Notice to Members 03-25

Waiver Program for Parties in California Arbitration Proceedings has Been Extended to September 30, 2003; New Waiver Agreement Form

Effective March 31, 2003

The Securities and Exchange Commission (SEC or Commission) has approved an extension to a pilot program in IM-10100 of the NASD Code of Arbitration Procedure (Code) governing Failure to Act Under Provisions of Code of Arbitration Procedure. The pilot program provides that members and associated persons involved in NASD arbitration proceedings in the State of California are required to waive application of California Ethics Standards for Neutral Arbitrators in Contractual Arbitration (the "California Standards") to their arbitration proceedings upon the request of investors or, in industry cases, upon the request of associated persons with claims of statutory employment discrimination, for a pilot period ending September 30, 2003 (or until pending litigation has resolved the question of whether or not the California Standards apply to NASD arbitration). The waiver agreement form has been revised as of March 31, 2003.

The pilot program will apply to the appointment of arbitrators from September 30, 2002, to September 30, 2003, to serve in California arbitrations.

Questions regarding this Notice may be directed to Jean I. Feeney, Vice President and Chief Counsel, NASD Dispute Resolution, at (202) 728-6959, or via e-mail.