Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change To Allow Certain Institutional Customers To Elect Not To Receive Account Statements, 60784-60786 [E6-17064]

Download as PDF 60784 Federal Register / Vol. 71, No. 199 / Monday, October 16, 2006 / Notices general, and with Section 6(b)(5) of the Act 8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. B. Self-Regulatory Organization’s Statement on Burden on Competition C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action This proposed rule change is filed pursuant to paragraph (A) of Section 19(b)(3) of the Act 9 and Rule 19b– 4(f)(6) 10 thereunder. The proposed rule change does not significantly affect the protection of investors or the public interest, does not impose any significant burden on competition, and, by its terms, does not become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate. Nasdaq provided the Commission written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing the proposed rule change. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.11 IV. Solicitation of Comments jlentini on PROD1PC65 with NOTICES • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2006–039 on the subject line. Paper Comments Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b–4(f)(6). 11 See 15 U.S.C. 78(b)(3)(C). Electronic Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549–1090. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.12 Jill M. Peterson, Assistant Secretary. [FR Doc. E6–17081 Filed 10–13–06; 8:45 am] BILLING CODE 8011–01–P 9 15 16:16 Oct 13, 2006 12 17 Jkt 211001 [Release No. 34–54566; File No. SR–NASD– 2006–066] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change To Allow Certain Institutional Customers To Elect Not To Receive Account Statements October 3, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 All submissions should refer to File notice is hereby given that on May 23, Number SR–NASDAQ–2006–039. This 2006, the National Association of file number should be included on the Securities Dealers, Inc. (‘‘NASD’’) filed subject line if e-mail is used. To help the with the Securities and Exchange Commission process and review your Commission (‘‘SEC’’ or ‘‘Commission’’) comments more efficiently, please use the proposed rule change as described only one method. The Commission will in Items I, II, and III below, which Items post all comments on the Commission’s have been prepared by NASD. On Internet Web site (https://www.sec.gov/ August 17, 2006, NASD filed rules/sro.shtml). Copies of the Amendment No. 1 to the proposed rule submission, all subsequent change.3 The Commission is publishing amendments, all written statements this notice to solicit comments on the proposed rule change from interested with respect to the proposed rule persons. change that are filed with the Commission, and all written I. Self-Regulatory Organization’s communications relating to the Statement of the Terms of Substance of proposed rule change between the the Proposed Rule Change Commission and any person, other than NASD is proposing to amend NASD those that may be withheld from the Rule 2340 to relieve members from the public in accordance with the requirement to send quarterly account provisions of 5 U.S.C. 552, will be statements to customer accounts that are available for inspection and copying in carried solely for the purpose of the Commission’s Public Reference execution on a delivery versus payment Room. Copies of such filing also will be and receive versus payment (‘‘DVP/ available for inspection and copying at RVP’’) basis, provided certain the principal office of Nasdaq. All conditions are met.4 Below is the text of comments received will be posted the proposed rule change.5 Proposed without change; the Commission does new language is in italic; proposed not edit personal identifying deletions are in [brackets].6 information from submissions. You * * * * * should submit only information that you wish to make available publicly. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. All submissions should refer to File 3 In Amendment No. 1, NASD proposed Number SR–NASDAQ–2006–039 and additional changes to the text of proposed amended should be submitted on or before Rule 2340, which are incorporated in the proposed November 6, 2006 rule text below. 8 15 VerDate Aug<31>2005 SECURITIES AND EXCHANGE COMMISSION PO 00000 CFR 200.30–3(a)(12). Frm 00099 Fmt 4703 Sfmt 4703 4 The proposed rule change is similar to a rule change proposed by the New York Stock Exchange, Inc. (now known as New York Stock Exchange LLC). See Securities Exchange Act Release No. 53826 (May 18, 2006), 71 FR 30211 (May 25, 2006). 5 The text includes minor technical changes to proposed paragraph (b)(4) pursuant to a telephone conversation between Shirley Weiss, Associate General Counsel, NASD, and Brice Prince, Special Counsel, Division of Market Regulation, Commission, on October 3, 2006. 6 The changes to Rule 2340 proposed in this rule filing are marked to the current version of the rule text as recently amended in SR–NASD–2004–171. See Securities Exchange Act Release No. 54411 (Sept. 7, 2006), 71 FR 54105 (Sept. 13, 2006). E:\FR\FM\16OCN1.SGM 16OCN1 Federal Register / Vol. 71, No. 199 / Monday, October 16, 2006 / Notices 2300. TRANSACTIONS WITH CUSTOMERS * * * * * jlentini on PROD1PC65 with NOTICES 2340. Customer Account Statements (a) General (1) Except as otherwise provided by paragraph (b), [E]each general securities member shall, with a frequency of not less than once every calendar quarter, send a statement of account (‘‘account statement’’) containing a description of any securities positions, money balances, or account activity to each customer whose account had a security position, money balance, or account activity during the period since the last such statement was sent to the customer. (2) No change in text. (b) Delivery Versus Payment/Receive Versus Payment (DVP/RVP) Accounts Quarterly account statements need not be sent to a customer pursuant to paragraph (a) of this Rule if: (1) the customer’s account is carried solely for the purpose of execution on a DVP/RVP basis; (2) all transactions effected for the account are done on a DVP/RVP basis in conformity with Rule 11860; (3) the account does not show security or money positions at the end of the quarter (provided, however that positions of a temporary nature, such as those arising from fails to receive or deliver, errors, questioned trades, dividend or bond interest entries and other similar transactions, shall not be deemed security or money positions for the purpose of this paragraph (b)); (4) the customer consents to the suspension of such statements in writing, and the member maintains such consents in a manner consistent with Rule 3110 and SEC Rule 17a–4; (5) the member undertakes to provide any particular statement or statements to the customer promptly upon request; and (6) the member undertakes to promptly reinstate the delivery of such statements to the customer upon request. Nothing in this Rule shall be seen to qualify or condition the obligations of a member under SEC Rule 15c3–2 concerning quarterly notices of free credit balances on statements. [(b)] (c) No change in text. [(c)] (d) Definitions For purposes of this Rule, the following terms will have the stated meanings: (1)–(5) No change in text. (6) a ‘‘DVP/RVP account’’ is an arrangement whereby payment for securities purchased is made to the VerDate Aug<31>2005 16:16 Oct 13, 2006 Jkt 211001 selling customer’s agent and/or delivery of securities sold is made to the buying customer’s agent in exchange for payment at time of settlement, usually in the form of cash. [(d)] (e) Exemptions Pursuant to this Rule 9600 Series, [the Association] NASD may exempt any member from the provisions of this Rule for good cause shown. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In filing the proposed rule change and Amendment No. 1 with the Commission, NASD included statements concerning the purpose of, and basis for, the proposed rule change, as amended. The text of these statements may be examined at the places specified in Item IV below. NASD has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose NASD Rule 2340 requires any member that conducts a general securities business and also carries customer accounts or holds customer funds or securities, at least once each calendar quarter, to send a statement of account containing a description of any securities positions, money balances, or account activity to each customer whose account had a security position, money balance, or account activity during the time since the last statement was sent. In a DVP/RVP arrangement, payment for securities purchased is made to the selling customer’s agent and/or delivery of securities sold is made to the buying customer’s agent in exchange for payment at time of settlement, usually in the form of cash. Because transactions in DVP/RVP accounts (chiefly institutional accounts) are settled directly with the agent on a transaction-by-transaction basis, account statements sent by general securities firms to customers with DVP/ RVP accounts generally do not reflect any cash balance or security position at the end of a quarter. Rather than using the information provided in quarterly statements, DVP/RVP customers generally rely on trade runs or customer confirmations issued pursuant to Rule 10b-10 under the Act for transactionrelated information. PO 00000 Frm 00100 Fmt 4703 Sfmt 4703 60785 The proposed rule change to Rule 2340 would relieve members from the obligation to send quarterly statements to customers with DVP/RVP accounts if: (1) The customer’s account is carried solely for the purpose of execution on a DVP/RVP basis; (2) all transactions in the account are handled on a DVP/RVP basis in conformity with Rule 11860; 7 (3) there are no securities or cash positions in the account at the end of the quarter (other than positions of a temporary nature, such as those arising from fails to receive or deliver, errors, questioned trades, dividend or bond interest entries and other similar transactions); (4) the customer consents to the suspension in writing; (5) the member undertakes to provide any particular statement or statements to the customer promptly upon request; and (6) the member undertakes to promptly reinstate the delivery of such statements to the customer upon request. The proposed rule change specifies that Rule 2340 does not qualify or condition the obligations of a member under SEC Rule 15c3–2 concerning quarterly notices of free credit balances on statements. The proposed rule change would also define ‘‘DVP/RVP account’’ for purposes of Rule 2340.8 By requiring the customer’s affirmative consent, the customer’s ability to receive quarterly statements is preserved, and the member is precluded from unilaterally terminating delivery of customer statements. In addition, customers would be able to promptly receive particular account statements upon request, and promptly reinstate the delivery of account statements upon request. The proposed rule change also includes a technical amendment that would replace the reference to ‘‘the Association’’ in paragraph (e) of Rule 2340 with ‘‘NASD,’’ because NASD no longer refers to itself using its full corporate name, ‘‘the Association,’’ or ‘‘the NASD.’’ Instead, NASD uses ‘‘NASD’’ unless otherwise appropriate for corporate or regulatory reasons. 7 Prior to accepting an order in a DVP/RVP account, a member must comply with Rule 11860, which requires, among other things, that the member obtain certain information from the customer, including the name and address of the agent and the account number of the customer on file with the agent. 8 Proposed Rule 2340(d)(6) would define a ‘‘DVP/ RVP account’’ as ‘‘an arrangement whereby payment for securities purchased is made to the selling customer’s agent and/or delivery of securities sold is made to the buying customer’s agent in exchange for payment at time of settlement, usually in the form of cash.’’ E:\FR\FM\16OCN1.SGM 16OCN1 60786 Federal Register / Vol. 71, No. 199 / Monday, October 16, 2006 / Notices 2. Statutory Basis NASD believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act, which requires, among other things, that NASD rules must be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, and, in general, to protect investors and the public interest. NASD believes that the proposed rule change is designed to facilitate transactions in securities and to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to transactions in securities by giving members a mechanism to allow certain customers that utilize alternative sources of information to keep track of their trading to opt out of receiving unwanted account statements. NASD also believes that the conditions of the proposed amended rule are designed to promote just and equitable principles of trade and, in general, to protect investors and the public interest by requiring that consents to the suspension of account statements under the amended rule be in writing, and by requiring members to undertake to promptly provide any particular account statement upon request and to promptly reinstate delivery of account statements upon request. B. Self-Regulatory Organization’s Statement on Burden on Competition NASD does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. jlentini on PROD1PC65 with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others NASD neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: VerDate Aug<31>2005 16:16 Oct 13, 2006 Jkt 211001 (a) By order approve such proposed rule change, or (b) institute proceedings to determine whether the proposed rule change should be disapproved. NASD will announce the effective date of the proposed rule change in a Notice to Members to be published no later than 60 days following Commission approval. The effective date of the proposed rule change will be 30 days following publication of the Notice to Members announcing Commission approval. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rule-comments@sec.gov. Please include File Number SR–NASD–2006–066 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR-NASD–2006–066. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s Internet Web site (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of NASD. All comments received will be posted without change; the Commission does not edit personal identifying PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NASD–2006–066 and should be submitted on or before November 6, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.9 Nancy M. Morris, Secretary. [FR Doc. E6–17064 Filed 10–13–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54579; File No. SR–NYSE– 2006–30] Self-Regulatory Organizations; New York Stock Exchange, Inc. (a/k/a New York Stock Exchange LLC); Notice of Filing of Proposed Rule Change and Amendments No. 1 & 2 Thereto Relating to the Treasury Share Exception in NYSE Listed Company Manual Section 312.03, Section 312.04 and Section 703.01(A) October 5, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on May 5, 2006, the New York Stock Exchange, LLC (the ‘‘Exchange’’ or ‘‘NYSE’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in items I, II, and III below, which items have been prepared by the Exchange. On August 11, 2006, the Exchange filed Amendment No. 1 to the proposed rule change.3 On September 25, 2006, the Exchange filed Amendment No. 2 to the proposed rule change.4 The Commission 9 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 The substance of Amendment No. 1 was changed in Amendment No. 2. See infra note 4. In Amendment No. 1, the Exchange had (1) modified the proposed rule change to state that if a company has executed a binding contract prior to August 15, 2006 with respect to the issuance of common stock, the existing treasury share exception will continue to be available for the transaction; and (2) revised the definition of ‘‘market value.’’ 4 In Amendment No. 2, which replaced and superseded Amendment No. 1 in its entirety, the Exchange (1) revised the example provided with respect to the proposed definition of ‘‘market value’’ to make it clearer; and (2) amended the transition period proposed so that the existing treasury share exception would continue to be available for companies that have entered into a binding contract with respect to the issuance of common stock prior to the date that is five business days after the Commission publishes notice of the proposed rule change in the Federal Register. 1 15 E:\FR\FM\16OCN1.SGM 16OCN1

Agencies

[Federal Register Volume 71, Number 199 (Monday, October 16, 2006)]
[Notices]
[Pages 60784-60786]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-17064]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54566; File No. SR-NASD-2006-066]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Allow 
Certain Institutional Customers To Elect Not To Receive Account 
Statements

 October 3, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 23, 2006, the National Association of Securities Dealers, Inc. 
(``NASD'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by NASD. On August 
17, 2006, NASD filed Amendment No. 1 to the proposed rule change.\3\ 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, NASD proposed additional changes to the 
text of proposed amended Rule 2340, which are incorporated in the 
proposed rule text below.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend NASD Rule 2340 to relieve members from 
the requirement to send quarterly account statements to customer 
accounts that are carried solely for the purpose of execution on a 
delivery versus payment and receive versus payment (``DVP/RVP'') basis, 
provided certain conditions are met.\4\ Below is the text of the 
proposed rule change.\5\ Proposed new language is in italic; proposed 
deletions are in [brackets].\6\
---------------------------------------------------------------------------

    \4\ The proposed rule change is similar to a rule change 
proposed by the New York Stock Exchange, Inc. (now known as New York 
Stock Exchange LLC). See Securities Exchange Act Release No. 53826 
(May 18, 2006), 71 FR 30211 (May 25, 2006).
    \5\ The text includes minor technical changes to proposed 
paragraph (b)(4) pursuant to a telephone conversation between 
Shirley Weiss, Associate General Counsel, NASD, and Brice Prince, 
Special Counsel, Division of Market Regulation, Commission, on 
October 3, 2006.
    \6\ The changes to Rule 2340 proposed in this rule filing are 
marked to the current version of the rule text as recently amended 
in SR-NASD-2004-171. See Securities Exchange Act Release No. 54411 
(Sept. 7, 2006), 71 FR 54105 (Sept. 13, 2006).
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* * * * *

[[Page 60785]]

2300. TRANSACTIONS WITH CUSTOMERS
* * * * *
2340. Customer Account Statements
    (a) General
    (1) Except as otherwise provided by paragraph (b), [E]each general 
securities member shall, with a frequency of not less than once every 
calendar quarter, send a statement of account (``account statement'') 
containing a description of any securities positions, money balances, 
or account activity to each customer whose account had a security 
position, money balance, or account activity during the period since 
the last such statement was sent to the customer.
    (2) No change in text.
    (b) Delivery Versus Payment/Receive Versus Payment (DVP/RVP) 
Accounts
    Quarterly account statements need not be sent to a customer 
pursuant to paragraph (a) of this Rule if:
    (1) the customer's account is carried solely for the purpose of 
execution on a DVP/RVP basis;
    (2) all transactions effected for the account are done on a DVP/RVP 
basis in conformity with Rule 11860;
    (3) the account does not show security or money positions at the 
end of the quarter (provided, however that positions of a temporary 
nature, such as those arising from fails to receive or deliver, errors, 
questioned trades, dividend or bond interest entries and other similar 
transactions, shall not be deemed security or money positions for the 
purpose of this paragraph (b));
    (4) the customer consents to the suspension of such statements in 
writing, and the member maintains such consents in a manner consistent 
with Rule 3110 and SEC Rule 17a-4;
    (5) the member undertakes to provide any particular statement or 
statements to the customer promptly upon request; and
    (6) the member undertakes to promptly reinstate the delivery of 
such statements to the customer upon request.
    Nothing in this Rule shall be seen to qualify or condition the 
obligations of a member under SEC Rule 15c3-2 concerning quarterly 
notices of free credit balances on statements.
    [(b)] (c) No change in text.
    [(c)] (d) Definitions
    For purposes of this Rule, the following terms will have the stated 
meanings:
    (1)-(5) No change in text.
    (6) a ``DVP/RVP account'' is an arrangement whereby payment for 
securities purchased is made to the selling customer's agent and/or 
delivery of securities sold is made to the buying customer's agent in 
exchange for payment at time of settlement, usually in the form of 
cash.
    [(d)] (e) Exemptions
    Pursuant to this Rule 9600 Series, [the Association] NASD may 
exempt any member from the provisions of this Rule for good cause 
shown.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In filing the proposed rule change and Amendment No. 1 with the 
Commission, NASD included statements concerning the purpose of, and 
basis for, the proposed rule change, as amended. The text of these 
statements may be examined at the places specified in Item IV below. 
NASD has prepared summaries, set forth in Sections A, B, and C below, 
of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASD Rule 2340 requires any member that conducts a general 
securities business and also carries customer accounts or holds 
customer funds or securities, at least once each calendar quarter, to 
send a statement of account containing a description of any securities 
positions, money balances, or account activity to each customer whose 
account had a security position, money balance, or account activity 
during the time since the last statement was sent.
    In a DVP/RVP arrangement, payment for securities purchased is made 
to the selling customer's agent and/or delivery of securities sold is 
made to the buying customer's agent in exchange for payment at time of 
settlement, usually in the form of cash. Because transactions in DVP/
RVP accounts (chiefly institutional accounts) are settled directly with 
the agent on a transaction-by-transaction basis, account statements 
sent by general securities firms to customers with DVP/RVP accounts 
generally do not reflect any cash balance or security position at the 
end of a quarter. Rather than using the information provided in 
quarterly statements, DVP/RVP customers generally rely on trade runs or 
customer confirmations issued pursuant to Rule 10b-10 under the Act for 
transaction-related information.
    The proposed rule change to Rule 2340 would relieve members from 
the obligation to send quarterly statements to customers with DVP/RVP 
accounts if: (1) The customer's account is carried solely for the 
purpose of execution on a DVP/RVP basis; (2) all transactions in the 
account are handled on a DVP/RVP basis in conformity with Rule 11860; 
\7\ (3) there are no securities or cash positions in the account at the 
end of the quarter (other than positions of a temporary nature, such as 
those arising from fails to receive or deliver, errors, questioned 
trades, dividend or bond interest entries and other similar 
transactions); (4) the customer consents to the suspension in writing; 
(5) the member undertakes to provide any particular statement or 
statements to the customer promptly upon request; and (6) the member 
undertakes to promptly reinstate the delivery of such statements to the 
customer upon request. The proposed rule change specifies that Rule 
2340 does not qualify or condition the obligations of a member under 
SEC Rule 15c3-2 concerning quarterly notices of free credit balances on 
statements. The proposed rule change would also define ``DVP/RVP 
account'' for purposes of Rule 2340.\8\
---------------------------------------------------------------------------

    \7\ Prior to accepting an order in a DVP/RVP account, a member 
must comply with Rule 11860, which requires, among other things, 
that the member obtain certain information from the customer, 
including the name and address of the agent and the account number 
of the customer on file with the agent.
    \8\ Proposed Rule 2340(d)(6) would define a ``DVP/RVP account'' 
as ``an arrangement whereby payment for securities purchased is made 
to the selling customer's agent and/or delivery of securities sold 
is made to the buying customer's agent in exchange for payment at 
time of settlement, usually in the form of cash.''
---------------------------------------------------------------------------

    By requiring the customer's affirmative consent, the customer's 
ability to receive quarterly statements is preserved, and the member is 
precluded from unilaterally terminating delivery of customer 
statements. In addition, customers would be able to promptly receive 
particular account statements upon request, and promptly reinstate the 
delivery of account statements upon request.
    The proposed rule change also includes a technical amendment that 
would replace the reference to ``the Association'' in paragraph (e) of 
Rule 2340 with ``NASD,'' because NASD no longer refers to itself using 
its full corporate name, ``the Association,'' or ``the NASD.'' Instead, 
NASD uses ``NASD'' unless otherwise appropriate for corporate or 
regulatory reasons.

[[Page 60786]]

2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act, which requires, among other 
things, that NASD rules must be designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, and, in general, to protect investors and the public 
interest. NASD believes that the proposed rule change is designed to 
facilitate transactions in securities and to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to transactions in securities by 
giving members a mechanism to allow certain customers that utilize 
alternative sources of information to keep track of their trading to 
opt out of receiving unwanted account statements. NASD also believes 
that the conditions of the proposed amended rule are designed to 
promote just and equitable principles of trade and, in general, to 
protect investors and the public interest by requiring that consents to 
the suspension of account statements under the amended rule be in 
writing, and by requiring members to undertake to promptly provide any 
particular account statement upon request and to promptly reinstate 
delivery of account statements upon request.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    NASD neither solicited nor received written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (a) By order approve such proposed rule change, or
    (b) institute proceedings to determine whether the proposed rule 
change should be disapproved.
    NASD will announce the effective date of the proposed rule change 
in a Notice to Members to be published no later than 60 days following 
Commission approval. The effective date of the proposed rule change 
will be 30 days following publication of the Notice to Members 
announcing Commission approval.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, is consistent with the Act. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2006-066 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASD-2006-066. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Section, 100 F Street, 
NE., Washington, DC 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of NASD. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASD-2006-066 and should be 
submitted on or before November 6, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-17064 Filed 10-13-06; 8:45 am]
BILLING CODE 8011-01-P