Document ID: SEC-2007-0367-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2007-03-13T04:00Z

[Federal Register: March 13, 2007 (Volume 72, Number 48)]
[Notices]               
[Page 11414-11416]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr07-93]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55412; File No. SR-NASD-2007-015]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Amend NASD Rules 1012 (General Provisions) and 1013 (New 
Member Application and Interview) To Require an Applicant for 
Membership To Submit an Application in the Manner Prescribed by NASD

March 7, 2007.
    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 20, 2007, the National Association of Securities Dealers, 
Inc. (``NASD'') filed with the Securities and Exchange

[[Page 11415]]

Commission (``Commission'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by NASD. NASD 
has designated the proposed rule change as constituting a ``non-
controversial'' proposed rule change under paragraph (f)(6) of Rule 
19b-4 under the Act,\3\ which renders the proposed rule change 
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\ Id.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD proposes to amend NASD Rules 1012 (General Provisions) and 
1013 (New Member Application and Interview) to require an applicant for 
membership to submit an application in the manner prescribed by NASD. 
The text of the proposed rule change is available at NASD, 
http://www.nasd.com, 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, 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 such statements.

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

1. Purpose
    Applying for NASD membership is a comprehensive process requiring 
the submission of extensive information, considerable attention to 
detail, and a substantial time commitment. To streamline the 
application process and outline clearly the information that must be 
submitted with the application, NASD recently amended Rule 1013 (New 
Member Application and Interview) to require applicants to use a 
standardized form, Form NMA, to submit their membership 
applications.\4\ Form NMA is organized according to the 14 individual 
standards for membership enumerated in Rule 1014 (Department Decision) 
and assists applicants in compiling a complete application package by 
listing the forms and supporting documentation required by Rule 1013. 
Applicants currently submit Form NMA in hard copy to NASD, along with 
the required forms and supporting documentation, via hand delivery, 
courier, or first-class mail.\5\
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    \4\ See Securities Exchange Act Release No. 53564 (March 29, 
2006), 71 FR 16847 (April 4, 2006) (SR-NASD-2006-038).
    \5\ See Rule 1012(a)(1) and Rule 1013(a)(1).
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    NASD, however, previously indicated in the rule filing requiring 
applicants to use Form NMA that it intended to develop systems to 
enable applicants to submit Form NMA electronically. NASD has now 
completed those systems and converted Form NMA to an electronic 
document. The electronic Form NMA and the new electronic application 
submission process changes only the manner in which NASD receives the 
information that a membership application is required to include under 
Rule 1013. They do not change the information applicants must submit 
pursuant to Rule 1013 or the standards set forth in Rule 1014 for 
granting an applicant's membership application.
    The proposed rule change amends Rule 1012 to require applicants to 
file an application in the manner prescribed in Rule 1013. The proposed 
rule change also amends Rule 1012(a) to reflect that the electronic 
filing of a new member application will be deemed complete on the date 
specified on the confirmation page generated by the electronic filing 
system. In addition, the proposed rule change amends Rule 1013(a) to 
require new member applicants to file an application in the manner 
prescribed by NASD and to include the completed Form NMA as part of the 
contents of a membership application.
    Finally, the proposed rule change deletes outdated references in 
Rules 1011, 1012 and 1013 to ``the Association'' and replaces them with 
``NASD.''\6\
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    \6\ NASD no longer refers to itself using its full corporate 
name or ``the Association.'' Instead, NASD uses the name ``NASD'' 
unless otherwise appropriate for corporate or regulatory reasons.
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    Prior to the proposed rule change being operative and implemented, 
NASD will make the Form NMA available to applicants via Web CRD and 
will outline details in a Notice to Members regarding how to complete 
the online form and submit it using the new electronic filing 
system.\7\
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    \7\ NASD will also provide notice through the NASD Notice to 
Members 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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    This move away from a paper new member application to an electronic 
application will further streamline and make more efficient the new 
member application process.\8\ An electronic application process is 
also consistent with NASD's By-Laws, which state that new member 
applications ``shall be made to the NASD via electronic process or such 
other process as the NASD may prescribe, on the form to be prescribed 
by the NASD.''\9\
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    \8\ Cf. Securities Exchange Act Release No. 54654 (October 26, 
2006), 71 FR 64326 (November 1, 2006) (SR-NASD-2006-60) (order 
approving new NASD Rule 3170 (Mandatory Electronic Filing 
Requirements) giving NASD the authority to require members to file 
or submit electronically any regulatory notice or other document 
that a member is required to file with (or otherwise submit to) 
NASD).
    \9\ NASD By-Laws, Art. IV, Sec. 1(a).
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    As noted in Item 2 above, NASD has filed the proposed rule change 
for immediate effectiveness. NASD will announce the implementation date 
of the proposed rule change in a Notice to Members to be published no 
later than 60 days following Commission notice of the filing of the 
proposed rule change for immediate effectiveness. The implementation 
date will be 30 days from the publication of the Notice to Members.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among 
other things, that NASD 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 Rules 1012 and 1013 to 
require new member applications to be submitted in the manner 
prescribed by NASD, which will be electronically. The proposed rule 
change does not propose any new or additional content requirements for 
member applications. NASD believes that the proposed rule change is 
consistent with the provisions of Section 15A(b)(6) as the requirement 
to file electronic applications using Form NMS will ensure a more 
streamlined and efficient membership application process.
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    \10\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden On Competition

    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.

[[Page 11416]]

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \11\ and 
Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    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 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 Number SR-NASD-2007-015 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-2007-015. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of 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-2007-015 and should be submitted on or before April 3, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4505 Filed 3-12-07; 8:45 am]

BILLING CODE 8010-01-P