[Federal Register Volume 69, Number 207 (Wednesday, October 27, 2004)]
[Notices]
[Pages 62732-62735]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E4-2871]
[[Page 62732]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50575; File No. SR-NASD-2004-145]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1 Thereto Relating to Amendments to
Section 4 of Schedule A to the NASD By-Laws (Fees for Qualification
Examinations)
October 20, 2004.
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 September 30, 2004, 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, and
II below, which Items have been prepared by NASD. NASD has designated
this proposal as one establishing or changing a due, fee or other
charge imposed by the self-regulatory organization under Section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders the rule effective upon filing with the Commission.\5\
The Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, 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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
\5\ On October 13, 2004, the NASD filed Amendment No. 1 to the
proposal. See letter from Shirley H. Weiss, Associate General
Counsel, NASD, to Katherine A. England, Assistant Director, Division
of Market Regulation, Commission, dated October 13, 2004
(``Amendment No. 1''). Amendment No. 1 clarifies and makes minor
edits to the purpose section and the proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD proposes to amend Section 4 of Schedule A to the NASD By-Laws,
to establish examination fees that shall be assessed upon persons
taking various qualification examinations as of January 1, 2005. The
proposed rule change also lists the examination fees that NASD will
publish in Schedule A regardless of whether the current examination fee
will increase. Below is the text of the proposed rule change. Proposed
new language is in italics. Deletions are in [brackets].
SCHEDULE A TO NASD BY-LAWS
* * * * *
Section 4--Fees
(a) and (b) No change
(c) [There shall be an examination fee of $60.00 assessed as to
each individual who is required to take an examination for registration
as a registered representative pursuant to the provisions of the Rule
1030 Series, except that the examination fee for general securities
representatives shall be $110.00.] The following fees shall be assessed
to each individual who registers to take an examination as described
below as of January 1, 2005. [This] These fees [is] are in addition to
the registration fee described in [Item] paragraph (b). [Persons for
whom an examination is waived pursuant to Rule 1070 shall pay a fee as
set forth in paragraph (l) of this Section.]
Series 4..................... Registered Options Principal $80
Series 6..................... Investment Company Products/ $70
Variable Contracts
Representative.
Series 7..................... General Securities $225
Representative.
Series 9..................... General Securities Sales $60
Supervisor--Options Module.
Series 10.................... General Securities Sales $95
Supervisor--General Module.
Series 11.................... Assistant Representative-- $60
Order Processing.
Series 17.................... Limited Registered $65
Representative.
Series 22.................... Direct Participation $70
Programs Representative.
Series 23.................... General Securities Principal $75
Sales Supervisor Module.
Series 24.................... General Securities Principal $85
Series 26.................... Investment Company Products/ $75
Variable Contracts
Principal.
Series 27.................... Financial and Operations $85
Principal.
Series 28.................... Introducing Broker/Dealer $75
Financial and Operations
Principal.
Series 37.................... Canada Module of S7 (Options $150
Required).
Series 38.................... Canada Module of S7 (No $150
Options Required).
Series 39.................... Direct Participation $75
Programs Principal.
Series 42.................... Registered Options $60
Representative.
Series 55.................... Limited Representative-- $80
Equity Trader.
Series 62.................... Corporate Securities Limited $70
Representative.
Series 72.................... Government Securities $80
Representative.
Series 82.................... Limited Representative-- $75
Private Securities Offering.
Series 86.................... Research Analyst--Analysis.. $150
Series 87.................... Research Analyst--Regulatory $105
(1) Persons for whom any qualification examination is waived
pursuant to Rule 1070 shall be assessed as an application fee the
examination fee for each qualification examination so waived.
(2) There shall be a service charge equal to the examination fee
assessed to each individual who, having made an appointment for a
specific time and place for computer-based administration of an
examination, fails to timely appear for such examination or timely
cancel such appointment.
(3) There shall be a service charge fee of $15.00 in addition to
those fees specified above for any examination taken in a foreign test
center located outside the territorial limits of the United States.
[(d) There shall be a New York Stock Exchange examination
development fee of $90.00 assessed as to each individual who takes a
Series 7 examination for registration as a general securities
representative. This fee is in addition to the registration and
examination fees described in paragraphs (b) and (c) respectively.]
[(e) There shall be an examination fee of $105.00 assessed as to
each individual who takes a Series 86 examination for registration as a
research analyst pursuant to Rule 1050. There shall be an examination
fee of $55.00 assessed as to each individual who takes a Series 87
examination for registration as a research analyst pursuant to Rule
1050. This fee is in addition to the registration fee described in
paragraph (b). Persons for whom an
[[Page 62733]]
examination is waived pursuant to Rule 1070 shall pay a fee as set
forth in paragraph (l) of this Section.]
[(f) There shall be a New York Stock Exchange examination
development fee of $45.00 assessed as to each individual who takes a
Series 86 or Series 87 examination for registration as a research
analyst pursuant to Rule 1050. This fee is in addition to the
registration and examination fees described in paragraphs (b) and (e)
respectively.]
[(g) There shall be an examination fee of $110.00 assessed as to
each individual taking the General Securities-Sales Supervisor
Examination. There shall be an examination fee of $75.00 assessed as to
each individual who is required to take any other examination for
principals pursuant to the provisions of the Rule 1020 Series. Persons
for whom an examination is waived pursuant to Rule 1070 shall pay a fee
as set forth in paragraph (l) of this Section.] \6\
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\6\ See Amendment No. 1, supra note 5.
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[(h) There shall be a service charge fee of $15.00 in addition to
those fees specified in (b), (c), (d), (e) and (f) above for any
examination taken in a foreign test center located outside the
territorial limits of the United States.] \7\
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\7\ Id.
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[(i) There shall be a service charge equal to the examination fee
assessed as to each individual who, having made an appointment for a
specific time and place for computer-based administration of an
examination, fails to timely appear for such examination or timely
cancel such appointment.] \8\
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\8\ Id.
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(j) and (k) are renumbered (d) and (e).\9\
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\9\ Id.
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[(l) Each individual who is granted a waiver(s) for any
qualification examination specified in paragraphs (c), (e), or (g) of
this section shall be assessed as an application fee the examination
fee as set forth in paragraph (c), (e), (f), or (g) for each
qualification examination so waived.] \10\
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\10\ Id.
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(m) through (o) are renumbered (f) through (h).\11\
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\11\ Id.
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* * * * *
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 had 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
NASD proposes to make certain changes in qualification examination
fees. NASD also proposes to publish in Schedule A a list of all the
qualification examinations that may be required and their corresponding
fees, regardless of whether such fees are proposed to be changed or
would remain the same under the proposed rule change.\12\
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\12\ NASD states that Section 4 of Schedule A currently
identifies NYSE examination development fees of $90.00 for the
Series 7 examination and $45.00 per examination for the Series 86
and 87 examinations. Under the proposed rule change, these
development fees will continue to be part of the total examination
fee charged to candidates, but they will no longer be separately
identified in Schedule A. See Amendment No. 1, supra note 5.
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Any person associated with a member firm who is engaged in the
securities business of the firm must register with NASD. As part of the
registration process, securities professionals must pass a
qualification examination to demonstrate competence in each area in
which they intend to work. Some of these examinations are sponsored
(i.e., developed) by NASD, and others are sponsored by the North
American Securities Administrators Association (``NASAA''), the New
York Stock Exchange (``NYSE''), the Municipal Securities Rulemaking
Board (``MSRB''), or other self-regulatory organizations
(``SROs'').\13\ NASD administers these qualification examinations via
computer through the PROCTOR[reg] system at test centers operated by
vendors under contract with NASD. NASD charges an examination fee to
candidates for NASD-sponsored examinations. For those examinations
sponsored by an NASD client and administered/delivered by NASD, NASD
charges a delivery fee that comprises either a part or all of the
examination fee for these examinations.
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\13\ For example, NASD administers and delivers the Series 6,
24, and 27 examinations, which are sponsored by NASD. NASD also
administers and delivers client examinations, such as the Series 7,
which is sponsored by NYSE, and the Series 9 and 10, which are
sponsored jointly by several SROs (AMEX, CBOE, MSRB, NASD, NYSE,
PCX, and PHLX).
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NASD has not adjusted current examination fees for NASD-sponsored
examinations or delivery fees for client-sponsored examinations since
1989. At present, these fees do not reflect the costs incurred by NASD
for administering and delivering these examinations. These costs
consist of operational, technology and delivery costs. Operational
costs consist of salaries and overhead for NASD staff involved in test
delivery technical support, customer support and service, and
examination administration. Delivery costs vary based on the length of
the examination because NASD pays its delivery vendors an hourly rate
for seat time at test delivery centers.\14\
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\14\ NASD provides a network of more than 400 test centers
located throughout the United States and overseas operated by two
commercial vendors.
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Technology costs are the costs associated with the PROCTOR[supreg]
system, including system maintenance and enhancements. The
PROCTOR[supreg] system provides the following capabilities: importation
and storage of items within examination banks; statistical analyses
against the examination bank; tracking candidates' enrollment windows,
appointments and result records; use of the delivery driver at the test
delivery centers; and exporting raw data on item performance.
Technology costs also include the significant expense being incurred
over the next two years for the PROCTOR[supreg] system redesign/
rebuild. The current PROCTOR[supreg] system needs to be updated to
incorporate more modern technology. The new system will be more
reliable and will include many new features such as additional item
(question) formats (short answer, matching, drag/drop), on-line
exhibits, and advanced biometrics for greater security.
NASD represents that this proposed rule change would eliminate
existing provisions relating to specific examinations. Specifically,
the proposed rule change would list in Schedule A all qualification
examinations that may be required by NASD for its members, regardless
of sponsor(s), and the corresponding fee that will be charged for each
examination (whether the fee is proposed to be changed or remains the
same). These fees represent the fees to be charged persons who register
for one of these examinations beginning on January 1, 2005.\15\ NASD
plans to conduct an annual review of its costs and adjust examination
and delivery fees, if necessary, as of January 1 each year after making
the appropriate rule filings.
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\15\ The published fee represents the fee that will be charged
at the time the individual registers for the examination. The
individual then has 120 days to take the examination.
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[[Page 62734]]
Fee Changes
NASD recently conducted an analysis of the costs of developing,
administering, and delivering qualification examinations. The analysis
showed that NASD's costs are rising, particularly, with respect to
technology and delivery costs. Thus, NASD proposes to raise examination
fees for certain NASD-sponsored examinations. In addition, NASD has
advised its client examination sponsors of the impact of the higher
costs on delivery fees for client-sponsored examinations. Accordingly,
NASD is proposing to raise the examination fees for the following
examinations.
Series 4......................... Registered Options Principal From $75 to $80.
(Sponsored jointly by AMEX,
CBOE, NASD, NYSE, PCX, and PHLX).
Series 6......................... Investment Company Products/ From $60 to $70.
Variable Contracts
Representative (NASD-sponsored).
Series 7......................... General Securities Representative From $200 to $225.
(NYSE-sponsored).
Series 9......................... General Securities Sales From $50 to $60.
Supervisor--Options Module
(Sponsored jointly by AMEX,
CBOE, MSRB, NASD, NYSE, PCX, and
PHLX).
Series 10........................ General Securities Sales From $60 to $95.
Supervisor--General Module
(Sponsored jointly by AMEX,
CBOE, MSRB, NASD, NYSE, PCX, and
PHLX) \16\.
Series 22........................ Direct Participation Programs From $60 to $70.
Representative (NASD-sponsored).
Series 24........................ General Securities Principal From $75 to $85.
(NASD-sponsored).
Series 27........................ Financial and Operations From $75 to $85.
Principal (NASD-sponsored).
Series 55........................ Limited Representative--Equity From $60 to $80.
Trader (NASD-sponsored).
Series 62........................ Corporate Securities Limited From $60 to $70.
Representative (NASD-sponsored).
Series 72........................ Government Securities From $60 to $80.
Representative (NASD-sponsored).
Series 87........................ Research Analyst--Regulatory From $100 to $105.
(sponsored jointly by NASD and
NYSE).
Publication of Fee Schedule in Schedule A to NASD By-Laws
Notwithstanding whether the current examination fee will increase,
NASD proposes to publish in Schedule A a schedule of all qualification
examination fees that are delivered by NASD and that may be required by
NASD for its members. NASD proposes to publish the following schedule:
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\16\ See Amendment No. 1, supra note 5.
Series 4..................... Registered Options Principal $80
Series 6..................... Investment Company Products/ $70
Variable Contracts
Representative.
Series 7..................... General Securities $225
Representative.
Series 9..................... General Securities Sales $60
Supervisor--Options Module.
Series 10.................... General Securities Sales $95
Supervisor--General Module.
Series 11.................... Assistant Representative-- $60
Order Processing.
Series 17.................... Limited Registered $65
Representative.
Series 22.................... Direct Participation $70
Programs Representative.
Series 23.................... General Securities Principal $75
Sales Supervisor Module.
Series 24.................... General Securities Principal $85
Series 26.................... Investment Company Products/ $75
Variable Contracts
Principal.
Series 27.................... Financial and Operations $85
Principal.
Series 28.................... Introducing Broker/Dealer $75
Financial and Operations
Principal.
Series 37.................... Canada Module of S7 (Options $150
Required).
Series 38.................... Canada Module of S7 (No $150
Options Required).
Series 39.................... Direct Participation $75
Programs Principal.
Series 42.................... Registered Options $60
Representative.
Series 55.................... Limited Representative-- $80
Equity Trader.
Series 62.................... Corporate Securities Limited $70
Representative.
Series 72.................... Government Securities $80
Representative.
Series 82.................... Limited Representative-- $75
Private Securities Offering.
Series 86.................... Research Analyst--Analysis.. $150
Series 87.................... Research Analyst--Regulatory $105
NASD will announce the implementation of the proposed rule change
in a Notice to Members to be published no later than 30 days from the
date the proposed rule change is filed with the Commission. The new
fees will become effective for ``120-day examination windows'' opened
in the Central Registration Depository (CRD[supreg]) on or after
January 1, 2005.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A of the Act,\17\ in general and with Section
15A(b)(5) of the Act,\18\ in particular which requires, among other
things, that NASD's rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that NASD operates or
controls. NASD believes that the rule change is consistent with Section
15A(b)(5) of the Act \19\ in that the fee changes reflect NASD's
increased costs in delivering the examinations and in maintaining and
upgrading the examination delivery system.
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\17\ 15 U.S.C. 78o-3.
\18\ 15 U.S.C. 78o-3(b)(5).
\19\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD believes that the proposed rule change does not impose 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.
[[Page 62735]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has become effective upon filing with the
Commission, pursuant to Section 19(b)(3)(A)(ii) of the Act \20\ and
subparagraph (f)(2) of Rule 19b-4 thereunder,\21\ because it
establishes or changes a due, fee, or other charge imposed by NASD. At
any time within 60 days of the filing of the proposed rule change, as
amended, 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.
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\20\ 15 U.S.C. 78s(b)(3)(a)(ii).
\21\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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-2004-145 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2004-145. 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 the
filing also will be available for inspection and copying at the
principal offices 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-2004-145 and should be submitted on or before November 17,
2004.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E4-2871 Filed 10-26-04; 8:45 am]
BILLING CODE 8010-01-P