031202morgan

MEMORANDUM

TO: File No. S7-17-01

FROM: Patricia Albrecht

DATE: March 12, 2002

RE: February 12, 2002 Conference call between Commission staff members and representatives of Morgan Stanley Dean Witter

________________________________________________________________________

PARTICIPANTS
Representatives from the Securities and Exhange Commission
Catherine McGuire
Patricia Albrecht
Representatives from Morgan Stanley Dean Witter
Georgia Bullitt
Bill McCoy
Heather Siedel

CONTENTS OF CONFERENCE CALL

The conference call participants discussed the differences between the confirmation practices of the securities industry and those of the futures industry. Specifically, the meeting participants discussed the confirmation requirements under SEC Rule 10b-10, CFTC Rule 1.33(b), and the confirmation rules of the Chicago Mercantile Exchange and the Chicago Board of Trade.

Attached is a chart prepared by the Morgan Stanley Dean Witter staff comparing the requirements of SEC Rule 10b-10, CFTC Rule 1.33(b), and the confirmation rules of the Chicago Mercantile Exchange and the Chicago Board of Trade.

Summary of
Confirmation Requirements
under SEC Rule 10b-10 and CFTC Rule 1.33(b)

Item of Information SEC Rule 10b-10 General Description CFTC Rule 1.33(b) General Description

Scope (a) and (d)(1) Only includes customers, not broker-dealers (c) For commodity customers. Does not need to be sent to members of a contract market or for the FCM's own accounts or the accounts of its affiliates.

Timing (a) At or before completion of transaction (b) Next business day

(b)(1) For commodity customers.
No specified items in Rule 1.33(b), but industry practice is to include on a daily confirm the items required by CFTC Rule 1.33(b)(2), CFTC Rule 1.46 (daily purchases and sales) and CFTC Rule 1.33(a) (open positions and balance summary required in monthly statements. Also, futures exchanges have specific rules detailing some information that must be included on confirmations.

(b)(2) For options on futures customers.

Execution Date (a)(1) Required. (b)(2)(vi) Required.

Exercise Date (b)(2)(v) Required.

Execution Time (a)(1) Can be available upon request Industry practice to include that it will be available upon request.

Identity (a)(1) Required. (b)(2)(iv) Underlying futures contract or physical.
Also, exchange rules require the identity of the product.

Price (a)(1) Execution price required. CME Rule 537, CBOT Rule 421 Execution price required.

CBOE Rule 9.11, NASD Rule 2860(b)(12) Amount of premium required. (b)(2)(ii) Amount of premium required.

CBOE Rule 9.11, NASD Rule 2860(b)(12) Exercise price required. (b)(2)(iii) Strike price required.

Average Price SEC no-action letter. Can disclose average price on one confirm subject to certain requirements. CFTC no-action letter. Can disclose weighted mathematical average price upon request by client.

Amount (a)(1) Required. CME Rule 537, CBOT Rule 421 Industry practice to include it. Also required by exchange rules.

Buy/Sell (a)(1) Required. CME Rule 537, CBOT Rule 421 Industry practice to include it. Also required by exchange rules.

Account number Industry practice. (b)(2)(i) Required.

Name of other Party

(a)(2)(i)(A) Only when acting in an agency capacity.
Can say available upon request.
CBOT Rule 421 Can also be provided upon request (CBOT Rule 421.01).

Capacity - Agent (a)(2) Agent
Agent for other
Agent for both
A majority of trades are done as agent. In limited circumstances a firm may act as market maker or engage in block trades, exchange for physicals ("EFPs"), exchange-for swaps ("EFSs") or exchange-permitted cross trades that the firm facilitates.

Capacity - Principal (a)(2) Required. Must disclose if it's a block trade, EFP or EFS under CFTC Rule 1.38(b).

Capacity - Market Maker (a)(2) and (a)(8)(ii) Required.

Fees, Charges, Etc.

(a)(2)(i)(B) - when acting in an agency capacity Commissions
(specifically, remuneration received by broker from customer in connection with transaction)
(b)(2)(ii) All other commission, costs, fees and other charges

(a)(2)(i)(C) - when acting in an agency capacity Payment for Order Flow Statement
(covers listed, Nasdaq NM and SmallCap and OTCBB securities)
Practice does not exist in futures markets.

(a)(2)(i)(D) - when acting in an agency capacity Any other remuneration in connection with transaction
(can state will be furnished upon request)
(b)(2)(ii) All other commission, costs, fees and other charges

(a)(2)(ii)(A) - when not acting as market maker, only for "riskless" principal trades Difference between price to customer and dealer's offsetting price (AKA "mark-up/down") (b)(2)(ii) Mark-up (CFTC rules only allow mark-ups on option premiums).

(a)(8)(i)(A) - when not acting as market maker, only for "riskless" principal trades Mark-up/down or similar remuneration (b)(2)(ii) Mark-up (CFTC rules only allow mark-ups on option premiums).

(a)(2)(ii)(B) - principal trades, including market maker trades Reported trade price, price to customer, and difference, if any
(covers listed and Nasdaq NM securities and any equity security quoted on Nasdaq or traded on a national securities exchange that is subject to last sale reporting).
(b)(2)(ii) Mark-up, and all other commission, costs, fees and other charges

(a)(8)(i)(B) - principal trades, including market maker trades Reported trade price, price to customer and difference, if any
(covers listed and Nasdaq NM securities)
(b)(2)(ii) Mark-up, and all other commission, costs, fees and other charges

Odd-Lot Differential (a)(3) Required. N/A N/A (futures do not trade in odd lots).

SIPC (a)(9) Must state if not a member of SIPC. Will have to disclose to clients in new required SIPC/seg notice.

Managed Accounts SEC 1994 release on 10b-10 and 1995 no-action letter. Allowed to send confirms to the investment advisers or custodian provided certain requirements are met. (d) Must send to person who controls the account as well as the underlying client. Must also send statement required by CTFC Rule 1.46 (daily purchases and sales).

Introduced Accounts NYSE Rule 382 generally sets out certain requirements for these types of accounts. Industry practice to disclose on confirms. (f) Must show the name of the introducing broker and the FCM.

Directed Brokerage Commission release and no-action letter under Rule 10b-10. Must disclose that a portion of the commission was returned. N/A Practice does not exist in futures markets.

TO:	File No. S7-17-01
FROM:	Patricia Albrecht
DATE:	March 12, 2002
RE:	February 12, 2002 Conference call between Commission staff members and representatives of Morgan Stanley Dean Witter

Item of Information	SEC Rule 10b-10	General Description	CFTC Rule 1.33(b)	General Description
Scope	(a) and (d)(1)	Only includes customers, not broker-dealers	(c)	For commodity customers. Does not need to be sent to members of a contract market or for the FCM's own accounts or the accounts of its affiliates.
Timing	(a)	At or before completion of transaction	(b)	Next business day
			(b)(1)	For commodity customers. No specified items in Rule 1.33(b), but industry practice is to include on a daily confirm the items required by CFTC Rule 1.33(b)(2), CFTC Rule 1.46 (daily purchases and sales) and CFTC Rule 1.33(a) (open positions and balance summary required in monthly statements. Also, futures exchanges have specific rules detailing some information that must be included on confirmations.
			(b)(2)	For options on futures customers.
Execution Date	(a)(1)	Required.	(b)(2)(vi)	Required.
Exercise Date			(b)(2)(v)	Required.
Execution Time	(a)(1)	Can be available upon request		Industry practice to include that it will be available upon request.
Identity	(a)(1)	Required.	(b)(2)(iv)	Underlying futures contract or physical. Also, exchange rules require the identity of the product.
Price	(a)(1)	Execution price required.	CME Rule 537, CBOT Rule 421	Execution price required.
	CBOE Rule 9.11, NASD Rule 2860(b)(12)	Amount of premium required.	(b)(2)(ii)	Amount of premium required.
	CBOE Rule 9.11, NASD Rule 2860(b)(12)	Exercise price required.	(b)(2)(iii)	Strike price required.
Average Price	SEC no-action letter.	Can disclose average price on one confirm subject to certain requirements.	CFTC no-action letter.	Can disclose weighted mathematical average price upon request by client.
Amount	(a)(1)	Required.	CME Rule 537, CBOT Rule 421	Industry practice to include it. Also required by exchange rules.
Buy/Sell	(a)(1)	Required.	CME Rule 537, CBOT Rule 421	Industry practice to include it. Also required by exchange rules.
Account number		Industry practice.	(b)(2)(i)	Required.
Name of other Party	(a)(2)(i)(A)	Only when acting in an agency capacity. Can say available upon request.	CBOT Rule 421	Can also be provided upon request (CBOT Rule 421.01).
Capacity - Agent	(a)(2)	Agent Agent for other Agent for both		A majority of trades are done as agent. In limited circumstances a firm may act as market maker or engage in block trades, exchange for physicals ("EFPs"), exchange-for swaps ("EFSs") or exchange-permitted cross trades that the firm facilitates.
Capacity - Principal	(a)(2)	Required.		Must disclose if it's a block trade, EFP or EFS under CFTC Rule 1.38(b).
Capacity - Market Maker	(a)(2) and (a)(8)(ii)	Required.
Fees, Charges, Etc.
	(a)(2)(i)(B) - when acting in an agency capacity	Commissions (specifically, remuneration received by broker from customer in connection with transaction)	(b)(2)(ii)	All other commission, costs, fees and other charges
	(a)(2)(i)(C) - when acting in an agency capacity	Payment for Order Flow Statement (covers listed, Nasdaq NM and SmallCap and OTCBB securities)		Practice does not exist in futures markets.
	(a)(2)(i)(D) - when acting in an agency capacity	Any other remuneration in connection with transaction (can state will be furnished upon request)	(b)(2)(ii)	All other commission, costs, fees and other charges
	(a)(2)(ii)(A) - when not acting as market maker, only for "riskless" principal trades	Difference between price to customer and dealer's offsetting price (AKA "mark-up/down")	(b)(2)(ii)	Mark-up (CFTC rules only allow mark-ups on option premiums).
	(a)(8)(i)(A) - when not acting as market maker, only for "riskless" principal trades	Mark-up/down or similar remuneration	(b)(2)(ii)	Mark-up (CFTC rules only allow mark-ups on option premiums).
	(a)(2)(ii)(B) - principal trades, including market maker trades	Reported trade price, price to customer, and difference, if any (covers listed and Nasdaq NM securities and any equity security quoted on Nasdaq or traded on a national securities exchange that is subject to last sale reporting).	(b)(2)(ii)	Mark-up, and all other commission, costs, fees and other charges
	(a)(8)(i)(B) - principal trades, including market maker trades	Reported trade price, price to customer and difference, if any (covers listed and Nasdaq NM securities)	(b)(2)(ii)	Mark-up, and all other commission, costs, fees and other charges
Odd-Lot Differential	(a)(3)	Required.	N/A	N/A (futures do not trade in odd lots).
SIPC	(a)(9)	Must state if not a member of SIPC.		Will have to disclose to clients in new required SIPC/seg notice.
Managed Accounts	SEC 1994 release on 10b-10 and 1995 no-action letter.	Allowed to send confirms to the investment advisers or custodian provided certain requirements are met.	(d)	Must send to person who controls the account as well as the underlying client. Must also send statement required by CTFC Rule 1.46 (daily purchases and sales).
Introduced Accounts	NYSE Rule 382 generally sets out certain requirements for these types of accounts.	Industry practice to disclose on confirms.	(f)	Must show the name of the introducing broker and the FCM.
Directed Brokerage	Commission release and no-action letter under Rule 10b-10.	Must disclose that a portion of the commission was returned.	N/A	Practice does not exist in futures markets.