[Federal Register Volume 69, Number 8 (Tuesday, January 13, 2004)]
[Notices]
[Pages 2032-2033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-610]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49030; File No. SR-NASD-2003-194]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to Elimination of Duplicate 
Assessments and Fees Contained in Schedule A of the NASD By-Laws

January 6, 2004.
    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 29, 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. NASD has 
designated the proposed rule change as one constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder \4\ and 
as establishing or changing a due, fee, or other charge under Section 
19(b)(3)(A)(ii) of the Act \5\ and Rule 19b-4(f)(2) thereunder,\6\ 
which render the proposal effective upon receipt of this filing by the 
Commission.\7\ 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)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
    \7\ NASD clarified that it filed the proposed rule change 
pursuant to both Section 19(b)(3)(A)(i) and Section 19(b)(3)(A)(ii) 
of the Act, as discussed in the purpose section of the notice and in 
the body of NASD's Form 19b-4 filing. Telephone conversation between 
Shirley H. Weiss, Associate General Counsel, NASD, and David A. Hsu, 
Attorney, Division of Market Regulation, Commission, on January 6, 
2004.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend Section 5 of Schedule A to the NASD By-
Laws (``Section 5'') to clarify that two or more members that are under 
substantially the same ownership or control (commonly referred to as a 
``simultaneous filing group'' or ``SFG'') may eliminate certain 
duplicate fees and assessments and to remind members to provide NASD 
with prior notice in the format specified by NASD if they wish to 
establish eligibility for the reduced fees. Below is the text of the 
proposed rule change. Proposed new language is in italic; proposed 
deletions are in brackets.
* * * * *

Schedule A to NASD By-Laws

    Assessments and fees pursuant to the provisions of Article VI of 
the By-Laws of NASD shall be determined on the following basis.
    Sections 1 through 4. No change.

Section 5--Elimination of Duplicate Assessments and Fees

    Two or more members under substantially the same ownership or 
control shall be required to pay (1) only one personnel assessment and 
one [registration renewal] system processing fee annually for those 
individuals

[[Page 2033]]

employed by more than one of the members; [and] (2) only one fee 
annually for each branch office registered at the same location by more 
than one of the members[.]; and (3) [There shall be] only one 
registration fee, one fingerprint processing fee, and one termination 
fee applicable to each applicant registered or terminated 
simultaneously with two or more members under substantially the same 
ownership or control. To establish their eligibility to receive the 
reduction in fees described herein, members must provide NASD with 
information as requested by NASD and in the format specified by NASD 
prior to NASD's assessment of such fees.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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. 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
    Section 5 addresses the elimination of certain duplicate 
assessments and fees for two or more members under substantially the 
same ownership or control. The proposed rule change will amend Section 
5 to codify NASD's stated policies and practices with respect to the 
availability of these reduced fees to simultaneous filing groups. 
First, the proposed rule change will change the reference to a 
``registration renewal fee'' to ``system processing fee,'' to conform 
the terminology to an amendment to Section 5 made in 1999.\8\ Second, 
the proposed rule change will clarify that, in addition to being able 
to pay only one system processing fee, a simultaneous filing group, as 
described in Section 5, may pay only one fingerprint processing fee and 
one termination fee. Third, the proposed rule change will add language 
reminding members that, as a procedural matter, they must provide NASD 
with certain information as requested by NASD and in the format 
specified by NASD in order to receive the reduced fees prior to NASD's 
assessment of such fees.
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    \8\ The ``registration renewal fee'' was replaced with a 
``system processing fee'' in 1999. See Exchange Act Release No. 
41937 (Sept. 28, 1999). The reference in Section 5 to ``registration 
renewal fee'' should have been, but was not, changed at that time.
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    NASD notes that this language will codify existing long-standing 
practice, which requires members to follow certain procedures to obtain 
the benefits of NASD's simultaneous filing group program and the 
reduced registration fees associated therewith, including establishing 
an simultaneous filing group, notifying NASD staff of the affiliated 
firms included in the simultaneous filing group, and requesting and 
completing an SFG Participation Agreement.\9\
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    \9\ NASD is in the process of posting a description of the 
Simultaneous Form Filing Program on its Web site. In the interim, 
and thereafter, members may call NASD's Gateway Call Center (301-
590-6500) for information about the program.
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2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(5) of the Act,\10\ which requires, among 
other things, that NASD rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among members, issuers and 
other persons using any facility or system that NASD operates or 
controls. NASD also believes that the proposed rule change to amend 
Section 5 will more accurately reflect its long-standing policies and 
practices with respect to assessing certain reduced fees to 
simultaneous filing groups that establish their eligibility for such 
reductions.
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    \10\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    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.

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.

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

    The foregoing rule change has become effective pursuant to Sections 
19(b)(3)(A)(i) and (ii) of the Act \11\ and subparagraphs (f)(1) and 
(f)(2) of Rule 19b-4 thereunder \12\ because it constitutes a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule and establishes or 
changes a due, fee, or other charge.\13\ At any time within 60 days of 
this filing, the Commission may summarily abrogate this proposal 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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    \11\ 15 U.S.C. 78s(b)(3)(A)(i) and (ii).
    \12\ 17 CFR 240.19b-4(f)(1) and (2).
    \13\ See supra note 7.
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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 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-NASD-2003-194. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in hard 
copy or by e-mail but not by both methods. 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 NASD. All submissions 
should refer to File No. SR-NASD-2003-194 and should be submitted by 
February 3, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-610 Filed 1-12-04; 8:45 am]
BILLING CODE 8010-01-P