[Federal Register Volume 59, Number 152 (Tuesday, August 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19376]
[[Page Unknown]]
[Federal Register: August 9, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34479; File No. SR-NASD-94-34]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc.,
Relating to Fees for the Late Payment of Service Charges
August 2, 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 May 27,
1994, the National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NASD.
On July 29, 1994, the NASD filed with the Commission Amendment No. 1 to
the proposed rule change.\1\ The Commission is publishing this notice
to solicit comments on the proposed rule change from interested
persons.
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\1\Amendment No. 1 to the proposal corrects a mathematical error
in an example provided in the language of the proposed rule change,
and explains that the new late fee established by the proposal will
be assessed to accounts that are in arrears prior to the
implementation of the new late fee charge. Letter from Joan Conley,
Corporate Secretary, NASD, to Elizabeth MacGregor, Branch Chief,
Commission, dated July 28, 1994.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The NASD proposes to adopt a uniform and consistent methodology for
assessing fees for late payment of Nasdaq Stock Market service charges.
(Additions are in italics; deletions are bracketed.)
Schedule D
Part IX
* * * * *
H. Late Fees
All charges imposed by The Nasdaq Stock Market, Inc. that are
past due 45 days or more will be subject to a late fee computed by
taking the summation of one and one-half percent (1\1/2\%) of the
amount past due for the first month plus one and one-half percent
(1\1/2\%) of the amount past due for any month thereafter,
compounded by late fees assessed for previous months.
To illustrate how later fees are assessed, if an account is past
due $1,000 for 45 days, the late fee would be $30.22. This charge
reflects a charge of $15 for the first month past due ($1,000 x 1\1/
2\%) and $15.22 for the second month past due ($1,015 x 1\1/2\%).
[NASDAQ charges, except those for NASDAQ Level 1 and NASDAQ/NMS Last
Sale services, that are past due for 60 days or more shall be
subject to a late fee of ten percent (10%) of the amount past due.
Charges for NASDAQ Level 1 and NASDAQ/NMS Last Sale services
that are past due shall be subject to a late fee equal to one and
one-half percent (1\1/2\%) per month of the unpaid balance
commencing forty-five (45) days after the invoice date.]
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
1. Purpose
In view of the NASD's implementation of a consolidated billing
system for virtually all direct subscriber services provided by The
Nasdaq Stock Market, Inc. (``NSM''), the NASD proposes to adopt a
uniform and consistent methodology for assessing fees for the late
payment of NSM charges. Specifically, for NSM charges that are past due
45 days or more, the NASD proposes to assess late fees by taking the
summation of one and one-half percent (1\1/2\%) of the amount past due
for the first month plus one and one-half percent (1\1/2\%) of the
amount past due for any month thereafter, compounded by late fees
assessed for previous months.
Currently, Section H of Part IX of Schedule D to the By-Laws
provides that charges for Nasdaq Level 1 and Nasdaq/NMS Last Sale
services which are past due 45 days will be assessed a fee equal to
1\1/2\% per month of the unpaid balance. For all other Nasdaq charges,
namely, charges for the Nasdaq Level 2/3 service, Over-the-Counter
Bulletin Board (``OTCBB''), Mutual Fund Quotation Program, and Nasdaq
Workstation service (collectively referred to hereinafter as ``Nasdaq
charges''), the late payment fee presently is equal to 10% of the
amount past due for 60 days or more. By eliminating the current
practice of using these two different methods to assess late fees for
various NSM charges, the NASD's operational efficiency will be enhanced
and public confusion concerning the NASD's late fee policy likely will
be diminished.
The NASD also is proposing to amend Section H to provide that the
section governs fees for the late payment of NSM charges instead of
``NASDAQ charges.'' This amendment reflects the merger, effective June
30, 1993, of two of the NASD's corporate subsidiaries, Nasdaq, Inc. and
NASD Market Services, Inc. (``MSI''), into one consolidated subsidiary
called The Nasdaq Stock Market, Inc. In addition, this amendment serves
to subject charges for services provided by MSI (the NSM after the
merger) to late payment fees (e.g., SOES, SelectNet, and ACT charges).
Currently, other than for Nasdaq/NMS Last Sale service charges, there
is no fee for the late payment of service charges that previously were
assessed by MSI but now are assessed by the NSM after the merger. Thus,
the proposal enhances the consistency and uniformity of late payment
charges assessed by the NSM.
The NASD notes that the current 10% late fee charge has produced
revenues of approximately $35,000 annually. However, the NASD also
notes that its implementation of a subscriber deposit policy in April
1990 has been very effective in offsetting potential losses from
subscribers with delinquent accounts.\2\ Therefore, the NASD believes
the 10% fee for late payments is no longer necessary and that the 1\1/
2\% fee for amounts past due over 45 days is a reasonable way to impose
fees for the late payment of service charges.
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\2\See Securities Exchange Act Release No. 27924 (April 20,
1990), 55 FR 17691 (File SR-NASD-90-25).
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2. Statutory Basis
The NASD believes that the proposed rule change is consistent with
Section 15A(b)(5) of the Act. Section 15A(b)(5) requires that the rules
of a national securities association provide for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system which the
association operates or controls. Specifically, by instituting a
uniform and consistent policy for assessing fees for the late payment
of service charges imposed by the NSM, the NASD believes that the
amount charged for the late payment of fees will be reasonable and
equitably allocated. Moreover, the uniform late fee policy will enhance
the efficiency of the NASA's new consolidated billing system and likely
decrease confusion concerning the method by which fees for the late
payment of NSF charges are determined.
B. Self-Regulatory Organization's Statement on Burden on Competition
The NASD believes that the proposed rule change will not 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 Commerce on the Proposed
Rule Change Received From Members, Participants, or Others
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 NASD 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 August 30, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\3\
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\3\17 CFR 200.30-3(a)(12) (1989).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-19376 Filed 8-8-94; 8:45 am]
BILLING CODE 8010-01-M
