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87-14 Request for Comments on Proposed Amendments to Article I, Section (c) of the NASD By-Laws and Schedule C to the NASD By-Laws Relating to the Definition of the Term "Branch Office"
TO: All NASD Members and Other Interested Persons
LAST DATE FOR COMMENT IS APRIL 15, 1987.
The NASD requests comments on proposed amendments to Article I, Section (c) of the NASD By-Laws and Schedule C to the NASD By-Laws that would clarify that branch offices of NASD member firms located outside the United States fall within the definition of "branch office."
The amendments would delete the phrase "located in the United States" from the definition of "branch office" contained in both Article I, Section (c) of the By-Laws and in the Explanation of the Board of Governors — "Distinction Between Branch Office and Office of Supervisory Jurisdiction; Appointment of Executive Representative; Standards for Determining Branch Offices," following Schedule C to the By-Laws.
The text of the amendments is attached.
BACKGROUND AND SUMMARY OF AMENDMENTS
The NASD is concerned that there exists among the membership some confusion concerning the status of member firms' offices located outside the United States. This confusion may result from the fact that, although the offices and associated persons are subject to NASD jurisdiction, the offices are excluded from the definition of "branch office."
The NASD Board of Governors believes that the restrictive language now contained in the NASD By-Laws and Schedule C is inconsistent with the current environment of increasing internationalization of the securities markets and that such restrictive language serves no useful purpose. The Board, upon the recommendation of the Qualifications Committee, is therefore proposing to delete the restriction, making the definition applicable to all branch offices, wherever located.
If the proposed changes are adopted, branch offices located outside the United States will be assigned to existing NASD districts for purposes of examinations, elections and other district-level functions. These proposed changes are not intended to affect the availability of the "foreign associate" category of registration for persons associated with foreign branch offices.
The NASD encourages all members and other interested persons to comment on the proposed amendments. Comments should be directed to:
Mr. Lynn Nellius
National Association of Securities Dealers, Inc.
1735 K Street, N.W.
Washington, D.C. 20006-1506
Comments must be received no later than April 15, 1987. Comments received by this date will be considered by the NASD Qualifications Committee and Board of Governors. Any changes to the NASD By-Laws that are approved by the Board must be voted upon by the membership, and filed with and approved by the Securities and Exchange Commission before becoming effective.
Questions concerning this notice may be directed to Eugene Bleier, Attorney, NASD Office of General Counsel, at (202) 728-8287.
Frank J. Wilson
Executive Vice President and General Counsel
PROPOSED AMENDMENT TO NASD BY-LAWS*
* * *
PROPOSED AMENDMENT TO SCHEDULE C TO THE BY-LAWS*
••• Explanation of the Board of Governors
Distinction Between Branch Office and Office of Supervisory Jurisdiction; Appointment of Executive Representative; Standards for Determining Branch Offices
. . . The term "branch office" defined in Article I of the By-Laws means any office, including a corporate subsidiary of a member, [located in the United States and] other than the main office which is owned or controlled by a member and engaged in the investment banking or securities business.
* Deleted language is bracketed.