Notice To Members 95-65

NASD Files NASD Manual Revisions With The SEC For Review And Approval

Published Date:

SUGGESTED ROUTING

Senior Management
Legal & Compliance

Executive Summary

The NASD will soon file its proposed revision of the NASD Manual with the Securities and Exchange Commission (SEC) for approval, which is expected later this year. Following SEC approval, the NASD will direct the Commerce Clearing House and vendors providing electronic versions of the NASD Manual to convert the NASD Manual to the new version and to provide new-to-old and old-to-new conversion charts. This should be accomplished by April 1996.

Background

Many users of the NASD Manual have commented that it is difficult for the casual reader to use, citing in particular its use of such categories as Articles, Sections, Schedules, Codes, Guidelines, Interpretations, Resolutions, and others; the difficulty in finding all rules on a particular subject; and familiar phrases not found in the Topical Index.

In response to such comments, the NASD Legal Advisory Board produced a topical Guide to the Manual that has been printed in the NASD Manual (at page 21) for several years. NASD senior management subsequently decided to rearrange the actual text of the NASD Manual.

The NASD Manual revision project has focused on reorganizing the text of the NASD Manual, and creating an expanded Key Word Index. The Board approved the necessary By-Law amendments at its meeting in March to accomplish the final stages of this project and the finished product will be filed with the SEC for approval this month.

NASD Manual Reorganization

The new NASD Manual will be divided into four major sections: Administrative, Corporate Organization, Rules of the Association, and Regulation T and SEC Rules. A common numbering scheme will extend through the Rules, while allowing space for additional Rules to be added without the use of decimal or letter extensions. Highlights of the revised NASD Manual include:

  • The Rules of the Association are divided into four sections: Membership and Registration Rules, Conduct Rules, Marketplace Rules, and Procedural Rules. The Guide to the NASD Manual is attached for your information.

  • The term Rules of Fair Practice will be changed simply to Rules, and will include the material currently contained in the Rules of Fair Practice as well as other provisions that have the effect of rules, such as the membership and qualification rules of Schedule C, the Nasdaq® rules of Schedule D, and all other Schedules except Schedule A (fees) and B (District boundaries), which will remain with the By-Laws.

  • There is consistency in the numbering and lettering of paragraphs and subparagraphs within the Rules. Interpretations to the Rules are now called Interpretive Material, and numbered with an "IM" followed by the number of the Rule or Rules they interpret.

  • The Code of Procedure, Code of Arbitration Procedure, and Uniform Practice Code will keep their current names, and will be in the overall Rules-numbering convention.

  • Duplicate definitions were deleted.

  • References to the SEC, the Securities Exchange Act of 1934, and the NASD were conformed to ensure that they are consistent throughout the NASD Manual.

Attached to this Notice is a Guide to the NASD Manual with provisions listed in substantially the order that they will appear in the revised NASD Manual. Any developments in the status of this project will be reported in regular editions of Notices to Members.

Please direct your questions or concerns about these proposed changes to T. Grant Callery, Vice President and General Counsel, Office of General Counsel, at (202) 728-8285 or Joan C. Conley, Corporate Secretary, at (202) 728-8381.

Guide To The NASD Manual

Administrative

Guide To The Manual History And Organization Of The NASD Officials Telephone Inquiries List Of Selected Notices To Members Publications Order Form Clearing Corporation And Depository References Members Changes To List Of Members; Disciplinary Actions

Corporate Organization

Certificate Of Incorporation By-Laws Schedule A—Assessments And Fees Schedule B—Districts: Number And Territorial Boundaries

Rules Of The Association

0100 General Provisions (Rules of Fair Practice, Articles I and II)

Membership And Registration Rules

1000 Membership, Registration, And Qualification Requirements (Schedule C)

Conduct Rules

(Schedule D, Part VII; Schedule E; Government Securities Rules; Rules of Fair Practice, Article III)

2000 Business Conduct
2100 General Standards
2200 Communications With Customers And The Public
2300 Transactions With Customers
2400 Commissions, Markups, And Charges
2500 Special Accounts
2700 Securities Distributions
2800 Special Products
2900 Responsibilities To Other Brokers Or Dealers
3000 Responsibilities Relating To Associated Persons, Employees, And Others' Employees
3100 Books And Records And Financial Condition
3200 Settlements
3300 Trading

Marketplace Rules

4000 The Nasdaq Stock MarketSM (Schedule D)
4100 General
4200 Definitions (Part I)
4300 Qualification Requirements For The Nasdaq Stock Market Securities (Part II)
4400 Nasdaq National Market® Issuer Designation Requirements (Part III)
4500 Issuer Listing Fees (Part IV)
4600 Market-Maker Requirements (Parts V, X, XI, XII)
4700 Small Order Execution System (SOESSM)
5000 Other Nasdaq® And NASD Markets
5100 Nasdaq International® Service Rules
5200 Intermarket Trading System/Computer Assisted Execution System (ITS/CAES)
5300 The PORTALSM Market (Schedule I)
6000 NASD Systems And Programs
6100 Automated Confirmation Transaction (ACTSM) Service
6200 Fixed Income Pricing System (FIPS®)
6300 Consolidated Quotations Service (CQS) (Schedule D, Part VI)
6400 Reporting Transactions In Listed Securities (Schedule G)
6500 OTC Bulletin Board (OTCBB®)
6600 Reporting Transactions In Over-The-Counter Equity Securities (Schedule D, Part XII)
6700 Reporting Transactions In Certain Non-Nasdaq Securities (Schedule H)
6800 Mutual Fund Quotation Program (Schedule D, Part XIV)
7000 Charges For Services And Equipment (Schedule D, Part VIII)

Procedural Rules

8000 Complaints, Investigations And Sanctions
8100 Complaints (Article IV, Secs. 1-4, RFP)
8200 Investigations (Article IV, Sec. 5, RFP)
8300 Sanctions (Article V, RFP)
9000 Code Of Procedure
9100 Administrative Provisions (Article I And X)
9200 Disciplinary Actions By District Business Conduct Committees, The Market Surveillance Committee, And Others (Article II)
9300 Review Of Disciplinary Actions By The National Business Conduct Committee And The Board (Article III)
9400 Imposition Of Sanctions And Costs (Article IV)
9500 Limitation And Approval Procedures Under Rules 3130 And 3140 (Article V)
9600 Summary Suspension (Article VIII), Revocation (Article VI) Expedited Remedial (Article XI), And Eligibility (Article VII) Procedures
9700 Procedures On Grievances Concerning The Automated Systems (Article IX)
9800 Corporate Financing And Direct Participation Program Matters (Article XII)
10000 Code Of Arbitration Procedure
10100 Administrative Provisions
10200 Industry And Clearing Controversies
10300 Uniform Code Of Arbitration
11000 Uniform Practice Code

Regulation T And SEC Rules

Key Word Index