From: michael.garcia.bvzx@statefarm.com Sent: Tuesday, January 20, 2004 7:09 PM To: rule-comments@sec.gov Subject: file#SR-NASD-2003-104 Proposed NASD Rule Change re: Definition of Branch Office Dear Secretary: I am a licensed insurance professional and variable products/mutual funds salesperson. I am writing to you because the NASD's proposal to revise the definition of branch office in Rule 3010(g)(2) will have a significant impact on my business. ****** This proposal will HELP THE BIG BROKERS and HURT THE BEGINNING INVESTOR!! ****** The financial expense and administrative burdens that will be caused by the change in status of my office from a non-branch location to a branch office will result in it no longer being economically feasible to offer variable products and mutual funds to my clients. This can only have a harmful impact on consumers since their access to these products, which often constitute an important part of my clients overall financial planning, will likely be reduced or eliminated. ***** Currently, if a parent wants to begin an Education Savings Account, they can see me, and set one up for $50 or $100 per month. The Big Brokers would NEVER talk to them--too little money for them! Under the new rules, I would NOT BE ALLOWED TO TALK TO THEM. I'm sure this is an unintended consequence! ******* In addition, the NASD has not addressed the disproportionate impact that the proposal will have on limited purpose broker-dealers affiliated with life insurance companies. The proposal will have little if any impact on full-service broker-dealers, who typically conduct all of their activities from offices that meet the NASDs current definition of branch offices. This is appropriate since full-service broker-dealers conduct a full range of securities and financial activities at these offices. However, I, a broker-dealer affiliated with State Farm Insurance Companies, perform a much narrower range of activities. State Farm and I have structured our operations based on the current definition, and we would be presented with significant new economic and administrative costs in order to comply with the new definition. For these reasons, I am urging the SEC to reject the NASD proposal to revise the definition of branch office and to keep in place the current definition. In the alternative, the proposal should be amended to (i) waive the filing fee for any non-branch location which becomes a branch office as a result of the proposal, and (ii) the number of permitted transactions in the exclusion found in section 3010(g)(2)(E) should be substantially increased. Thank you for your consideration of my views on this matter. Sincerely, Michael Garcia 3223 Duke St Ste C Alexandria, VA 22314