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Notice

Self-Regulatory Organizations; The National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Transfer Customer Account(s)

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Start Preamble Start Printed Page 75990 November 29, 2000.

Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] , notice is hereby given that, on November 20, 2000, the National Association of Securities Dealers, Inc. (“NASD”) through its wholly-owned subsidiary, NASD Regulation, Inc. (“NASD Regulation”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been prepared primarily by NASD. The Commission is publishing this notice to solicit comments on the propose rule change from interested parties.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The proposed rule change would allow the NASD to amend Rule 11879(e) of the Uniform Practice Code to require that following the validation of a transfer instruction, the carrying member must complete the transfer of customer account(s) to the receiving member within three business days instead of four business days.

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

In its filing with the Commission, NASD included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements. [2]

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

Rule 11870(e) regulates the transfer of customer accounts from one member organization to another. Such transfers are generally effected through the Automated Customer Account Transfer (“ACAT”) Service, which is a system administered by the National Securities Clearing Corporation (“NSCC”). Since the inception of the ACAT Service in 1985, numerous enhancements to the system have allowed for faster and more efficient transfers of customer accounts. The NSCC enhanced the ACAT Service in 1999 to require carrying members to complete the transfer of accounts to the receiving member within three business days following the validation of a transfer instruction. The NYSE has already amended its Rule 412 to reduce the total post-validation transfer period from four days to three days. [3] The NASD currently expects its members to comply with the three-day requirement notwithstanding that Rule 11870(e) to conform to the NYSE Rule 412(b)(3) requirement that post-validation transfer occur within three business days. This will make Rule 11870(e) consistent with the current NSCC and NYSE three-day requirement, which is the industry standard.

NASD Regulation believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, which requires, among other things, that the NASD's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The NASD believes that the proposed rule change is designed to accomplish these ends by reducing the time frame allowed for the transfer of customer accounts from one member organization to another and to make NASD requirements conform to NYSE Rule 412(b)(3) and current NSCC requirements.

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

NASD Regulation 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 proposed rule change has been filed by NASD as a “non-controversial” rule change under Rule 19b-4(f)(6) under the Act.[4] In accordance with Rule 19b-4(f)(6)(iii), prior to the filing date, NASD Regulation submitted written notice of its intent to file the proposed rule change along with a brief description and text of the proposed rule change. In that notice of its intent, NASD Regulation requested that the Commission waive the requirement that the rule change, by its terms, not become operative for 30 days after the date of the filing, as consistent with the protection of investors and the public interest. The Commission has decided to waive that requirement. Accordingly, the proposed rule change will become effective upon filing pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. At any time within 60 days of this filing, the Commission may summarily abrogate this proposal if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the act.

IV. Solicitation of Comments

Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-0609. 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 the Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All submissions should refer to File No. SR-NASD-00-68 and should be submitted by December 21, 2000.

Start Signature
Start Printed Page 75991

For the Commission by the Division of Market Regulation, pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

2.  The Commission has modified the text of the summaries prepared by the NASD.

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3.  Securities Exchange Act Release No. 40712 (Nov. 25, 1998), 63 FR 67163 (December 4, 1998).

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[FR Doc. 00-30879 Filed 12-4-00; 8:45 am]

BILLING CODE 8010-01-M