Proposed Rule Change to Amend Rule 1022(b), Rule 1022(c) (FINOP and Introducing FINOP Registration Requirements) and Rule 9610(a) (Procedures for Exemptive Relief)

The NASD, through its wholly owned subsidiary, NASD Regulation, Inc., has filed with the SEC a proposed rule change to amend Membership and Registration Rule 1022(b) (Limited Principal - Financial and Operations ("FINOP")), Membership and Registration Rule 1022(c) (Limited Principal - Introducing Broker/Dealer Financial and Operations ("Introducing FINOP")), and Procedural Rule 9610 (Procedures for Exemptions). The proposed amendments to Rule 1022(b) and Rule 1022(c) would (1) clarify the applicability of Rule 1022(b) and Rule 1022(c) to members by making citations in these rules consistent with the SEC's net capital rule, (2) eliminate the ability of a member that is subject to the SEC's net capital rule to request an exemption from the requirement under Rule 1022(b) to have a FINOP, and (3) exclude from the requirements of Rule 1022(b) and Rule 1022(c) those firms that are exempt from or otherwise not subject to the SEC's net capital rule. The proposed amendments to Rule 9610(a) would eliminate Rule 1022 from the list of rules from which a member may seek exemptive relief. The proposed amendments to Rule 9610(a) also would make a technical change to clarify that the Rule 9600 Series merely sets forth procedures for seeking exemptive relief, and that the type of relief that may be requested, and the authority to grant such relief, is found in the rules listed in Rule 9610(a).