[Federal Register Volume 69, Number 120 (Wednesday, June 23, 2004)]
[Notices]
[Pages 35090-35091]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14147]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49876; File No. SR-NASD-2004-016]


Self-Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change by the National Association of Securities Dealers, 
Inc. Relating to Implementation of a Web-based Arbitration Claim 
Notification and Filing Procedure

June 16, 2004.

I. Introduction

    On January 29, 2004, the National Association of Securities 
Dealers, Inc. (``NASD'') filed with the Securities and Exchange 
Commission (``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 amending NASD Rule 10314(a) to 
allow parties to complete part of the arbitration claim filing process 
through the Internet. On February 25, 2004, NASD filed Amendment No. 1 
to the proposed rule change.\3\ On April 16, 2004, NASD filed Amendment 
No. 2 to the proposed rule change.\4\ Notice of the proposed rule 
change, as amended, was published for comment in the Federal Register 
on May 14, 2004.\5\ No comments were received on the proposed rule 
change. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Mignon McLemore, Counsel, NASD, to Katherine 
England, Assistant Director, Division of Market Regulation, 
Commission, dated February 24, 2004.
    \4\ See letter from Mignon McLemore, Counsel, NASD, to Katherine 
England, Assistant Director, Division of Market Regulation, 
Commission, dated April 16, 2004.
    \5\ See Securities Exchange Act Release No. 49673 (May 10, 
2004), 69 FR 26910.
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II. Description of Proposed Rule Change

    Currently, to file an arbitration claim, NASD requests that the 
party voluntarily complete and remit, along with other documents, a 
Claim Information Sheet containing data about the claim and the 
parties. Upon receipt, NASD staff manually enters the claim data into 
its CRAFTIS computer system.\6\
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    \6\ CRAFTIS is the legacy software application that NASD Dispute 
Resolution uses to support its case administration function. It uses 
a non-Web-based technology platform.
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    The proposed rule change would permit, but not require, a claimant 
to file an arbitration claim by completing an online version of the 
Claim Information Form. The online version of

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the Claim Information Form would gather information similar to the 
paper Claim Information Sheet currently in use. Once the claimant has 
completed the Claim Information Form, the system would generate a 
Tracking Form that summarizes the claimant's entries for review and 
provides a tracking number for the claim. The claimant would then file 
a copy of the Tracking Form, the Statement of Claim (if it has not been 
submitted electronically with the Claim Information Form), an executed 
Uniform Submission Agreement, and the filing fee and hearing session 
deposit through the mail, as is the current practice.
    Using the tracking number, NASD staff could locate the claimant's 
data, verify it, and then upload it into CRAFTIS. NASD staff would be 
able to analyze the claimant's file without having to manually input 
the data into CRAFTIS.

III. Discussion

    For the following reasons, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association.\7\ Specifically, the Commission believes that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act, which 
requires, among other things, that 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 Commission believes that the proposed rule 
change should enhance the efficiency of the NASD arbitration forum by 
providing a mechanism to process new claims expeditiously. The proposed 
implementation of the voluntary online claim notification procedure 
should expedite the case intake process, reduce manual data entry, and 
provide for more efficient claims intake and administration. Moreover, 
the implementation of a Web-based arbitration claim notification and 
filing system should streamline the claim filing process and provide 
global access to potential filers.
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    \7\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NASD-2004-016) be, and hereby 
is, approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14147 Filed 6-22-04; 8:45 am]
BILLING CODE 8010-01-P