Document ID: SEC-2006-1077-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-08-22T04:00Z

[Federal Register: August 22, 2006 (Volume 71, Number 162)]
[Notices]               
[Page 48958-48959]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au06-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54319; File No. SR-NASD-2006-060]

 
 Self-Regulatory Organizations: National Association of 
Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change To 
Require Members To File Regulatory Notices With NASD Electronically

August 15, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 under the Act,\2\ 
notice is given that on May 16, 2006, the 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. These items have been prepared 
by 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. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD proposes to adopt NASD Rule 3170 to provide NASD with the 
authority to require member firms to file or submit electronically with 
NASD any regulatory notice or other document that member firms are 
required to file with (or otherwise submit to) NASD. NASD may specify 
the electronic format to be used. The proposed rule change does not 
specify the particular regulatory notices or documents that NASD will 
require members to file electronically. Instead, NASD's proposed rule 
change would give NASD authority to require members to file or submit 
electronically with NASD any specified regulatory notice or document. 
NASD plans to require members to file certain specified notices with 
NASD via an electronic, Internet-based receiving and processing system 
(``System''), using templates developed by NASD for each notice. The 
System will be available to members on NASD's Internet Web site.
    Below is the text of the proposed rule change. Proposed new 
language is in italic.
* * * * *

3170. Mandatory Electronic Filing Requirements

    Each member shall be required to file with NASD, or otherwise 
submit to NASD, in such electronic format as NASD may require, all 
regulatory notices or other documents required to be filed or otherwise 
submitted to NASD, as specified by NASD.
* * * * *

II. Self-Regulatory Organization's Statement Concerning the Proposed 
Rule Change

    In its filing with the Commission, 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. NASD has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of the statements.

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

1. Purpose
    The purpose of the proposed rule change is to provide NASD with the 
authority to require member firms to file or submit electronically with 
NASD any regulatory notice or other document that member firms are 
required to file with (or otherwise submit to) NASD. NASD may specify 
the electronic format to be used. The proposed rule change does not 
specify the particular regulatory notices or documents that NASD will 
require members to file electronically. Instead, NASD's proposed rule 
change would give NASD authority to require members to file or submit 
electronically with NASD any specified regulatory notice or document.
    Upon approval of the rule change, NASD will issue a Notice to 
Members and other member communications, as appropriate, to advise its 
members which regulatory notices or documents members will be required 
to file or submit electronically to NASD and the date on which 
electronic filing or submission of these notices or documents will be 
required. These communications will also advise members that as of the 
specified date, electronic filing or submission of the specified 
regulatory notices or documents will be mandatory, and that NASD will 
no longer accept facsimile or other non-electronic transmissions of 
these notices or documents.
    NASD notes that, upon approval of the proposed rule change, NASD, 
as a member's designated examining authority, examining authority, or 
regulatory authority that examines the firm as to financial 
responsibility (``DEA''), plans to require members to file certain 
notices that must be filed with NASD under the following Exchange Act 
Rules electronically:\3\
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    \3\ NASD has requested relief from the Commission with respect 
to these Exchange Act rules. Electronic filing of notices with NASD 
does not affect requirements in those rules to file notices with the 
Commission or other securities regulatory agencies.
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     Rule 15c3-1(e)--Withdrawals of equity capital
     Rule 15c3-3(i)--Special Reserve Bank Account
     Rule 17a-4(f)(2)(i); Rule 17a-4(f)(3)(vii)--Electronic 
storage media
     Rule 17a-5(f)(4)--Replacement of accountant
     Rule 17a-11(b)--Net capital deficiency
     Rule 17a-11(c)(1)--Aggregate indebtedness is in excess of 
1200 percent of net capital

[[Page 48959]]

     Rule 17a-11(c)(2)--Net capital is less than 5 percent of 
aggregate debit items
     Rule 17a-11(c)(3)--Net capital is less than 120 percent of 
required minimum dollar amount
     Rule 17a-11(d)--Failure to make and keep current books and 
records
     Rule 17a-11(e)--Material inadequacy in accounting systems, 
internal controls, or practices and procedures
    NASD members will be required to file these specified notices with 
NASD via an electronic, Internet-based receiving and processing system 
(``System''), using templates developed by NASD for each notice. The 
System will be available to members on NASD's Internet Web site.
2. Statutory Basis
    NASD believes that the proposed amendment to NYSE Rule 418 is 
consistent with Section 6(b) of the Act \4\ in general, and furthers 
the objectives of Section 6(b)(5) of the Act \5\ in particular, in that 
it is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and to remove impediments and 
perfect the mechanism of a free and open market and to protect 
investors and the public interest. NASD believes that the electronic 
filing of notices is cost-saving and efficient and that it will enhance 
the speed and efficiency of processing the filings and reduce 
administrative costs.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will impose any 
inappropriate burden on competition.

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

    Pursuant to Section 19(b)(2) of the Act,\6\ 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 Exchange 
consents, the Commission will:
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    \6\ 15 U.S.C. 78f(b)(2).
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    (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 proposed rule change, 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 e-mail to rule-comments@sec.gov. Please include File 

Number SR-NASD-2006-060 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASD-2006-060. 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, 100 F Street, 
Washington, DC 20549. Copies of the filings will also be available for 
inspection and copying at the principal office of the NASD. 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-NASD-2006-060 and should be 
submitted on or before September 12, 2006.
    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).

Nancy M. Morris,
Secretary.
[FR Doc. E6-13812 Filed 8-21-06; 8:45 am]

BILLING CODE 8010-01-P