[Federal Register Volume 62, Number 127 (Wednesday, July 2, 1997)]
[Notices]
[Pages 35870-35872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17319]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38781; File No. SR-NASD-97-41]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
the Definition of Branch Office in Rule 3010
June 26, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 17, 1997, the
National Association of Securities Dealers, Inc. (``NASD'') 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
[[Page 35871]]
have been prepared by NASD Regulation, Inc. (``NASDR'').\2\ 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. 78s(b)(1) (1988).
\2\ The proposed rule change has not yet been approved by the
NASD Board of Governors. Accordingly, the NASD has consented to an
extension of the period of time specified in Section 19(b)(2) of the
Act until at least thirty-five days after it has filed an amendment
advising the Commission of the action taken by the NASD Board of
Governors. See letter from Craig L. Landauer, Associate General
Counsel, NASD Regulation, to Mignon McLemore, Division of Market
Regulation, SEC, dated June 24, 1997.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASDR is proposing to amend Conduct Rule 3010 of the NASD, to
create another exception to the definition of branch office. Below is
the text of the proposed rule change. Proposed new language is in
italics.
3010. Supervision
(g) Definitions
* * * * * * *
(2) ``Branch Office'' means any location identified by any means to
the public or customers as a location at which the member conducts an
investment banking or securities business, excluding:
* * * * * * *
(D) any location where a person conducts business on behalf of the
member occasionally and exclusively by appointment for the convenience
of customers, so long as each customer is provided with the address and
telephone number of the branch office or OSJ of the firm from which the
person conducting business at the non-branch location is directly
supervised.
* * * * * * *
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
The definition of a branch office, found in NASD Rule 3010,
includes any location identified by any means to the public or
customers as a location at which the member conducts an investment
banking or securities business, subject to several exceptions. If a
business location of a member meets the definition of a branch office,
such office must be identified to the NASD through the filing of a
Schedule E to Form BD and such location is subject to an annual NASD
fee of $75.00. Several members have asked for guidance from NASDR staff
as to the application of the branch office registration requirements
where a business location is used exclusively for appointments from
time to time between registered representatives and customers.
This issue may arise under networking arrangements between NASD
members and banks. In this context, registered persons of the member
may periodically schedule appointments with bank customers at a bank
location where the NASD member conducts no securities activities. Under
the Interagency Statement on Retail Sales of Non-deposit Investment
Products, banks are required to use signage at the place of the
appointment to identify the NASD member that employs the registered
person.\3\ This use of signage at the appointment may imply the need
for the location to register as a branch office. The NASD is proposing
to create another exception to the definition of branch office to
address this type of situation.
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\3\ Board of Governors of the Federal Reserve System et al.,
Interagency Statement on Retail Sales of Non-deposit Investment
Products, at 10 (February 15, 1994).
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The proposed amendment would add language to paragraph (g) of Rule
3010 to exempt from the branch office definition certain locations
where a person conducts business for the member firm occasionally and
by appointment only for the convenience of customers, and where the
member maintains no other tangible presence. To be consistent with
other provisions of Rule 3010, the person conducting business at such
locations would be required to provide each customer with the address
and telephone number of the branch office or office of supervisory
jurisdiction (``OSJ'') of the firm from which the person who is
conducting the meeting is supervised.
The NASD believes that the proposed rule change is consistent with
the provisions of Section 15A(b)(6) \4\ of the Act. The NASD believes
the proposed rule change will provide clarification regarding branch
registration requirements and will ease the filing burden of many
members without compromising the ability to monitor compliance.
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\4\ Section 15A(b)(6) requires that the rules of the Association
be designed to prevent fraudulent and manipulative acts and
practices, to remove impediments to and perfect the mechanism of a
free and open market, and in general, to protect investors and the
public interest.
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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.
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
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
[[Page 35872]]
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 23, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12) (1996).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17319 Filed 7-1-97; 8:45 am]
BILLING CODE 8010-01-M
