[Federal Register Volume 69, Number 70 (Monday, April 12, 2004)]
[Notices]
[Pages 19255-19257]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8178]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49527; File No. SR-NASD-2004-049]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. To Establish Examination and Development Fees 
in Connection With Series 86/87 Fees for Research Analysts

April 2, 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 March 19, 2004, 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 the NASD has prepared. On March 31, 2004, the 
NASD filed Amendment No. 1 to the proposed rule change (``Amendment No. 
1'').\3\ The NASD has designated this proposal as one establishing or 
changing a due, fee or other charge imposed by the NASD pursuant to 
section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Marc Menchel, Executive Vice President and 
General Counsel, NASD, to Katherine England, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated 
March 31, 2004. In Amendment No. 1, the NASD amended the effective 
date of proposed Section (f) of Section 4 of Schedule A to the NASD 
By-Laws to April 2, 2004.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

    The NASD is filing with the Commission a proposed rule change to 
amend Section 4 of Schedule A of the NASD By-Laws to establish the 
examination fee for the new Research Analyst Qualification Examination 
(``Series 86/87'') program.\6\ The proposed rule change also sets forth 
a pass-through examination development fee for the Series 86 and Series 
87 examinations, to be collected by the NASD on behalf of the New York 
Stock Exchange (``NYSE'').\7\ The text of the proposed rule change is 
set forth below. Proposed new language is in italics; proposed 
deletions are in [brackets].
---------------------------------------------------------------------------

    \6\ On January 28, 2004, NASD filed with the Commission for 
immediate effectiveness the Series 86/87 examination program. See 
Securities Exchange Act Release No. 49253 (February 13, 2004), 69 FR 
8257 (February 23, 2004) (notice of filing and immediate 
effectiveness of File No. SR-NASD-2004-17). NASD previously filed 
with the Commission on January 16, 2004, a proposed rule change for 
immediate effectiveness that delayed the effective date of NASD Rule 
1050 to ``not later than March 30, 2004.'' See Securities Exchange 
Act Release No. 49119 (January 23, 2004), 69 FR 4337 (January 29, 
2004) (notice of filing and immediate effectiveness of File No. SR-
NASD-2004-10). NASD Rule 1050 became effective on March 30, 2004.
    \7\ See supra note 3.
---------------------------------------------------------------------------

* * * * *

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.
    Section 1 through 3--No Change.

Section 4--Fees

    (a) through (b) No Change.
    (c) There shall be an examination fee of $60.00 assessed as to each 
individual who is required to take an examination for registration as a 
registered representative pursuant to the provisions of the Rule 1030 
Series, except that the examination fee for general securities 
representatives shall be $110.00. This fee is in addition to the 
registration fee described in Item (b). Persons for whom an examination 
is waived pursuant to Rule 1070 shall pay a fee as set forth in 
paragraph [(j)] (l) of this Section.
    (d) No Change.
    (e) There shall be an examination fee of $105.00 assessed as to 
each individual who takes a Series 86 examination for registration as a 
research analyst pursuant to Rule 1050. There shall be an examination 
fee of

[[Page 19256]]

$55.00 assessed as to each individual who takes a Series 87 examination 
for registration as a research analyst pursuant to Rule 1050. This fee 
is in addition to the registration fee described in paragraph (b). 
Persons for whom an examination is waived pursuant to Rule 1070 shall 
pay a fee as set forth in paragraph (l) of this Section.
    (f) There shall be a New York Stock Exchange examination 
development fee of $45.00 assessed as to each individual who takes a 
Series 86 or Series 87 examination for registration as a research 
analyst pursuant to Rule 1050. This fee is in addition to the 
registration and examination fees described in paragraphs (b) and (e) 
respectively.\8\
---------------------------------------------------------------------------

    \8\ Amendment No. 1 establishes the effective date for proposed 
Section (f) of Section 4 to Schedule A of the NASD By-Laws as April 
2, 2004.
---------------------------------------------------------------------------

    [(e)] (g) There shall be an examination fee of $110.00 assessed as 
to each individual taking the General Securities-Sales Supervisor 
Examination. There shall be an examination fee of $75.00 assessed as to 
each individual who is required to take any other examination for 
principals pursuant to the provisions of the Rule 1020 Series. Persons 
for whom an examination is waived pursuant to Rule 1070 shall pay a fee 
as set forth in paragraph [(j)] (l) of this Section.
    [(f)] (h) There shall be a service charge fee of $15.00 in addition 
to those fees specified in (b), (c), [and] (d), (e), and (f) above for 
any examination taken in a foreign test center located outside the 
territorial limits of the United States.
    (g) through (i) Renumbered as (i) through (k).
    [(j)] (l) Each individual who is granted a waiver(s) for any 
qualification examination specified in paragraphs (c), [or] (e), or (g) 
of this section shall be assessed as an application fee the examination 
fee as set forth in paragraph (c), [or] (e), (f), or (g) for each 
qualification examination so waived.
    (k) through (l) Renumbered as (m) through (n).
    Section 5 through 13--No Change.
* * * * *

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 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
    Pursuant to NASD Rule 1050, an associated person who functions as a 
research analyst must be registered and pass a qualification 
examination. To that end, the NASD and the NYSE jointly have developed 
a Research Analyst Examination program, a two-part examination that 
tests competency of fundamental analytical skills (Series 86) and 
applicable laws, rules, and regulations (Series 87).\9\ NASD Rule 1050 
became effective on March 30, 2004. The proposed rule change would 
amend Section 4 of Schedule A of the NASD By-Laws to establish a fee of 
$105.00 and $55.00 for an associated person to take the Series 86 and 
Series 87 examinations, respectively. These fees are based on the costs 
to the NASD to administer the examinations, including printing, 
delivery, and systems charges.
---------------------------------------------------------------------------

    \9\ On February 2, 2004, NASD filed with the Commission a 
proposed rule change to amend NASD Rule 1050 to set forth certain 
prerequisites and exemptions for the requirement that all associated 
persons who function as research analysts be registered with NASD 
and pass a qualification examination. Specifically, the proposed 
rule change would (1) establish as a prerequisite to be registered 
as a research analyst the requirement that an applicant first be 
registered pursuant to NASD Rule 1032 as a General Securities 
Representative and (2) provide for an exemption from the Series 86 
portion of the Research Analyst Examination for certain applicants 
who have passed both Levels I and II of the Chartered Financial 
Analyst Examination. See Securities Exchange Act Release No. 49314 
(February 24, 2004), 69 FR 9888 (March 2, 2004) (notice of filing of 
File No. SR-NASD-2004-20). See also File No. SR-NYSE-2004-19 which 
establishes the exam development fee for the Series 86/87 exam for 
the NYSE.
---------------------------------------------------------------------------

    In addition, the proposed rule change authorizes a pass-through 
examination development fee of $45.00, to be collected by the NASD on 
behalf of the NYSE, each time an individual takes one of the 
examinations. The amount of the development fee was determined by the 
NYSE, and the NASD understands that a proposal to establish this fee is 
being filed with the Commission contemporaneously by the NYSE for 
immediate effectiveness.\10\
---------------------------------------------------------------------------

    \10\ The NYSE represents that the NYSE will file the 
corresponding filing with the Commission on April 2, 2004. Telephone 
conversation between Bill Jannace, Director, Rule and Interpretive 
Standards, NYSE, and Katherine England, Assistant Director, and 
Elizabeth MacDonald, Attorney, Division, Commission, March 31, 2004.
---------------------------------------------------------------------------

    Accordingly, the total examination and development fees assessed on 
each individual who takes a Series 86 examination for registration as a 
research analyst will be $150.00. The total examination and development 
fees assessed on each individual who takes a Series 87 examination for 
registration as a research analyst will be $100.00. NASD proposes to 
implement the proposed rule change on March 30, 2004, except for 
proposed Section (f) of Section 4 of Schedule A to the NASD By-Laws, 
which will become effective on April 2, 2004.
2. Statutory Basis
    The NASD believes that the proposed rule change is consistent with 
the Act, including Section 15A(b)(5) of the Act,\11\ which requires, 
among other things, that NASD 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. The Series 86/87 examination and development 
fees are equitably allocated to NASD members, and the NASD believes the 
fee levels are reasonable because they seek only the recovery of the 
costs associated with developing and administering the examination 
program.
---------------------------------------------------------------------------

    \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 impose 
any burden on competition not necessary or appropriate in furtherance 
of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The NASD neither solicited nor received written comments on this 
proposal.

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

    The foregoing proposed rule change has been designated as a fee 
change pursuant to section 19(b)(3)(A)(ii) of the Act \12\ and Rule 
19b-4(f) (2)\13\ thereunder. Accordingly, the proposal has taken effect 
upon filing with the Commission. The NASD proposes to implement the 
proposed rule change on March 30, 2004, except for proposed Section (f) 
of Section 4 of Schedule A to the NASD By-Laws, which will become 
effective April 2, 2004.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days after the filing of the proposed rule 
change, the Commission may summarily abrogate

[[Page 19257]]

the 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.

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-2004-049. 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 the NASD. All 
submissions should refer to File No. SR-NASD-2004-049 and should be 
submitted by May 3, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-8178 Filed 4-9-04; 8:45 am]
BILLING CODE 8010-01-P