The U.S. Securities and Exchange Commission has approved a proposal that could force broker-dealers affiliated with life insurers to register more offices as branch offices.
The proposal will change the definition of "branch office" used by the National Association of Securities Dealers Inc., Washington.
The NASD requires member firms to register branch offices and pay a $75 fee for each branch.
The NASD has been using a relatively narrow definition that has excluded many small satellite locations affiliated with life insurance company broker-dealers. The securities industry self-regulatory organization hopes to begin using the new, broader definition in early 2006, after it introduces new branch office information features of its Central Registration Depository system, according to the SEC order approving the NASD rule change.
The NASD filed the first version of the proposed rule change in July 2003 and the final version in August.
The old branch office definition has exempted many satellite locations, such as locations listed on sales reps' business cards, as long as the rep has provided the telephone number and address of the branch office responsible for supervising the satellite location.
The old NASD definition is different from definitions that the SEC and the New York Stock Exchange have been using. The SEC has been encouraging the NASD and the NYSE to come up with a single definition, to increase the usefulness of the CRD system as a tool for tracking branch offices and branch office reps, SEC officials write in a discussion of their order.
The NASD and NYSE came up with definitions similar to the SEC definition, but the NASD left out a condition that might have required member firms to register reps' homes if the reps work in their homes at least 50 days a year.
The current version of the NASD definition leaves out the 50-day limit for reps' use of homes as unregistered locations. But reps might still have to register their homes if they handle money in their home offices or meet with customers in their homes.
The NASD exempts satellite locations other than homes if reps use those locations for fewer than 30 business days per year or in effect fewer than 25 securities transactions at those locations per year.
