Federal Register / Vol. 69, No. 191 / Monday, October 4, 2004 / Notices 59285

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See letter from Grace Yeh, Assistant General 

Counsel, NASD, to Katherine A. England, Assistant 

Director, Division of Market Regulation, 

Commission, dated July 22, 2004 (‘‘Amendment No. 

1’’). In Amendment No. 1, NASD replaced in its 

entirety the original rule filing.

4See Securities Exchange Act Release No. 50204 

(August 16, 2004), 69 FR 51873 (August 23, 2004).

5See NASD Rule 1120(a)(1).

6For purposes of NASD Rule 1120, a significant 

disciplinary action generally means a statutory 

disqualification as defined in section 3(a)(39) of the 

Act; a suspension or imposition of a fine of $5,000 

or more; or being subject to an order from a 

securities regulator to re-enter the Regulatory 

Element. See Rule 1120(a)(3).

7When NASD Rule 1120 was first adopted in 

1995, the Regulatory Element schedule required 

registered persons to satisfy the Regulatory Element 

on the second, fifth, and tenth anniversary of their 

initial securities registration. After satisfying the 

tenth anniversary requirement, a person was 

‘‘graduated’’ from the Regulatory Element. A 

graduated principal re-entered the Regulatory 

Element if he or she incurred a significant 

disciplinary action. A graduated person who was 

not a principal re-entered if he or she acquired a 

principal registration or incurred a significant 

disciplinary action.

8The Council recommended at its December 2003 

meeting that SRO Rules (e.g., NASD Rule 1120(a)), 

be amended to eliminate existing exemptions from 

the Regulatory Element and to require all 

‘‘grandfathered’’ and ‘‘graduated’’ persons to fully 

participate in future standardized CE programs, 

according to the Rule’s prescribed schedule.

9 15 U.S.C. 78o–3.

10 In approving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f).

11 15 U.S.C. 78o–3(b)(6).

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). 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 

Section, 450 Fifth Street, NW., 

Washington, DC 20549. Copies of such 

filing also will be available for 

inspection and copying at the principal 

office of FICC and on FICC’s Web site 

at http://www.ficc.com/gov/

gov.docs.jsp?NS-query. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–FICC–

2004–11 and should be submitted on or 

before October 22, 2004.

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.10

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. E4–2465 Filed 10–1–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50456; File No. SR–NASD–

2004–098] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Order Approving 

Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

Proposed Amendments to Eliminate 

Exemptions From the Continuing 

Education Regulatory Element 

Requirements 

September 27, 2004. 

On June 25, 2004, the National 

Association of Securities Dealers 

(‘‘NASD’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’

or ‘‘SEC’’) a proposed rule change, 

pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and rule 19b–4 thereunder,2 to 

eliminate all currently effective 

exemptions from the requirement to 

complete the Regulatory Element of the 

Continuing Education (‘‘CE’’) Program. 

On July 23, 2004, NASD submitted 

Amendment No. 1 to the proposed rule 

change.3 The proposed rule change, as 

amended, was published for comment 

in the Federal Register on August 23, 

2004.4 The Commission received no 

comments on the proposal. This order 

approves the proposed rule change, as 

amended.

NASD Rule 1120(a) currently 

provides, in part, that no member shall 

permit any registered person to continue 

to, and no registered person shall 

continue to, perform duties as a 

registered person, unless such person 

has complied with the Regulatory 

Element of the CE requirement set forth 

in this Rule.5 The Regulatory Element 

component of NASD Rule 1120(a)(1) 

requires each registered person to 

complete a standardized, computerbased, interactive CE program within 

120 days of their second registration 

anniversary date and every three years 

thereafter, or as otherwise prescribed by 

NASD. Registered persons who fail to 

complete the Regulatory Element are 

deemed inactive and may not perform 

in any capacity or be compensated in 

any way requiring registration.

Currently, two classes of persons are 

exempt from Regulatory Element 

requirements under NASD Rule 1120(a). 

The first class of persons come within 

the ‘‘grandfathered’’ exemption which 

applies to persons who were 

continuously registered, without serious 

disciplinary action,6 for more than ten 

years as of the Rule’s effective date (i.e., 

July 1, 1995). The second class of 

persons come within the ‘‘graduated’’

exemption, which, although 

discontinued as of July 1998, continues 

to apply to registered persons who were 

‘‘graduated’’ prior to the discontinuation 

of the exemption.7

However, in response to 

recommendations made by the 

Securities Industry/Regulatory Council 

on Continuing Education (the 

‘‘Council’’), NASD submitted a 

proposed rule change to eliminate all 

currently effective exemptions from 

required participation in Regulatory 

Element programs.8 The Council 

believes that there is great value in 

exposing all registered industry 

participants to the full benefit of 

Regulatory Element programs.

NASD will announce the effective 

date of the proposed rule change in a 

Notice to Members to be published no 

later than 60 days following 

Commission approval. Proposed 

amendments are expected to become 

effective (1) not more than 30 days 

following publication of the Notice to 

Members announcing Commission 

approval, (2) not more than 30 days 

following the implementation of 

necessary changes to Web Central 

Registration Depository (‘‘Web CRD’’), 

or (3) April 4, 2005, whichever date is 

latest to occur. 

The Commission finds that the 

proposed rule change, as amended, is 

consistent with the requirements of 

section 15A of the Act,9 and the rules 

and regulations thereunder applicable to 

a national securities association.10 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with section 15A(b)(6) of the Act,11

which requires, among other things, that 

the Association’s rules be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The Commission 

59286 Federal Register / Vol. 69, No. 191 / Monday, October 4, 2004 / Notices 

12 15 U.S.C. 78s(b)(2).

13 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Release No. 50183 

(August 11, 2004), 69 FR 51341 (August 18, 2004).

4 15 U.S.C. 78o–3.

5 15 U.S.C. 78o–3(b)(6).

6 17 U.S.C. 78s(b)(2).

7 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(7).

2 17 CFR 240.19b–7.

3 7 U.S.C. 21(j).

4See letter from Lawrence B. Patent, Deputy 

Director, Compliance and Registration Section, 

Division of Clearing and Intermediary Oversight, 

CFTC to Thomas W. Sexton, III, General Counsel, 

NFA, dated September 17, 2004.

5See letter from Kathryn Page Camp, Associate 

General Counsel, NFA, to John C. Roeser, Assistant 

Director, Division of Market Regulation 

(‘‘Division’’), Commission, dated September 27, 

2004. Amendment No. 1 clarifies the proposal. 

Amendment No. 1 is incorporated into this notice.

believes that the proposed rule change 

should help to ensure that all registered 

persons are kept up-to-date on 

regulatory, compliance, and sales 

practice-related industry issues. Further, 

the Commission believes that the 

proposed rule change will reinforce the 

importance of compliance with just and 

equitable principles of trade by 

exposing all registered industry 

participants to the full benefits of the 

Regulatory Element programs, which 

include a new Regulatory Element 

module that focuses specifically on 

ethics.

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,12 that the 

proposed rule change (SR–NASD–2004–

098), as amended, is approved.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.13

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–22195 Filed 10–1–04; 8:45 am] 

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50458; File No. SR–NASD–

2004–109] 

Self-Regulatory Organizations; 

National Association of Securities 

Dealers, Inc.; Order Granting Approval 

to Proposed Rule Change To Increase 

the Initial Inclusion Requirements for 

Certain Foreign Securities Seeking To 

List on the Nasdaq SmallCap Market 

September 28, 2004. 

On July 15, 2004, the National 

Association of Securities Dealers, Inc. 

(‘‘NASD’’), through its subsidiary, The 

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’), 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’),1 and 

Rule 19b–4 thereunder,2 a proposed rule 

change to modify Rule 4320 to apply the 

same, heightened quantitative initial 

inclusion standards upon non-Canadian 

foreign issuers that currently apply to 

domestic and Canadian issuers seeking 

to list on the Nasdaq SmallCap Market 

(‘‘SmallCap Market’’). Specifically, 

Nasdaq has added to the initial 

inclusion requirements of Rule 4320 a 

minimum bid price requirement of $4 

and a market value requirement for 

publicly held shares of $5,000,000.

The proposed rule change was 

published for comment in the Federal 

Register on August 18, 2004.3 The 

Commission received no comments on 

the proposal.

The Commission finds that the 

proposed rule change is consistent with 

the provisions of Section 15A of the 

Act,4 in general, and with Section 

15A(b)(6) of the Act,5 in particular, in 

that the proposal is designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. The Commission 

believes that applying the same 

quantitative initial inclusion standards 

upon non-Canadian foreign issuers 

seeking to list on the Nasdaq SmallCap 

market that currently apply to domestic 

and Canadian issuers is an appropriate 

change that raises the applicable 

standards and achieves consistent 

application of those standards among 

issuers.

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,6 that the 

proposed rule change (File No. SR–

NASD–2004–109) be, and it hereby is, 

approved.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.7

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. E4–2468 Filed 10–1–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–50461; File No. SR–NFA–

2004–01] 

Self-Regulatory Organizations; 

National Futures Association; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change and 

Amendment No. 1 Thereto Adopting 

Bylaw 1508 Regarding Security 

Futures Agreements 

September 28, 2004 

Pursuant to Section 19(b)(7) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–7 thereunder,2

notice is hereby given that on 

September 7, 2004, the National Futures 

Association (‘‘NFA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by NFA. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons. 

On September 3, 2004, the NFA filed 

the proposed rule change with the 

Commodity Futures Trading 

Commission (‘‘CFTC’’) for approval and 

invoked the ‘‘ten-day’’ provision of 

Section 21(j) of the Commodity 

Exchange Act 3 (‘‘CEA’’). On September 

17, 2004, the CFTC determined not to 

review the proposed rule change and 

permitted NFA to make the proposed 

rule change effective on September 17, 

2004.4 On September 27, 2004, NFA 

filed Amendment No. 1 to the proposed 

rule change.5

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NFA proposes to adopt NFA Bylaw 

1508 regarding securities futures 

agreements. The text of the proposed 

rule change appears below. New 

language is in italics.

* * * * *

Bylaws

* * * * *

Bylaw 1508. Security Futures 

Agreements. 

Staff may, with the approval of the 

Executive Committee, enter into one or 

more agreements with one or more 

designated contract markets to provide 

regulatory services to NFA to assist NFA 

in discharging its obligations under 

Sections 15A(k) and 19(g) of the 

Securities Exchange Act of 1934. Any 

action taken by a designated contract 

market, or its employees or authorized 

agents, acting on behalf of NFA 

pursuant to a regulatory services 

agreement shall be deemed to be an 

action taken by NFA; provided, 

however, that nothing in this provision 

shall affect the oversight of the 

designated contract market by the 

Commodity Futures Trading