To Establish Effective Date for NASD Rule 3370, Affirmative Determination Requirements
NASD has filed with the SEC a proposed rule change to establish April 1, 2004, as the effective date of the amendments to Rule 3370 (the “Affirmative Determination Rule”) that the SEC approved in November 2003. The amendments expand the scope of the affirmative determination requirements to include orders received from broker/dealers that are not members of NASD (“non-member broker/dealers”). As revised, Rule 3370 applies to orders received by member firms from both customers and non-member broker/dealers, as well as most firm proprietary orders. The revisions also add an exception for “proprietary” short sales of non-member broker/dealers provided the member can establish that the order meets certain conditions.