SR-NASD-2004-135

Disclosure and Consent Requirements When Trading on a Net Basis With Customers

NASD has filed with the SEC proposed NASD Rule 2441 to clarify and codify the staff position that market makers that intend to trade on a net basis with their customers are required to provide disclosure to, and obtain affirmative consent from, non-institutional customers on an order-by-order basis and obtain consent from institutional customers, which may be evidenced by the use of a negative consent letter.