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FINRA

 

For Release:
Contact:
Thursday, December 11, 1997
Nancy A. Condon - (202) 728-8379

NASD Approves Plan to Increase Electronic Trade Processing by Vendors

Washington, D.C.--The National Association of Securities Dealers, Inc. (NASDâ) today announced that its Board of Governors approved a plan to allow private vendors to confirm and affirm trades between institutional customers and broker/dealers. Rules passed in 1982 restrict confirmation and affirmation services to SEC-registered clearing organizations, such as the Depository Trust Company (DTC). This plan, which must be approved by the Securities and Exchange Commission (SEC), recognizes the technical advances that have occurred in trade processing capabilities.

 

Under the NASD plan, vendors will be allowed to confirm and affirm transactions once an independent auditor has certified that they have met specified financial and operational standards. The SEC also has the authority to review all vendor applications.

 

Every trade between an institution and a broker must be affirmed and confirmed before the trade can be finally settled and the securities change hands. Today, more than half of the 600 million share average daily volume of The Nasdaq Stock MarketSM are institutional trades.

 

In developing this plan, the NASD worked closely with the SEC; other self-regulators, such as the New York Stock Exchange; industry members, and third-party vendors. The NASD is the first self regulatory organization (SRO) to propose such changes, although others are expected follow suit.

 

"This plan is designed to ensure the safety and soundness of the nation’s clearance and settlement systems, while encouraging innovation and competition from the private sector. Working together with government, industry, and other self-regulators to develop this plan is self-regulation at its best," said Frank G. Zarb, Chairman, Chief Executive Officer, and President of the NASD.

 

The National Association of Securities Dealers is the largest securities-industry self-regulatory organization in the United States. Through its subsidiaries, NASD Regulation, Inc., and The Nasdaq Stock Market, Inc., the NASD develops rules and regulations; provides a dispute resolution forum; conducts regulatory reviews of members’ activities; and designs, operates, and regulates securities markets all for the benefit and protection of investors.