[Federal Register Volume 69, Number 155 (Thursday, August 12, 2004)]
[Notices]
[Pages 49921-49922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18416]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50144; File No. SR-NASD-2004-115]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change Relating to Amendments To Reduce the Fee for 
the Regulatory Element of the Continuing Education Program

August 4, 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 July 27, 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 and 
II below, which Items have been prepared by NASD. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons and is approving the proposed rule change on an 
accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    NASD is proposing to amend Section 4 of Schedule A to the NASD By-
Laws to reduce fees for the Regulatory Element of the continuing 
education requirements of NASD Rule 1120.\3\ Below is the text of the 
proposed rule change. Proposed new language is in italics. Proposed 
deletions are in [brackets].
---------------------------------------------------------------------------

    \3\ NASD filed a proposed rule change (for immediate 
effectiveness under Section 19(b)(3) of the Act) to reduce the 
Regulatory Element continuing education fees from $65 to $60 on 
December 24, 2003 (the ``original rule proposal''). While a signed 
receipt for the original rule proposal was obtained upon arrival at 
the SEC's premises, the original rule proposal was never delivered 
to the SEC's Division of Market Regulation.
---------------------------------------------------------------------------

SCHEDULE A TO NASD BY-LAWS

Section 4--Fees
    (a) through (l) No change.
    (m) There shall be a session fee of [$65.00] $60.00 assessed as to 
each individual who is required to complete the Regulatory Element of 
the Continuing Education Requirements pursuant to Rule 1120.
    (n) through (o) 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, NASD included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it had received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III 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
    The Regulatory Element, a computer-based education program 
administered by NASD to help ensure that registered persons are kept 
up-to-date on regulatory, compliance, and sales practice matters in the 
industry, is a component of the Securities Industry Continuing 
Education Program (``Program'') under NASD Rule 1120. The Securities 
Industry/Regulatory Council on Continuing Education (``Council'')\4\ 
was organized in 1995 to facilitate cooperative industry/regulatory 
coordination of the administration and future development of the 
Program in keeping with applicable industry regulations and changing 
industry needs. Its roles include recommending and helping develop 
specific content and questions for the Regulatory Element, defining 
minimum core curricula for the Firm Element component of the Program, 
and developing and updating information

[[Page 49922]]

about the Program for industry-wide dissemination.
---------------------------------------------------------------------------

    \4\ As of the date of this rule filing, the Council consists of 
17 individuals, six of whom represent self-regulatory organizations 
(the American Stock Exchange LLC, the Chicago Board Options 
Exchange, Inc., the Municipal Securities Rulemaking Board, NASD, the 
New York Stock Exchange, Inc., and the Philadelphia Stock Exchange, 
Inc.) and 11 whom represent the industry.
---------------------------------------------------------------------------

    It is the Council's responsibility to maintain the Program on a 
revenue neutral basis while maintaining adequate reserves. In its 
annual financial review, the Council analyzed projected revenues and 
expenses through 2008. The analysis showed that the current surplus, 
which is adequate for the Program's needs, would likely grow over the 
next two years if Regulatory Element volumes continue at current levels 
and the fee is maintained at $65 per session. The analysis also showed 
that reserves would remain adequate if the fee for a Regulatory Element 
session were reduced by $5 per session. As such, at its December 2003 
meeting, the Council unanimously supported a reduction of the fee that 
firms pay when their registered persons take the Regulatory Element 
from $65 to $60 per session. This is the second reduction in fees since 
the Program began in 1995. The first was a reduction of $10 (from $75 
to $65) that took place in 1999.\5\
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 40851 (December 28, 
1998), 64 FR 554 (January 5, 1999) (SR-NASD-98-95).
---------------------------------------------------------------------------

2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act,\6\ in general, and with Section 
15A(b)(5) of the Act,\7\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which the NASD operates or controls.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

A. Self-Regulatory Organization's Statement on Burden on Competition

    NASD believes that the proposed rule change does not impose 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. 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. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-115 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NASD-2004-115. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 the 
filing also will be available for inspection and copying at the 
principal offices of NASD. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-NASD-2004-115 and should be submitted on or before September 2, 
2004.

IV. Commission's Finding and Order Granting Accelerated Approval of 
Proposed Rule Changes

    NASD has requested that the Commission find good cause pursuant to 
Section 19(b)(2) of the Act for approving the proposed rule change 
prior to the 30th day after publication in the Federal Register. The 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to NASD and, in particular, the requirements of Section 15A 
and the rules and regulations thereunder. After careful review the 
Commission finds that the proposed rule change is consistent with the 
requirements of Section 15A(b)(5) of the Act \8\ because it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among members, issuers, and other persons using any facility or 
system which the association operates.\9\ Specifically, the proposed 
fee reduction will enable the Program to be maintained on a revenue 
neutral basis while simultaneously reducing the fee charged to members.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3(b)(5).
    \9\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    The Commission finds good cause to approve the proposed rule change 
prior to the thirtieth day after the date of publication of notice 
thereof in the Federal Register. The NASD represents that the original 
rule proposal was delivered to the SEC for filing on December 24, 2003. 
The Commission notes that while a signed receipt for the original rule 
proposal was obtained upon arrival at the SEC's premises, the original 
rule proposal was never received by the SEC's Division of Market 
Regulation. The original rule proposal was filed for immediate 
effectiveness under Section 19(b)(3) of the Act with an implementation 
date of January 1, 2004. As such, NASD made changes to Web Central 
Registration Depository (Web CRD [reg]) to charge members 
the reduced $60 fee beginning January 1, 2004 consistent with the 
actions of the Council. Accordingly, this rule change also is effective 
retroactive to January 1, 2004. Based on the above, the Commission 
believes that there is good cause, consistent with Section 15A(b)(5) 
\10\ and Section 19(b)(2) of the Act \11\ to approve the proposal on an 
accelerated basis.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3(b)(5).
    \11\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NASD-2004-115) is hereby 
approved on an accelerated basis. 
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18416 Filed 8-11-04; 8:45 am]
BILLING CODE 8010-01-P