NASD Notice to Members 06-05 - January 2006

SEC Approves Permanent Rules Concerning Bond Mutual Fund Volatility Ratings; Effective Date: December 27, 2005

Executive Summary

On December 27, 2005, the Securities and Exchange Commission (SEC) approved a proposed rule change to make permanent Rule 2210(c)(3) and Interpretive Material 2210-5 (collectively, the "Rule") concerning bond mutual fund volatility ratings.1 The Rule previously had operated as a pilot program. Interpretive Material 2210-5 permits members and associated persons to include bond mutual fund volatility ratings in supplemental sales literature, subject to certain conditions. Rule 2210(c)(3) requires supplemental sales literature containing bond mutual fund volatility ratings to be filed with the Advertising Regulation Department (the Department) for review and approval at least 10 days prior to use.

 

The Rule became immediately effective on the date of SEC approval.

 

Included with this Notice is Attachment A (text of rule as amended).

 

Questions or comments concerning this Notice may be directed to Joseph P. Savage, Associate Vice President, Investment Companies Regulation, Regulatory Policy and Oversight (RPO), at (240) 386-4534; or Philip A. Shaikun, Associate General Counsel, RPO, at (202) 728-8451.

 

1 See Securities Exchange Act Release No. 53027 (Dec. 27, 2005); 71 FR 375 (Jan. 4, 2006) (SR-NASD-2005-117).