[Federal Register Volume 68, Number 69 (Thursday, April 10, 2003)]
[Notices]
[Pages 17712-17713]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8732]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47623; File No. SR-NASD-2003-65]


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

April 3, 2003.
    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 March 31, 2003, the National Association of Securities Dealers, Inc. 
(``NASD'') 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 NASD 
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.\5\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \217\ 17 CFR 200.30-3(a)(12).
    \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).
    \5\ The Commission waived the five-day pre-filing notice 
requirement. See Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii). 
The NASD also asked the Commission to waive the 30-day operative 
delay.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD proposes to extend the pilot period for the Trading 
Activity Fee (``TAF'') through April 15, 2003. The TAF (as originally 
proposed in SR-NASD-2002-98) is in effect, and is set to expire on 
April 1, 2003.\6\ The NASD is requesting the Commission approve SR-
NASD-2002-148, granting permanent approval of the TAF, before the 
expiration of the TAF pilot on April 15, 2003.\7\ If the Commission 
does not approve SR-NASD-2002-148 before the expiration of the TAF 
pilot on April 15, 2003, the trading fee component of the member 
regulatory pricing structure will revert to Section 8 of Schedule A to 
the NASD By-Laws, as amended.
---------------------------------------------------------------------------

    \6\ See 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 Nos. 47112 (December 31, 2002), 68 
FR 824 (January 7, 2003) (SR-NASD-2002-182) and 47436 (March 4, 
2003), 68 FR 11422 (March 10, 2003) (SR-NASD-2003-26).
    \7\ See Securities Exchange Act Release No. 46817 (November 12, 
2002), 67 FR 69785 (November 19, 2002)(SR-NASD-2002-148).
---------------------------------------------------------------------------

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 its proposal and discussed any 
comments it received regarding the proposal. 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, which proposed a 
new member regulatory pricing structure, including the TAF, to replace 
the existing trading fee contained in section 8 of Schedule A to the 
NASD By-Laws.\8\ SR-NASD-2002-98 is currently in effect. Assessments 
under the TAF were effective as of October 1, 2002, payable January 15, 
2003.\9\ On October 18, 2002, the NASD established a sunset provision 
whereby the TAF established by SR-NASD-2002-98 would cease to exist 
after December 31, 2002.\10\ Upon expiration of SR-NASD-2002-98, the 
member regulatory pricing structure was to revert to Section 8 of 
Schedule A to the NASD By-Laws, as amended.
---------------------------------------------------------------------------

    \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 three 
Notices to Members describing the proposed changes and addressing 
interpretive questions posed by NASD members. See Notices to Members 
02-41 (July 2002), 02-63 (September 2002), and 02-75 (November 
2002).
    \9\ Member firms were required to pay the TAF in accordance with 
the pilot program (for the first quarter starting October 1, 2002) 
by no later than January 15, 2003, and thereafter, on a monthly 
basis.
    \10\ 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 
comment.
---------------------------------------------------------------------------

    On December 24, 2002, the NASD extended the TAF pilot through March 
1, 2003. On February 28, 2002, the NASD again extended the TAF pilot 
through April 1, 2003. With the instant proposed rule change, the NASD 
is extending the TAF pilot through April 15, 2003, to allow the 
Commission additional time to review issues presented by the proposal 
to make the TAF permanent (SR-NASD-2002-148). The NASD requests that 
the Commission approve SR-NASD-2002-148 before the expiration of the 
TAF pilot on April 15, 2003.
2. Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
the Act, including section 15A(b)(5),\11\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

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, however, have been solicited 
by publication in the Federal Register of SR-NASD-2002-98, SR-NASD-
2002-147, SR-NASD-2002-148, SR-NASD-2002-182, and SR-NASD-2003-26.

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 \12\ and 
Rule 19b-4(f)(6) thereunder.\13\

[[Page 17713]]

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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    The NASD has requested that the Commission waive the 30-day 
operative delay. The Commission believes waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Acceleration of the operative date will allow the TAF pilot 
to operate without interruption through April 15, 2003. For these 
reasons, the Commission designates the proposal to be effective and 
operative upon filing with the Commission.\14\
---------------------------------------------------------------------------

    \14\ 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).
---------------------------------------------------------------------------

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 NASD. All 
submissions should refer to file number SR-NASD-2003-65 and should be 
submitted by May 1, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-8732 Filed 4-9-03; 8:45 am]
BILLING CODE 8010-01-P