The National Association of Securities Dealers is offering some flexibility in its new branch office registration rules for insurance sales offices that exceed securities sales expectations.[@@]
The NASD, Washington, says it has developed the new office registration rules in an effort to make regulation more uniform and ease the process of setting up a branch office registration system that will be linked to the NASD’s Central Registration Depository system.
The U.S. Securities and Exchange Commission recently approved the new NASD branch office definition and related changes in the definition of branch office used by the New York Stock Exchange.
One new NASD rule provision will require broker-dealers to register most offices that handle more than 25 securities transactions per year as branch offices.
Life insurers and their distributors have complained bitterly about the new branch office registration rule, arguing that the NASD seems to be intent on using it to milk office registration fees from life distribution systems, which use vast networks of insurance production offices that each handle a small number of securities transactions per year.
Life insurers and their trade groups, such as the American Council of Life Insurers, Washington, have suggested that the 25-transaction limit could be particularly difficult to handle for life insurance production offices that surprise their managers by handling more securities transactions than expected.
In Notice 2005-67, the document that explains how the NASD will apply the new definition, the self-regulatory group says it will make allowances for non-branch locations used primarily to engage in non-securities transactions.
If a non-branch startles managers by meeting the 25-transaction threshold, “members will be given a 30-calendar-day window to register such locations as branch offices,” the NASD says.
The NASD notes that it will lock users out of the branch registration system from Oct. 14 to Oct. 30, while it converts to the new system.
NASD members will have from Oct. 31 to April 30, 2006, to register branch offices under the new branch office definition.
A copy of the NASD notice is on the Web at http://www.nasd.com/web/groups/rules_regs/documents/notice_to_members/nasdw_015121.pdf