[Federal Register Volume 62, Number 179 (Tuesday, September 16, 1997)]
[Notices]
[Pages 48688-48689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24444]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39033; File No. SR-NASD-97-62]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. Relating to Gross Income Assessments to Member
Firms
September 9, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 22, 1997, 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. 78s(b)91) (1994).
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I. Self-Regulatory Organizations' Statement of the Terms of Substance
of the Proposed Rule Change
The NASD is proposing a rule change to amend Section 1(c) to
Schedule A of the NASD By-Laws (``Schedule A'') to revise the credit
allowed to members against the annual assessment on their gross income.
The text of the proposed rule change is below. Additions are
italicized; deletions are bracketed.
* * * * *
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) No Change.
(b) No Change.
(c) Members shall receive a credit against the annual assessment on
gross income stated in paragraph (a) above as follows:
(1) Portion of assessment > $5,000 -- 21% [23%]
(2) Portion of assessment > $25,000 -- 3% [4%] additional
[[Page 48689]]
(3) Portion of assessment > $50,000 -- 5% additional
(4) Portion of assessment > $100,000 -- 3% [4%] additional.
* * * * *
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 Regulation, Inc. (``NASD Regulation'') 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
Pursuant to Article VI of the NASD By-Laws, the NASD requires its
members to pay an annual assessment fee, as defined by Schedule A,
Section 1. NASD members are required under Section 1(a) of Schedule A
to pay an amount equal to the greater of $1,200.00 or the total of a
specified percentage of their annual gross income from securities
transactions.\2\ NASD members also receive, pursuant to Section 1(c) of
Schedule A, a credit against the annual assessment on their gross
income imposed under Section 1(a) of Schedule.
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\2\ Schedule A, Section 1(a) requires NASD members to pay an
amount equal to the greater of $1,200.00 or the total of: (i) 0.125%
of the annual gross revenue from state and municipal securities
transactions; (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.
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A. The Section 1(c) of Schedule A credit to members is calculated
by a tiered discount structure that is intended to address, to some
extent, the regulatory subsidy provided by larger NASD firms.
The proposed rule change would amend Section 1(c) of Schedule A to
decrease the credit allowed to members against the annual assessment on
their gross income by an average of approximately 10%. This reduction
in credit allowed to members will result in approximately $2.8 million
of additional revenue in 1997 for the NASD. This action, based on the
current forecast for operating costs and other revenues, should allow
the NASD to fund its operating needs and achieve a balanced budget for
1997. The need for this discount rate change results from various
factors, including a shortfall in the members' 1996 reported gross
revenues subject to this assessment, as well as incremental costs
associated with various computer and technology related initiatives and
various personnel programs.
2. Statutory Basis
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 equitable reduction in the tiered discount
structure applied to the gross revenue assessment.
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\3\ 15 U.S.C. 78o-3(b)(5) (1994).
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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
The foregoing rule change establishes or changes a due, fee, or
other charge and, therefore, has become effective on August 22, 1997,
pursuant to Section 19(b)(3)(A)(ii) of the Act \4\ and subparagraph (e)
of Rule 19b-4 \5\ thereunder. At any time within 60 days of the filing
of such 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.
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\4\ 15 U.S.C. 78s(b)(3)(A)(ii) (1994).
\5\ 17 CFR 240.19b-4 (1997).
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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 file number SR-NASD-97-62 and
should be submitted by October 7, 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) (1997).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-24444 Filed 9-15-97; 8:45 am]
BILLING CODE 8010-01-M
