Broker-Dealer Registration and Reporting

SUMMARY: The Securities and Exchange Commission is proposing technical

amendments to Form BD, the uniform broker-dealer registration form, and

related rules under the Securities Exchange Act of 1934. The proposed

amendments would modify the version of Form BD that was adopted in 1996

but never implemented. The primary purpose of the amendments is to aid

the implementation of electronic filing in the new, Internet-based

Central Registration Depository system. This computer system, which is

operated by the National Association of Securities Dealers, Inc.,

maintains registration information regarding broker-dealers and their

registered personnel. The formatting and technical changes proposed

today are needed to accommodate the shift from the network-based

architecture and proprietary software approach anticipated in the 1996

Central Registration Depository system to the new, Internet-based

system.

DATES:omments must be submitted on or before June 9, 1999.

ADDRESSES: All comments concerning the rule proposal should be

submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities

and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-

0609. Comments also may be submitted electronically at the following E-

mail address: [email protected]. All comment letters should refer

to File Number S7-16-99; this file number should be included on the

subject line if E-mail is used. Comment letters will be available for

inspection and copying in the public reference room at the same

address. Electronically submitted comment letters will be posted on the

Commission's Internet Web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel or

Barbara A. Stettner, Special Counsel, (202) 942-0073, Office of Chief

Counsel, Division of Market Regulation, Securities and Exchange

Commission, 450 Fifth Street, NW, Washington, DC 20549-1001.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Securities and Exchange Commission (``Commission'') is

proposing technical amendments to Form BD, the uniform application for

broker-dealer registration, and related rules under the Securities

Exchange Act of 1934 (``Exchange Act'').\1\ The proposed amendments

would modify the version of Form BD that was adopted in 1996 but never

implemented (``1996 Form BD'').\2\ The amendments are necessary to

accommodate the shift from the proposed network-based and proprietary

software approach anticipated in the 1996 Central Registration

Depository (``CRD'') system (``Redesigned CRD'') to ``Web CRD,'' the

new, Internet-based CRD system. The CRD is operated and maintained by

the National Association of Securities Dealers, Inc. (``NASD'')\3\ and

is used by the Commission,\4\ self-regulatory organizations (``SROs''),

and state securities regulators in connection with registering and

licensing broker-dealers and their registered personnel. The 1996 Form

BD amendments were based upon the electronic filing approach of the

1996 Redesigned CRD, which differs significantly from the electronic

filing approach of Web CRD. Web CRD will replace the current CRD system

(``Legacy CRD''), which was created in 1981 as a cooperative effort

with the North American Securities Administrators Association

(``NASAA''), in order to facilitate the ``one-stop'' filing process for

broker-dealers and their associated persons.\5\

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\1\ 17 CFR 240.15b1-1; 17 CFR 249.501; 15 U.S.C. Secs. 78a et

seq.

\2\ Securities Exchange Act Release No. 37431 (July 12, 1996),

61 FR 139 (July 18, 1996).

\3\ For purposes of this release, the term ``NASD'' will be sued

to encompass both the NASD and NASD Regulation, Inc. (``NASDR'')

unless specified otherwise. The NASDR is the regulatory subsidiary

of the NASD and is responsible for the operation of the CRD system.

\4\ In 1992, the Commission joined the CRD system and adopted

amendments to the broker-dealer registration process. Those

amendments required, among other things, that all broker-dealers

file Form BD with the Commission through the CRD. These changes were

made as part of the Commission's ongoing effort to reduce the costs

associated with broker-dealer registration. Securities Exchange Act

Release No. 31660 (Dec. 28, 1992), 58 FR 11 (Jan. 4, 1993).

\5\ Applicants seeking broker-dealer registration with the

Commission, the NASD, the Chicago Board Options Exchange (``CBOE''),

and the various states currently file a single Form BD with the

NASD. The NASD manually enters the information into the CRD system,

which then makes the information available (electronically) to the

Commission and the appropriate states for review. Applicants may

also seek registration with SROs other than the NASD and the CBOE

through Form BD, but they may also be required to submit a copy of

the paper Form BD to those SROs that do not participate in the CRD

system. The NASD anticipates more SROs to become full participants

in Web CRD after the system is operational.

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Web CRD's Internet-based system is expected to further streamline

and lower the costs associated with the one-stop registration process

for broker-dealers and their associated persons. It is also expected to

provide the Commission, SROs, and state securities regulators with

enhanced access to registrant disciplinary and disclosure information.

Web CRD is scheduled to be operational beginning August 16, 1999.

The proposed amendments are the result of discussions between the

Commission staff, NASAA's CRD Project Committee (formerly the CRD/Forms

Revision Committee), the NASD, the New York Stock Exchange, Inc., and

representatives from the securities industry.

II. Background

On January 12, 1995, the Commission proposed amendments to Form BD

in order to respond to anticipated design updates (i.e., Redesigned

CRD) being developed for the Legacy CRD system.\6\ Redesigned CRD was a

comprehensive project undertaken by the NASD involving the creation of

proprietary software and a network-based architecture that would have

allowed broker-dealers to electronically file with the CRD. This system

would have required broker-dealers to obtain through a subscription

agreement the software developed by the NASD as well as computer

hardware that met minimum configuration requirements. Redesigned CRD

was intended to enable broker-dealers and their associated persons to

file Forms BD, BDW, U-4, and U-5\7\ electronically through a direct

link to the CRD.\8\ On July 18, 1996, the Commission adopted the

amendments to 1996 Form BD that were necessary to fully implement the

new system. These amendments, which elicited more precise disclosure

from applicants and reorganized disclosure items into related

categories, were intended to

[[Page 25154]]

become effective with the implementation of Redesigned CRD.

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\6\ Securities Exchange Act Release No. 35224 (Jan. 12, 1995);

60 FR 4040 (Jan. 19, 1995).

\7\ Forms BD and BDW are joint forms used by the Commission,

SROs, and the states. The forms are used, respectively, to register,

and to terminate the registration of, broker-dealers. SROs and the

states use Forms U-4 and U-5 to register, and terminate the

registration of, associated persons of broker-dealers.

\8\ The direct link with the CRD would have been accomplished

through several methods, including computer-to-computer interface,

network access, and standard dial-up access.

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At that time, the NASD expected to implement Redesigned CRD in

September 1996. However, a test of the system that began in May 1996

revealed that the NASD's proprietary software needed additional

changes. The NASD also determined that broker-dealers needed more time

to prepare their internal operations and infrastructure to support

electronic filings through Redesigned CRD. The NASD, therefore, delayed

the implementation of Redesigned CRD. Because of this delay, on

September 4, 1996, the Commission suspended the compliance date for the

1996 Form BD amendments.\9\ Applicants seeking broker-dealer

registration were instructed to continue filing the 1993 version of

Form BD until Redesigned CRD was fully operational.

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\9\ Securities Exchange Act Release No. 37632 (September 4,

1996), 61 FR 47412 (September 9, 1996).

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In February 1997, following a reassessment of the CRD technology,

the NASD decided to abandon the network-based, Redesigned CRD system

and proceed instead with the Internet-based, Web CRD system. Because

the implementation of 1996 Form BD was tied to the Redesigned CRD

system, the use of the Form was further delayed. Moreover, because Web

CRD would take additional time to fully develop, the substantive

disclosure questions adopted in the 1996 Form BD could not be

implemented immediately. As a result, the Commission adopted ``Interim

Form BD,'' effective March 16, 1998.\10\ Interim Form BD requires

registrants to file the same disclosure information called for by the

1996 Form BD amendments in a format that is compatible with the Legacy

CRD system.\11\ Thus, while Interim Form BD incorporated all of the

substantive changes of the 1996 Form BD amendments relating to

disclosure of disciplinary history, it did not incorporate the

formatting changes adopted in connection with the electronic filing

approach contemplated in Redesigned CRD. Interim Form BD remains in

effect today.

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\10\ Securities Exchange Act Release No. 39677 (February 18,

1998), 63 FR 9413 (February 25, 1998).

\11\ One of the principal goals of Redesigned CRD, and the 1996

amendments to Form BD, was to make certain information regarding

broker-dealers and their associated persons, that is required to be

reported on the applicable registration forms, more readily

available to the public. Accordingly, pending the implementation of

Web CRD, Interim Form BD incorporated the enhanced disclosure

elicited by 1996 Form BD Question 11 into the existing Form BD

Question 7. Interim Form BD Question 7, therefore, requests

information about the disciplinary history of the applicant and its

control affiliates, including information relating to statutory

disqualifications, other relevant history, and the applicant's

financial soundness. In order to make the disclosures more organized

and complete, Question 7 is divided into broad categories: criminal,

civil, regulatory, and financial.

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Today's proposed amendments would adapt 1996 Form BD to Web CRD's

Internet-based environment. Web CRD will be a secure Web-based system

that applicants will access through the NASD's Web site \12\ with

significantly less difficulty and at lower costs than would have been

possible under Redesigned CRD. Under Web CRD, a firm will need access

to the Internet through an account with an Internet Service Provider

(``ISP'') \13\ (e.g., AmericaOnLine, MCI WorldCom, Microsoft Network)

to submit filings electronically.\14\

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\12\ Broker-dealers will submit filings through the NASDR's Web

site at https://crd.nasdr.com/crdmain>.

\13\ A broker-dealer would also need access to an Internet

browser (e.g., Netscape, Internet Explorer) in order to submit

filings over the Internet. Internet browsers typically are provided

by the ISP or can be downloaded free of charge from the Internet.

\14\ In contrast, Redesigned CRD would have required firms to

obtain NASD-developed software under a subscription agreement as

well as computer hardware that met certain minimum configuration

requirements (which may have involved costly upgrades to existing

hardware). Broker-dealers would also have incurred costs associated

with on-line usage fees and reports derived from the Redesigned CRD

system.

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Web CRD will streamline the registration process for broker-

dealers, and help broker-dealers submit more complete and accurate

filings. For example, Web CRD will employ completeness checks to alert

firms when required information is missing. If a firm files a form

containing incomplete information in a ``Mandatory Field,'' Web CRD

will automatically reject the submission and prompt the firm to re-

submit a completed form. Completeness checks should reduce costly

registration delays resulting from deficient filings. Web CRD also

categorizes disclosure information on the Disclosure Reporting Pages

(``DRPs'') through the use of pull-down menus \15\ that provide

specific options (``Pick Lists''), as well as ``Text Boxes.'' Pick

Lists are intended to elicit precise information about a registrant's

disclosure history and to capture standardized responses when possible.

Text Boxes are intended to provide applicants with the opportunity to

fully describe the details of a disclosable event in their own words.

The use of Pick Lists and Text Boxes is also expected to benefit

regulators by streamlining the capture and display of data, which

should enhance regulators' ability to use standardized and specialized

computer searches. By giving regulators better access to information,

Web CRD is expected to bolster the oversight of broker-dealers and

their registered personnel.

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\15\ Pull-down menus are used to select options that are not

readily visible on the screen. Pull-down menus are used by clicking

the mouse and holding it on the option selected. The other choices

then appear in a menu (or list) format.

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The amendments to Form BD proposed today consist mainly of

technical changes necessary to accommodate Web CRD's Internet

environment. The proposed amendments are intended to elicit the same

level of disclosure required by both the 1996 Form BD and the Interim

Form BD, but require the information to be submitted in a different

format than is required today. Other changes being proposed are

intended to clarify the current Form, to update references, or to

streamline the registration process. The amendments proposed to

Exchange Act Rules 15b3-1, 15Ba2-2, and 15Ca2-2 are necessary to

implement Web CRD.

III. Proposed Amendments to Form BD

The Commission is proposing to make technical and formatting

amendments to 1996 Form BD, to its general filing instructions and

terms, and to its Schedules DRP and E. These changes are necessary to

accommodate Web CRD's Internet-based environment. The proposed

amendments would correct oversights, replace outdated information, and

clarify instructions. They would also replace Legacy CRD references

with Web CRD references, establish certain information fields as

``read-only,'' \16\ and make conforming changes based on the

reorganization of the NASD manual in 1996 \17\ throughout Form BD. One

change proposed is intended to help eliminate incorrect succession

filings by requiring broker-dealers to discuss these filings with CRD

personnel prior to submission.\18\ Another proposed amendment would

make questions in the DRPs pertaining to sanctions consistent.\19\

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\16\ Read only fields could not be altered by the applicants.

\17\ See NASD Notice to Members 96-26.

\18\ See discussion regarding Item 5 on Form BD in Appendix A.

\19\ See discussion regarding Civil Judicial Action DRP, Part

II, Question 13.C (Sanction Detail). Specifically, the proposed

amendments would change Question 13.C to ask, among other things,

whether any portion of a penalty assessed against the applicant was

waived.

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As mentioned above, the Commission is also proposing amendments to

1996 Form BD's corresponding DRPs, which must be completed when an

applicant answers ``Yes'' to one of the disclosure questions in Item 11

of proposed Form BD. The proposed DRPs are designed to correspond to

DRPs that are proposed in

[[Page 25155]]

connection with Forms U-4 and U-5.\20\ While there are more technical

and formatting amendments proposed for the DRPs than for the main part

of Form BD, the proposed amendments primarily involve restructuring and

reformatting to facilitate electronic filing in the Web CRD

environment. They are not intended to make substantive changes to the

information requested, with the exception of Question 13 in the Civil

Judicial DRP which would now require the applicant to indicate whether

any portion of a penalty assessed against it was waived.

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\20\ Release No. 34-41326 (April 22, 1999); File No. SR-NASD-98-

96.

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By way of background, the DRPs that accompanied the 1996 Form BD

(``1996 DRPs'') elicited more detailed information about reportable

events than previously elicited on DRPs. Regulators had indicated that

they needed this additional detail in order to make informed licensing

and registration decisions. Consistent with the overall approach taken

in Redesigned CRD, the additional detail would have been entered into

many discrete fields. While this approach was intended to provide all

CRD users with maximum flexibility in making queries to and deriving

customized reports from the system, it had unanticipated practical

drawbacks. One significant drawback was the fragmentation of the

information once it was retrieved from the system.\21\ Another drawback

was that the numerous data fields and data tables demanded substantial

time to process queries, which in turn resulted in delays in system

response and other impediments to system performance.

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\21\ The 1996 DRP data structure was designed to provide

regulators with the ability to sort information and create reports

using all of the discrete data fields. As a practical matter,

however, the NASD determined that the numerous data fields would

have resulted in the retrieval of information that was separated

from its context.

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The DRPs proposed today would eliminate these practical problems

through the use of improved formatting. For example, the proposed DRPs

would reduce the number of data fields and add Text Boxes. These Text

Boxes would not only accommodate Web CRD, but would also allow

applicants to describe events in context. The proposed DRPs would also

contain Pick Lists in certain discrete fields. Pick Lists should create

more consistency in the data entered in those fields. In response to

concerns that the categories enumerated in the Pick Lists might not

completely or accurately describe an event, the category of ``Other''

would be included where applicable. Therefore, while the Pick Lists

would elicit more precise information, in a large percentage of

questions the availability of ``Other'' would continue to provide for

flexibility in response to DRP questions.

In sum, regulators should be able to use Web CRD to more

efficiently gather the information needed to make informed registration

and licensing decisions. Web CRD should also help regulators to process

registration-related filings more efficiently and effectively and

significantly enhance their ability to use the system for regulatory

purposes. Finally, Web CRD should make it easier for registrants to

comply with their filing obligations.\22\

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\22\ In addition, by providing for Internet access, Web CRD is

expected to streamline the procedures to process and respond to

requests from the public for information about particular broker-

dealers and their associated persons.

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A detailed textual description of the proposed amendments to Form

BD, its instructions and terms, Schedule E, and the DRPs (collectively,

``Appendix A'') is available on the Commission's Web site at http://

www.sec.gov \23\ or may be obtained from Barbara A. Stettner, Special

Counsel, Office of Chief Counsel, Division of Market Regulation,

Securities and Exchange Commission, 450 Fifth Street, NW, Washington,

DC 20549-1001; (202) 942-0073.\24\ Form BD as proposed to be amended is

attached as Appendix B to this document.

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\23\ On the SEC Web site see ``Current SEC Rulemaking; Proposed

Rules; Release No. 34-41351, File No. S7-16-99.''

\24\ Appendix A will not be published in the Federal Register.

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IV. Electronic Filing and Re-Filing

Web CRD is intended to expedite the electronic filing of

registration and licensing information for broker-dealers and their

associated persons. While initial applications for broker-dealer

registration on Form BD would continue to be filed on paper, the

proposed amendments provide that all subsequent amendments to the Form

would be made electronically through Web CRD.\25\ The proposed

amendments would also require registered broker-dealers to

electronically re-file certain information in Web CRD that is already

filed in Legacy CRD. The key dates and events associated with the

transition from Legacy CRD to Web CRD, including the proposed Web CRD

filing and re-filing requirements for broker-dealer applicants and

registered broker-dealers, are described below.

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\25\ The NASD expects, however, that all filings for both

broker-dealers and their associated persons will eventually be

submitted exclusively through electronic means.

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A. Key Dates

July 31, 1999 Through August 15, 1999

As the NASD transitions from Legacy CRD to Web CRD, there will be a

two-week period beginning July 31, 1999 and ending August 15, 1999

(``System Transition Period''), during which neither system will

process Form BD filings and amendments, or Form BDW filings. Initial

filings of Form BD received during this period will be held until

August 16, 1999 and then input into Web CRD by the NASD. Amendments to

Form BD received by the CRD during this period will be returned with

instructions to re-submit the amendments electronically after August

16, 1999. Forms BDW seeking withdrawal from registration with all

jurisdictions that are received during this period would be held by the

CRD until August 16, 1999, then input into Web CRD by the NASD. Forms

BDW seeking withdrawal from registration with only some jurisdictions

that are received by the CRD during this period will be returned with

instructions to re-submit the filing electronically after August 16,

1999. During the System Transition Period, the NASD will also transfer

certain information from Legacy CRD to Web CRD.\26\

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\26\ Since March 1998, the NASD has been converting the

following broker-dealer information from Legacy CRD to Web CRD: Base

information (i.e., the broker-dealer's general CRD record

information including the broker-dealer's CRD number, name,

Commission number, IRS number, NASD district assignment, CRD

contact, and related telephone number), Registration Status, Current

Address (main and mailing), Types of Business (e.g., municipal

securities dealer, corporate debt securities broker), and Form U-6

Disclosure (e.g., Commission and NASD actions). This initial

conversion was done to accommodate the NASD's Public Disclosure

Program on the Internet. During the System Transition Period, the

NASD will transfer any remaining data described above. In addition,

it will convert the following information: Name Change History

(i.e., old name, new name, effective date of change), Mass Transfer

History (e.g., firm name and CRD number, pre- and post-merger,

acquisition), and Branch Information (Schedule E).

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August 1, 1999

It is anticipated that the proposed amendments to Form BD will

become effective on August 1, 1999. Any filings submitted on Interim

Form BD after July 31, 1999 will be returned by CRD.

August 16, 1999

It is anticipated that Web CRD will be operational on August 16,

1999. The requirements for broker-dealer applicants filing initial Form

BD, for registered broker-dealers filing amendments to Form BD, or for

currently registered broker-dealers re-filing certain information in

Web CRD

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on or after August 16, 1999, are described below.

B. Filings on or After August 16, 1999

1. Initial Filings of Form BD by Broker-Dealer Applicants

Under the proposed amendments, broker-dealer applicants would

continue to obtain the paper version of Form BD from the Commission

\27\ or from the NASD.\28\ They would also continue to mail the

completed initial Form BD to the CRD, which would manually input the

information into the Web CRD system. This manual process would allow

the NASD to establish a base record of information on broker-dealer

applicants as well as begin the process of establishing a unique Web

CRD user account for each broker-dealer.

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\27\ Applicants can, and will continue to be able to, request

Form BD from the Commission's Publications Office at (202) 942-4040

or from any of the Commission's Regional or District Offices listed

at http://www.sec.gov/asec/secaddr.htm>. In addition, Form BD will

be available from the Commission's Web site at http://www.sec.gov>

(under ``Current SEC Rulemaking; Proposed Rules; Release No. 34-

41351, File No. S7-16-99'').

\28\ Form BD will also be available from the NASD's Publications

Office at (301) 590-6201 or can be downloaded from NASD's Web site

at http://www.nasdr.com>.

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Before a broker-dealer could access Web CRD, it would first need to

designate an ``account administrator.'' This person, who may be someone

within the firm or a third-party,\29\ would serve as the point-of-

contact between the broker-dealer and Web CRD.\30\ The NASD would

establish a user account for the broker-dealer's account administrator

and send a letter of confirmation to the broker-dealer containing the

account administrator's user name and initial password. Among other

things, the account administrator would be responsible for identifying

any additional persons who would need access to Web CRD \31\ to submit

filings on the firm's behalf . Designated persons would then be given

passwords and the authorization to use Web CRD as determined by the

account administrator.

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\29\ Broker-dealers would have the option to designate a third

party (e.g., a service bureau or clearing firm) as its account

administrator. However, if a broker-dealer opts for a third-party

account administrator, it must acknowledge that the broker-dealer is

responsible for filings made by those designated persons on behalf

of the firm.

\30\ The NASD anticipates that information packages on how to

establish a Web CRD user account would be made available

concurrently with Form BD.

\31\ The account administrator would be responsible for

determining who would have access to Web CRD and could limit such

access in any manner. For example, a person responsible for Form U-4

filings might not have access to Form BD on Web CRD. In addition,

the account administrator could choose to allow read-only access to

many individuals within the broker-dealer.

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Each broker-dealer would have a separate, unique account with the

NASD that would enable it to access its own records and file subsequent

amendments to its Form BD in Web CRD. Once the CRD has established an

account for a broker-dealer, it would manually input the information

from the broker-dealer into Web CRD, and it would then disseminate the

information to the Commission, SROs, and state securities regulators

with which the broker-dealer is requesting registration. Thus, except

for the establishment of an account and account administrator, the

processing of the initial Form BD would not significantly differ from

the filing procedures currently in place under Legacy CRD.

2. Re-Filing and Amendments to Form BD by Registered Broker-Dealers

The proposed amendments would also require registered broker-

dealers to establish Web CRD accounts to accommodate both the transfer

of existing Form BD information from Legacy CRD to Web CRD and the

electronic filing of Form BD amendments in Web CRD. Beginning August

16, 1999, all Form BD amendments and re-filings would be submitted

electronically through the NASD's Web site at https://crd.nasdr.com/

crdmain.

Due to technical issues identified by the NASD, certain broker-

dealer information currently contained in Legacy CRD will not be

transferred by the NASD to Web CRD.\32\ Therefore, beginning on August

16, 1999, broker-dealers would be required to re-file the following

information: Item 11 Disclosure (Schedule DRP), Direct/Indirect Owners

(Schedules A and B), Control/Financial Information (i.e., direct

owners, executive officers, and indirect owners), Industry Arrangements

(e.g., custodial arrangements, holding company status), and Affiliated

Firms. The proposed amendments would require a registered broker-dealer

to re-file this information when it files its first amendment in Web

CRD but, in any event, no later than December 15, 1999.\33\

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\32\ Large portions of Form BD data are currently stored as text

fields in Legacy CRD. It is not technology possible for the NASD to

convert this data to the counterpart text fields of Web CRD.

\33\ The December 15, 1999 date was chosen to ensure that re-

filing would take place prior to the annual shutdown of CRD for

renewals and to have the re-filing complete before the Year 2000.

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V. Other Proposed Amendments

The Commission is also proposing to amend Rules 15b3-1, 15Ba2-2,

and 15Ca2-1 under the Exchange Act. Rules 15b3-1 and 15Ca2-1 both

contain ``Temporary Filing Instructions'' for Form BD that are now

outdated. The proposed amendments would delete the outdated

instructions and add ``Temporary Re-Filing Instructions'' for Form BD

to all three rules.

VI. Effective Date

The Commission anticipates that the proposed amendments to Form BD

would become effective on August 1, 1999. Initial Forms BD that are

completed and submitted to CRD during the System Transition Period

would be accepted by the CRD and entered into Web CRD by the NASD

beginning on August 16, 1999.\34\ Any Form BD amendments submitted to

Web CRD during the System Transition Period, however, would be returned

with instructions to re-submit on or after August 16, 1999. Broker-

dealers may have difficulty complying with the requirement in Exchange

Act Rule 15b3-1 to promptly file amendments because (1) they will not

be able to file amendments to their Form BDs during the System

Transition Period, and (2) they must re-file certain information from

their Forms BD in Web CRD at the same time they are required to file

their first amendment in Web CRD. Therefore, the proposed amendments

would provide that broker-dealers will be considered to have met this

requirement if they file an amendment that should have been filed

during the System Transition Period no later than September 14, 1999

(i.e., 30 days from August 16, 1999).\35\ In addition, during the

period from August 16 to December 15, 1999, the staff of the Division

of Market Regulation will not recommend

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enforcement action for filings of any amendment to Form BD that would

also trigger the re-filing obligation, if the amendment was filed

within 30 days from when the disclosable event occurred. In any event,

however, all re-filings would have to be completed on or before

December 15, 1999.

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\34\ As already described in Section IV.A., Forms BDW seeking

withdrawal from registration with all jurisdictions that are

received during this period would be held by the CRD until August

16, 1999, then input into Web CRD by the NASD. Forms BDW seeking

withdrawal from registration with only some jurisdictions that are

received by the CRD during this period would be returned with

instructions to re-submit the filing electronically after August 16,

1999. In addition, the NASD also would accept a paper-filed Form BDW

seeking withdrawal from registration in all jurisdictions after

August 16, 1999 if it was the first filing made by broker-dealer in

the Web CRD system.

\35\ The Commission has not defined with constitutes ``prompt''

filing for purposes of Rule 15B3-1 because whether a filing is

deemed ``promptly filed'' needs to be determined on a facts-and-

circumstances basis. Moreover, the concept of ``promptness'' changes

with the evolution of technology. However, in no event would filing

an amendment after 30 days be considered ``prompt'' at a time other

than during the System Transition Period.

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VII. Request for Comment

The Commission is soliciting comment on whether the changes to Form

BD and the related rules described above will provide more meaningful

information to the Commission and other securities regulators without

increasing the regulatory burden on broker-dealers. In particular, the

Commission requests comment on whether the restructuring of Form BD to

accommodate Web CRD would create additional burdens on broker-dealers

and whether the restructuring will result in ultimate cost savings to

broker-dealers. The Commission is preliminarily of the view that the

costs associated with filing in Web CRD are minimal and will ultimately

decrease. The Commission is also preliminarily of the view that most

broker-dealers either already have Internet access or would be able to

obtain Internet access at a minimal cost. However, the Commission

requests comment as to whether ``hardship exemptions,'' such as is

provided for the Commission's EDGAR system would be appropriate for Web

CRD.\36\

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\36\ See ``Temporary'' and ``Continuing'' Hardship Exemptions at

17 CFR 232.201 and 17 CFR 232.202, respectively.

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VIII. Cost Benefit Analysis

No statutory mandate directs the Commission to undertake a specific

cost-benefit analysis of a rule. Instead, pursuant to Section 23(a)(2)

of the Exchange Act, the Commission is directed to consider, among

other matters, the impact any rule would have on competition. The

Commission may not adopt a rule which would impose a burden on

competition not necessary or appropriate in furtherance of the purposes

of the Exchange Act.

The Commission preliminarily believes that the benefits of Web CRD

to the industry outweigh the costs associated with the one-time re-

filing requirement \37\ for registered broker-dealers. Based on

discussions with industry representatives, the Commission expects that

when Web CRD is fully implemented, it will minimize future regulatory

burdens on broker-dealers for filing Form BD and related amendments.

Specifically, postage, duplication costs, and staff time would be

reduced by using the Internet to file Form BD amendments. The

Commission estimates that broker-dealers filed approximately 15,350

Form BD amendments in Legacy CRD for fiscal year 1998. Industry

representatives estimate that each amendment in Legacy CRD typically

requires $.60 for duplication costs (i.e., $.05 per page at

approximately 12 pages), $180 for postage (i.e., $12 x approximately

15 next-day mailings to the CRD, SROs, and relevant states), and $140

of staff time required to fill out the amendment to Form BD and submit

it to the appropriate regulators (i.e., 4 hours of staff time per

amendment x an average compensation rate of $35 per hour). Thus, the

total annual cost burden to the industry to amend Form BD in Legacy CRD

is approximately $4,921,210 (i.e., [$.60 + $180 + $140] x a yearly

average of 15,350 amendments).

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\37\ See discussion in Section XI (Paperwork Reduction Analysis)

regarding the burden hours for the one-time re-filing of certain

information on Form BD.

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In contrast, industry representatives estimate that the average

time necessary to complete an amendment on Web CRD will be

approximately 20 minutes (i.e., 5 minutes for simple amendments and up

to 30 minutes for more complicated amendments). Therefore, the

Commission estimates that the annual cost burden to the industry to

amend Form BD under Web CRD will be approximately $177,293 (i.e., .33

hours x a yearly average of 15,350 amendments x an average

compensation rate of $35 per hour).\38\ This would result in a total

annual cost savings of over $4.5 million for all broker-dealers

amending Form BD.

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\38\ Broker-dealers that employ third-party filers account for

approximately 3,009 (See Footnote No. 44 infra) of the Form BD

amendments (i.e., an approximate cost burden of $34,754). See

discussion in Section XI (Paperwork Reduction Act Analysis)

regarding the cost burdens on these broker-dealers.

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Because the Form would still be filed initially on paper, the

proposed amendments do not alter the current burden on initial filers

of Form BD. In addition, the proposed amendments requiring broker-

dealers to designate an account administrator and establish an ISP

account are not expected to significantly alter the current burden on

broker-dealers. As described above, the account administrator will be

the point-of-contact between the broker-dealer and the CRD. According

to industry representatives, the account administrator will most likely

be the person who already performs filing and reporting functions for

the firm (either internally or as a third-party filer). It is

anticipated, therefore, that this person will continue to be the point-

of-contact with the CRD and continue to perform similar reporting and

administrative tasks for the firm. The Commission seeks comment,

however, on any additional burden that will be placed on broker-dealers

due to the requirement of designating an account administrator.

With respect to ISP accounts, the Commission is preliminarily of

the view that the requirement that broker-dealers have Internet access

(either internally or through a third-party filer) would not

significantly alter the current burden on broker-dealers. Most broker-

dealers already have Internet access and, for those that do not, the

cost of obtaining an ISP account averages approximately $20 per month.

In addition, many broker-dealers use the Internet for other business

purposes such as sending and receiving e-mail, maintaining a Web site,

or delivering documents. For these broker-dealers, the additional

burden to file amendments to Form BD through the Internet would be only

a fraction of their total costs associated with their use of the

Internet. The Commission requests comment, however, on the percentage

of brokers who do not currently have Internet access as well as the

marginal costs associated with filing amendments to Form BD through an

existing ISP account.

The Commission also preliminarily believes that Web CRD will

benefit regulators and the public by streamlining the capture of

relevant information pertaining to broker-dealers and their associated

persons. Precise information regarding a broker-dealer's activities and

disciplinary history is needed for investigations and examinations by

regulators. It also is a valuable informational resource for investors

in deciding whether to entrust their financial assets to a particular

broker-dealer.\39\ While it is impossible to quantify these benefits,

the Commission believes that these benefits exceed the recordkeeping

and reporting burden imposed on broker-dealers.

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\39\ The NASD receives approximately 525,000 inquiries each year

from the public requesting information about broker-dealers or their

associated persons.

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IX. Effects on Competition, Efficiency, and Capital Formation

Section 23(a)(2) of the Exchange Act \40\ requires the Commission,

in adopting rules under the Exchange Act, to consider the

anticompetitive effects of such rules, if any, and to refrain from

adopting a rule that would impose a burden on competition not

necessarily

[[Page 25158]]

or appropriate in furthering the purpose of the Exchange Act.

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\40\ 15 U.S.C. 78w(a)(2).

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Moreover, Section 3 of the Exchange Act as amended by the National

Securities Markets Improvement Act of 1996, provides that whenever the

Commission is engaged in rulemaking and is required to consider or

determine whether an action is necessary or appropriate in the public

interest, the Commission shall consider, in addition to the protection

of investors, whether the action will promote efficiency, competition,

and capital formation.

The Commission is preliminarily of the view that the proposed

amendments to Form BD and the related rules under the Exchange Act

would not result in any burden on competition that is not necessary or

appropriate in furtherance of the purposes of the Exchange Act. As

noted above, the form revisions proposed today will reduce the

regulatory burden on broker-dealers by facilitating electronic filing

over the Internet, a more efficient and cost-effective means for

broker-dealers to meet their regulatory and reporting obligations. The

Commission requests comment, however, on any competitive burdens that

might result from adoption of the form revisions described in this

release. In addition, for purposes of the Small Business Regulatory

Enforcement Fairness Act of 1996, the Commission is also requesting

information regarding the potential impact of the proposed rules on the

economy an annual basis. Commentators should provide empirical data to

support their views.

X. Regulatory Flexibility Analysis

The Commission has prepared an Initial Regulatory Flexibility

Analysis (``IRFA''), pursuant to the requirements of the Regulatory

Flexibility Act,\41\ regarding the proposed amendments to Form BD. The

IRFA indicates that the proposed revisions are intended to respond to

the shift from the network-based architecture and proprietary software

approach anticipated in the 1996 CRD system to the Internet-based Web

CRD. The adoption of the proposed revisions to Form BD not only will

provide benefits to securities regulators in the retrieval of

information, but will also ease the burden of registration by future

registrants. The IRFA also indicates that, except for the one-time re-

filing requirement on registered broker-dealers, the proposed revisions

to Form BD will reduce aggregate cost and time burdens on broker-

dealers who are required to file, or make amendments to, Form BD. The

IRFA further indicates that because the proposed amendments generally

are intended to lessen the burden of registration, small broker-dealers

will be affected in the same manner as other registrants. Thus,

exempting small broker-dealers from Form BD disclosures would be

unwarranted.

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\41\ 5 U.S.C. 603 (1990).

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The Commission requests comment, however, on whether there would be

a significant economic impact on a substantial number of small entities

that might result from adoption of the Form BD revisions described in

this release.

A copy of the IRFA may be obtained from Barbara A. Stettner,

Special Counsel, Office of Chief Counsel, Division of Market

Regulation, Securities and Exchange Commission, 450 Fifth Street, NW,

Washington, DC 20549-1001; (202) 942-0073.

XI. Paperwork Reduction Act Analysis

Certain provisions of the proposal to amend Form BD contain

``collection of information'' requirements within the meaning of the

Paperwork Reduction Act of 1995 (44 U.S.C. Section 3501 et seq.). The

Commission has submitted the proposal to the Office of Management and

Budget (``OMB'') for review in accordance with PRA requirements in

effect at this time. The title for this collection of information:

``Application for Registration as a Broker or Dealer,'' which the

Commission is proposing to amend, contains a currently approved

collection of information under OMB control number 3235-0012. The

information received by Form BD is mandatory and the responses are not

kept confidential. An agency may not sponsor, conduct, or require

response to an information collection unless a currently valid OMB

control number is displayed.

The proposed amendments to Form BD are expected to provide

securities regulators with better information about a registrant's

disciplinary history by grouping disciplinary information into related

categories and by customizing the corresponding DRPs used to disclose

details of the registrant's disciplinary history. The proposed

amendments also are intended to elicit more precise information about

the business activities of broker-dealer applicants.\42\

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\42\ The Commission uses the information disclosed by applicants

in Form BD to: (i) Determine whether broker-dealer applicants meet

the standards for registration set forth in the provisions of the

Exchange Act; (ii) develop and maintain a central information

resource where members of the public may obtain relevant, current

information about broker-dealers, municipal securities dealers, and

government securities brokers or government securities dealers, and

where the Commission and other securities regulators may obtain

information for investigatory purposes; and (iii) develop

statistical information concerning broker-dealers, municipal

securities dealers, and government securities brokers or government

securities dealers.

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As discussed above, the proposed amendments to Form BD respond to

certain recommended changes to the CRD system that have led to its

redesign as an Internet-based system. Web CRD is expected to be more

useful to securities regulators. It will also allow broker-dealers to

file amendments to Form BD and other uniform registration forms

electronically. Because Web CRD is intended to operate in an electronic

environment, paper amendments to Form BD will no longer be submitted by

broker-dealers. Rather, broker-dealers will be able to access and

update their respective Forms BD through the NASD's Web site.

This should result in cost-savings related to copying, postage, and

staff time. Under Web CRD, broker-dealers will not have to obtain

dedicated computer systems or proprietary software as would have been

required under Redesigned CRD. Rather, a firm only needs access to the

Internet and an Internet browser through an account with an ISP to

submit filings electronically.

Broker-dealers already are required pursuant to Rule 15b1-1[ \43\

under the Exchange Act to file for registration on Form BD and,

pursuant to Rule 15b3-1(b),\44\ to promptly file an amendment to Form

BD if any information contained therein becomes inaccurate. The

proposed amendments are intended to adapt Form BD to Web CRD's

Internet-based environment. Therefore, except for the one-time re-

filing requirement, the proposed amendments to Form BD will not impose

any significant additional recordkeeping, reporting or other compliance

requirement on broker-dealers. Initial filings of Form BD will continue

to be made on paper and the electronic filing of Form BD amendments is

expected to reduce time and cost burdens on broker-dealers.

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\43\ 17 CFR 240.15b1-1.

\44\ 17 CFR 240.15b3-1(b).

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With respect to the one-time re-filing requirement, the Commission

staff estimates (based on discussions with industry representatives)

that the average time necessary to complete a re-filing will be as

follows: (1) approximately 30 large firms (total capital of more than

$500 billion) will require approximately 40 hours each to re-file, (2)

approximately 170 medium firms (total capital between $499 billion and

$20 million) will require approximately 24 hours each to re-file, and

(3) approximately 6,640 small

[[Page 25159]]

firms \45\ (total capital below $20 million) will require approximately

2 hours each to re-file. Thus, the total burden hours for the re-filing

of certain disclosure information into Web CRD is estimated as 18,560

hours [30 large firms x 40 (1,200) + 170 medium firms x 24 (4,080)

+ 6,640 small firms x 2 (13,280) = 18,560].

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\45\ The Commission estimate that approximately 20% of the small

broker-dealer population (i.e., 1,660 [.20 x 8,300 small broker-

dealer]) employ third parties to file information related to their

respective Forms BD with the CRD. These broker-dealers would not

incur an hour burden and, therefore, for purposes of the Paperwork

Reduction Act, are removed from the hour-burden calculation for

small broker-dealers (i.e., 8,300 total small broker-dealers--1,660

small broker-dealers that employ third party filers = 6,640 small

broker-dealers that would incur hour burdens). As discussed below,

however, the 1,660 broker-dealers would incur a cost burden with

respect to re-filing and Form BD amendments.

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Broker-dealer applicants are also subject to Form BD's initial

reporting obligation. Form BD is only submitted once and is updated by

amendment (see discussion on Form BD amendments below). For fiscal year

1998, the Commission received approximately 790 Form BDs for an initial

or successor application for registration as a broker-dealer, non-bank

municipal securities dealer, or non-bank government securities broker-

dealer (pursuant to Rules 15b1-1, 15b1-3, 15b1-4, 15Ba2-2(a), 15Ba2-4,

15Ba2-5, 15Ca2-1, 15Ca2-3, and 15Ca2-4). Although the time necessary to

complete Form BD will vary depending on the nature and complexity of

the applicant's securities business, Commission staff estimates that

the average time necessary to complete the initial form is

approximately 2.75 hours. Thus, the Commission estimates that total

annual burden hours required for the initial filing of a Form BD is

2,173 hours (2.75 x 790). It is important to note that the proposed

amendments do not alter the current burden on initial filers of Form BD

because a Form BD filed for the first time is still required to be

filed on paper.

Under Web CRD, all amendments to Form BD would be filed

electronically. For fiscal year 1998, the Commission received

approximately 15,350 amendments. Of these 15,350 amendments,

approximately 3,009 were from broker-dealers that employ third-party

filers.\46\ Because these broker-dealers would incur cost burdens

rather than hour burdens, they will be removed from the total annual

hour burden calculation (see discussion regarding cost burdens on

broker-dealers that employ third-party filers below). Therefore, for

purposes of the annual hour burden calculation, the total annual number

of amendments to Form BD would be 12,341 (i.e., 15,350 total

amendments--3,009 amendments filed by third-party filers). The staff

estimates that the average time necessary to complete an amendment on

Web CRD will be approximately 20 minutes (i.e., 5 minutes for simple

amendments and up to 30 minutes for more complicated amendments).

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\46\ Out of the approximate 15,350 amendments filed each year,

approximately 15,043 are filed by small broker-dealer (i.e., 8,300

small broker-dealers = 98% of the broker-dealer community; 15,350

x .98 = 15,043). As discussed in footnote 43, supra, approximately

1,660 (20%) of small broker-dealers employ third-party filers and,

therefore, would be responsible for approximately 3,009 of the total

annual amendments to Form BD (i.e., 15,043 amendments by small

broker-dealer community x .20 = 3,009 amendments).

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Thus, the total annual burden hours for the filing of Form BD

amendments is 4,073 hours (.33 hours x approximately 12,341

[15,350-3009] amendments per year).

The staff estimates that the total annual filing burden for Form BD

and Form BD amendments is 6,246 hours (2,173 for initial filings of

Form BD + 4,073 for amendments to Form BD). This is a reduction of

approximately 1,030 total burden hours from the annual regulatory

burden anticipated in Redesigned CRD. However, the total one-time re-

filing burden would be approximately 18,560 hours. Accordingly, for the

year when Web CRD is first implemented, the total hour burden will be

approximately 24,806 hours.

The Commission also anticipates that the burden hours discussed

above would apply similarly to broker-dealers who rely on third-party

filers. Instead of incurring the cost of staff time, however, these

broker-dealers would be billed by third-party filers at an average

compensation rate of $35 per hour. Therefore, a small broker-dealer

would pay a third-party filer $70 (2 hours for re-filing x $35 per

hour) to comply with its one-time re-filing obligation. This would

amount to a total, one-time cost burden of $58,100 ($70 x 1,660 small

broker-dealers that employ third-party filers).

Broker-dealers that employ third-party filers to file amendments to

Form BD would also incur a cost burden. As discussed above in Section

VIII (Cost Benefit Analysis), the Commission estimates that

approximately 15,350 amendments to Form BD are filed each year by

broker-dealers. Of these 15,350 amendments, approximately 3,009 are

from broker-dealers that employ third-party filers. The average time

necessary to complete an amendment on Web CRD is estimated to be

approximately 20 minutes. Therefore, the total annual cost burden to

broker-dealers that employ third-party filers to file amendments to

Form BD would be approximately $34,754 (i.e., .33 hours x 3,009

amendments x an average compensation rate of $35 per hour). The staff

estimates that the total annual cost burden to these broker-dealers for

re-filing and amending Form BD is approximately $92,854 (i.e., $58,100

+ $34,754).

With respect to ISP accounts, the Commission is preliminarily of

the view that most broker-dealers already have Internet access (either

internally or through a third-party filer), which they currently use to

send and receive e-mail, to maintain a Web site, or to deliver

documents. Therefore, the use of their existing Internet accounts for

filing in Web CRD would be incremental and would not significantly

alter their current burden. As discussed above in Section VIII (Cost

Benefit Analysis), for those broker-dealers that do not currently have

access to the Internet, the cost burden of obtaining an ISP account is

approximately $20 per month. The Commission preliminarily estimates

that approximately 5% of all broker-dealers (approximately 425 broker-

dealers) do not currently have access to the Internet either directly

or through the use of a third-party filer. Therefore, the total annual

cost burden for obtaining and maintaining an Internet account would be

approximately $102,000 [$20 x 12 months x (.05 x 8500)].

Accordingly, for the year when Web CRD is first implemented, the

total cost burden would be $194,854 (i.e., $102,000 for ISP accounts +

$92,854 for broker-dealers employing third-party filers to amend and

re-file Form BD).

It is important to note that regardless of whether a broker-dealer

employs a person internally or hires a third-party to file information

in CRD, ultimately the same costs would apply. The Commission seeks

comment, however, on the costs associated with third-party filers, and

in particular, whether broker-dealers employing third-party filers

would bear different cost burdens than their counterparts who file with

CRD internally. In addition, the Commission requests comment on the

total number of broker-dealers who employ third-party filers.

Pursuant to 44 USC 3506(c)(2)(B), the Commission solicits comments

to --

(i) Evaluate whether the proposed collections of information are

necessary for the proper performance of the functions of the agency,

including whether the information shall have practical utility;

[[Page 25160]]

(ii) Evaluate the accuracy of the agency's estimate of the burden

of the proposed collections of information;

(iii) Enhance the quality, utility, and clarity of the information

to be collected;

(iv) Minimize the burden of the collections of information on those

who are to respond, including through the use of automated collection

techniques or other forms of information technology.

Persons desiring to submit comments on the collection of

information requirements should direct them to the Office of Management

and Budget, Attention: Desk Officer for the Securities and Exchange

Commission, Office of Information and Regulatory Affairs, Washington,

DC 20503, and should also send a copy of their comments to Jonathan G.

Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street,

NW, Washington, DC 20549-0609 with reference to File No. S7-16-99. OMB

is required to make a decision concerning the collections of

information between 30 and 60 days after publication, so a comment to

OMB is best assured of having its full affect if OMB receives it within

30 days of publication.

XII. Statutory Basis

The foregoing amendments are being proposed pursuant to the

Exchange Act and particularly to Sections 15(a), 15(b), 15B, 15C, and

23(a) therein.\47\

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\47\ 15 U.S.C. 78o(a), 78o(b), 78o-4(a)(2), 78o-5(a)(2), and

78w(a).

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List of Subjects in 17 CFR Parts 240 and 249

Broker-dealers, Reporting and recordkeeping requirements,

Securities.

Text of Proposed Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code

of Federal Regulations is proposed to be amended as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF

1934

1. The authority citation for part 240 continues to read in part as

follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,

77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,

78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),

78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and

80b-11, unless otherwise noted.

* * * * *

2. By amending Sec. 240.15b3-1 by removing paragraph (b),

redesignating paragraph (c) as paragraph (b), and adding paragraph (c)

to read as follows:

Sec. 240.15b3-1 Amendments to application.

* * * * *

(c) Temporary re-filing instructions. (1) Every registered broker-

dealer shall re-file with the Central Registration Depository, at the

time the broker-dealer submits its first amendment on or after August

16, 1999 but, in any event, no later than December 15, 1999, the

following information from its current Form BD:

(i) Question 8 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section V of Schedule D);

(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section VI of Schedule D);

(v) Question 11 (if any item in Question 11 is answered ``Yes,''

the broker-dealer must also complete the relevant DRP(s)); and

(vi) Schedules A and B.

(2) Every registered broker-dealer, at the time it re-files the

information required by paragraph (c)(1) of this section, shall review,

and amend as necessary, the information in Form BD that was transferred

by the National Association of Securities Dealers to the Central

Registration Depository prior to August 16, 1999.

3. By amending Sec. 240.15Ba2-2 by adding paragraph (e) to read as

follows:

Sec. 240.15Ba2-2. Application for registration of non-bank municipal

securities dealers whose business is exclusively intrastate.

* * * * *

(e) Temporary re-filing instructions. (1) Every registered broker-

dealer shall re-file with the Central Registration Depository, at the

time the broker-dealer submits its first amendment on or after August

16, 1999 but, in any event, no later than December 15, 1999, the

following information from its current Form BD:

(i) Question 8 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section V of Schedule D);

(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section VI of Schedule D);

(v) Question 11 (if any item in Question 11 is answered ``Yes,''

the broker-dealer must also complete the relevant DRP(s)); and

(vi) Schedules A and B.

(2) Every registered broker-dealer, at the time it re-files the

information required by paragraph (e)(1) of this section, shall review,

and amend as necessary, the information in Form BD that was transferred

by the National Association of Securities Dealers to the Central

Registration Depository prior to August 16, 1999.

4. By amending Sec. 240.15Ca2-1 by removing paragraph (b),

redesignating paragraph (c) as paragraph (b), and adding a new

paragraph (c) to read as follows:

Sec. 240.15Ca2-1 Application for registration as a government

securities broker or government securities dealer.

* * * * *

(c) Temporary re-filing instructions. (1) Every registered broker-

dealer shall re-file with the Central Registration Depository, at the

time the broker-dealer submits its first amendment on or after August

16, 1999 but, in any event, no later than December 15, 1999, the

following information from its current Form BD:

(i) Question 8 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(ii) Question 9 (if answered ``Yes,'' the broker-dealer must also

complete relevant items in Section IV of Schedule D);

(iii) Question 10(a) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section V of Schedule D);

(iv) Question 10(b) (if answered ``Yes,'' the broker-dealer must

also complete relevant items in Section VI of Schedule D);

(v) Question 11 (if any item in Question 11 is answered ``Yes,''

the broker-dealer must also complete the relevant DRP(s)); and

(vi) Schedules A and B.

(2) Every registered broker-dealer, at the time it re-files the

information required by paragraph (c)(1) of this section, shall review,

and amend as necessary, the information in Form BD that was transferred

by the National Association of Securities Dealers to the Central

Registration Depository prior to August 16, 1999.

[[Page 25161]]

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

10. The authority citation for part 249 continues to read in part

as follows:

Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;

* * * * *

11. By revising Form BD (referenced in Sec. 249.501) to read as set

forth in Appendix B below:

Note: Form BD does not and the revisions will not appear in the

Code of Federal Regulations. Revised Form BD is attached as Appendix

B to this document.

Dated: April 30, 1999.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

Note: Appendices A and B to this document are available in the

Commission's Public Reference Room and will be available on the

Commission's Web site at www.sec.gov.

BILLING CODE 8010-01-P

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Appendix B

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[FR Doc. 99-11358 Filed 5-7-99; 8:45 am]

BILLING CODE 8010-01-C