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To: Ellen who wrote (45186)	4/9/1998 6:30:00 PM
From: Ellen	Respond to of 55532

From nasdr.com Part of it says: 3 The proposed rule change became effective on filing. See Release No. 34- 39665 (February 13, 1998), 63 FR 9032 (February 23, 1998). The concerns raised by the commenters include issues concerning the effect of the rules on the review of incoming correspondence and the scope of the obligation of member firms to control the use of electronic communications systems that registered persons use to communicate with their customers. After considering these issues, NASD Regulation proposes to implement the amendments to Rules 3010 and 3110 approved in Release No. 39510 immediately, including the requirements set forth in Notice to Members 98-11, with the exception of the provision in the Notice stating that members must review 3all incoming correspondence received in non-electronic format directed to registered representatives and related to a member1s investment banking or securities business.2 NASD Regulation proposes to delay the effective date of this provision until July 7, 1998. Extension of the effective date for this provision will allow NASD Regulation a further opportunity to consider comments on this issue. Prior to this effective date, however, members will be required to review and report customer complaints as required by Rule 3070(a)(2); keep and preserve all written customer complaints as required by Rule 3110(d); and establish procedures for the review of incoming and outgoing written and electronic correspondence consistent with new Rules 3010(d)(1) and (2). Among other things, NASD Regulation proposes to make effective immediately that portion of the Notice to Members that states that members1 supervisory policies and procedures must: prohibit registered representatives and other employees1 use of electronic correspondence to the public unless such communications are subject to supervisory and review procedures developed by the firm. For example, NASD Regulation would expect members to prohibit correspondence with customers from employees1 home computers or through third party systems unless the firm is capable of monitoring such communications. In response to comments received regarding this provision in the Notice, NASD Regulation wishes to point out that the Notice to Members does not establish any new obligation that is not already encompassed by Rule 3010's requirement that firms supervise the activities of their associated persons and registered representatives to ensure compliance with applicable securities laws and regulations and NASD rules and merely provides guidance to members on how they can comply with Rule 3010. Furthermore, the Notice to Members does not prohibit the use of such systems or dictate the use of a particular system. The Notice only points out that firms should prohibit correspondence with customers through electronic communication systems unless the firm is capable of supervising the communications. In developing procedures for the review of correspondence, each firm must determine how it will review different types of correspondence, including electronic correspondence. If the firm determines that it can subject correspondence to customers through electronic communication systems to appropriate supervision and review, the firm can allow employees to correspond with customers through such systems.