[Federal Register Volume 67, Number 223 (Tuesday, November 19, 2002)]
[Notices]
[Pages 69785-69789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29316]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46817; File No. SR-NASD-2002-148]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 by the National Association of 
Securities Dealers, Inc. Relating to the Regulatory Fee and the SEC 
Section 31 Transaction Fee

November 12, 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 October 18, 2002, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association'') filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. The Association amended the proposed rule change on 
November 5, 2002.\3\ On November 8, 2002, the NASD again amended the 
proposal.\4\ 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 November 4, 2002 letter from Barbara Z. Sweeney, Senior 
Vice President (``SVP'') and Corporate Secretary, NASD, to Katherine 
A. England, Assistant Director, Division of Market Regulation 
(``Division''), Commission, and attachments (``Amendment No. 1''). 
Amendment No. 1 completely replaced and superseded the original 
proposed rule change.
    \4\ See November 7, 2002 letter from Barbara Z. Sweeney, SVP and 
Corporate Secretary, NASD, to Katherine A. England, Assistant 
Director, Division, Commission, and attachments (``Amendment No. 
2''). Amendment No. 2 completely replaced and superseded Amendment 
No. 1 and the original proposed rule change.
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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 Schedule A to the NASD By-Laws to amend 
its member regulatory pricing structure. Under the structure this rule 
proposal is intended to change, three types of fees and assessments are 
used to fund the NASD's member regulatory activities: Regulatory 
Fee,\5\ Personnel Assessment, and Gross Income Assessment.\6\ The 
proposed restructuring is comprised of four amendments: (1) Eliminate 
the Regulatory Fee; (2) institute a new transaction-based Trading 
Activity Fee (``TAF'') similar to the SEC's Section 31 Fee; (3) 
increase the rates assessed to member firms under the Personnel 
Assessment; and (4) implement a simplified three-tiered flat rate for 
the Gross Income Assessment and eliminate current deductions and 
exclusions.\7\ This rule filing is to be read as a part of a package of 
two separate yet related rule filings \8\ submitted to the SEC as a 
result of a review of the overall NASD pricing structure \9\ and is 
intended to address the first two amendments to NASD pricing 
restructuring by eliminating the Regulatory Fee and instituting a new 
transaction-based TAF.
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    \5\ The Regulatory Fee is described in section 8(a) of Schedule 
A to NASD By-Laws.
    \6\ The Personnel Assessment and Gross Income Assessment are 
described in Section 1 of Schedule A to NASD By-Laws.
    \7\ The changes resulting from the proposed restructuring would 
be revenue neutral.
    \8\ See also SR-NASD-2002-99.
    \9\ The NASD, in its pricing restructuring review, proposed 
changes to the Regulatory Fee in Special Notice to Members 02-09 and 
requested comments. The NASD received a number of comments. In 
response to those comments, the proposal set forth in Special Notice 
to Members 02-09 is not being pursued.
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    These fees assessed upon and paid by member firms are used by the 
NASD to fund NASD's member regulatory activities, including the 
supervision and regulation of members through examinations, processing 
of membership applications, financial monitoring, policy, rulemaking, 
interpretative, and enforcement activities. These amendments to this 
pricing structure are intended to serve the following purposes: (1) 
Simplify the NASD's fee structure; (2) ensure fairness in the NASD's 
fee structure by assessing higher fees to those member firms that 
require more NASD regulatory services; (3) assess a transaction-based 
fee in a manner that, unlike the Regulatory Fee, does not influence 
where members choose to execute trades; (4) reduce the cyclical nature 
of the current NASD fee structure; and (5) eliminate the NASD's 
reliance on funds generated from the Regulatory Fee on transactions 
executed through Nasdaq.
    The NASD believes assessing Regulatory Fees only for Nasdaq 
transactions is no longer appropriate for three reasons. First, Nasdaq 
is separating from the NASD and registering as a national securities 
exchange. Second, the current fee structure is out of step with recent 
changes in the markets, such as the drastic growth in trading volumes, 
reductions in average trade size, decimalization, and trading no longer 
remaining exclusive to the listing exchange. Finally, the Regulatory 
Fee is only assessed against Nasdaq-listed and other transactions that 
are reported through the Automated Confirmation Transaction (ACT) 
system,\10\ although these fees are used to support member regulatory 
activities across all markets.
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    \10\ This package of filings proposed rule changes to NASD's 
Member Regulation fees. It is not related to the recent Nasdaq 
filing regarding Nasdaq's Regulatory Fee. See Nasdaq SR-NASD-2002-
61.
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    In the instant proposed rule change, the NASD is including the TAF 
rates (retroactively effective to October 1, 2002, but giving members 
until January 15, 2003 to remit fees for the preceding quarter), 
including a reference to Notice to Members 02-75 (issued on October 30, 
2002 and discussing the TAF), and making minor technical, non-
substantive changes to the proposed rule change. In addition, certain 
footnotes containing TAF rates have been deleted (because the TAF rate 
information is now included in the body of the proposed rule language).
    Below is the text of the proposed rule change. The text below shows 
amended rule language that would be necessary if SR-NASD-2002-98 were 
not in place.\11\ Proposed new language is in italics; proposed 
deletions are in brackets.
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    \11\ The Commission notes that, because SR-NASD-2002-98 was 
effective upon filing with the Commission, the rule language that 
was proposed in SR-NASD-2002-98 is in fact a rule. The Commission 
recognizes, however, that the instant filing presents rule language 
that would be necessary if SR-NASD-2002-98 were not an established 
rule to more clearly demonstrate how the NASD's member regulatory 
pricing structure is proposed to be amended by the recent filings 
described in this proposed rule change.
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Schedule A to [the] NASD By-Laws
    Assessments and fees pursuant to the provisions of Article VI of 
the By-Laws of [the] NASD shall be determined on the following basis.
* * * * *

[[Page 69786]]

Section [8] 2--Member Regulatory [Transaction] Fees
    [(a) NASD fee on cleared transactions. Each member shall be 
assessed a transaction charge of $.0625 per 1,000 shares, with a 
minimum charge per side of $.025 and a maximum charge per side of 
$.46875 for each over-the-counter transaction with another member of 
the Association reportable through ACT in which the member acts either 
as an agent or a principal for the purchase and/or sale of equity 
securities.]
    [(b) SEC transaction fee. Each member shall be assessed a SEC 
transaction fee. The amount shall be determined by the SEC in 
accordance with Section 31 of the Act.]
    (a) Recovery of cost of services. NASD shall, in accordance with 
this section, collect member regulatory fees that are designed to 
recover the costs to NASD of the supervision and regulation of members, 
including performing examinations, processing of membership 
applications, financial monitoring, and policy, rulemaking, 
interpretive, and enforcement activities. NASD shall periodically 
review these revenues in conjunction with these costs to determine the 
applicable rate. NASD shall publish notices of the fees and adjustments 
to the assessment rates applicable under this section.
    (b) Each member shall be assessed a Trading Activity Fee for the 
sale of covered securities.
    (1) Covered Securities. For purposes of the rule, covered 
securities shall mean:
    (i) All exchange registered securities wherever executed (other 
than bonds, debentures, and other evidence of indebtedness);
    (ii) All other equity securities traded otherwise than on an 
exchange; and
    (iii) All security futures wherever executed.
    (2) Transactions exempt from the fee. The following shall be exempt 
from the Trading Activity Fee:
    (i) Transactions in securities offered pursuant to an effective 
registration statement under the Securities Act of 1933 (except 
transactions in put or call options issued by the Options Clearing 
Corporation) or offered in accordance with an exemption from 
registration afforded by Section 3(a) or 3(b) thereof, or a rule 
thereunder;
    (ii) Transactions by an issuer not involving any public offering 
within the meaning of Section 4(2) of the Securities Act of 1933;
    (iii) The purchase or sale of securities pursuant to and in 
consummation of a tender or exchange offer;
    (iv) The purchase or sale of securities upon the exercise of a 
warrant or right (except a put or call), or upon the conversion of a 
convertible security; and
    (v) Transactions that are executed outside the United States and 
are not reported, or required to be reported, to a transaction 
reporting association as defined in Rule 11Aa3-1 and any approved plan 
filed thereunder.
    NASD may exempt other securities and transactions as it deems 
appropriate.

(3) Fee Rates*

    (i) Each member shall pay to NASD a fee per share for each sale of 
a covered equity security.
    (ii) Each member shall pay to NASD a fee per contract for each sale 
of an option.
    (iii) Each member shall pay to NASD a fee for each round turn 
transaction (treated as including one purchase and one sale of a 
contract of sale for future delivery) of a security future.
    *Trading Activity Fee rates are as follows: Each member shall pay 
to NASD $0.00005 per share for each sale of a covered equity security, 
with a maximum charge of $5 per trade; $0.002 per contract for each 
sale of an option; and $0.04 per contract for each round turn 
transaction of a security future. In addition, if the execution price 
for a covered security is less than the Trading Activity Fee rate 
($0.00005 for covered equity securities, $0.002 for covered option 
contracts, or $0.04 for a security future) on a per share, per 
contract, or round turn transaction basis then no fee will be assessed.
    (4) Reporting of Transactions. Members shall report to NASD the 
aggregate share, contract, and/or round turn volume of sales of covered 
securities in a manner as prescribed by NASD from time to time.

Section 3--SEC Transaction Fee

    Each member shall be assessed an SEC transaction fee. The amount 
shall be determined by the SEC in accordance with Section 31 of the 
Act.

Section [2] 4--Fees

    (a) Each member shall be assessed a fee of $75.00 for the 
registration of each branch office, as defined in the By-Laws. Each 
member shall be assessed an annual fee for each branch office in an 
amount equal to the lesser of (1) $75.00 per registered branch, or (2) 
the product of $75.00 and the number of registered representatives and 
registered principals associated with the member at the end of [the 
Association] NASD's fiscal year.
    (b) [The] NASD shall assess each member a fee of:
    (1) $85.00 for each initial Form U-4 filed by the member with [the] 
NASD for the registration of a representative or principal, except that 
the following discounts shall apply to the filing of Forms U-4 to 
transfer the registration of representatives or principals in 
connection with acquisition of all or a part of a member's business by 
another member:

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

    (2) $40.00 for each initial Form U-5 filed by the member with [the] 
NASD for the termination of a registered representative or registered 
principal, plus a late filing fee of $80.00 if the member fails to file 
the initial Form U-5 within 30 days after the date of termination;
    (3) through (5) No Change.
    (c) through (k) No Change.
    (l)(1) Unless a specific temporary extension of time has been 
granted, there shall be imposed upon each member required to file 
reports, as designated by this paragraph, a fee of $100 for each day 
that such report is not timely filed. The fee will be assessed for a 
period not to exceed 10 business days. Requests for such extension of 
time must be submitted to [the Association] NASD at least three 
business days prior to the due date; and
    (2) through (3) No Change.
* * * * *

Section [3] 5--Elimination of Duplicate Assessments and Fees

    No Change to rule language.
* * * * *

Section [4] 6--Assessments and Fees for New Members, Resigning Members 
and Successor Organizations

    (a) The assessment of a firm, which is not a member throughout [the 
Association] NASD's full calendar year from January 1 to December 31, 
shall be based upon the number of quarter years of membership. The 
proration for a new member shall include the quarter year in which the 
member is admitted to membership. The proration for a member which 
resigns shall include the quarter year in which the member's letter of 
resignation is received in [the Association] NASD's Executive Office.
    (b) A member [which] that is a successor organization to a previous 
member or members shall assume the unpaid balance of the assessments of 
its predecessor or predecessors and its next

[[Page 69787]]

assessment shall be determined, if applicable, upon the assessment data 
of its predecessors. Such successor member shall not be required to re-
register branch offices and personnel of predecessor members or pay 
registration fees therefor. Whether a member is the successor 
organization to a previous member or members shall be determined by 
[the Association] NASD upon a consideration of the terms and conditions 
of the particular merger, consolidation, reorganization, or succession. 
A member [which] that has simply acquired the personnel and offices of 
another member under circumstances [which] that do not constitute the 
member a successor organization shall not be required to assume the 
unpaid assessments of the other member. Such non-successor member shall 
be required to re-register the branch offices and personnel acquired 
from the other member and pay applicable registration fees.

Section [5] 7--Gross Revenue for Assessment Purposes

    No Change to rule language.
Section [6] 8--Fees for Filing Documents Pursuant to the Corporate 
Financing Rule
    (a) There shall be a fee imposed for the filing of initial 
documents relating to any offering filed with [the] NASD pursuant to 
the Corporate Financing Rule equal to $500 plus .01% of the proposed 
maximum aggregate offering price or other applicable value of all 
securities registered on an SEC registration statement or included on 
any other type of offering document (where not filed with the SEC), but 
shall not exceed $30,500. The amount of filing fee may be rounded to 
the nearest dollar.
    (b) There shall be an additional fee imposed for the filing of any 
amendment or other change to the documents initially filed with [the] 
NASD pursuant to the Corporate Financing Rule equal to .01% of the net 
increase in the maximum aggregate offering price or other applicable 
value of all securities registered on an SEC registration statement, or 
any related Rule 462(b) registration statement, or reflected on any 
Rule 430A prospectus, or included on any other type of offering 
document. However, the aggregate of all filing fees paid in connection 
with an SEC registration statement or other type of offering document 
shall not exceed $30,500.
Section [7] 9--Service Charge for Processing Extension of Time Requests
    (a) No Change.
    (b) The service charge for processing each initial extension of 
time request and for all subsequent extension of time requests (1) 
involving the same transaction under Regulation T and/or (2) involving 
an extension of time previously granted pursuant to Rule 15c3-3(n) 
shall be $2.00; provided, however, that the service charge shall be 
$1.00 for extension of time requests filed electronically by members 
using [the Association] NASD's Automated Regulatory Reporting System.
* * * * *
Section [9] 10--Subscription Charges for Firm Access Query System 
(FAQS)
    No Change to rule language.
Section [10] 11--Request for Data and Publications
    No Change to rule language.
Section [11] 12--Reserved
    No Change to rule language.
* * * * *
Section [12] 13--Application and Annual Fees for Member Firms With 
Statutorily Disqualified Individuals
    (a) Any member firm seeking to employ or continuing to employ as an 
associated person any individual who is subject to a disqualification 
from association with a member as set forth in Article III, Section 4 
of [the Association] NASD's By-Laws shall, upon the filing of an 
application pursuant to Article III, Section 3, paragraph (d) of [the 
Association] NASD's By-Laws, pay to [the Association] NASD a fee of 
$1,500.00. Any member firm whose application filed pursuant to Article 
III, Section 3, paragraph (d) of [the Association] NASD's By-Laws 
results in a full hearing for eligibility in [the Association] NASD 
pursuant to the Rule 9640 Series, shall pay to [the Association] NASD 
an additional fee of $2,500.00.
    (b) Any member firm continuing to employ as an associated person 
any individual subject to disqualification from association with a 
member as set forth in Article III, Section 4 of [the Association] 
NASD's By-Laws shall pay annually to [the Association] NASD a fee of 
$1,500.00 when such person or individual is classified as a Tier 1 
statutorily disqualified individual, and a fee of $1,000.00 when such 
person or individual is classified as a Tier 2 statutorily disqualified 
individual.
Section [13] 14--Review Charge for Advertisement, Sales Literature, and 
Other Such Material Filed or Submitted
    There shall be a review charge for each and every item of 
advertisement, sales literature, and other such material, whether in 
printed, video or other form, filed with or submitted to [the 
Association] NASD, except for items that are filed or submitted in 
response to a written request from [the Association] NASD's Advertising 
Regulation Department issued pursuant to the spot check procedures set 
forth in [the Association] NASD's Rules as follows: (1) for printed 
material reviewed, $75.00, plus $10.00 for each page reviewed in excess 
of 10 pages; and (2) for video or audio media, $75.00, plus $10.00 per 
minute for each minute of tape reviewed in excess of 10 minutes.
    Where a member requests expedited review of material submitted to 
the Advertising Regulation Department there shall be a review charge of 
$500.00 per item plus $25 for each page reviewed in excess of 10 pages. 
Expedited review shall be completed within three business days, not 
including the date the item is received by the Advertising Regulation 
Department, unless a shorter or longer period is agreed to by the 
Advertising Regulation Department. The Advertising Regulation 
Department may, in its sole discretion, refuse requests for expedited 
review.
* * * * *

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 NASD 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
    On July 24, 2002, the NASD filed SR-NASD-2002-98 and SR-NASD-2002-
99, which proposed a new member

[[Page 69788]]

regulatory pricing structure.\12\ By filing SR-NASD-2002-147, the NASD 
is establishing a sunset provision for the TAF. The TAF, as established 
in SR-NASD-2002-98, will cease to exist after December 31, 2002, and 
the member regulatory pricing structure will revert to section 8 of 
Schedule A of the By-Laws as amended, absent further action. The NASD 
is sunsetting the changes made to the TAF in SR-NASD-2002-98 in 
response to member comments asserting that a full notice and comment 
period would be beneficial to NASD members. In addition, the NASD would 
like an opportunity to review its published rates. Further, the NASD is 
amending Schedule A, section 2 of the By-Laws to correct language that 
was mistakenly referenced in SR-NASD-2002-98.\13\ The instant proposed 
rule change includes the TAF rates (retroactively effective to October 
1, 2002, but allowing members until January 15, 2003 to remit such 
fees) and inserts the rate language into section 2. In addition, the 
instant proposed rule change updates certain footnotes to include a 
reference to Notice to Members 02-75 (issued October 30, 2002 and 
discussing the TAF), deletes footnotes that included TAF rates and 
inserts the TAF rate information in the body of the proposed rule 
language, and makes minor technical, non-substantive changes to the 
proposed rule change.
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    \12\ Securities Exchange Act Release Nos. 46416 (Aug. 23, 2002), 
67 FR 55901 (Aug. 30, 2002)(SR-NASD-2002-98) and 46417 (Aug. 23, 
2002), 67 FR 55893 (Aug. 30, 2002)(SR-NASD-2002-99). The NASD also 
published three Notices to Members describing the proposed changes 
and addressing interpretive questions posed by NASD members. See 
Notice to Members 02-41 (July 2002), Notice to Members 02-63 
(September 2002), and Notice to Members 02-75 (October 30, 2002).
    \13\ In its efforts to amend rule language to reflect its 
corporate restructuring, the NASD inadvertently added incorrect rule 
text. The correct rule language cited herein was effective upon 
filing in SR-NASD-99-43. See Securities Exchange Act Release No. 
41937 (September 28, 1999), 64 FR 53762 (October 4, 1999).
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    On September 27, 2002, the NASD announced the initial TAF rates. 
The TAF rates were as follows:
    [sbull] $0.0001 per share for each sale of a covered equity 
security.
    [sbull] $0.002 per contract for each sale of an option.
    [sbull] $0.08 per contract for each round turn transaction of a 
security future.
    On October 3, 2002, in response to members' comments, the NASD 
modified the TAF rates to incorporate a per trade maximum, 
retroactively effective to October 1, 2002. The revised TAF rates were 
modified as follows:
    [sbull] For each sale of a covered equity security, each member 
shall pay to the NASD $0.0001 per share, with a maximum charge of $10 
per trade.
    [sbull] For each sale of an option, each member shall pay to the 
NASD $0.002 per contract.
    [sbull] For each round turn transaction of a security future, each 
member shall pay to the NASD $0.08 per contract.
    [sbull] Additionally, if the execution price for a covered equity 
security is less than the TAF rate $0.0001) on a per share basis, then 
no fee will be assessed.
    On October 18, 2002, the NASD filed two subsequent proposed rule 
changes with the Commission that are directly related to SR-NASD-2002-
98. The first proposed rule change was SR-NASD-2002-147, which was 
effective upon filing with the Commission. SR-NASD-2002-147 established 
a sunset provision that terminates on December 31, 2002 the changes 
made to Schedule A to the NASD By-Laws in SR-NASD-2002-98. In addition, 
language that was mistakenly referenced in SR-NASD-2002-98 was 
corrected in SR-NASD-2002-147.
    The second proposed rule change is the instant filing, which 
contains substantially the same proposed rule language as proposed in 
SR-NASD-2002-98, but is filed pursuant to section 19(b)(1) of the Act 
\14\ to allow for an additional notice and comment period. The NASD 
filed SR-NASD-2002-148 in response to comments made by NASD members 
that the TAF should not be filed as immediately effective, but instead 
should be given a full notice and comment period. In addition, this 
subsequent comment period allows the NASD to examine further the impact 
of the published TAF rates currently in effect, and to adjust the TAF 
rates accordingly if they are inconsistent with the NASD's overall 
intent that the amendments to its pricing structure be revenue neutral. 
The NASD intends that SR-NASD-2002-148 be read in conjunction with SR-
NASD-2002-99. The two separate yet related proposed rule changes are 
the result of a review of the overall NASD pricing structure, and will 
be used to fund the NASD's member regulatory activities.
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    \14\ 15 U.S.C. 78s(b)(1).
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    On January 1, 2003, if the Commission has not approved SR-NASD-
2002-148, the TAF as established in SR-NASD-2002-98 will terminate and 
will revert to Section 8 of Schedule A of the By-Laws as amended, until 
such time that an approved alternative funding source is in place.
    On October 30, 2002, based on further analysis of trading volumes 
and feedback from member firms, the NASD further adjusted the rate 
structure. The NASD revised the TAF (retroactively effective to October 
1, 2002, but allowing members until January 15, 2003 to remit such 
fees), as follows:
    [sbull] The initial rate of $0.0001 for covered equity securities 
was reduced to $0.00005.
    [sbull] The maximum charge on covered equity securities was reduced 
to $5.00.
    [sbull] The initial rate of $0.08 for security futures was reduced 
to $0.04.
    [sbull] The minimum exclusion was extended to cover options and 
futures, clarifying that if the execution price for a covered security 
is less than the TAF rate on a per share, per contract, or round turn 
transaction basis, then no fee will be assessed.
2. Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
the Act, including section 15A(b)(5) of the Act,\15\ which requires 
among other things, that the NASD's rules provide for the equitable 
allocation of reasonable dues, fees, and other charges among members 
and issuers and other persons using any facility or system that NASD 
operates or controls. The NASD believes that the TAF is objectively 
allocated to NASD members. Moreover, the NASD believes that the level 
of the fee is reasonable because it relates to the recovery of the 
costs of supervising and regulating members.
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    \15\ 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, as amended.

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

    Written comments were neither solicited nor received on the current 
proposal.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the NASD consents, the Commission will:
    A. By order approve such proposed rule change, or

[[Page 69789]]

    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 
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 
NASD. All submissions should refer to file number SR-NASD-2002-148 and 
should be submitted by December 10, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-29316 Filed 11-18-02; 8:45 am]
BILLING CODE 8010-01-P