[Federal Register Volume 62, Number 9 (Tuesday, January 14, 1997)]
[Notices]
[Pages 1939-1940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-860]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38126; File No. SR-NASD-96-56]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. Relating to Increase in Minimum Gross Income
Assessment
January 6, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 24, 1996, the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NASD.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD Regulation, Inc. (``NASD Regulation'') is proposing a rule
change to amend Section 1 to Schedule A of the By-Laws to increase the
minimum gross income assessment from $850.00 to $1,200.00. Proposed new
language is italicized; proposed deletions are in brackets.
Schedule A to the NASD By-Laws
Assessments and fees pursuant to the provisions of Article VI of
the By-Laws of the Corporation, shall be determined on the following
basis.
Section 1--Assessments
Each member shall pay an annual assessment composed of:
(a) An amount equal to the greater of $1,200.00[850.00] or the
total of:
(i) 0.125% of the annual gross revenue from state and municipal
securities transactions,
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(ii) 0.125% of annual gross revenue from other over-the-counter
securities transactions,
(iii) 0.125% of the annual gross revenue from U.S. Government
securities transactions, and
(iv) With respect to members whose books, records, and financial
operations are examined by the NASD, 0.125% of annual gross revenue
from securities transactions executed on an exchange.
Each member is to report annual gross revenue as defined in Section
5 of this Schedule, for the preceding calendar year.
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
Article VI of the By-Laws authorizes the NASD Board of Governors to
levy fees, dues and assessments to be paid by members to defray
reasonable expenses incurred in the administration of the work of the
NASD. Currently, each member of the NASD is required to pay an annual
gross income assessment of the greater of (i) $850.00 or (ii) the total
of 0.125% of the annual gross revenue from state and municipal
securities transactions, 0.125% of annual gross revenue from other
over-the-counter securities transactions, 0.125% of the annual gross
revenue from U.S. Government securities transactions, and, with respect
to members whose books, records, and financial operations are examined
by the NASD, 0.125% of annual gross revenue from securities
transactions executed on an exchange.
The minimum gross income assessment of $850.00 has not been changed
since 1989. Due to inflationary pressures and increased regulatory
costs, the NASD is proposing to raise the minimum gross income
assessment from $850.00 to $1,200.00. The 1997 expenses of NASD
Regulation are expected to grow by $43 million or 24% as the result of
various factors, including, among other things, initiatives designed to
respond to the findings by the SEC in its recent report concerning the
NASD,\2\ completion of a regulatory transition plan for the examination
program, development of the new Central Registration Depository system,
further implementation of the Arbitration Policy Task Force
recommendations and continued development of an Order Audit Trail
System. The proposed increase in the minimum gross income assessment,
along with anticipated revenue growth in other areas, is expected to
help defray the significant increase in regulatory costs anticipated to
be incurred by NASD Regulation.
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\2\ See, Report Pursuant To Section 21(a) Of The Securities
Exchange Act Of 1934 Regarding the NASD And the Nasdaq Stock Market,
U.S. Securities and Exchange Commission (August 8, 1996).
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The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(5) of the Act,\3\ which require that
the rules of the Association provide for the equitable allocation of
reasonable dues, fees, and other charges in that the proposed rule
reasonably provides for an increase in the minimum gross income
assessment to help defray the significant increase in regulatory costs
anticipated to be incurred by NASD Regulation.
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\3\ 15 U.S.C. Sec. 78o-3(b)(5).
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(B) Self-Regulatory Organization's Statement on Burden on Competition
The 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, as amended.
(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 foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A) of the Act \4\ and subparagraph (e) of Rule 19b-
4 \5\ thereunder in that it constitutes a due, fee or other charge
imposed by the Association. However, the NASD has determined to
implement the rule change on January 1, 1997.
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\4\ 15 U.S.C. Sec. 78s(b)(3)(A).
\5\ 17 CFR 19b-4(e).
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At any time within 60 days of the filing of a rule change, the
Commission may summarily abrogate 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
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. Sec. 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 principle office of the
NASD. All submissions should refer to File No. SR-NASD-96-56 and should
be submitted by January 27, 1997.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-860 Filed 1-13-97; 8:45 am]
BILLING CODE 8010-01-M
