[Federal Register Volume 68, Number 187 (Friday, September 26, 2003)]
[Notices]
[Pages 55686-55691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24323]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48503; File No. SR-NASD-2002-108]


Self-Regulatory Organizations; Notice of Filing of Amendment Nos. 
4 and 5 to a Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to Business Continuity Plans and 
Emergency Contact Information

September 17, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ the National Association of 
Securities Dealers, Inc. (``NASD''), on August 7, 2002, filed with the 
Securities and Exchange Commission (``Commission''),

[[Page 55687]]

a proposed rule change to require its members to establish and maintain 
business continuity plans. The Commission published the original 
proposal in the Federal Register on September 9, 2002.\3\ In response 
to comments received, the NASD submitted amendments to the proposed 
rule change on December 12, 2002; \4\ January 8, 2003; \5\ and February 
19, 2003.\6\ The Commission published Amendment Nos. 1, 2, and 3 for 
comment in the Federal Register on March 10, 2003.\7\ In response to 
additional comments received, the NASD submitted Amendment No. 4 to the 
proposal on September 4, 2003,\8\ and Amendment No. 5 on September 17, 
2003.\9\ The Commission is publishing this notice of Amendment Nos. 4 
and 5 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\ Securities Exchange Act Release No. 46444 (August 30, 2002), 
67 FR 57257 (``Original Notice'').
    \4\ See letter from Brian J. Woldow, Office of General Counsel, 
NASD, to Katherine A. England, Division of Market Regulation 
(``Division''), Commission, dated December 11, 2002 (``Amendment No. 
1'').
    \5\ See letter from Brian J. Woldow, Office of General Counsel, 
NASD, to Katherine A. England, Division, Commission, dated January 
8, 2003 (``Amendment No. 2'').
    \6\ See letter from Brian J. Woldow, Office of General Counsel, 
NASD, to Katherine A. England, Division, Commission, dated February 
19, 2003 (``Amendment No. 3'').
    \7\ Securities Exchange Act Release No. 47441 (March 4, 2003), 
68 FR 11432.
    \8\ See letter from Brian J. Woldow, Office of General Counsel, 
NASD, to Katherine A. England, Division, Commission, dated September 
3, 2003 (``Amendment No. 4'').
    \9\ See letter from Brian J. Woldow, Office of General Counsel, 
NASD, to Katherine A. England, Division, Commission, dated September 
16, 2003 (``Amendment No. 5'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD is proposing certain amendments to the proposed rule 
change, which requires member firms to create and maintain business 
continuity plans and provide the NASD with certain information to be 
used in the event of future significant business disruptions.\10\ Among 
other things, Amendment No. 4 clarifies that the proposed rule change 
would not mandate that members stay in business in the event of a 
significant business disruption. The new amendment also would impose a 
disclosure requirement on members. In addition, the amendment would 
require each member to review and, if necessary, update its emergency 
contact information. Below is the text of the proposed rule change. The 
base rule text is that proposed in Amendment No. 3. Proposed new 
language added by Amendment Nos. 4 and 5 is in italics; text deleted by 
Amendment Nos. 4 and 5 is in brackets.
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    \10\ A similar rule change has been proposed by the New York 
Stock Exchange (``NYSE''). See Securities Exchange Act Release No. 
46443 (August 20, 2002), 67 FR 57264 (September 9, 2002) (original 
NYSE proposal); Securities Exchange Act Release No. 47584 (March 27, 
2003), 68 FR 16334 (September 9, 2002) (Amendment No. 3 to NYSE 
proposal).
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* * * * *

3500. Emergency Preparedness

3510. Business Continuity Plans

    (a) Each member must create and maintain a written business 
continuity plan identifying procedures relating to an emergency or 
significant business disruption. Such procedures must be reasonably 
designed to enable the member to [continue its business in the event of 
future significant business disruptions] meet its existing obligations 
to customers. In addition, such procedures must address the member's 
existing relationships with other broker-dealers and counter-parties. 
The business continuity plan must be made available promptly upon 
request to NASD staff.
    (b) Each member must update its plan in the event of any material 
change to the member's operations, structure, business or location. 
Each member must also conduct an annual review of its business 
continuity plan to determine whether any modifications are necessary in 
light of changes to the member's operations, structure, business, or 
location.
    (c) The elements that comprise a business continuity plan are 
flexible and may be tailored to the size and needs of a member. Each 
plan, however, must at a minimum, address:
    (1) Data back-up and recovery (hard copy and electronic);
    (2) All mission critical systems;
    (3) Financial and operational assessments;
    (4) Alternate communications between customers and the member;
    (5) Alternate communications between the member and its employees;
    (6) Critical [B]business constituents, banks, and counter-parties[y 
impact];
    (7) Regulatory reporting; [and]
    (8) Communications with regulators; and[.]
    (9) How the member will assure customers' prompt access to their 
funds and securities in the event that the member determines that it is 
unable to continue its business.
    Each member must address the above-listed categories to the extent 
applicable and necessary [to enable the member to continue its business 
in the event of a future significant business disruption]. If any of 
the above-listed categories is not applicable, the member's business 
continuity plan need not address the category. The member's business 
continuity plan, however, must document the rationale for not including 
such category in its plan. If a member relies on another entity for any 
one of the above-listed categories or any mission critical system, the 
member's business continuity plan must address this relationship.
    (d) Members must designate a member of senior management to approve 
the plan and he or she shall be responsible for conducting the required 
annual review. The member of senior management must also be a 
registered principal.
    (e) Each member must disclose to its customers how its business 
continuity plan addresses the possibility of a future significant 
business disruption and how the member plans to respond to events of 
varying scope. At a minimum, such disclosure must be made in writing to 
customers at account opening, posted on the member's Internet Web site 
(if the member maintains a Web site), and mailed to customers upon 
request.
    (f) For purposes of this rule, the following terms shall have the 
meanings specified below:
    (1) ``Mission critical system'' means any system that is necessary, 
depending on the nature of a member's business, to ensure prompt and 
accurate processing of securities transactions, including, but not 
limited to, order taking, order entry, execution, comparison, 
allocation, clearance and settlement of securities transactions, the 
maintenance of customer accounts, access to customer accounts and the 
delivery of funds and securities.
    (2) ``Financial and operational assessment'' means a set of written 
procedures that allows a member to identify changes in its operational, 
financial, and credit risk exposures.

3520. Emergency Contact Information

    (a) Each member shall report to NASD, via such electronic or other 
means as NASD may require, prescribed emergency contact information for 
the member. Among other things, the emergency contact information for 
the member includes designation of two emergency contact persons. Each 
emergency contact person shall be a member of senior management and a 
registered principal of the member.
    (b) Each member must promptly update its emergency contact 
information, via such electronic or other means as NASD may require, in 
the event of any material change. Each

[[Page 55688]]

member must review and, if necessary, update its emergency contact 
information, including designation of two emergency contact persons, 
within 17 business days after the end of each calendar quarter to 
ensure the information's accuracy. The member's Executive 
Representative must conduct such review and any update. Furthermore, 
members must have adequate controls and procedures to ensure that only 
the Executive Representative may perform the review and update.
* * * * *

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, as 
amended, 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
    The NASD's original proposal and the NYSE's proposal elicited 
comments from three parties.\11\ The NASD addressed these comments in 
Amendment Nos. 1, 2, and 3, which the Commission published for comment 
in the Federal Register on March 10, 2003.\12\ The NASD incorporates 
the interpretations in the Original Notice and Federal Register release 
of March 10, 2003, to the extent that they are consistent with the 
interpretations contained in this release. The amended proposals of the 
NASD and NYSE relating to business continuity planning also elicited 
comments from three parties.\13\
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    \11\ One commenter submitted a single letter that addressed both 
proposals. See letter from Melvyn Musson, Edward D. Jones & Co. 
(``Edward Jones''), to Jonathan G. Katz, Secretary, Commission, 
dated September 30, 2002. A second commenter submitted two letters 
that addressed each proposal separately. See letters from Jerry W. 
Klawitter, Securities Industry Association and Bond Market 
Association (``SIA/BMA''), to Margaret H. McFarland, Deputy 
Secretary, Commission, dated September 30, 2002. A third commenter 
submitted a letter that addressed only the NASD proposal. See letter 
from Frances M. Stadler, Investment Company Institute, to Jonathan 
G. Katz, Secretary, Commission, dated September 30, 2002.
    \12\ See supra note 7. The Commission also published for comment 
Amendment No. 3 to the NYSE's proposal relating to business 
continuity planning. See supra note 10.
    \13\ Two commenters responded only to the NASD proposal. See 
letter from Melvyn Musson, Edward Jones, to Jonathan G. Katz, 
Secretary, Commission, dated March 28, 2003 (``Edward Jones 
Letter''); letter from Thomas K. Heard, A.G. Edwards & Sons, Inc., 
to Jonathan G. Katz, Secretary, Commission, dated March 31, 2003 
(``A.G. Edwards Letter''). One commenter, the SIA/BMA, submitted a 
separate letter in response to each notice. See letters from Jerry 
W. Klawitter, SIA/BMA, to Jonathan G. Katz, Secretary, Commission, 
dated March 31, 2003 (``SIA/BMA Letter''), and April 24, 2003.
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    The purpose of Amendment No. 4 is to clarify that the proposed rule 
change does not mandate that members stay in business in the event of a 
significant business disruption. This amendment also would require each 
member to disclose to its customers how its business continuity plan 
addresses the possibility of a future significant business disruption. 
In addition, the amendment would require each member to review and, if 
necessary, update its emergency contact information on a quarterly 
basis. Amendment No. 5 clarifies the implementation date of the 
proposed rules.

Proposed NASD Rule 3510

    [sbull] Requirement that Plans be Reasonably Designed to Enable the 
Member to Continue its Business
    Proposed NASD Rule 3510(a) would require that members create and 
maintain business continuity plans. Amendment No. 3 amended the 
language of the proposed rule to provide that each member's plan be 
``reasonably designed to enable the member to continue its business in 
the event of future significant business disruption.'' As explained in 
the Original Notice, the NASD intended for proposed NASD Rule 3510 to 
require that a member not only conduct a planning process to create a 
written business plan, but also that the resultant plan ensure that 
member's ability to continue its business in the event of a significant 
business disruption.
    One commenter expressed concern that the language added to proposed 
NASD Rule 3510(a) would create a new obligation on a member to continue 
its business after a significant business disruption.\14\ This is not 
the intention of the proposal. The proposal would not deprive a member 
of its autonomy to choose to cease its operations at any time, provided 
it does so in a manner consistent with applicable laws and Commission 
and NASD rules. Nonetheless, to clarify that the rule would not create 
a new obligation for members to continue their businesses, NASD is 
amending the proposed rule. Specifically, the proposed rule text 
stating that ``[s]uch procedures must be reasonably designed to enable 
the member to continue its business in the event of future significant 
business disruptions'' is amended to read, ``[s]uch procedures must be 
reasonably designed to enable the member to meet its existing 
obligations to customers. In addition, such procedures must address the 
member's existing relationships with other broker-dealers and counter-
parties.''
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    \14\ See SIA/BMA Letter.
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    The general principle that firms are not required to remain in 
business is further recognized in a related amendment that the NASD is 
proposing to make with respect to the categories that a member's plan 
must, at a minimum, address. In particular, following discussions with 
Commission staff and NYSE staff, the NASD is proposing to amend 
proposed NASD Rule 3510(c) to require a plan to address how a member 
will assure customers' prompt access to their funds and securities in 
the event that the member determines it is unable to continue its 
business.\15\ If a member has customers, the member must detail the 
procedures it would employ to ensure customer access to funds and 
securities. This new category would help to ensure that if a member 
were unable to continue its business following a significant business 
disruption, those customers holding funds or securities through the 
member would be able to access their funds and/or securities.
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    \15\ The NYSE also is proposing a substantially similar 
amendment. See Securities Exchange Act Release No. 48502 (September 
17, 2003) (Amendment No. 4 to NYSE proposal relating to business 
continuity planning).
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    [sbull] Requirement to Update Business Continuity Plans
    Proposed NASD Rule 3510(b) states, ``[e]ach member must update its 
plan in the event of any material change to the member's operations, 
structure, business or location. Each member must also conduct an 
annual review of its business continuity plan to determine whether any 
modifications are necessary in light of changes to the member's 
operations, structure, business, or location.'' One commenter suggested 
that the annual review should be required at the plan component level 
(either defined by business function or department), rather than the 
firm level.\16\ The NASD continues to believe, however, that each 
member should annually review the contents of its business continuity 
plan at the overall firm level. Such a firm-level review would, among 
other things, help to

[[Page 55689]]

ensure that the business continuity plan continues to operate 
effectively as a whole notwithstanding any operational or business 
changes that may have occurred in a defined business area or 
department.
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    \16\ See A.G. Edwards Letter.
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    [sbull] Senior Management Approval
    Proposed NASD Rule 3510(d) requires that ``[m]embers must designate 
a member of senior management to approve the plan and he or she shall 
be responsible for conducting the required annual review.'' One 
commenter requested clarification of whether the member of senior 
management would actually be required to conduct the review or whether 
he or she must only ensure that the review was completed.\17\ The NASD 
believes that it is the responsibility of the designated member of 
senior management to ensure an adequate, (at least) annual, firm-level 
review of the member's business continuity plan. This would not require 
the member of senior management to personally conduct all aspects of 
the review; however, he or she would be required to review the final 
plan, including any proposed changes to the existing plan, and have a 
reasonable basis on which to believe that any persons delegated to 
conduct the more detailed parts of the review had the appropriate 
levels of knowledge in their assigned areas.
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    \17\ See Edward Jones Letter.
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    [sbull] Business Constituent, Bank, and Counter-Party Impact
    The proposal would require a member's business continuity plan to 
address ``business constituent, bank, and counter-party impact.'' In 
addressing this category, the NASD stated that firms should have 
procedures that assess the impact that a significant business 
disruption has on business constituents (businesses with which a member 
firm has an ongoing commercial relationship in support of the member's 
operating activities), banks (lenders), and counter-parties (such as 
other broker-dealers or institutional customers). In addition, the NASD 
stated that members should provide for alternative actions or 
arrangements with respect to their contractual relationships with 
business constituents, banks, and counter-parties upon the occurrence 
of a material business disruption to either party.
    The commenters expressed concern over this provision. Commenters 
contended that the requirement to provide for alternative actions or 
arrangements would place an undue burden on members, might upset 
existing contracts, and presupposes that all such actions or 
arrangement are sufficiently critical to require consideration of 
alternatives.\18\ Another commenter suggested that the term ``business 
constituent'' should be limited to customer relationships.\19\
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    \18\ See SIA/BMA Letter; A.G. Edwards Letter.
    \19\ See Edward Jones Letter.
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    The NASD disagrees with the commenters that the provision is unduly 
burdensome or that it might upset existing contracts. The provision 
would require only that a firm consider and include in its plan 
alternative steps that the firm would take in the event that a member's 
critical business constituents, bank, or counter-parties were 
inaccessible. The rule would not mandate that a member enter into 
supplemental contracts or conditional agreements. For example, if a 
member were to determine that a telecommunications company is a 
critical business constituent, the member would then be required to 
create procedures or actions to follow in the event that this business 
constituent was unavailable. Alternatively, the member could enter into 
a supplemental agreement with another telecommunications service to 
provide back-up services. The rule permits each member to adopt an 
approach in dealing with its business constituents, banks, and counter-
parties that is best suited to the member's particular operations, 
structure, business, and location. It would require a member only to 
assess the effect of a significant business disruption on its business 
constituents, banks, and counter-parties and decide appropriate actions 
if faced with any such situation.
    The NASD, however, recognizes that certain business constituent, 
banking, and counter-party relationships might not be critical to a 
firm's business or operations. The NASD, therefore, is amending the 
category of ``business constituent, bank, and counter-party impact'' in 
proposed NASD Rule 3510(c)(6) to read, ``[c]ritical business 
constituents, banks, and counter-parties.'' Members would be 
responsible for identifying those relationships that they deem critical 
for purposes of complying with the rule; the NASD, however, would 
consider, based on its experience in working with the rule following 
its adoption, whether to enumerate specific relationships that it views 
as critical to all members.
    [sbull] Disclosure Provision
    Following discussions with Commission staff and NYSE staff, the 
NASD also is amending the proposed rule text to require each member to 
disclose to its customers how its business continuity plan addresses 
the possibility of a future significant business disruption and how the 
member plans to respond to events of varying scope. Furthermore, such 
disclosure would be required, at a minimum, to be made in writing to 
customers at account opening, posted on the member's Internet Web site 
(if the member maintains a Web site), and mailed to customers upon 
request. The NASD believes that this requirement would enable investors 
to make an educated decision about whether to place their funds and 
securities at the specific member based on the firm's business 
continuity planning and also would deter members from creating plans 
that do not adequately address contingency planning. The NASD, however, 
notes that members would not be required to disclose their actual 
plans; rather, each member would be required only to create a summary 
of how its plan addresses the possibility of significant business 
disruptions and disclose the member's general planned responses to 
significant business disruptions. Members would not need to disclose 
such factors as: the specific location of any back-up facilities; any 
proprietary information contained in the plan; or the parties with whom 
the member has back-up arrangements. Members, however, would need to 
disclose the existence of back-up facilities and arrangements.
    [sbull] Technical Amendment
    Two commenters questioned a technical amendment made by the NASD to 
the proposed rule text. Originally, proposed NASD Rule 3510(a) would 
have required that a member have a plan identifying procedures ``to be 
followed in the event of an emergency or significant business 
disruption.'' In Amendment No. 3, the NASD changed ``to be followed in 
the event of an emergency or significant business disruption'' to 
``relating to an emergency or significant business disruption.'' The 
commenters believed that this new language is less clear than the 
language originally proposed.\20\ This technical amendment, however, 
intends only to reflect that a plan might include more than a list of 
procedures to be followed by the member in the event of a significant 
business disruption. For example, a plan may reference an existing 
arrangement with another entity that permits the entity to perform 
services for the member in the event of a future business disruption. 
While this arrangement is not necessarily a procedure to be followed by 
the member in the event of a significant business disruption, it does 
reflect the member's

[[Page 55690]]

procedures relating to a business disruption and should be included in 
the member's business continuity plan.
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    \20\ See A.G. Edwards Letter; SIA/BMA Letter.
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Proposed NASD Rule 3520

    [sbull] Emergency Contact Information
    Proposed NASD Rule 3520 would require members to provide the NASD 
with emergency contact information and to update any information upon 
the occurrence of a material change. The proposed rule would require 
members, among other things, to designate two emergency contact persons 
that the NASD could contact in the event of a significant business 
disruption. Each emergency contact person would have to be a registered 
principal and a member of senior management.
    One commenter asserted that the proposed rule should not require 
emergency contact persons to be members of senior management and 
registered principals. The commenter characterized this requirement as 
invasive and believed that the NASD should allow others to serve as 
emergency contact persons.\21\ The NASD disagrees with this assessment. 
The NASD proposed this requirement to address situations in which the 
NASD wishes to contact a member in the event of a significant business 
disruption and believes that the emergency contact persons must be 
registered principals and members of senior management. Under such 
critical circumstances, the NASD wants to ensure that it will be able 
to contact persons in senior management directly regarding the 
condition and operations of the firm. Moreover, the NASD believes that 
it is essential that the emergency contact persons be members of senior 
management with the authority, experience, and knowledge to make 
potentially critical and time-sensitive decisions regarding the 
firm.\22\
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    \21\ See A.G. Edwards Letter.
    \22\ The NASD notes that the requirement that a contact person 
be a member of senior management and a registered principal is 
consistent with other NASD rules, including designation of a 
member's Executive Representative.
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    [sbull] Review and Update of Emergency Contact Information
    The NASD also is amending its proposed rule to include a 
requirement that each member review and update, if necessary, its 
emergency contact information on a quarterly basis. Proposed NASD Rule 
3520(b), as amended by Amendment No. 1, would require members to 
promptly update their emergency contact information in the event of any 
material change. Because of the essential nature of this information, 
the NASD believes that members also should review and update this 
information on a quarterly basis to ensure its accuracy. Consistent 
with the quarterly FOCUS reporting schedule, members must review or 
update, if necessary, its emergency contact information within 17 
business days after the end of each calendar quarter. Under this 
provision, the member's Executive Representative must perform the 
review and update. Finally, members must have adequate controls and 
procedures to ensure that only the Executive Representative may perform 
the review and update of the member's emergency contact information.
    [sbull] Effective Date of Rules
    One commenter requested that, upon Commission approval of the 
proposed rule change, the NASD announce in the Federal Register an 
effective date for the rule of 360 days after notice of Commission 
approval.\23\ In Amendment No. 5, the NASD proposes to establish 
separate effective dates for introducing firms and clearing firms 
(including self-clearing firms) to create or modify their business 
continuity plans, as required by proposed NASD Rule 3510. The NASD 
believes that this is necessary because many introducing firms may need 
access to information regarding the business continuity planning of 
their clearing firms. To ensure that introducing firms would have 
sufficient time to create or modify sections of their plans that might 
be affected by the plans of their clearing firms, the NASD is extending 
by 30 days the proposed effective date for introducing firms to comply 
with proposed NASD Rule 3510.
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    \23\ See SIA/BMA Letter.
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    In addition, to further consistency with the business continuity 
plan rule proposed by the NYSE, the NASD is proposing in Amendment No. 
5 to calculate the effective dates of both proposed NASD Rules 3510 and 
3520 from the date of publication of the Commission approval order. 
Accordingly, clearing firms would have to establish business continuity 
plans, as required by proposed NASD Rule 3510, within 120 days of the 
publication of the Commission order announcing the approval of the 
NASD's rule filing; introducing firms would be required to establish 
business continuity plans, as required by proposed NASD Rule 3510, 
within 150 days of the publication of the Commission order announcing 
the approval of the NASD's rule filing. All members (both introducing 
and clearing firms) would be required to designate emergency contact 
persons and provide the NASD with their contact information, as 
required by proposed NASD Rule 3520, within 60 days of publication of 
the Commission's approval order.
2. Statutory Basis
    The NASD believes that the proposed rule change, as amended, is 
consistent with the provisions of section 15A(b)(6) of the Act,\24\ 
which requires, among other things, that the NASD's rules be designed 
to prevent fraudulent and manipulative acts and practices; to promote 
just and equitable principles of trade; and, in general, to protect 
investors and the public interest. The NASD believes that the proposed 
rule change, as amended, which would help to ensure that members are 
prepared for significant business disruptions, is consistent with those 
purposes.
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    \24\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD does not believe that the proposed rule change, as 
amended, would 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 received in response to Notice to Members 02-
23 (April 2002) and the Original Notice. The NASD received 32 comment 
letters following publication of the Notice to Members. The NASD 
received three comment letters in response to the Original Notice.\25\ 
The NASD addressed these comments in Amendment Nos. 1, 2, and 3, which 
were published for comment in the Federal Register on March 10, 
2003.\26\ The NASD incorporates the interpretations in the Original 
Notice and Amendment Nos. 1, 2, and 3 to the extent that they are 
consistent with the interpretations contained in this release. In 
response to the Federal Register notice of March 10, 2003, the 
Commission received three comment letters.\27\ The NASD's response to 
these comment letters is contained in section II(A)(1) above.
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    \25\ See supra note 11.
    \26\ See supra note 7.
    \27\ See supra note 13.
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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

[[Page 55691]]

longer period to be appropriate and publishes its reasons for so 
finding, or (ii) as to which the self-regulatory organization consents, 
the Commission will:
    (A) by order approve such proposed rule change; or
    (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, as amended, 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 No. 
SR-NASD-2002-108 and should be submitted by October 17, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-24323 Filed 9-25-03; 8:45 am]
BILLING CODE 8010-01-P