Alert ID: 057   10/31/2005
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BRANCH OFFICE DEFINITION
FINALLY ISSUED BY THE NASD

Effective May 1, 2006 NASD Rule 3010(g)(2) will be amended to reflect the new definition of a branch office, which will include "any location where one or more associated persons of a member regularly conducts the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security, or that is held out as such."

The following locations will be exempt from the definition of a branch office:
1.
 A location that operates as a non-sales location or a back office;
2.
 A representative's primary residence provided that the location is not held out as an office; meetings with customers may not be conducted at this office; customer funds or securities may not be handled; associated
person(s) are assigned to a branch office, which is referenced on all business cards, letterhead, advertisements and other communications to the public; e-mail must be transmitted through the firm's e-mail system; orders must be entered through the branch office or through an electronic system that can be reviewed by the branch office; communication with the public are subject to all NASD rules; and written procedures regarding the supervision of the location are maintained;
3.
 Any location other than a primary residence that is used for securities business less than 30 business-days in any calendar year (i.e. vacation or second home;
4.
 Locations of convenience where an associated person meets with customers by appointment. The location cannot be held out to the public as an office location;
5.
 Locations where associated persons are primarily engaged in non-securities activities (insurance sales) and no more than 25 securities transactions are effected in a calendar year. Advertisements and other communication with the public must list the supervising branch office in addition to the non-securities location;
6.
 Floor of a national securities exchange; and
7.
 Temporary location used as part of a business continuity plan.

An office that supervises one or more non-branch offices is also considered a branch office and an office that supervises one or more branch offices is considered an Office of Supervisory Jurisdiction (OSJ).

This revised definition of a branch office should be utilized when completing the Form BR which supersedes Schedule E on the Form BD. Since October 14, 2005 the NASD-CRD system has been locked out for the NASD's conversion of Schedule E to Form BR. On October 31, 2005, firms will commence the identification of branch offices on Form BR which will be linked to the Form U-4 to identify the physical location of the representative as well as the supervising location. .Firms will have until May 1, 2006 to complete the review and updating of all branch locations.
Curtis Sorrells, Vice President Broker/Dealer Division 281-863-6116
  MGL Consulting Corporation
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The Woodlands, Texas 77381
Phone: 281-367-0380
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