NASD Notice to Members 05-67 - October 2005

SEC Approves Uniform Branch Office Definition and Related Interpretive Material; Effective Date: May 1, 2006

Executive Summary

On September 9, 2005, the Securities and Exchange Commission (SEC) approved (1) amendments to Rule 3010(g)(2) to revise the definition of "branch office" (Uniform Definition); and (2) adoption of IM-3010-1 to provide guidelines on factors to be considered by a member in conducting internal inspections of offices. The SEC simultaneously approved amendments to the New York Stock Exchange, Inc.'s (NYSE) Rule 342 (Offices-Approval, Supervision and Control) to provide a new, uniform industry definition of the term "branch office."

 

In addition, there has been a coordinated effort by regulators to develop a new centralized branch office registration system through the Central Registration Depository (CRD) to provide a more efficient, standardized method for members to register branch office locations as required by the rules and regulations of states and self-regulatory organizations (SROs), including NASD. To facilitate the development of this system, NASD filed a rule proposal with the SEC to adopt new Form BR, which will replace Schedule E of the Form BD, the current NYSE Branch Office Application Form, and certain state branch office forms. The SEC approved such rule filing on September 30, 2005.4 Form BR will enable firms to register or report branch offices electronically with NASD, the NYSE and states that require branch registration or reporting, via a single filing through the CRD system.

 

Questions concerning this Notice may be directed to Chip Jones, Vice President, Registration and Disclosure (RAD), at (240) 386-4797; Richard E. Pullano, Associate Vice President/Chief Counsel, RAD, at (240) 386-4821; or Kosha K. Dalal, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-6903.

 

 

See Exchange Act Release No. 52403 (September 9, 2005); 70 FR 54782 (September 16, 2005); File No. SR-NASD-2003-104 (Order Granting Approval of Proposed Rule Change Relating to Proposed Uniform Branch Office Definition) (SEC Approval Order).

 

See Exchange Act Release No. 52402 (September9, 2005); 70 FR 54788 (September 16, 2005); File No. SR-NYSE-2002-34 (Order Granting Approval of Proposed Rule Change Relating to Proposed Uniform Branch Office Definition) (SEC NYSE Approval Order).

 

See Exchange Act Release No. 51742 (May 25,2005); 70 FR 32386 (June 2, 2005); File No. SR-NASD-2005-030 (Proposed Form BR (Uniform Branch Office form) and Conforming Changes and Technical Revisions to the Uniform Application for Securities Industry Registration or Transfer (Form U4) and the Uniform Termination Notice for Securities Industry Registration (Form U5)) (March 11, 2005).

 

See Exchange Act Release No. 52544 (September 30, 2005).

 

Although these terms may be used interchangeably by SROs and/or states, "registration" typically refers to a process that requires an approval by the SRO or state before a branch may begin doing business, whereas "reporting" typically refers to a process by which firms "notice file" or notify an SRO or state of the existence of a branch office, but an approval is not required.

 

For information on which states will accept Form BR for branch office registration, see the North American Securities Administrators Association (NASAA) Web site at www.nasaa.org.