Newsletter

August 2006 - Index
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Source NTM

Type of Firm

Topic/Business Type

Summary Description

NTM 05-77

General Securities

Credit Default Swaps
Debt Securities
Options
Rule 6200 Series
TRACE Rules
Transaction Reporting

The NASD provided interpretive guidance on the obligation of members to report to the Trade Reporting and Compliance Engine (TRACE) transactions in TRACE-eligible securities, including the exercise or settlement of options Continued…

NTM 06-03

General Securities

Rule 2111
Manning Rule
Market Orders

In this notice the NASD provides guidance on Rule 2111 which prohibits members from trading ahead of customer market orders under certain circumstances. Continued…

NTM 06-04

Rule 3012
Supervisory Control Systems

NASD Rule 3012 requires members to have in place a system to test and verify that their supervisory procedures are reasonably designed with respect to the activities of that member and their firm.  Continued…

NTM 06-05

Mutual Funds

Bond Mutual fund Volatility Ratings
Rule 2210

On December 27, 2005, the SEC approved a proposed rule change to make permanent Rule 2210(c)(3) and Interpretive Material 2210-5 (“IM 2210-5”) concerning bond mutual fund volatility ratings. Previously, the NASD had interpreted their rules so as to prohibit the use of bond fund volatility ratings in sales material. Continued…

NTM 06-07

All

AML  Compliance Programs
Rule 3011

Effective 3/6/06 the SEC has approved amendments to the AML program rule (NASD Rule 3011) and provided interpretive material to clarify and provide guidance on the rule. Continued…

NTM 06-10

All

NASD Sanction Guidelines

Sanction Guidelines Q&A

NTM 06-11

All

IM-3013
Annual Compliance and Supervision

NASD Rule 3013 requires each member’s CEO, or equivalent officer, to certify annually that there are processes in place to establish, maintain, review, modify and test the firm’s policies and procedures. Continued…

NTM 06-12

All

Branch Office Def/Registration
CRD
Form BR
Internal Inspections
Rule 3010
Supervision

The SEC has approved a new Form BR that will replace the current Schedule E of Form BD. Continued…

NTM 06-15

General Securities

OATS
NASDAQ Listed Securities
Rule 6958
Rule 9610(a)

Compliance date is July 10, 2006.  Members are required to capture and report both the time an order is received from the customer, and the time the order is received at the trading desk or trading department (if those times are different). Continued…

NTM 06-18

General Securities

Short Sales - Close-Out Requirements
SEC Regulation SHO
SEC Rule 203(b)(3)

Regulation SHO requires participants of a registered clearing agency to “close out” failure-to-deliver positions in threshold securities that have persisted for 13 consecutive settlement days by purchasing securities of like kind and quantity.

NTM 06-19

General Securities

Market Orders
Rule 3380
Trade Shredding/splitting

Reminds members of SEC Rule 3380, approved 2/24/06, which prohibits splitting any order or execution into multiple smaller orders or executions for the purpose receiving greater financial rewards such as rebates, commissions, gratuities, credits, etc.  This rule was effective May 25, 2006.

NTM 06-21

All

Charitable Giving
Charitable Solicitation

The concerns are present when employees of a customer acting in a fiduciary capacity solicit substantial charitable contributions from members with whom they intend to or have under contract. Continued…

NTM 06-22

General Securities

Debt Securities
Rule 6200 Series
TRACE Rules
Transaction Reporting

The NASD is seeking comments on publicly disseminating Buy/Sell and Customer/Deale information currently being reported through TRACE.  Only members currently reporting transitions through the TRACE are asked to comment.

NTM 06-23

All

Finops

The NASD is reminding FINOPs of their obligations under NASD Rule 1022 and issuing guidance to FINOPs who work part-time, work off-site or hold multiple registrations. Continued…