[Federal Register: February 22, 2005 (Volume 70, Number 34)]
[Notices]
[Page 8649-8650]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22fe05-149]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51187; File No. SR-NASD-2005-021]
Self Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. To Provide Guidance Regarding Members'
Regulatory Transaction Fees
February 10, 2005.
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 February 4, 2005, 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 NASD. NASD has
designated the proposed rule change as constituting a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the self-
regulatory organization pursuant to Section 19(b)(3)(A)(i) of the Act
\3\ and Rule 19b-4(f)(1) thereunder,\4\ which renders the proposal
effective upon receipt of this filing by 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\ 15 U.S.C. 78s(b)(3)(A)(i).
\4\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD is filing Notice to Members (``NtM'') 05-11, providing further
guidance regarding members' obligations under Section 3 of Schedule A
to the NASD By-Laws (Regulatory Transaction Fees) and a self-reporting
form that is used by members to report trade data that is not captured.
No changes to the text of NASD rules are required by this proposed
rule change.
II. Self-Regulatory OrgChange
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
In August 2004, NASD issued NtM 04-63 (Transaction Fees: New SEC
Procedures Relating to section 31 of the Securities Exchange Act of
1934) informing member firms of the new Commission procedures governing
the calculation, payment, and collection of fees and assessments on
securities transactions owed by national securities exchanges and
associations to the Commission pursuant to section 31 of the Act. NtM
04-63 also discussed the obligations of member firms under section 3 of
Schedule A to the NASD By-Laws in light of the new Commission
procedures.
Following the publication of NtM 04-63, NASD staff has received a
significant number of questions from member firms regarding these
obligations. Accordingly, NASD staff is providing further guidance
regarding these obligations in NtM 05-11. In NtM 05-11, NASD staff is,
among other things, providing guidance on what constitutes an away-
from-the-market sale and additional information regarding member firms'
self-reporting obligations. NASD also is reminding members about the
restrictions on the use of the Step-Out function in ACT for
transferring NASD's regulatory transaction fee to correspondents or
broker-dealer customers. In addition, NtM 05-11 is revoking prior
guidance concerning the appropriate rounding methodology used by member
firms when they choose to pass regulatory transaction fees to their
customers. Specifically, the guidance in NtM 05-11 regarding rounding
supersedes the rounding guidance provided in NtM 04-63 or any prior
NtMs and Member Alerts.
[[Page 8650]]
NASD believes that the guidance provided in NtM 05-11 constitutes
an interpretation of section 3 of Schedule A to the NASD By-Laws that,
due to its nature, should be filed as a proposed rule change. In
addition, NASD also is filing its Permanent Self-Reporting Form with
the Commission.\5\ A copy of the Permanent Self-Reporting Form will be
attached to NtM 05-11. NASD has revised its Permanent Self-Reporting
Form to: (1) Incorporate the new rate structure that became effective
on January 7, 2005 (in conformity with the change to the Commission's
Section 31 fee rate); (2) incorporate minor changes to the instructions
section; and (3) create an obligation on certain member firms to file
the Permanent Self-Reporting Form each month (regardless of whether
they have any reportable transactions).
---------------------------------------------------------------------------
\5\ As noted in NtM 05-11, clearing and self-clearing member
firms will now be required to file with NASD the Permanent Self-
Reporting Form each month, regardless of whether they have
qualifying transactions for that month. NASD is requiring a monthly
filing by all clearing and self-clearing member firms to ensure that
they conduct the necessary review to determine that all qualifying
transactions have been properly reported. Member firms that do not
have any reportable transactions for a given month will be required
to submit the blank form signed by an authorized representative,
along with a statement that the firm had no reportable transactions
for the month. While NASD is filing its Permanent Self-Reporting
Form with the Commission in this instance, NASD does not intend to
file its Permanent Self-Reporting Form with the Commission each time
it makes a non-substantive change to the text of the form or changes
that reflect adjustments in the amount or scope of the fee, where
such adjustments are determined solely by reference to section 31 of
the Act.
---------------------------------------------------------------------------
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of section 15A(b)(6) of the Act,\6\ which requires, among
other things, that NASD's rules must 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. In addition, NASD believes that the proposed rule
change is consistent with the provisions of section 15A(b)(5) of the
Act,\7\ which requires, among other things, that NASD's 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 NASD operates or controls, insofar as it is intended to
assist members in complying with section 3 of Schedule A to the NASD
By-Laws.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78o-3(b)(6).
\7\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
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 proposed rule change has become effective pursuant to section
19(b)(3)(A)(i) of the Act \8\ and Rule 19b-4(f)(1) thereunder.\9\ NASD
asserts that the proposed rule change constitutes a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of NASD. NASD will
announce the implementation date of the proposed rule change in NtM 05-
11, which NASD expects to issue on the same date as the filing of the
proposed rule change with the Commission. At any time within 60 days of
the filing of the proposed rule change, the Commission may summarily
abrogate such 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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78s(b)(3)(A)(i).
\9\ 17 CFR 240.19b-4(f)(1).
---------------------------------------------------------------------------
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. 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 rule-comments@sec.gov. Please include
File Number SR-NASD-2005-021 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-2005-021. 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 such
filing also will be available for inspection and copying at the
principal office 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 the File Number SR-NASD-2005-021
and should be submitted on or before March 15, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-693 Filed 2-18-05; 8:45 am]
BILLING CODE 8010-01-P