Document ID: SEC-2008-0426-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-03-18T04:00Z

[Federal Register: March 18, 2008 (Volume 73, Number 53)]
[Notices]               
[Page 14519-14520]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18mr08-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57480; File No. SR-FINRA-2008-008]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Amend Rule 1013 (New Member Application and 
Interview) and the Manner in Which Membership Applicants Submit Their 
Applications to FINRA

March 12, 2008.
    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 February 29, 2008, the Financial Industry Regulatory Authority, 
Inc., (``FINRA'') (f/k/a National Association of Securities Dealers, 
Inc. (``NASD'')) 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 substantially prepared by FINRA. 
FINRA has designated this proposal as constituting a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. 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)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA proposes to amend NASD Rule 1013 (New Member Application and 
Interview) to change the manner in which membership applicants submit 
their applications to FINRA. FINRA also proposes changes to online Form 
NMA to make it a more interactive, user-friendly document that 
applicants can use to submit application information. The text of the 
proposed rule change is available at http://www.finra.org, FINRA, and 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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. FINRA 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
    In an effort to streamline the membership application process and 
make it more efficient, FINRA recently required membership applicants 
to complete and submit electronically via the Electronic Filing System 
(``EFS'') FINRA's standardized membership application form, the Form 
NMA. NASD Rule 1013 requires that the Form NMA and other required 
application materials be filed with the Department of Member Regulation 
(``Department'') at the district office in the district in which the 
applicant intends to have its principal place of business. Although the 
Form NMA can be forwarded electronically to the district offices, 
applicants must submit certain required application materials, such as 
the Form BD, fingerprint cards of associated persons, the new member 
assessment report, CRD entitlement forms, and the membership 
application fee via first class mail, overnight courier, or hand 
delivery.\5\
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    \5\ See NASD Rule 1012(a)(2) (requiring an applicant to file 
application documents and information by first class mail, overnight 
courier, or hand delivery where FINRA has not otherwise prescribed 
an electronic or alternative filing process).
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    The instant proposed rule change would amend NASD Rule 1013 to 
require that an application be filed directly with the Department. 
Pursuant to the proposed rule change, FINRA will require applicants to 
send all hard copy application materials to a central location within 
the Department, and EFS automatically will route the Form NMA to the 
same location within the Department. The proposed rule change also 
would amend NASD Rule 1013 to eliminate the requirement that applicants 
submit the membership application fee by physical check. Instead, FINRA 
will require applicants to pay the fees electronically.
    Further, FINRA proposes to change the Form NMA from a static 
electronic document to an interactive, user-friendly document that will 
provide a more tailored application experience. The revised Form NMA 
automatically will retrieve certain information (e.g., identification 
information, proposed business lines, etc.) from the applicants' Forms 
U4 and the Form BD, which FINRA will require applicants to submit prior 
to completion of the Form NMA.\6\ The revised form also will have 
applicants provide a greater level of detail regarding the required 
application information. FINRA anticipates that these changes to the 
Form NMA will result in a more complete and accurate application that, 
in turn, will allow FINRA staff to conduct a more timely evaluation and 
make fewer information requests during the course of the review.
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    \6\ Although applicants submit their Form BD in hard copy, the 
revised Form NMA will be able to retrieve the information via an 
electronic database that FINRA staff currently populates with Form 
BD information. Applicants already submit Forms U4 in an electronic 
format accessible to the revised form.
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    The proposed rule change would alter the manner in which FINRA 
receives a membership application and revise the online Form NMA to 
make it more interactive; it would not change the information 
applicants must submit pursuant to NASD Rule 1013 during the 
application process or the standards set forth in NASD Rule 1014 for 
granting an applicant's membership application. Additionally, the 
proposed changes are consistent with the FINRA By-Laws, which allow 
FINRA to require that new member applications be made ``via electronic 
process or such other process as the Corporation may prescribe.'' \7\
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    \7\ FINRA By-Laws, Art. IV, Sec. 1(a).
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    Finally, the proposed rule change would amend the NASD Rule Series 
1010 (Membership Proceedings) to reflect FINRA's change in corporate 
name or to otherwise delete references to ``the Association.''
    Prior to the proposed rule change becoming operative, FINRA will 
outline in a Regulatory Notice the details regarding the changes to the 
electronic

[[Page 14520]]

application process and how to complete the revised Form NMA.\8\
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    \8\ FINRA will also provide advance notice through the 
Regulatory Notice process (or similar guidance) of any systems 
changes to the electronic application process that would alter the 
manner in which applicants interact with the electronic filing 
system.
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    FINRA has filed the proposed rule change for immediate 
effectiveness. The effective date will be the date of filing, February 
29, 2008. FINRA will announce the implementation date in a Regulatory 
Notice to be published no later than 30 days following the effective 
date.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\9\ which requires, among 
other things, that FINRA 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. The proposed rule change amends NASD Rule 1013 to 
require that an applicant file a membership application directly with 
the Department instead of with a particular district office and revises 
the online Form NMA to make it more interactive. The proposed rule 
change does not propose any new or additional content requirements for 
member applications. The proposed rule change also eliminates the 
requirement to pay the membership application fee with a physical 
check. FINRA believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(6) as it will ensure a more 
streamlined and efficient membership application process.
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    \9\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA 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 proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(i) of the Act \10\ and Rule 19b-4(f)(1) \11\ 
thereunder, because it constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of such 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 proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-FINRA-2008-008 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-FINRA-2008-008. This 
file 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 Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m.. Copies of such filing also will be available for 
inspection and copying at the principal office of FINRA. 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-FINRA-2008-008 and should be 
submitted on or before April 8, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-5418 Filed 3-17-08; 8:45 am]

BILLING CODE 8011-01-P