[Federal Register Volume 62, Number 9 (Tuesday, January 14, 1997)]
[Notices]
[Pages 1939-1940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-860]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38126; File No. SR-NASD-96-56]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by National Association of 
Securities Dealers, Inc. Relating to Increase in Minimum Gross Income 
Assessment

January 6, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 24, 1996, 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. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD Regulation, Inc. (``NASD Regulation'') is proposing a rule 
change to amend Section 1 to Schedule A of the By-Laws to increase the 
minimum gross income assessment from $850.00 to $1,200.00. Proposed new 
language is italicized; proposed deletions are in brackets.

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) An amount equal to the greater of $1,200.00[850.00] or the 
total of:
    (i) 0.125% of the annual gross revenue from state and municipal 
securities transactions,

[[Page 1940]]

    (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.
    Each member is to report annual gross revenue as defined in Section 
5 of this Schedule, for the preceding calendar year.

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

    Article VI of the By-Laws authorizes the NASD Board of Governors to 
levy fees, dues and assessments to be paid by members to defray 
reasonable expenses incurred in the administration of the work of the 
NASD. Currently, each member of the NASD is required to pay an annual 
gross income assessment of the greater of (i) $850.00 or (ii) the total 
of 0.125% of the annual gross revenue from state and municipal 
securities transactions, 0.125% of annual gross revenue from other 
over-the-counter securities transactions, 0.125% of the annual gross 
revenue from U.S. Government securities transactions, and, 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.
    The minimum gross income assessment of $850.00 has not been changed 
since 1989. Due to inflationary pressures and increased regulatory 
costs, the NASD is proposing to raise the minimum gross income 
assessment from $850.00 to $1,200.00. The 1997 expenses of NASD 
Regulation are expected to grow by $43 million or 24% as the result of 
various factors, including, among other things, initiatives designed to 
respond to the findings by the SEC in its recent report concerning the 
NASD,\2\ completion of a regulatory transition plan for the examination 
program, development of the new Central Registration Depository system, 
further implementation of the Arbitration Policy Task Force 
recommendations and continued development of an Order Audit Trail 
System. The proposed increase in the minimum gross income assessment, 
along with anticipated revenue growth in other areas, is expected to 
help defray the significant increase in regulatory costs anticipated to 
be incurred by NASD Regulation.
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    \2\ See, Report Pursuant To Section 21(a) Of The Securities 
Exchange Act Of 1934 Regarding the NASD And the Nasdaq Stock Market, 
U.S. Securities and Exchange Commission (August 8, 1996).
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    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 increase in the minimum gross income 
assessment to help defray the significant increase in regulatory costs 
anticipated to be incurred by NASD Regulation.
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    \3\ 15 U.S.C. Sec. 78o-3(b)(5).
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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, as amended.

(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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) of the Act \4\ and subparagraph (e) of Rule 19b-
4 \5\ thereunder in that it constitutes a due, fee or other charge 
imposed by the Association. However, the NASD has determined to 
implement the rule change on January 1, 1997.
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    \4\ 15 U.S.C. Sec. 78s(b)(3)(A).
    \5\ 17 CFR 19b-4(e).
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    At any time within 60 days of the filing of a 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.

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. Sec. 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 principle office of the 
NASD. All submissions should refer to File No. SR-NASD-96-56 and should 
be submitted by January 27, 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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-860 Filed 1-13-97; 8:45 am]
BILLING CODE 8010-01-M