[Federal Register Volume 69, Number 141 (Friday, July 23, 2004)]
[Notices]
[Page 44071]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16788]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50036; File No. SR-NASD-2004-039]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the National Association of Securities Dealers, Inc. To 
Reduce the Time for Chairperson Selection

July 19, 2004.

I. Introduction

    On March 4, 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 10308 to reduce the time 
allotted the parties to an arbitration for chairperson selection.\3\ On 
May 13, 2004, NASD filed Amendment No. 1 to the proposed rule 
change.\4\ Notice of the proposed rule change, as amended, was 
published for comment in the Federal Register on June 18, 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 March 3, 2004.
    \4\ See letter from Mignon McLemore, Counsel, NASD, to Katherine 
England, Assistant Director, Division of Market Regulation, 
Commission, dated May 12, 2004.
    \5\ See Securities Exchange Act Release No. 49852 (June 14, 
2004), 69 FR 34205.
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II. Description of Proposed Rule Change

    The proposed rule change would reduce the time allotted the parties 
to arbitration for chairperson selection from fifteen days to seven 
days. Parties can have up to eight additional days provided they notify 
NASD prior to the expiration of the original deadline that they need 
more time in which to reach agreement.

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.\6\ 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.
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    \6\ 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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    In its filing, NASD states that under current NASD Rule 10308, 
under which parties are given fifteen days in which to select a 
chairperson, in a majority of cases the parties fail to agree on a 
chairperson. As a result, NASD contends that the current fifteen-day 
selection period unnecessarily delays the arbitration process.\7\ The 
Commission believes the NASD's goal of streamlining the arbitration 
process is appropriate and believes that the current proposal will help 
NASD achieve that goal while assuring parties of an adequate 
opportunity to participate in the selection of the chairperson. In 
particular, the proposal gives the parties seven days in which to 
select a chairperson while allowing the parties to apply for an 
additional eight days when they require more time to reach agreement. 
The Commission anticipates that in the great majority of cases the 
parties will either agree on a chairperson or agree to disagree and 
thereby permit NASD to select the chairperson within the time allotted 
under the proposed rule. As a result, the Commission believes the 
proposal should remove an unnecessary delay from the arbitration 
process while giving parties the flexibility to apply for additional 
time when they are negotiation in good faith to reach an agreement on a 
chairperson.
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    \7\ Securities Exchange Act Release No. 49852 (June 14, 2004), 
69 FR 34205, 34206 (June 18, 2004).
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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-2004-039) be, and hereby 
is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-16788 Filed 7-22-04; 8:45 am]
BILLING CODE 8010-01-P