Metropolitan Life Insurance Company

January 14, 2004

VIA EMAIL

Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549-0609

Re: Release No. 34-48897; File No. SR-NASD-2003-104
Proposed New "Branch Office" Definition Under NASD Rule 3010(g)(2)

Dear Mr. Katz:

This letter is written on behalf of Metropolitan Life Insurance Company, and its affiliated broker-dealers which include, MetLife Securities, Inc., New England Securities Corp. and Walnut Street Securities, Inc. (hereinafter collectively referred to as "MetLife"), all duly registered broker-dealers under the Securities and Exchange Act of 1934 and member firms of the NASD. MetLife appreciates the opportunity to comment on Release No. 34-48897; File No. SR-NASD-2003-104 which proposes to amend the NASD's current branch office definition. Additionally, MetLife commends the NASD's effort to amend its original rule proposal and address the concerns set forth in the industry's comments on that proposal. In particular, MetLife is particularly pleased with the NASD's amendments concerning the treatment of primary residences as branch offices and the elimination of the 50-business day requirement.

As stated in our previous comment letter,1 we believe that a registered representative's primary residence should generally not be required to be registered as a branch office. The only situation where MetLife believes such registration may be appropriate is when a representative regularly meets with clients at such residence and holds such residence out to the general public as a place where securities business can be transacted. We believe that registration of a representative's residence in most other circumstances creates an undue and costly burden on the member firm.

We applaud the NASD for recognizing that its member firms, are more diverse in structure than most New York Stock Exchange firms and may include independent contractor firms, smaller broker-dealers, or insurance affiliated broker-dealers which have dispersed sales forces that work from numerous locations throughout the country. As the brokerage business changes, however, it is important for regulators to provide firms with the flexibility to allow people to work from their homes without turning their homes into full-fledged branch offices that require the maintenance of books and records. Furthermore, we believe that it is more appropriate for the books and records required to be maintained in connection with a registered representative who works from home to be maintained in the office to which such representative reports so the appropriate supervisor can review the representative's business and adequately discharge his/her supervisory responsibilities. There appears to be no additional regulatory benefit of registering a representative's primary residence so long as the business that the representative generates from their home is reviewed and approved at a registered branch office.

Whether a location is registered as a branch office or not has no impact on a firm's responsibility to supervise its representatives. Member firms are required to visit both registered and non-registered offices on a periodic basis. Therefore, the only impact that the registration of a primary residence as a branch office has on the industry and investing public is the imposition of further compliance burdens and an increase of fees that will surely be passed on to the investing public. Provided there are safeguards in place to protect investors, we believe that a primary residence should not be treated as a branch office so long as the business generated from a residential location flows through a registered branch or OSJ and the location is not held out to the public. We believe that, for the most part, the NASD's branch office definition as currently proposed provides such necessary safeguards.

While we support the proposed definition as it is a significant improvement over the original proposal, we would like to express our concern over a few provisions of the primary residence registration exemptions which may prove to be difficult to monitor. First, the rule allows a primary residence to be an unregistered location so long as customer funds are not "handled" at the location. We would hope that a situation where a registered representative meets with a client in the evening, receives a check made payable to the broker-dealer from the client, and, because of the late hour, brings that check back to his/her primary residence would not constitute the "handling" of funds. We believe that the funds are not "handled" until they are processed at the branch office or OSJ at which they are received. However, due to the ambiguity of the term "handled," we are concerned that this activity may be interpreted to require a home to be registered as a branch office. We suggest that the NASD consider modifying proposed Rule 3010(g)(B)(iii) to include a time limitation or such other qualifying parameter for defining the handling of customer funds.

In addition, the proposed rule, as amended, imposes a restriction against registered representatives meeting with clients in the representative's residence. Prohibiting representatives from meeting clients in their residences appears to be overly restrictive and difficult to enforce. So long as the other required safeguards are met to ensure that a representative's activities are being supervised, we believe that it should not matter where a meeting occurs. As such, we respectfully recommend that the NASD make an allowance for meetings at a representative's residence so long as such meetings are not a regular occurrence.

Lastly, MetLife would like to reiterate its view that the 50-business day requirement in the primary residence exception would be burdensome, time consuming and difficult to enforce. It would be nearly impossible to track the number of days and hours an associated person works from his or her primary residence. Not only would such monitoring be prone to error, the resources needed to monitor where work is performed could be better directed at supervising the firm's securities activities, rather than keeping track of how many days a representative works from home. MetLife, again, commends the NASD for the elimination of the 50-business day requirement and we respectfully urge the NYSE to reconsider their rule proposal to allow the industry to achieve true uniformity.

In summary, MetLife supports the NASD's amendments to the proposed rule and applauds the efforts of the NASD and the state securities regulators to develop a uniform branch office definition across the securities industry. In addition to allowing for convenient and cost efficient registration through CRD, the uniform definition will allow representatives to take advantage of the modern technology that enables them to work from home, while still being supervised from the branch office to which they report. Most importantly, by not requiring primary residence registration in most circumstances, the NASD will be promoting more effective and less costly supervision and compliance among all member firms.

Sincerely,

Leonard M. Bakal
Vice President and Compliance Director
Metropolitan Life Insurance Company

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1 See letter dated September 30, 2002 from Marc Cohn, which we incorporate by reference herein.