[Federal Register Volume 68, Number 4 (Tuesday, January 7, 2003)]
[Notices]
[Pages 824-825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-268]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47112; File No. SR-NASD-2002-182]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Extending Existing Pilot Program for the 
Regulatory Fee and Trading Activity Fee

December 31, 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 December 26, 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 filed the proposal pursuant to Section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD proposes to extend the pilot program for the Trading 
Activity Fee (``TAF'') through March 1, 2003. The TAF structure as 
originally proposed in SR-NASD-2002-98 \5\ (and modified in SR-NASD-
2002-147 \6\) is set to expire on December 31, 2002. Upon expiration of 
SR-NASD-2002-98, the member regulatory pricing structure was to revert 
to Section 8 of Schedule A of the By-Laws as amended. However, the NASD 
has determined not to revert to the previous pricing structure, but 
rather to extend the TAF pilot program, to maintain the status quo and 
to allow the Commission more time to review issues presented by the TAF 
proposed rule change.\7\ The NASD proposes no substantive changes to 
the existing pilot

[[Page 825]]

program, other than to extend its operation through March 1, 2003.
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    \5\ Securities Exchange Act Release No. 46416 (August 23, 2002), 
67 FR 55901 (August 30, 2002).
    \6\ Securities Exchange Act Release No. 46818 (November 12, 
2002), 67 FR 69782 (November 19, 2002).
    \7\ In addition, many NASD member firms have already made 
programming changes to pay in conformity with the TAF structure that 
was effective on October 1, 2002.
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    The text of the proposed rule change is available at the NASD and 
at the Commission.

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
    On July 24, 2002, the NASD filed SR-NASD-2002-98, which proposed a 
new member regulatory pricing structure.\8\ The proposed rule change 
was filed for immediate effectiveness pursuant to Section 
19(b)(3)(A)(ii) of the Act \9\ and Rule 19b-4(f)(2)\10\ thereunder. SR-
NASD-2002-98 is currently in effect. Assessments under the new TAF were 
effective as of October 1, 2002.\11\ On October 18, 2002, the NASD 
established a sunset provision whereby the TAF would cease to exist 
after December 31, 2002.\12\ Upon expiration of SR-NASD-2002-98, the 
member regulatory pricing was to revert to Section 8 of Schedule A of 
the By-Laws as amended.
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    \8\ Securities Exchange Act Release No. 46416 (August 23, 2002), 
67 FR 55901 (August 30, 2002)(SR-NASD-2002-98). See also Securities 
Exchange Act Release No. 46417 (August 23, 2002), 67 FR 55893 
(August 30, 2002)(SR-NASD-2002-99). The NASD also published two 
Notices to Members describing the proposed changes and addressing 
interpretive questions posed by NASD members. See Notice to Members 
02-41 (July 2002), and Notice to Members 02-63 (September 2002).
    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ Member firms must pay the TAF (for the first quarter 
starting October 1, 2002) by no later than January 15, 2003.
    \12\ At the same time, the NASD filed a new proposed rule change 
(SR-NASD-2002-148), substantially similar to SR-NASD-2002-98 but 
filed under Section 19(b)(1) of the Act, to allow for additional 
notice and comment. The NASD sought Commission approval of SR-NASD-
2002-148 with an implementation date of December 31, 2002. To date, 
this proposed rule filing is pending with the Commission.
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    The NASD has determined not to revert to the previous pricing 
structure established in Section 8 of Schedule A of the NASD By-Laws, 
but rather to extend the TAF pilot program in order to maintain the 
status quo and to allow the Commission more time to review issues 
presented by the TAF proposed rule change. Accordingly, the NASD filed 
the instant proposed rule change to extend the TAF structure pilot 
program through March 1, 2003. The NASD proposes no other changes to 
the pilot, other than to extend its operation through March 1, 2003.
2. Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
the Act, including Section 15A(b)(5) of the Act,\13\ 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 the 
NASD operates or controls.
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    \13\ 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 on this proposed rule change were neither 
solicited nor received. Written comments have been solicited on SR-
NASD-2002-98, SR-NASD-2002-147 and SR-NASD-2002-148. These comments are 
not addressed herein, but are, as appropriate, discussed in connection 
with the respective rule filings.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) Become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \14\ and 
Rule 19b-4(f)(6) thereunder.\15\ 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    The NASD has requested that the Commission waive the five-day pre-
filing notice requirement and the 30-day operative delay. The 
Commission believes waiving the five-day pre-filing notice requirement 
and the 30-day operative delay is consistent with the protection of 
investors and the public interest. In particular, acceleration of the 
operative date will allow the pilot to operate without interruption. 
For these reasons, the Commission designates the proposal to be 
effective and operative upon filing with the Commission.\16\
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    \16\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the 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-2002-182 and should be 
submitted by January 28, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-268 Filed 1-6-03; 8:45 am]
BILLING CODE 8010-01-P