NASD Provides Additional Information Regarding Options Exemption for the Trading Activity Fee

INFORMATIONAL

Options Exemption

Executive Summary

On May 30, 2003, the Securities and Exchange Commission (SEC or Commission) permanently approved revisions to NASD By-Laws, eliminating the current Regulatory Fee assessed upon NASD members and instituting a new transaction-based Trading Activity Fee (TAF).¹ As part of the permanent fee structure, listed options transactions executed by broker/dealers for which NASD is not the primary regulator were exempted from the TAF, effective January 1, 2004. A listing of those broker/dealers exempt from the fee is attached.

Questions/Further Information

Questions regarding this Notice should be directed to NASD Finance at (240) 386-5397, or the Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8071.

Discussion

The SEC approved the TAF on a permanent basis on May 30, 2003, whereby listed options transactions executed by broker/dealers for which NASD is not the primary regulator were exempted from the fee, effective January 1, 2004. Listed option transactions will be subject to the TAF only if NASD is that member firm's Designated Options Examining Authority (DOEA). A listing of those firms who are not designated to NASD who are exempt from the fee appear in Attachment A. As changes are required, a revised listing will be published through further Notices to Members.

¹ Securities Exchange Act Rel. No. 47946 (May 30, 2003).

Attachment A

2004 DOEA Allocations - Firms not Designated to NASD