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92-47 The Role of the NASD's Standing Committees

SUGGESTED ROUTING:*

Senior Management
Corporate Finance
Government Securities
Institutional
Internal Audit
Legal & Compliance
Municipal
Mutual Fund
Operations
Options
Registration
Research
Syndicate
Systems
Trading
*These are suggested departments only. Others may be appropriate for your firm.

EXECUTIVE SUMMARY

The work of the NASD's Board of Governors standing committees is essential to the success of the NASD's programs and the fulfillment of its purposes. Every year, more than 200 individuals with expertise in various aspects of the securities business contribute their time and serve on one or more of these committees. This Notice includes a brief overview of the role and workings of these committees as well as the process for selecting committee members.

OVERVIEW

The committees of the Board of Governors are essential to developing NASD policy, advising the Board, and representing the many constituencies of the NASD and its subsidiaries. The countless hours devoted by industry and other volunteer members of these committees contribute much to the success and effectiveness of the NASD.

The Board currently has 16 standing committees. A list of these committees along with a brief description of their primary functions is included with this Notice. In addition to these committees, ad hoc (or "special") committees or task forces are often established by the Board to address transitory issues and issues that require special expertise or that cannot, as a practical matter, be addressed by standing committees.

Committee size varies and the majority of the committees have at least two Governors who act as liaisons with the Board. This structure facilitates broad industry participation and provides a mechanism for ongoing communication with the NASD Board. It also brings important segments of the industry into the NASD process.

SELECTION PROCESS

Under NASD By-Laws, the Board has broad discretion to establish committees. When selecting persons to serve on committees, a Selection Committee consisting of the President and the incoming and retiring Chairman of the Board reviews current committee rosters. This review begins after election of the Chairman of the Board for the coming year each November.

The Selection Committee recommends to the Board a slate of nominees for each committee. Those nominated have the expertise to address the issues before the committee and represent the public and the participants in the securities industry affected by the work of the committee. To carry out its role, the Selection Committee takes into consideration:

  • Each committee's particular needs including the number of members, committee functions, short- and long-term issues to be addressed, and other external factors that would have a bearing on the group's actions.


  • Recommendations by the various committee chairmen and staff liaisons based on their observations of the participation, attendance, and length of service of each committee member.


  • Suggestions received from district committee chairmen and district directors concerning current and former members of the district committees with expertise in the areas covered by particular committees.


  • Requests from Governors to serve on particular committees.


  • Correspondence and biographical data received throughout the year from or about individuals who wish to serve on the committees.

The Selection Committee presents its recommended committee roster to the Board for approval at the January meeting.

ENCOURAGING BROADER PARTICIPATION

The NASD believes that adding individuals to the rosters who have not previously served on committees will enhance the NASD's vitality. Bringing new people into the work of the committees subjects established points of view to continuing scrutiny, accords representation to a broad spectrum of the securities industry and the public, and adds greater depth to the pool of qualified candidates for future Board service.

Service on an NASD committee is a privilege afforded to those who have demonstrated expertise in the area of the securities industry that the committee represents. Although expertise is the most important criteria for committee service, it is not the only one. Often, committee members must expend significant amounts of time and effort to properly discharge their duties. This can frequently create challenges as committee members try to fulfill their obligations to the committee while simultaneously meeting the continuing demands of their careers.

For these reasons, persons thinking about offering their services to one or more of the NASD committees listed below should consider not only their level of expertise in the subject matter but also the effect such service will have on their current and future schedules. If, after careful thought, an individual would like to learn more about service on a committee, simply contact the staff liaison listed after the committee.

Corporate Financing Committee develops NASD policy relating to public equity and debt financing; and considers the fairness and reasonableness of underwriting compensation and arrangements proposed by members. Contact Charles Bennett at (202) 728-8253.

Direct Participation Programs/Real Estate Committee reviews and develops regulations specifying standards of fairness and reasonableness that members must satisfy when distributing direct participation programs; and regulations that such programs sponsored or distributed by members must satisfy. Contact Charles Bennett at (202) 728-8253.

Fixed Income Securities Committee monitors developments and advises the Board on matters relating to corporate, municipal, and government fixed-income securities. Contact Richard G. Ketchum at (202) 728-8020.

Institutional Investors Committee advises the staff and Board on matters concerning investments, investment strategies, the workings of institutional investors, and how the Nasdaq market can better serve the needs of these investors. Contact S. William Broka at (202) 728-8050.

Insurance Affiliated Members Committee provides the Board with expertise, advice, and recommendations on matters concerning insurance company members, insurance products, and the insurance business. Contact R. Clark Hooper at (202) 728-8330.

International Committee concerns itself with the activities of members in international securities in U.S. markets and their activities in U.S. securities in international markets. Areas addressed include trading and settlement procedures; U.S. and other national government laws; regulations and reporting requirements; and reciprocal dealer access to the international markets. Contact John T. Wall at (202) 728-8200.

Investment Companies Committee considers a broad range of issues relating to the distribution of investment company shares; makes recommendations to the Board for new rules, amendments to existing rules, comments on SEC proposals; and provides interpretive advice to members and their staff. Contact R. Clark Hooper at (202) 728-8330.

Issuer Affairs Committee, comprised of senior officials of Nasdaq listed companies, addresses issues related to listing requirements, investor relations and policy issues affecting Nasdaq listed companies. Contact Glenn C. Faulkner at (202) 728-8275.

Marketing Committee advises the staff on developing and maintaining a comprehensive marketing plan and program for the NASD and its subsidiaries. The committee also advises the staff on public relations programs directed to key publics that elevate the prestige and image of the NASD and The Nasdaq Stock Market,SM and promote maximum awareness and greater understanding of their business and regulatory activities. Contact L. Brian Holland at (202) 728-8116.

Membership Committee recommends various categories of registration to the Board, develops qualification examinations for Board-approved categories of registration; provides ongoing industry oversight to the NASD's qualification examination program; recommends actions to the Board in areas related to registration and qualification such as membership and training standards; and reviews current registration and licensing procedures of self-regulatory organizations, state, and other government jurisdictions. Contact Frank J. McAuliffe at (301) 590-6694.

Nasdaq Hearing Review Committee reviews Nasdaq qualification matters appealed to or called for review by the Board and considers policy issues relating to Nasdaq issuer qualifications. Contact T. Grant Callery at (202) 728-8285.

Nasdaq Qualifications Committee monitors qualification standards, both for initial inclusion and maintenance, for The Nasdaq Stock Market. Contact Donald H. Bosic at (202) 728-8043.

National Arbitration Committee, composed of individuals from both the general public and the securities industry, monitors the activities of the NASD's arbitration forum; develops policies and procedures under which that forum operates; recommends changes in the NASD Code of Arbitration Procedure; and supplements the national list of arbitrators with qualified persons. Contact Deborah Masucci at (212) 858-4488.

Operations Committee recommends policy, rules, and interpretations to the Board on uniform practice matters; reviews and makes recommendations on clearing policies and other back-office-related areas; and monitors developments and makes recommendations on financial responsibility and credit rules and regulations. Contact Thomas R. Cassella at (202) 728-8237.

State Liaison Committee serves as the focal point for all NASD dealings with state legislatures, state securities regulators and the North American Securities Administrators Association, Inc. Contact Frank J. Formica at (202) 728-8289.

Trading Committee, which is primarily involved in issues relating to the trading of securities in the Nasdaq market and the over-the-counter market, develops recommendations for consideration by the Board of Governors on issues that impact the trading community. It also addresses and advises the Board on policy issues related to rule changes and system enhancements for the Small Order Execution System (SOES)SM; designs and develops rules and regulations on the trading of listed options over-the-counter; and is responsible for the development of a Nasdaq Options program to facilitate options trading on Nasdaq-quoted securities. Contact Glen R. Shipway at (212) 858-4448.


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