EXCERPTS COURTESY OF ... www.bdcompliance.com
The NASD has an enhanced tool for automated searching of the U.S. TreasuryÂ´s Office of Foreign Asset ControlÂ´s (OFAC) Specially Designated Nationals and Blocked Persons (SDN) List. The new tool is located at: http://
The MSRB has proposed new Rule G-41 to ensure that all brokers, dealers and municipal securities dealers that effect transactions in municipal securities â€” and in particular those that only effect transactions in municipal securities â€” are aware of, and in compliance with, anti-money laundering program requirements. Proposed Rule G-41 requires that all dealers establish and implement anti-money laundering programs that are in compliance with the rules and regulations of either its registered securities association (i.e., NASD) or its appropriate banking regulator governing the establishment and maintenance of anti-money laundering programs.
On July 1, 2003, the Department of the Treasury requested comment on two issues relating to the final customer identification regulations issued recently under Section 326 of the Patriot Act. The issues are: 1) Whether and under what circumstances financial institutions should be required to retain photocopies of identification documents relied on to verify customer identity; and, 2) whether there are situations when the regulations should preclude reliance on certain forms of foreign government issued identification to verify customer identity. Written comments must be submitted on or before July 31, 2003. For more information: http://www.treas.gov/offices/general-counsel/ 326_notice_of_inquiry.html.
Release 5.1 is scheduled for implementation July 14th. This release will incorporate changes to Forms U4 and U5 if approved by the SEC. The changes will (1) streamline the language associated with questions on the Form U-4 question relating to fingerprint requirements; (2) add a question and disclosure reporting page (DRP) to the Form U-5 that parallels the Form U-4 question and DRP relating to terminations for cause; (3) add new disclosure questions to require reporting of certain events that now subject individuals to a statutory disqualification under the expanded definition of that term in the Securities Exchange Act of 1934; and (4) make certain technical, clarifying, and conforming changes on the Forms U-4 and U-5 to facilitate accurate reporting
NASD and SEC proposals
The SEC has approved a rule filed by the NASD and the International Securities Exchange (ISE) to transfer from the ISE to the NASD certain responsibilities for regulating the options-related sales practices of members that belong to both SROs. After a comment period in which no comments were received, the SEC approved the rule change and said that the change would prevent a pattern from developing in which broker-dealers maintaining membership in more than one SRO could be subject to multiple examinations.
The NASD reminds members that the use of â€œinstant messagingâ€ by employees is subject to the same requirements as e-mail communications. It must be retained for at least three years and the communication cannot violate rules governing sales literature and correspondence. In addition, members must ensure that their use of instant messaging is consistent with their basic supervisory and record keeping obligations.
The SEC has published guidance for the new books and records requirements. The guidance is contained in Rel. No. 34-47910.
The Municipal Securities Rulemaking Board (MSRB) has published two documents regarding its planned move to real-time municipal securities transaction reporting. The first is a notice requesting comments on how real-time prices should be disseminated. The second notice contains specifications for dealers wishing to program their automated trade processing systems to report municipal transaction data to the MSRB. For more information contact the MSRB at 703-797-6600 or www.msrb.org.
The MSRBÂ´s electronic Rule G-37 Submission System which generates electronically reports of political contributions and/or new public finance business (as defined by MSRB Rule G-37), is now operational. Although firms are not required to file their Form G-37/38 or Form G-37x electronically, the use of the MSRB eG-37 System will permit municipal securities dealers to eliminate their paper filings. In order to first use the MSRB eG-37 System, municipal securities dealers must register on the MSRBÂ´s Web Site at www.msrb.org. For more information, contact the MSRB at (703) 797-6600.
A joint NYSE/NASD advisory group has completed a report on IPO practices and has recommended significant changes in the process.
A proposed rule enabling members that are registered as market markers or ECNâ€™s to request and receive a second market participant identifier with which to enter a second attributable quote/order in the NASDAQ quotation montage or to enter non-attributable orders into SIZE in SuperMontage is established as a two month pilot program scheduled to begin July 1, 2003. NASDAQ will issue a Head Trader Alert publicly announcing the precise start and end dates of the pilot.