1350 Federal Register / Vol. 62, No. 6 / Thursday, January 9, 1997 / Notices

8 17 C.F.R. 200.30–3(a)(12).

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

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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to File No.

SR–CXH–96–30 and should be

submitted by January 30, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority. 8

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–443 Filed 1–8–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38112; File No. SR–NASD–

96–53]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc., Relating to Fees for

Registering and Termination the

Registration of Registered Individuals

January 3, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

December 19, 1996, NASD Regulation

Inc. (‘‘NASD Regulation’’) 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 the self-regulatory

organization. NASD Regulation has

designated this proposal as one

constituting a rule through which the

Association imposes dues, fees and

other charges under § 19(b)(3)(A)(ii) of

the Act, which renders the rule effective

upon the Commission’s receipt of this

filing. The Commission is publishing

this notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing to

amend Section 2 of Schedule A to the

By-Laws of the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to eliminate the

scheduled fee rollbacks and to retain the

current fee level for registration and

termination of registration of

individuals indefinitely. Below is the

text of the proposed rule change.

Proposed new language is in italics;

proposed deletions are in brackets.

Schedule A

Assessments and fees pursuant to the

provisions of Article VI of the By-Laws

of the Corporation, shall be determined

on the following basis.

Fees

Sec. 2.

(b) Each member shall be assessed a

fee of $85.00 for each application filed

with the Association for registration of

a registered representative or registered

principal [from August 1, 1995 through

December 31, 1996. Such fee shall be

$70.00 from January 1, 1997 through

December 31, 1997 and shall be $65.00

thereafter]. Additionally, each member

shall be assessed a surcharge of $95.00

for registrations involving a special

registration review filed with the

Association [from August 1, 1995

through December 31, 1997 and shall be

$85.00 thereafter]. The following shall

apply to the filing of applications to

register or transfer the registration of

registered persons or registered

principals in connection with

acquisition of all or a part of a member’s

business by another member:

Number of registered personnel

transferred

Discount in

percent

1,000–1,999 .............................. 10

2,000–2,999 .............................. 20

3,000–3,999 .............................. 30

4,000–4,999 .............................. 40

5,000 and over .......................... 50

(h) (i) Each member shall be assessed

a fee of $40.00 for each notice of

termination of a registered

representative or registered principal

filed with the Corporation as required

by Section 3 of Article IV of the ByLaws [from August 1, 1995 through

December 31, 1996. Such fee shall be

$35.00 from January 1, 1997 through

December 31, 1997 and shall be $25.00

thereafter].

(ii) A late filing fee of $65.00 shall be

assessed a member who fails to file with

the Corporation written notice of

termination of a registered

representative or registered principal

within thirty (30) calendar days of such

termination [from August 1, 1995

through December 31, 1996. Such fee

shall be $60.00 from January 1, 1997

through December 31, 1997 and shall be

$50.00 thereafter].

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

self-regulatory organization 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 self-regulatory organization has

prepared summaries, set forth in Section

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

NASD Regulation has a major systems

development project underway to

completely redesign the Central

Registration Depository (‘‘CRD’’). The

CRD is a computerized system for onestop registration and licensing of NASD

members and their associated persons.

The system was developed in 1981 to

standardize and streamline the

registration process by accommodating a

single filing and payment of fees for

registration in multiple jurisdictions.

Today the system processes filing on

behalf of 50 states, the District of

Columbia and Puerto Rico, seven (7)

self-regulatory organizations and the

Commission.

The redesigned CRD, scheduled for a

staged implementation in 1996 and

1997, will feature electronic filings, reengineered work processes, expedited

relicensing and a highly structured,

relational database to better serve the

information requirements of regulators,

members and investors. In addition, the

new system will include investment

adviser registration for the SEC and

states, an E-mail communication

capability for system participants and a

document imaging/storage/retrieval

service for support documents required

in certain filing situations.

NASD Regulation had originally

intended to fund the CRD redesign effort

from the current registration filing fees

based on expected activity levels in the

1995-1997 period. In 1995 registration

activity declined significantly, and the

resulting lower revenue levels are now

expected to continue through 1997. As

a result, in 1995 the NASD adopted a

temporary fee increase in order to

continue the investment in this
Federal Register / Vol. 62, No. 6 / Thursday, January 9, 1997 / Notices 1351

2Securities Exchange Act Release No. 36025 (July

26, 1995), 60 FR 39200 (Aug. 1, 1995).

3 15 U.S.C. § 78o-3.

4 15 U.S.C. 78o–3.

5 15 U.S.C. 78o–3(b)(5).

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4.

8 17 CFR 200.30–3(a)(12).

1The NASD amended the proposed rule change

four times subsequent to its initial filing.

Amendment No. 4 filed October 16, 1996, changed

the narrative in the proposed rule change.

Amendment No. 3, filed October 2, 1996, replaced

Amendment No. 2, which was filed September 23,

1996. Amendment No. 2, in turn, replaced

Amendment No. 1, which was filed August 5, 1996.

The proposed rule change, as originally

submitted, would have provided market makers

with a 15-second grace period following their

receipt of a Small Order Execution System

(‘‘SOES’’) execution report during locked and

crossed markets in which to update their quotation

in that security before being required to execute

another SOES order in that security. The filing as

amended would establish a 5 second grace period

between SOES executions in locked and crossed

markets. See letter from Robert E. Aber, Vice

President and General Counsel, The Nasdaq Stock

Market to Katherine England, Assistant Director,

Division of Market Regulation, Commission

(October 2, 1996).

2 15 U.S.C. § 78s(b)(1).

3 17 CFR 240.19b–4.

4NASD Manual, Marketplace Rules (CCH), Rule

4730.

5Letter from Edward J. Johnsen, Vice President &

Counsel, Morgan Stanley & Co. Inc. (‘‘Morgan

Stanley’’), to Jonathan G. Katz, Secretary,

Commission, dated November 14, 1996.

important systems project.2 The

temporary fees were implemented on

August 1, 1995, and applied to all

filings received on or after that date. The

fee increase was to be reduced for most

types of filings made in calendar year

1997 and was to return to the pre-1995

levels in calendar year 1998.

NASD Regulation has added

functionality to the new CRD system

and improved the system’s

compatibility with various computer

operating systems, such as Windows 95

and Windows NT. This has resulted in

delays and cost increases in

implementing the redesigned CRD.

Accordingly, NASD Regulation is

proposing to amend Schedule A,

Section 2 to eliminate the scheduled fee

rollbacks and to retain the current fee

level indefinitely. This fee level will

provide $4 million in extra revenue

each year over the revenue produced by

the pre-1995 fee levels.

The NASD believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(5) of the

Act 3 which requires that the rules of the

Association provide for the equitable

allocation of reasonable dues, fees, and

other charges in that the proposed rule

provides a consistent basis for

assessments among member firms and

fairly assesses a charge to cover the

costs incurred by the Association in the

implementation of the redesigned CRD

System.

2. Statutory Basis

The proposed rule change is

consistent with Section 15A of the Act 4

in general and furthers the objectives of

Section 15A(b) (5) 5 in particular in that

it provides for the equitable allocation

of reasonable dues, fees, and other

charges among the NASD’s members

and other persons using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change does not

impose 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

The NASD has neither solicited nor

received written comments on the

proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The foregoing rule change constitutes

or changes a due, fee, or other charge

imposed by the NASD and, therefore,

has become effective pursuant to

Section 19(b)(3)(A) of the Act 6 and

subparagraph (e) of Rule 19b–4

thereunder.7

At any time within 60 days of the

filing of the proposed rule change, the

Commission may summarily abrogate

such 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.

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 at

the Commission’s Public Reference

Room. Copies of such filing also will be

available for inspection and copying at

the principal office of the National

Association of Securities Dealers. All

submissions should refer to File No.

SR–NASD–96–53 and should be

submitted by January 30, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Jonathan G. Katz,

Secretary.

[FR Doc. 97–439 Filed 1–8–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38115; File No. SR–NASD–

95–54]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

National Association of Securities

Dealers, Inc., Relating to a Modification

of the Operation of the Small Order

Execution System During Locked and

Crossed Markets

January 3, 1997.

On November 15, 1995,1 the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’) 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’’) 2 and Rule

19b–4 thereunder.3 The rule change

amends NASD Rule 4730(b)(4) 4 to

provide that during locked or crossed

markets, SOES will execute orders in

five-second intervals against a locked or

crossed market maker at the best price,

regardless of whether the market maker

entered the quotation locking or

crossing the market.

Notice of the proposed rule change,

together with the substance of the

proposal, was provided by issuance of a

Commission release (Securities

Exchange Act Release No. 37845,

October 21, 1996) and by publication in

the Federal Register (61 FR 55342,

October 25, 1996). One comment letter

was received.5 This order approves the

proposed rule change.

I. Description of Rule Change

The rule change approved today

modifies SOES to provide that during