NASD Notice to Members 05-61

NASD Solicits Member Comment on Possible Realignment of the Trading Activity Fee; Comment Period Expires October 31, 2005

Executive Summary

NASD is issuing this Notice to Members to solicit comments from members on possible changes to the Trading Activity Fee (TAF). In 2003, the Securities and Exchange Commission (SEC or Commission) approved revisions to NASD By-Laws, eliminating the former regulatory fee assessed upon NASD members and instituting a new transaction-based TAF.1 The TAF, along with other revenue components, funds NASD's member regulatory activities. Recently, questions have arisen regarding whether the TAF should be modified to ensure that NASD's member regulatory fees are distributed appropriately among the member firms that drive member regulatory costs. NASD seeks input from the membership on the impact of any potential realignment of the fee. Specifically, NASD is seeking feedback on the potential impact on member firms if the TAF were restructured to assess any customer transaction in a covered security, regardless of whether an NASD member firm is on the buy or sell side of the transaction, and all proprietary transactions not effected in a firm's capacity as a market maker. NASD is committed to seeking additional member input as it refines its analysis, and is committed to ensuring that any realignment be revenue neutral to NASD. Therefore, in conjunction with the proposed realignment, NASD will re-analyze the funding required for its member regulatory program in order to determine any further rate reduction as previously committed to reduce the percentage that the TAF contributes to the overall funding structure.


Questions concerning this Notice should be directed to NASD Finance at (240) 386-5397; or the Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8071.


1 Securities Exchange Act Rel. No. 47946 (May 30, 2003) , 68 FR 34021 (June 6, 2003) (approving SR-NASD-2002-148).


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The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the author(s) and FINRA accepts no responsibility for the content of the comments.

Comments By Date Received
Camelot Investment Advisers, LTD (PDF 35 KB) 9/23/2005
Repex & Co., Inc. (PDF 35 KB) 10/24/2005
Financial Information Forum (PDF 166 KB) 10/28/2005
Knight Capital Group, Inc. (PDF 44 KB) 10/28/2005
Automated Trading Desk, LLC (PDF 1,390 KB) 10/31/2005
The Security Traders Association of New York (PDF 62 KB) 10/31/2005
Ameritrade, Inc. (PDF 61 KB) 10/31/2005
Goldman Sachs & Co. (PDF 38 KB) 10/31/2005
Wachovia Securities, LLC (PDF 34 KB) 10/31/2005
Securities Industry Association (PDF 43 KB) 11/8/2005
Charles Schwab & Co. (PDF 139 KB) 11/9/2005