Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by National Association of Securities Dealers, Inc. Relating to Fees on Members

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-33902; File No. SR-NASD-94-21]

Self-Regulatory Organizations; Notice of Filing and Immediate

Effectiveness of Proposed Rule Change by National Association of

Securities Dealers, Inc. Relating to Fees on Members

April 13, 1994.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April 7,

1994, the National Association of Securities Dealers, Inc. (``NASD'' or

``Association'') 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 the NASD.

The NASD has designated this proposal as one constituting a fee under

Sec. 19(b)(3)(A)(ii) of the Act, which renders the rule effective upon

the Commission's receipt of this filing. 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

The NASD is proposing a rule change to amend Schedule A to the By-

Laws\1\ to increase the charges, as set forth in section 13 of Schedule

A,\2\ for the review of certain advertisements and sales literature.

Below is the text of the proposed rule change. Proposed new language is

in italics; proposed deletions are in brackets.

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\1\NASD Manual, Schedules to the By-Laws, Schedule A (CCH) 1751

et seq.

\2\NASD Manual, Schedules to the By-Laws, Schedule A, Sec. 13

(CCH) 1764.

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Schedule A to the By-Laws

* * * * *

Section 13. Service Charge for Advertisement, Sales Literature, and

Other Such Material Filed or Submitted

There shall be a service charge for each and every item of

advertisement, sales literature, and other material, whether in

printed, video or other form, filed with or submitted to the

Association, except for items that are filed or submitted in response

to a written request from the Association's Advertising Regulation

Department issued pursuant to the spot check procedures set forth in

the Association's Rules of Fair Practice and Government Securities

Rules, as follows: (1) For printed material reviewed, $50.00 [$25.00]

plus $10.00 [$5.00] for each page reviewed in excess of 10 [5] pages;

and (2) for video or audio media, $50.00 [$25.00] plus $10.00 [$5.00]

per minute for each minute of tape reviewed in excess of 10 [5]

minutes.

[In addition, w]Where a member requests expedited review of

material submitted to the Advertising Regulation Department there shall

be a[n additional] service charge of $500.00 [$200] per item plus $25

for each page reviewed in excess of 10 pages. Expedited review shall be

completed within three business days, not including the date the item

is received by the Advertising Regulation Department, unless a shorter

or longer period is agreed to by the Advertising Regulation Department.

The Advertising Regulation Department may, in its sole discretion,

refuse requests for expedited review.

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the 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. The 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

The NASD's Advertising Regulation Department began offering an

expedited review process in February, 1991 for those members who

desired review and comment of advertising and sales literature that was

faster than the normal review and comment process, which is ten

business days. The expedited process is completed within three business

days. Over the past three years, use of the expedited process has

increased far beyond the NASD's expectation. The expedited filing

process has become standard operating procedure for many of the

program's most frequent users and many items filed are frequently more

difficult to review because they contain new concepts and approaches

requiring greater time for research and analysis. The increase in the

number of expedited filings has led to a significant increase in the

amount of administrative processing and has made it more difficult to

provide service within the ten-day turnaround time for normal filings.

The NASD is proposing an amendment to Section 13 of Schedule A to

the NASD By-Laws which establishes a fee structure that will give

members the ability to choose the level of service that best fits their

needs, taking into consideration the costs related to that level. Each

of the specific fees would be increased, including the service charge

for expedited service. However, the service charge for expedited

service would no longer be imposed in addition to the base service

charge and the number of pages or minutes of video that triggers an

additional fee would be increased, i.e., from 5 to 10 pages and from 5

to 10 minutes. The text of the amendment identifies each of the changes

to the fees. The NASD is requesting that the amendment be implemented

on May 1, 1994.

The NASD believes that the proposed rule change is consistent with

the provisions of Section 15A(b)(5) of the Act,\3\ which require that

the rules of the Association provide for the equitable allocation of

dues, fees and other charges among members in that the proposed rule

equitably adjusts the fees assessed for the review of advertising and

sales literature to accurately reflect the time spent and level of

analysis performed per item submitted for review.

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\3\15 U.S.C. Sec. 78o-3.

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(B) Self-Regulatory Organization's Statement on Burden on Competition

The 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, 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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for

Commission Action

The foregoing rule change has become effective upon filing pursuant

to section 19(b)(3)(A)(ii) of the Act and subparagraph (e) of rule 19b-

4 thereunder in that it constitutes a due, fee or other charge. The

rule will be implemented on May 1, 1994.

At any time within 60 days of the filing of a rule change pursuant

to section 19(b)(3)(A) of the Act, the Commission may summarily

abrogate the 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. Persons making written submissions

should file six copies thereof with the Secretary, Securities and

Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.

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-94-21 and

should be submitted by May 10, 1994.

For the Commission, by the Division of Market Regulation,

pursuant to delegated authority, 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-9316 Filed 4-18-94; 8:45 am]

BILLING CODE 8010-01-M