[Federal Register Volume 67, Number 135 (Monday, July 15, 2002)]
[Notices]
[Pages 46558-46559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-17683]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46168; File No. SR-NASD-2002-65]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 by the 
National Association of Securities Dealers, Inc. to Amend Schedule A to 
the NASD By-Laws Relating to Transaction Fees

July 8, 2002.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 21, 2002, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. On June 26, 2002, the NASD amended the proposal.\3\ The 
NASD again amended the proposal on June 27, 2002.\4\ The Association 
filed the proposal pursuant to Section 19(b)(3)(A) of the Act,\5\ and 
Rule 19b-4(f)(2) thereunder \6\ as one establishing or changing a due, 
fee, or other charge, which renders the proposed rule change effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See June 26, 2002 letter from T. Grant Callery, NASD, to 
Katherine England, Assistant Director, Division of Market Regulation 
(``Division''), SEC, and attachments (``Amendment No. 1''). In 
Amendment No. 1, the NASD amended the statutory basis for the 
proposed rule change to reflect its belief that the proposed rule 
change is consistent with the provisions of Section 15A(b)(5) of the 
Act. 15 U.S.C. 78o-3(b)(5).
    \4\ See June 27, 2002 letter from T. Grant Callery, NASD, to 
Katherine England, Assistant Director, Division, SEC (``Amendment 
No. 2''). In Amendment No. 2, the NASD provided new proposed rule 
language to correct a technical problem with the proposed rule 
language previously provided. For purposes of calculating the 60-day 
abrogation period, the Commission considers the period to have begun 
on June 27, 2002, the date that the NASD filed Amendment No. 2.
    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD proposes to amend Section 8(b) of Schedule A to the NASD 
By-Laws to conform Schedule A to Section 31 of the Act,\7\ as amended 
by H.R. 1088, the Investor and Capital Markets Fee Relief Act (``Fee 
Relief Act''). The text of the proposed rule change is below. Proposed 
additions are in italics; proposed deletions are in brackets.
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    \7\ 15 U.S.C. 78ee.
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BY-LAWS OF NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
Schedule A
* * * * *
Section 8--Transaction Fees
* * * * *
    (b) SEC transaction fee. Each member shall be assessed an SEC 
transaction fee. The amount of the transaction fee shall be determined 
by the SEC in accordance with Section 31 of the Act. [of 1/300 of one 
percent of the aggregate dollar value of sales of covered securities 
transacted by or through such member. For purposes of this section, 
covered securities shall mean:
    (i) all securities traded otherwise than on a national securities 
exchange (other than bonds, debentures, other evidences on 
indebtedness, and any sale or any class of sales of securities which 
the Securities and Exchange Commission may exempt from the fee imposed 
by Section 31 of the Act, and securities described in subparagraph 
(ii)) that are subject to prompt last sale reporting and
    (ii) effective October 1, 1997, securities registered on a national 
securities exchange pursuant to Section 12(b) of the Act (other than 
bonds, debentures, other evidences o[n]f indebtedness, and any sale or 
any class of sales of securities which the Securities and Exchange 
Commission may exempt from the fee imposed by Section 31 of the Act) 
traded otherwise than on such exchange.]
* * * * *

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

    In its filing with the Commission, the NASD included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Association has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    Section 31 of the Act provides for the assessment of transaction 
fees (``Section 31 fees'') to be paid to the Commission. Section 31 
levies transaction fees for exchange and off-exchange traded 
securities. Schedule A, Section 8(b) of the NASD By-Laws provides that 
these fees are assessed at a rate equal to 1/300 of one percent of the 
aggregate amount of sales transacted by or through any member of a 
national securities association or transacted on a national securities 
exchange (other than bonds, debentures, and other evidences of 
indebtedness and securities futures products). Under Schedule A, 
Section 8(b), the NASD collects the fee for off-exchange traded 
securities from members on behalf of the Commission.
    On December 21, 2001, Congress passed the Fee Relief Act, which 
provides for the reduction of Section 31 fees. Specifically, the Fee 
Relief Act amends Section 31 to reduce the transaction fees collected 
from 1/300 of one percent to $15 per $1,000,000. This rate went into 
effect on December 28, 2001.
    The Fee Relief Act also provides for an annual adjustment of the 
fee rate and, in some circumstances, a mid-year adjustment. The SEC 
will calculate the adjustments in accordance with the Fee Relief Act 
and publish the revised rates well in advance of any adjustment.
    The proposed amendment to Schedule A to the NASD By-Laws conforms 
the NASD By-Laws to these Congressional changes and allows for future 
adjustments to be made to the rates as specified by the SEC and in 
Section 31 of the Act.
2. Statutory Basis
    The NASD believes the proposed rule change is consistent with 
Section 15A(b)(5) of the Act,\8\ which requires, among other things, 
that a national securities association's rules must provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
members and issuers and other persons using any facility or system

[[Page 46559]]

which the association operates or controls.
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    \8\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    Written comments were neither solicited nor received.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\10\ because the proposal establishes or changes a due, fee, 
or other charge. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(3).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Copies of 
the submission, all subsequent amendments, all written statements with 
respect to the proposed rule change that are filed with the Commission, 
and all written communications relating to the proposed rule change 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with the provisions of 5 U.S.C. 
552, will be available for inspection and copying in the Commission's 
Public Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the Association. All 
submissions should refer to file number SR-NASD-2002-65 and should be 
submitted by August 5, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-17683 Filed 7-12-02; 8:45 am]
BILLING CODE 8010-01-P