[Federal Register Volume 68, Number 16 (Friday, January 24, 2003)]
[Notices]
[Pages 3577-3578]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1579]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47208; File No. SR-NASD 2002-157]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change Regarding ACT Risk 
Management

January 16, 2003.

I. Introduction

    On October 31, 2002, the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association''), through its subsidiary The 
Nasdaq Stock Market, Inc. (``Nasdaq''), submitted to the Securities and 
Exchange Commission (``SEC'' or ``Commission'') pursuant to section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 
19b-4 thereunder,\2\ a proposed rule change regarding the risk 
management function provided by Nasdaq's Automated Confirmation 
Transaction Service. The proposed rule change was published for public 
comment in the Federal Register on December 16, 2002.\3\ The Commission 
received no comments on the proposal. This order approves the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 46948 (December 4, 
2002), 67 FR 77117.
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    Nasdaq proposed changes to NASD Rule 6150 regarding the risk 
management function provided by Nasdaq's Automated Confirmation 
Transaction Service (``Act''). Upon approval of the proposed rule 
change, Nasdaq will permit members to voluntarily utilize the ACT risk 
management function, provided that they utilize another risk management 
tool of equal quality and that they and the correspondent firms for 
whom they clear trades continue to report clearing-eligible trades to 
ACT in compliance with applicable ACT rules.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with

[[Page 3578]]

section 15A of the Act \4\ and the rules and regulations thereunder 
applicable to a national securities association. In particular, the 
Commission finds that the proposed rule change is consistent with 
section 15A(b0(6) of the Act \5\ which requires, among other things, 
that the rules of the association be designed to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, and in general, to protect investors and the public 
interest.\6\
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78o-3.
    \5\ 15 U.S.C. 78o-3(b)(6).
    \6\ In approving this rule, the Commission has considered its 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    The ability of NASD clearing members to adequately assess the risk 
of their correspondent firms is critical to the protection of investors 
and the public interest, as required by the Act. Therefore, the 
Commission finds that the proposed rule change is consistent with the 
Act because the proposal seeks to ensure that all NASD clearing members 
retain the ability to monitor the trading activities and risk exposures 
of their correspondent firms, either by using the ACT risk management 
program, or another risk management tool comparable to ACT's risk 
management program. The proposed rule change also fosters cooperation 
and coordination with persons engaged in the regulating, clearing, 
settling, and processing of information with respect to and 
facilitating transactions in securities because it ensures that NASD 
clearing members utilize a risk management tool that monitors the 
acceptable levels of credit and risk exposure for correspondent firms, 
which helps to ensure the rapid and reliable comparison and settlement 
of transactions.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-NYSE-2002-57) is approved.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-1579 Filed 1-2-03; 8:45 am]
BILLING CODE 8010-01-M