NASD Notice to Members 04-24 - March 2004

SEC Announces Immediate Effectiveness of IM-3150 Governing Exemptions from the Reporting Requirements of NASD Rule 3150; Effective Date: February 20, 2004

Executive Summary

The Securities and Exchange Commission (SEC) has announced the immediate effectiveness of IM-3150, regarding possible exemptions from the reporting requirements of NASD Rule 3150.1 Under IM-3150, the following classes of self-clearing members will generally be exempt from the filing requirements of Rule 3150: (1) members that derive, on an annualized basis, at least 85 percent of their revenue from transactions in fixed income securities; (2) members that conduct an institutional business that settle transactions on an RVP/DVP basis, provided that such exemption from reporting shall apply only with respect to such institutional business unless NASD determines that any other remaining business otherwise qualifies for an exemption under IM-3150 or is de minimis in nature; or (3) members that do not execute transactions for customers or otherwise hold customer accounts or act as an introducing broker with respect to customer accounts. In addition, a clearing firm may obtain an exemption for one or more of the introducing firms for which it clears if the introducing firm meets one of the above grounds for relief.

 

'IM-3150 continues to require members to request all exemptions from Rule 3150(a), in writing, pursuant to the Rule 9600 Series, including possible exemptions under IM-3150. IM-3150(c) also clarifies that any clearing or self-clearing firm that, due to a change in the facts pertaining to the operation and nature of its business or the operation and nature of the business of a firm for which it clears, no longer qualifies for a previously granted exemption must promptly notify NASD and commence compliance with the reporting requirements of Rule 3150.

 

Questions concerning this Notice may be directed to Victoria Berberi-Doumar, Counsel, Regulation Policy, Department of Member Regulation, at (202) 728-8905; or Shirley H. Weiss, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8844.