23750 Federal Register / Vol. 66, No. 90 / Wednesday, May 9, 2001 / Notices

8 15 U.S.C. 78k–1.

9See telephone conversation between Rebekah

Liu, Special Counsel, SEC, Cyndi Nguyen, Attorney,

SEC and Eric Moss, Office of General Counsel,

NASD Regulation on May 3, 2001.

10 15 U.S.C. 78o–3(b)(6).

11 15 U.S.C. 78o–3(g)(3).

12 15 U.S.C. 78s(b)(3)(A)(i).

13 17 CFR 240.19b–4(f)(1).

14 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

trusts, collateralized mortgage

obligations, and securities of closed-end

companies registered pursuant to the

Investment Company Act of 1940. These

exams test candidates’ knowledge of

securities industry rules and regulations

pertinent to the respective products

listed above.

The staff of the Qualifications

Department of NASD Regulation, in

conjunction with an industry

committee, recently undertook a review

of the General Securities Principal and

Corporate Securities Limited

Representative examination programs.

As a result of this review, NASD

Regulation is proposing revisions to the

examination specifications, study

outlines, and question banks for the

Series 24 and Series 62 examination

programs to reflect changes to the rules

and regulations covered by the

examinations, including Commission

rules relating to Regulation M, the

Investment Advisers Act of 1940, and

section 11A of the Act 8 and the rules

thereunder. The proposed revisions also

reflect changes to NASD rules and

regulations, as well as to the Municipal

Securities Rulemaking Board Rules G–

37 and G–38.

To adequately test the material

covered in the revised programs, the

number of questions on the Series 24

examination has increased from 125 to

150 questions, and the number of

questions on the Series 62 examination

has increased from 100 to 115 questions.

The allowed testing time will change to

31⁄2 hours for the Series 24 examination

and 21⁄2 hours for the Series 62

examination. The passing score for the

examinations will continue to be 70

percent .9

2. Statutory Basis

NASD Regulation believes that the

proposed revisions are consistent with

the provisions of sections 15A(b)(6) 10

and 15A(g)(3) of the Act,11 which

authorize the NASD to prescribe

standards of training, experience, and

competence for persons associated with

NASD members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation 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 proposed rule change has become

effective pursuant to section

19(b)(3)(A)(i) of the Act 12 and

subparagraph (f)(1) of Rule 19b–4

thereunder,13 in that the foregoing

proposed rule change constitutes a

stated policy, practice, or interpretation

with respect to the meaning,

administration, or enforcement of an

existing rule of the self-regulatory

organization. NASD Regulation

proposes to implement the revised

Series 24 and 62 examination programs

on July 2, 2001.

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,

including whether the proposal is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549–0609. 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–2001–23 and should be

submitted by May 30, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11638 Filed 5–8–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44251; File No. SR–NASD–

2001–19]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Reporting

Requirements for Clearing Members

May 3, 2001.

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

Securities Exchange Act of 1934

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

notice is hereby given that on March 21,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary, NASD Regulation,

Inc. (‘‘NASD Regulation’’) 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 NASD Regulation. 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

adopt Rule 3150 to require all members

that are clearing firms to report certain

data to the NASD Regulation

Department of Member Regulation

(‘‘Member Regulation’’) on a daily basis.

Proposed new language is in italics.

* * * * *

3100. BOOKS AND RECORDS, AND

FINANCIAL CONDITION

* * * * *

3150. Reporting Requirements for Clearing

Firms

Each member that is a clearing firm shall

be required to report to the Association on a

daily basis and in such format as the

Association may require, prescribed data

pertaining to the member and any brokerdealer for which it clears. A clearing firm

may enter into an agreement with a third

party pursuant to which the third party

agrees to fulfill the clearing firm’s obligations

Federal Register / Vol. 66, No. 90 / Wednesday, May 9, 2001 / Notices 23751

3The Association anticipates requesting members

that are clearing firms to submit data electronically.

Telephone conversations between Shirley H. Weiss,

Office of General Counsel, NASD Regulation, and

Heidi Pilpel, Special Counsel, and Lisa Jones,

Attorney, Division of Market Regulation,

Commission (May 2, 2001).

4 15 U.S.C. 78o–3(b)(6). 5 17 CFR 200.30–2(a)(12).

under this Rule. Notwithstanding the

existence of such an agreement, each clearing

firm remains responsible for complying with

the requirements of this Rule.

* * * * *

I. Self Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation 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.

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

NASD Member Regulation is

developing a new business model

regarding the surveillance and

examination of NASD members. The

new program’s official title is Integrated

National Surveillance and Information

Technology Enhancements (commonly

referred to as ‘‘INSITE’’). INSITE will

allow NASD Regulation to concentrate

its examinations on higher-risk

segments of the industry; focus the

content of each examination on higherrisk topics; streamline the examination

process for the examiners and members;

better coordinate regulatory findings

with other NASD Regulation

departments; and provide specialized

training to enhance and maintain

examiners’ competency levels.

The surveillance component of the

INSITE program will produce reports

that identify member ‘‘exceptions’’

based on historical and current

comparisons of member data. The

exceptions will trigger follow-up

reviews and possible member

examinations. In order for the

surveillance component of INSITE to

work, it is essential that members that

are clearing firms (both those that are

self-clearing and those that clear for

other firms) provide certain data to

NASD Regulation on a daily basis.

Proposed Rule 3150 would establish the

INSITE reporting requirements and

would require members that are clearing

firms to provide the necessary data

directly to NASD Regulation.3 A

clearing firm member may enter into an

agreement with a third party pursuant to

which the third party agrees to fulfill

the clearing firm’s obligations under

proposed Rule 3150. Notwithstanding

the existence of such an agreement, each

member that is a clearing firm will be

responsible for complying with the

requirements of the proposed rule

change.

The text proposed Rule 3150 does not

specify the data that must be reported to

NASD Regulation. The data elements

that NASD Regulation currently expects

to require its members that are clearing

firms to submit to the Association

pursuant to proposed Rule 3150 include

items such as trade cancellations (T+1

forward) and as-of-trades, aggregate net

liquidating equity in each firms’s

proprietary accounts, and unsecured

customer debits. The Association will

continue to work with its clearing firm

members and the SEC staff in

identifying the data that is needed in

order to operate the surveillance

component of INSITE. The Association

will also provide its clearing firms

members with advance notice through

the NASD Notice to Members process

(or similar guidance) of any changes to

the required data elements. Moreover,

NASD Regulation will advise its

clearing firm members of the format to

be used in transmitting information

pursuant to proposed rule 3150, and the

methodology by which NASD

Regulation will require its clearing firm

members to submit the following to the

Association.

2. Statutory Basis

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of section 15A(b)(6) of

the Act,4 which requires, among other

things, that the Association’s rules must

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.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation 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

NASD Regulation has neither

solicited nor received written comments

on the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing and

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 self-regulatory

organization 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,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549–0609. 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

No. SR–NASD–2001–19 and should be

submitted by May 30, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–11640 Filed 5–8–01; 8:45 am]

BILLING CODE 8010–01–M