[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.

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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\
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    \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.
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    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.
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    \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.
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    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.
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    \9\ Securities Exchange Act Release No. 37632 (September 4, 
1996), 61 FR 47412 (September 9, 1996).
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    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.
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    \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.
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    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\
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    \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.
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    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.
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    \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.
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    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\
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    \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.
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    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

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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.
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    \20\ Release No. 34-41326 (April 22, 1999); File No. SR-NASD-98-
96.
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    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.
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    \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.
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    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\
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    \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.
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    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.
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    \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.
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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.
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    \25\ The NASD expects, however, that all filings for both 
broker-dealers and their associated persons will eventually be 
submitted exclusively through electronic means.
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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\
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    \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).
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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

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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.
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    \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>.
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    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.
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    \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.
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    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\
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    \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.
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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

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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.
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    \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.
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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]]

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[FR Doc. 99-11358 Filed 5-7-99; 8:45 am]
BILLING CODE 8010-01-C