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90-31 Electronic Filing of Forms LJ-5 and Amendments to Form U-4

SUGGESTED ROUTING*

Internal Audit
Legal & Compliance
Registration
Training

*These are suggested departments only. Others may be appropriate for your firm.

EXECUTIVE SUMMARY

On March 5, 1990, the NASAA/NASD Central Registration Depository (CRD) began accepting the electronic submission of amendments to page 1 of Form U-4, the Uniform Application for Securities Industry Registration or Transfer, and nondisciplinary Forms U-5, the Uniform Termination Notice for Securities Industry Registration. All NASD member firms that subscribe to the NASD Firm Access Query System (FAQS) are eligible to file electronically these forms that all CRD regulatory participants accept.

BACKGROUND

Recognizing the need to streamline the agent registration process, the NASD Registration Committee and Board of Governors approved a resolution in March 1988 calling for the electronic filing of agent registration and termination forms with the CRD. In addition, the staff was directed to develop an Electronic Filing Pilot, which began in January 1989 with 30 NASD member firms and two regulatory participants, the NASD and the state of Georgia, participating.

In February 1990, the North American Securities Administrators Association (NASAA) endorsed the implementation of the Electronic Filing Program for all CRD regulatory participants. With full participation in the program by all of CRD's regulatory participants, the Electronic Filing Program was implemented on March 5, 1990, for the members that participated in the pilot program. Members that subscribe to FAQS and did not participate in the pilot program received training in late March and are now participating in the Electronic Filing Program. The program is now available for participation by all NASD members.

SCOPE OF PROGRAM AND FILING REQUIREMENTS

The implementation of the Electronic Filing Program allows member firms to electronically file all amendments to page 1 of Form U-4 and all non-disciplinary Forms U-5 without submitting follow-up paperwork to CRD. While members must retain manually signed copies of electronically filed forms, the Electronic Filing Program eliminates the delays associated with submitting forms to the CRD for processing, and it provides immediate notification of registration requests and terminations to the applicable self-regulatory organizations (SROs) and states.

Through the Electronic Filing Program, members may process Form U-4, page 1 amendments requesting state registrations, SRO registrations, and examinations. Electronic page 1 amendments can also be filed to update or clear deficiencies associated with a representative's employment date, billing code, office of employment address, and information regarding dual registration. In addition, the program permits members to electronically file nondisciplinary Forms U-5, those forms on which questions 13 through 15 are answered "No," to effect full termination of a representative's registrations or partial termination of only specified registrations. In the summer of 1990 functions will be added to the program to enable the processing of page 2 amendments to Form U-4 and all Forms U-5.

To participate in the Electronic Filing Program, a member firm must subscribe to FAQS and complete an electronic filings Addendum to the FAQS Subscribers Agreement. Participants in the Electronic Filing Program agree to maintain sufficient funds in their CRD account to pay for any registration, examination, and termination fees resulting from electronic filings, retain manually signed copies of any form filed electronically, and make available, within 10 days, copies of any electronically filed form requested by any jurisdiction or SRO participating in the CRD. Members should not submit the hard-copy forms supporting their electronic filings to the CRD.

Since electronic filings do not require the submission of paper forms, the program eliminates any processing delays incurred in the mailing of forms to the CRD. Member firms participating in the program during the first month of operation (when 4,999 forms were processed electronically) report that electronic filings have not only reduced regular and express mail costs, but have reduced staff time needed to prepare documents sent to the CRD and the need for copying forms. In addition, members have found that the electronic filing program enables registered individuals to become quickly productive in newly requested states.

Members subscribing to FAQS have direct access to the CRD records of their representatives and can monitor the status of registration requests. Other services provided through FAQS include enabling members to transfer registrations through the Temporary Agent Transfer Program (TAT), obtaining overnight notification of registration approvals and examination results, accessing disciplinary information on prospective employees, and communicating directly with NASD Information Services through an electronic mail service. Members filing electronically are charged only for fees resulting from the registration or termination request and do not incur any FAQS communication charges while performing an electronic filing.

For more information on the Firm Access Query System (FAQS) and the Electronic Filing Program, contact NASD Firm Services at (301) 590-6715.


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