[Federal Register Volume 59, Number 23 (Thursday, February 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2373]
[[Page Unknown]]
[Federal Register: February 3, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33533; File No. SR-NASD-94-5]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. Relating to Application Fees for New Members
January 27, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on January
21, 1994, 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 NASD has designated this proposal as one establishing
or changing a fee under section 19(b)(3)(A)(ii) of the Act, which
renders the rule effective upon the Commission's receipt of this
filing. The Commission is publishing this notice to solicit comments on
the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing a rule change to Schedule A to the By-Laws to
amend the amount of new application fees assessed against firms other
than self-clearing or introduction firms, from $1,500 to $3,000.
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 the 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 of the NASD requires new members to pay
an application fee based on reasonable expenses incurred in carrying
out the work of processing new membership applications. Pursuant to
Schedule A, Section 2 to the By-Laws, the NASD currently assesses a new
application fee of $5,000 for self-clearing firms, $3,000 for
introducing firms and $1,500 for all firms other than self-clearing or
introducing firms (``other'' firms).\1\ The average cost of processing
new applications for other firms exceeds the revenue generated by the
fee for such applications. Currently, the NASD subsidizes the revenue
shortfall for other firms from other fees and assessments.
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\1\NASD Manual, Schedule A to the By-Laws, Sec. 2, (CCH) 1753.
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Because there is no reasonable justification for subsidizing the
initial entry of other firms into the industry, the NASD is proposing
to amend the application fee assessed against other firms to reflect
more closely the actual costs incurred in processing such applications.
The average cost for processing new applications for other firms is
approximately the same as that for introducing firms. Therefore, the
NASD is proposing to amend the amount of the new application fee
assessed against other firms in Schedule A, Section 2(i)(iii), which is
currently $1,500, to $3,000.
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(5) of the Act,\2\ which require that
the rules of the Association provide for the equitable allocation of
reasonable dues, fees, and other charges among members in that the
proposed rule change equitably adjusts the initial application fee so
that all new members are assessed their approximate entry costs.
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\2\15 U.S.C. 78o-3 (1988).
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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)(ii) of the Act and Rule 19b-4 promulgated
thereunder in that it constitutes a due, fee, or other charge.
At any time within 60 days of the filing of a rule change, the
Commission may summarily abrogate the rule change pursuant to Section
19(b)(3)(C) of the Act 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 NW., Washington, DC 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. 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 principal office of the
NASD. All submissions should refer to the file number in the caption
above and should be submitted by February 24, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Jonathan G. Katz,
Secretary.
[FR Doc. 94-2373 Filed 2-2-94; 8:45 am]
BILLING CODE 8010-01-M
