Revisions to NASD By-Laws Extending Existing Pilot Program for the Regulatory Fee and the Trading Activity Fee

NASD has filed with the SEC a proposed rule change to extend the pilot program for the Trading Activity Fee (“TAF”) for 60 days effective December 31, 2002 and expiring March 1, 2003. The TAF structure as originally proposed in SR-NASD-2002-98 (and sunset in SR-NASD-2002-147) expired on December 31, 2002. Upon expiration of SR-NASD-2002-98, the member regulatory pricing structure was to revert back to Section 8 of Schedule A of the By-Laws as amended. However, NASD has determined not to revert to the previous pricing structure established in Section 8 of Schedule A of the NASD By-Laws, but rather to extend the TAF pilot program in order to maintain the status quo and to allow the SEC more time to review issues presented by the proposed TAF rule change. This rule filing is to be read in conjunction with SR-NASD-2002-99. Together they comprise the NASD’s member regulatory pricing structure.