SR-NASD-2002-040

Security Futures Rules

NASD Regulation, Inc., has filed with the SEC a proposed rule change to: (1) amend Rule 1022 (Categories of Principal Registration), Interpretive Material 1022-1 (Registered Options Principals), Interpretive Material 1022-2 (Limited Principal—General Securities Sales Supervisor), and Rule 1032 (Categories of Representative Registration) to expand several registration categories to include engaging in and supervising security futures transactions; (2) amend Interpretive Material 2110-3 (Front Running Policy) to add block trading in single stock futures to the prohibition against front running; (3) amend Rule 2210 (Communications with the Public) and create new Interpretive Material 2210-7 (Guidelines for Communications with the Public Regarding Security Futures) to regulate communications with the public regarding security futures; (4) amend Interpretive Material 2310-2 (Fair Dealing with Customers) to refer to new proposed Rule 2865 regarding security futures sales practices; (5) create new Rule 2865 to regulate security futures sales practices; (6) amend Rule 3010(b)(2) (the Taping Rule) to recognize the ability of futures regulators to expel a member for futures-related sales practice violations; (7) amend Rule 3010(e) (Supervision) to require firms to check the backgrounds of job applicants who have previously worked in the futures industry; (8) amend Rule 3050 (Transactions for or by Associated Persons) to require associated persons to notify their member firm when they open certain futures accounts; and (9) amend Rule 3370 (Prompt Receipt and Delivery of Securities) to extend to security futures.