form BD is attached as Appendix
B to this document.
Dated: April 30, 1999.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
Note: Appendices A and B to this document are available in the
Commission's Public Reference Room and will be available on the
Commission's Web site at www.sec.gov.
BILLING CODE 8010-01-P
[[Page 25162]]
Appendix B
[GRAPHIC] [TIFF OMITTED] TP10MY99.003
[[Page 25163]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.004
[[Page 25164]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.005
[[Page 25165]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.006
[[Page 25166]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.007
[[Page 25167]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.008
[[Page 25168]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.009
[[Page 25169]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.010
[[Page 25170]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.011
[[Page 25171]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.012
[[Page 25172]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.013
[[Page 25173]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.014
[[Page 25174]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.015
[[Page 25175]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.016
[[Page 25176]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.017
[[Page 25177]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.018
[[Page 25178]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.019
[[Page 25179]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.020
[[Page 25180]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.021
[[Page 25181]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.022
[[Page 25182]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.023
[[Page 25183]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.024
[[Page 25184]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.025
[[Page 25185]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.026
[[Page 25186]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.027
[[Page 25187]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.028
[[Page 25188]]
[GRAPHIC] [TIFF OMITTED] TP10MY99.029
[FR Doc. 99-11358 Filed 5-7-99; 8:45 am]
BILLING CODE 8010-01-C