[Federal Register Volume 61, Number 114 (Wednesday, June 12, 1996)]
[Notices]
[Pages 29777-29782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14905]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37282; File No. SR-NASD-96-20]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
Changes in the Structure of the NASD Board of Governors
June 6, 1996.
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 May 28,
1996,\1\ 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\ On June 5, 1996, the NASD filed Amendment No. 1 to the
proposed rule change. Amendment No. 1 amends Article VI, Section 5
to clarify that, in a contested election, the term of office of a
candidate certified by the National Nominating Committee for
inclusion on the ballet for the election of Governors pursuant to
Article VI, Section 7(c) would be identical to the term of office of
a candidate nominated by the National Nominating Committee pursuant
to Article VI, Section 7(c). Amendment No 1 also amends Article VI,
Section 7(a) to clarify that any person elected to the Board of
Governors must be nominated or certified by the National Nominating
Committee. See Letter from Suzanne E. Rothwell, Associate General
Counsel, NASD to Katherine A. England, Assistant Director, Division
of Market Regulation, Commission (dated June 4, 1996).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing to amend the NASD's By-Laws. The text of the
proposed rule change is available at the Office of the Secretary, NASD
and at the Commission.
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
Background
In 1995, the NASD Board of Governors (``Board'') appointed The
Select Command on Structure and Governance (``Select Committee'') to
examine the corporate structure, governance, and functions of the NASD
and to recommend changes and improvements to enable the NASD to meet
its regulatory and business obligations. The Select Committee reported
to the Board at its September 1995 meeting and recommended, among other
things, the establishment of two distinct subsidiaries; one to perform
the regulatory functions of the NASD and the other to run The Nasdaq
Stock Market (``Nasdaq''). The Select Committee recommended that each
subsidiary have an independent Board of Directors and that the NASD
remain as parent corporation overseeing the operations of both
subsidiaries.
In January 1996, the NASD created a new subsidiary, NASD
Regulation, Inc. (``NASD Regulation'') to provide regulation and member
and constituent services, with the NASD retaining responsibility for
general oversight over the effectiveness of the self-regulatory and
business operations of the NASD and its major subsidiaries, Nasdaq and
NASD Regulations, and final policymaking authority for the association
as a whole. The NASD also
[[Page 29778]]
adopted Select Committee proposals to restructure and reduce the size
of the NASD Board and to implement policies to ensure a balance of non-
industry and industry representation on the Nasdaq and NASD Regulation
Boards. In Notice to Members 95-101 (December 11, 1995), members were
asked to vote on By-Law changes to implement these policies. The
amendments proposed in the Notice to Members would have: (1) deleted
Article V of the NASD By-Laws related to Affiliated Registered
Securities Associations; (2) amended Article VII of the NASD By-Laws to
create a national nominating committee to nominate persons to serve on
the Board of Governors and reconstitute the Board as a majority non-
industry Board; and (3) amend Article X to identify the Chief Executive
Officers as the most senior executive of the NASD.
Following member approval of the proposed By-Law changes, the SEC,
on April 11, 1996, granted temporary approval for a period of 90 days
to the amendments to Article VII Sections 4 and 6 that restructure the
Board and to a new NASD rule providing for the delegation of the
authority to act on behalf of the NASD to NASD Regulation and Nasdaq
pursuant to the ``Plan of Allocation and Delegation of Functions by
NASD to Subsidiaries'' (``Delegation Plan'').\2\ The Delegation Plan
sets forth the purposes, functions and governance procedures of the
three corporations working together.
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\2\ Securities Exchange Act Release No. 37106 (April 11, 1996),
61 FR 16944 (April 18, 1996) (``Release 34-37106''); Securities
Exchange Act Release No. 37107 (April 11, 1996), 61 FR 16948 (April
18, 1996) (``Release 34-37107'').
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In order to complete the reorganization and restructuring
contemplated by Notice to Members 95-101 and by the Delegation Plan,
the NASD published for member vote further amendments to the NASD By-
Laws in Special Notice to Members 96-35.\3\ The last date for member
vote is June 22, 1996. The proposed rule change filed herein,
therefore, incorporates amendments approved by the membership in Notice
to Members 95-101 and Special Notice to Members 96-35, that were not
previously approved by the Commission in Release 34-37106.
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\3\ The rule language published for member vote in Special
Notice to Members 96-35 treated as if adopted the rule changes
published for member vote in Notice to Members 95-101 and 96-01
(January 1996). The latter Notice proposed to adopt amendments to
the By-Laws to require members to file required documents
electronically. These amendments will be filed shortly.
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Description of Proposed Rule Change \4\
The proposed rule change would permit the NASD to continue the
restructuring necessary to implement the principles articulated in the
report of the Select Committee. The NASD is proposing to amend its By-
Laws to complete the reorganization proposed in Notice to Members 95-
101 and to make the By-Laws consistent with the Delegation Plan
approved by the Commission in Release 34-37107 by providing for the
creation of a national nominating committee to identify and nominate
for election industry and non-industry persons to serve on the Board
and by deleting sections and language now unnecessary or inappropriate
as a result of the Delegation Plan. Included in the proposed rule
change is the deletion of nearly all references to the Districts and
local administration, because responsibility for the local
administration of regulatory affairs under the Delegation Plan has been
assigned to NASD Regulation.\5\ The NASD is also proposing to amend its
By-Laws to conform terms and rule citations to those used in the
reorganized NASD Manual, including, for example, replacing the term
``Code of Procedure'' with ``Procedural Rules,'' \6\ and to make
various miscellaneous clarifying corrections to the By-Laws. Changes to
punctuation and other minor, non-substantive changes to the rule
language will not be described below. Finally, all references to the
NASD ``Certificate of Incorporation'' are being changed to the
``Restated Certificate of Incorporation'' to reflect that the
Certificate of Incorporation has been amended to be consistent with the
changes previously adopted and proposed herein to the By-Laws.\7\
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\4\ Certain minor, non-substantive changes from the rule
language published for member vote in Special Notice to Members 96-
35 have been made to the rule language proposed herein to correct
inadvertent errors and, in particular, to ensure that the language
of the proposed rule change is consistent with the reorganization of
the NASD Manual.
\5\ In recognition of this assignment of responsibility, the
Board of Directors of NASD Regulation adopted a resolution at its
May 13, 1996, meeting to appoint the Districts and District
Committees as Districts and District Committees of NASD Regulation.
\6\ The new version of the NASD Manual is divided into four
sections (Administrative, Corporate Organization, Rules of the
Association, and SEC Rules and Regulation T) and includes an
expanded key work index. See Notice to Members 96-25 (April 1996).
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Article I. Definitions
The NASD is proposing three new definitions. ``Delegation Plan'' is
the term by which the ``Plan of Allocation and Delegation of Functions
by NASD to Subsidies'' will be known. ``Corporations'' and ``Boards''
are the terms that will refer to the NASD, its subsidiaries and their
boards of directors.
In addition, the definition of ``Act'' is proposed to be revised to
match the definition in the Delegation Plan, and the definition of
``rules of the Corporation'' to be consistent with the various
references to rule in the reorganized NASD Manual.\7\
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\7\ The definition published for member vote in Special Notice
to Members 96-35, attached as Exhibit 2 to the proposed rule change,
has been modified to eliminate certain rule language that would not
have been consistent with the reorganized NASD Manual.
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Finally, the definition of ``bank'' is proposed to be revised to
expand the reference to national banks to include the citation that
such banks are included in the definition that are ``under the
authority of the Comptroller of the Currency pursuant to the first
section of Public Law 87-722 (12 U.S.C. 92a). * * *.''
Article II. Qualifications of Members and Associated Persons
Sec. 1. Persons Eligible To Become Members and Associated Persons of
Members
No change.
Sec. 2. Authority of Board To Adopt Qualification Requirements
The NASD is proposing to delete the second sentence of Subsection
(c), which authorizes the Board to amend its rules related to
qualification requirements without recourse to the membership for vote,
because the provision is redundant to Sec. 1(a)(2) of Article VI
(formerly Article VII).
Sec. 3. Ineligibility of Certain Persons for Membership or Association
The NASD is proposing to replace ``Code of Procedure'' in
Subsection (d) with the more general term ``Procedural Rules,'' as used
in the reorganized NASD Manual.
Sec. 4. Definition of Disqualification
No change.
Article III. Membership
Sec. 1. Application for Membership
In a change made necessary by the Delegation Plan, the NASD is
proposing to amend Subsection (a)(3) of this provision to extend to the
Nasdaq and NASD Regulation Boards, committee members, officers, and
employees protection from liability for action taken within the scope
of authority, except for
[[Page 29779]]
willful malfeasance. See also Article IV, Sec. 2(a)(2) of the By-Laws.
The NASD is further proposing to replace ``Board of Governors'' with
``Corporation'' in Subsection (a)(4) because it is the corporate staff
that requests information and processes applications for membership.
Consistent with the reorganized NASD Manual, which moved membership
application procedures to the Procedural Rules, the NASD is proposing
to delete rule language in Subsection (b) providing a procedure for the
processing of membership applications and to add language requiring
that applications be processed in the manner set forth in the
Procedural Rules.
The NASD is also proposing to delete Subsection (c), as part of the
general deletion references to Districts.
Sec. 2. Similarity of Membership Names
No change.
Sec. 3. Executive Representative
No change.
Sec. 4. Membership Roll
No change.
Sec. 5. Resignation of Members
The NASD is proposing to replace ``Code of Procedure'' with
``Procedural Rules.''
Sec. 6. Retention of Jurisdiction
The NASD is proposing to replace ``Code of Procedure'' with
``Procedural Rules.''
Sec. 7. Transfer and Termination of Membership
The NASD is proposing to replace ``Rules of Fair Practice'' with
``rules of the Corporation'' in Subsection (a).
Sec. 8. Registration of Branch Offices
The NASD is proposing to amend Subsection (a) to change the cross-
reference from Article VI to Article V, as current Aritcle V is
proposed to be deleted.
Sec. 9. Vote of Branch Offices
The NASD is proposing to delete this section, as part of general
deletion of references to Districts.
Sec. 10. District Committees' Right to Classify Branches
The NASD is proposing to delete this section, as part of the
general deletion of references to districts.
Article IV. Registered Representatives and Associated Persons
Sec. 1. Qualification Requirements
No change.
Sec. 2. Application for Registration
The NASD is proposing to amend Subsection (a)(1) to make a non-
substantiative correction to replace the word ``including'' with
``and.'' As in Article III, Sec. 1(a)(3), in a change made necessary by
the Delegation Plan, the NASD is proposing to amend Subsection (a)(2)
to extend to the Nasdaq and NASD Regulation Boards, committee members,
officers, and employees protection from liability for action taken
within the scope of authority, except for willful malfeasance. See also
Article IV, Sec. 2(a)(2) of the By-Laws. Moreover, all references to
the ``Board of Governors'' are proposed to be changed to
``Corporation.''
Sec. 3. Notification by Member to Corporation and Associated Person of
Termination; Amendments to Notification
The NASD is proposing to amend Subsection (a) to replace ``Code of
Procedure'' with ``rules of the Corporation,'' ``Board of Governors''
with ``Corporation,'' and ``Association'' with ``Corporation.''
Sec. 4. Retention of Jurisdiction
The NASD is proposing to amend the introduction to replace ``Code
of Procedure'' with ``rules of the Corporation'' and to amend the
introduction and Subsection (b) to clarify that the reference to Rule
8210 is to an NASD rule
Article V. Affiliates
The NASD is proposing to delete Article V to remove an unnecessary
reference to the affiliation of other Registered Securities
Associations with the NASD. Such affiliations remain authorized by
Section 15A of the Act.
Article VI. Dues, Assessments and Other Charges
This Article is proposed to be redesignated as Article V.
Sec. 1. Power of Board To Fix and Levy Assessments
The NASD is proposing to replace references to the ``Board of
Governors'' with ``Corporation'' in the section heading and text, and
to delete language that is redundant to Sec. 1(a)(2) of Article VI
(formerly Article VII) that authorizes the Board to adopt changes to
any fee, due, or assessment without recourse to the membership for
vote.
Sec. 2. Reports of Members
No change.
Sec. 3. Suspension or Cancellation of Membership or Registration
No change.
Sec. 4. Reinstatement of Membership or Registration
No change.
Article VII. Board of Governors
This Article is proposed to be redesignated as Article VI.
Sec. 1. Powers and Authority of Board of Governors
The NASD is proposing to replace ``Rules,'' with the more general
reference to the defined term ``rules of the Corporation'' in
Subsections (a)(2) and (3).
In conjunction with the implementation of the Delegation Plan, the
NASD is proposing to add a new Subsection (c) that sets forth the
authority of the Corporation to delegate functions, provided that such
delegations are not inconsistent with the Delegation Plan.
Sec. 2. Authority To Suspend for Failure to Submit Required Information
The NASD is proposing to change numerous references to the
``President'' in this Subsection (b) and in other By-Law sections to
``Chief Executive Officer'' to make clear that the person referenced is
the most senior executive of the Association.
Sec. 3. Authority To Take Action Under Emergency or Extraordinary
Market Conditions
The NASD is proposing to eliminate the special committee
established by Section 3 that has authority to take action in case of
emergencies or extraordinary market conditions when the full Board is
not available. Instead, the NASD is proposing that either the full
Board, or any person or persons designated by the Board, have authority
to take action under emergency conditions.
Sec. 4. Composition and Qualifications of the Board
The amendments approved by the Commission in Release No. 34-37106
reorganized Section 4 to Article VII into one provision that
reconstituted the NASD Board of Governors as a smaller, majority Non-
industry Board, comprising the Chief Executive Officer, one or more
Non-Industry Governors representative of issuers and investors and not
associated with an NASD member, and one or more Industry Governors.
This change reduced the minimum size of the Board from 25 to 5. The
rule change also adopted
[[Page 29780]]
definitions of Industry and Non-Industry Governors.
The NASD is proposing to reorganize this section into two
subsections. The amendments retain in Subsection (a) the new
organization of the Board as a majority Non-Industry Board but delete
the definitions of Industry and Non-Industry Governor, because those
terms, and a definition of Public Governor, are now contained at
Section I.A. of the Delegation Plan, which definitions also apply to
the Directors of Nasdaq and NASD Regulation.\8\ As revised, this
section requires that the Board of Governors be composed in a manner
consistent with the Delegation Plan and Section 15A(b)(4) of the
Securities Exchange Act of 1934. This will ensure that the Board will
at all times include full representation of issuers, investors, and the
securities industry, with a Non-Industry majority. In addition, new
Subsection (b) incorporates from Article X (to be redesignated Article
VII), Section 1 rule language providing for the election by the Board
of Governors of a Chairman and such other persons having titles as the
Board may choose.
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\8\See also Section I.C. of the Delegation Plan, which contains
provisions applicable to the composition, nomination, and election
of Governors. Release 34-37107.
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Sec. 5. Term of Office of Governors
The NASD is proposing to amend this provision to provide that,
except for the Chief Executive Officer, no Governor may serve more than
two consecutive three-year terms; with the limited exception that a
Governor appointed to fill a term of less than one year may serve up to
two consecutive terms following the expiration of that Governor's
current term.
Sec. 6. Filling of Vacancies
The NASD is proposing to amend this provision to clarify that the
filling of vacancies cannot be inconsistent with the Delegation Plan.
Sec. 7. Election of Board Members
Consistent with Section I.C. of the Delegation Plan, which
describes the procedures for the nomination and election of NASD
Governors, the NASD is proposing to amend this Section to replace all
current language with new Subsections (a), (b) and (c) that provide
that the members of the NASD Board of Governors shall be elected by a
plurality of the votes of the members of the NASD that are present in
person or represented by proxy at the annual meeting of the NASD and
entitled to vote. The provision further authorizes the Board of
Governors to establish a National Nominating Committee, which will
consist of six or more persons meeting qualifications to be established
by the NASD Board in conformance with the Delegation Plan,\9\ to
nominate or certify one or more persons for each governorship up for
election. Any person nominated or certified for election to the Board
is required to have demonstrated to the National Nominating Committee
that that person meets the applicable qualifications for the position.
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\9\ See Release 34-37107. The Delegation Plan provides that the
National Nominating Committee shall be composed of at least 6 and
not more than 9 members, equally balanced between Industry and Non-
industry Committee Members (including at least 2 Public Committee
Members), with 2 members of the National Nominating Committee
selected by NASD, NASD Regulation, and Nasdaq, respectively. The
National Nominating Committee shall propose to the NASD Board one or
more nominees for each vacant or new Governor position, and for each
Director position on the Boards of Directors of the Subsidiaries.
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Sec. 8. Filling of Vacancies on Board
This provision is proposed to be deleted consistent with the prior
approval of a new provision as Section 6 that provides a procedure for
the filling of vacancies on the Board of Governors in Release 34-37106.
See discussion above regarding Section 6.
Sec. 9. Meetings of Board
This section is proposed to be redesignated as Sec. 8. The title of
this provision is proposed to be changed to ``Meetings of the Board;
Quorum; Required Vote.'' The NASD is proposing to clarify that a quorum
of the Board shall consist of a majority of the ``total number'' of the
Governors, rather than a majority of the ``members'' of the Board. The
current rule language permitting meetings by mail, telephone or
telegraph is proposed to be amended to permit members of the Board or
any committee of the NASD to participate in a meeting by communications
facilities that permit the parties to hear and speak to each other. It
is further clarified that participation in a meeting constitutes the
person's presence at a meeting. The current rule language is retained
that no member of the Board shall vote by proxy at any meeting.
Sec. 10. Offices of Corporation
This section is proposed to be deleted as unnecessary as it
restates what is true by operation of law; namely, that the NASD may
maintain such offices as the Board of Governors may deem necessary.\10\
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\10\ In Notice to Members 95-101, this provision was proposed to
be deleted and replaced by new Section 9 that would provide
authority to the Board for action by written consent. In Special
Notice to Members 96-35, the new provision was proposed to be
deleted since this authority is already provided by operation of
Delaware General Corporation Law.
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Article VIII. District Committees and Article IX. Nominating
Committees
These two articles that address the creation of District Committees
and of District Nominating Committees, respectively, are proposed to be
deleted, as part of the general deletion of references to Districts. As
noted above, the local administration of regulatory affairs under the
Delegation Plan is now the responsibility of NASD Regulation, and the
NASD Regulation Board has appointed the Districts and District
Committees as that corporation's mechanisms for local administration.
Article X. Officers and Employees
This Article is proposed to be redesignated as Article VII. The
words ``and Employees'' have been deleted from the article title,
because this article concerns only officers of the Corporation, not
employees.
Sec. 1. Election of Officers of the Board
This provision has been relocated in Article VII (redesignated VI),
Section 4(b). The current rule language specifies that the provision
applies to the election by the Board of a ``Chairman, one or more Vice
Chairmen, and such other officers as it shall deem necessary or
advisable. * * *'' The proposed rule change in Section 4(b) would
modify the rule language of the provision to reference only the
Chairman ``and such other persons having titles as it shall deem
necessary or advisable. * * *''
Sec. 2. Officers of the Corporation
This Section is proposed to be redesignated as Sec. 1. The title is
proposed to be deleted as redundant of the article title. This
provision is proposed to be amended to specify that the powers and
duties assigned to the Chief Executive Officer of the Corporation may
not be inconsistent with the requirements of the Delegation Plan, and
therefore deletes the Chief Executive Officer's ex-officio membership
in all committees.
Sec. 3. Absence of President
This Section is proposed to be redesignated as Sec. 2. The title is
proposed to be changed to ``Absence of Chief Executive Officer.''
Sec. 4. Employment of Counsel
This Section is proposed to be redesignated as Sec. 3.
Sec. 5. Administrative Staff
This Section is proposed to be redesignated as Sec. 4. The NASD is
[[Page 29781]]
proposing to amend this provision to clarify that determinations of the
NASD Board regarding the employment of administrative staff shall not
be inconsistent with the Delegation Plan.
Sec. 6. Compensation of Board and Committee Members
This Section is proposed to be redesignated as Sec. 5. The
provision is proposed to be revised to delete a reference to District
Committees and to reference, instead, any committee of the Corporation.
Article XI. Committees
This Article is proposed to be redesignated as Article VIII.
Sec. 1. National Committees
The NASD is proposing to delete the section subtitle of ``National
Committees'' as unnecessary in light of the deletion of Section 2 and
to amend the provision to clarify that the determination of the Board
with respect to the establishment of committees shall not be
inconsistent with the Delegation Plan.
Sec. 2. Committees of the Districts
This provision is proposed to be deleted, as part of the general
deletion of references to Districts.
Sec. 3. Removal of Committee Member
This section is proposed to be redesignated as Sec. 2. The NASD is
proposing to amend this provision to change the reference to Article XI
to Article VIII, and delete references to District Committees.
Sec. 4. Executive Committee
This provision is proposed to be deleted, because the authority to
create an Executive Committee exists by operation of Delaware General
Corporation Law and Section 1 of this Article.
Article XII. Rules of Fair Practice
This Article is proposed to be redesignated as Article IX. The NASD
is proposing to delete ``Sec. 1,'' because there is only one section.
Article XIII. Disciplinary Proceedings
This Article is proposed to be redesignated as Article X.
Sec. 1
The NASD is proposing to delete language that is redundant to Sec.
1(a)(2) of Article VI (formerly Article VII) that authorizes the Board
of Governors to amend the Procedural Rules without the need for
membership vote.
Sec. 2
No change.
Article XIV. Powers of Board To Prescribe Sanctions
This Article is proposed to be redesignated as Article XI.
Sec. 1
The NASD is proposing in Subsection (c) to change the word ``Code''
to ``Arbitration Code'' to clarify the reference to this code and in
Subsection (e) to delete references to committees that are now
committees of NASD Regulation.
Article XV. Uniform Practice Code
This Article is proposed to be redesignated as Article XII.
Sec. 1. Authority To Adopt Code
The NASD is proposing to delete the last sentence of the section,
which is redundant to Sec. 1(a)(2) of Article VI (formerly Article
VII).
Sec. 2. Administration of Code
The NASD is proposing to replace the word ``code'' with ``Uniform
Practice Code'' in the last sentence to clarify the reference.
Sec. 3. Transactions Subject to Code
The NASD is proposing to replace the word ``code'' with ``Uniform
Practice Code'' in the last sentence to clarify the reference.
Article XVI. Limitation of Powers
This Article is proposed to be redesignated as Article XIII.
Sec. 1. Prohibitions
No change.
Sec. 2. Use of Name of Corporation by Members
No change.
Sec. 3. Unauthorized Expenditures
The NASD is proposing to delete the reference to District
Committees and replace ``President'' with ``Chief Executive Officer.''
Sec. 4. Conflicts of Interest
The NASD is proposing to delete language which is now redundant of
language of the Procedural Rules in the reorganized NASD Manual.
Sec. 5. Municipal Securities
No change.
Sec. 6. Government Securities
No change.
Article XVII. Procedure for Adopting Amendments to By-Laws
This Article is proposed to be redesignated as Article XIV. The
NASD is proposing to delete ``Sec. 1,'' because there is only one
section.
Article XVIII. Corporate Seal
This Article is proposed to be redesignated as Article XV. The NASD
is proposing to delete ``Sec. 1,'' because there is only one section.
Article XIX. Checks.
This Article is proposed to be redesignated as Article XVI. The
NASD is proposing to delete ``Sec. 1,'' because there is only one
section.
Article XX. Annual Financial Statement
This Article is proposed to be redesignated as Article XVII. The
NASD is proposing to delete ``Sec. 1,'' because there is only one
section.
Requested Effective Date
The NASD is requesting that the proposed rule change be effective
no later than July 11, 1996, as the 90-day temporary approval granted
by the SEC to the proposed restructuring of the NASD Board and to the
Delegation Plan expires on July 10, 1996.
The NASD believes that the proposed rule change is consistent with
the provisions of Sections 15A(b)(2), (4), and (6) of the Act 11
in that the restructured organization will: (1) provide for the
organization of the Association in a manner that will permit the
Association, through its operating subsidiaries, to carry out the
purposes of the Act, to comply with the Act, and to enforce compliance
by Association members and persons associated with members with the
Act, the rules and regulations thereunder, the rules of the Association
and the federal securities laws; (2) provide for the fair
representation of members, issuers and investors on the Board of
Governors and in the administration of the NASD's affairs; and (3)
enhance the NASD's ability to protect investors and the public interest
in furtherance of the purposes of the Act.
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\11\ 15 U.S.C. Sec. 78o-3.
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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.
[[Page 29782]]
(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. However, in
connection with the publication of certain parts of the proposed rule
change for member vote in Notice to Members 95-101, attached as Exhibit
2 to rule filing SR-NASD-96-02, the NASD receive three comments, which
were attached as Exhibit 4 to SR-NASD-96-02. The NASD's statement on
the comments received with respect to Notice to Members 95-101 is set
forth in rule filing SR-NASD-96-02 and was published by the Commission
in Release 34-37106.
III. Date of Effectiveness of the Proposed Rule Change And Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. by order approve such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
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. 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 July 3, 1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-14905 Filed 6-11-96; 8:45 am]
BILLING CODE 8010-01-M
