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FDIC Law, Regulations, Related Acts

[Main Tabs]     [Table of Contents - 8000]     [Index]     [Previous Page]     [Next Page]     [Search] 8000 - Miscellaneous Statutes and Regulations SEC. 3A.  SWAP AGREEMENTS   (a)  NON-SECURITY-BASED SWAP AGREEMENTS.--The definition of "security" in section 3(a)(10) of this title does not include any non-security-based swap agreement (as defined in section 206C of the Gramm-Leach-Bliley Act).   (b)  SECURITY-BASED SWAP AGREEMENTS.--     (1)  The definition of security' in section 3(a)(10) of this title does not include any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act).     (2)  The Commission is prohibited from registering, or requiring, recommending, or suggesting, the registration under this title of any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act). If the Commission becomes aware that a registrant has filed a registration application with respect to such a swap agreement, the Commission shall promptly so notify the registrant. Any such registration with respect to such a swap agreement shall be void and of no force or effect.     (3)  Except as provided in section 16(a) with respect to reporting requirements, the Commission is prohibited from--       (A)  promulgating, interpreting, or enforcing rules; or       (B)  issuing orders of general applicability; under this title in a manner that imposes or specifies reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act).     (4)  References in this title to the "purchase" or "sale" of a security-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act) shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap agreement, as the context may require. [Codified to 15 U.S.C. 78c--1] Source: Section 303(a) of title III of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--452), effective December 21, 2000] NOTE   Membership in a national securities exchange.   Section 31(a) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), provides in part as follows:   "(a)... Neither the provisions of section 3(a)(3)... of the Securities Exchange Act of 1934 (as amended by this Act) nor any rule or regulation thereunder shall apply so as to deprive any person of membership in any national securities exchange (or its successor) of which such person was, on the date of enactment of this Act [June 4, 1975], a member or a member firm as defined in the constitution of such exchange, or so as to deny membership in any such exchange (or its successor) to any natural person who is or becomes associated with such member or member firm." SECURITIES AND EXCHANGE COMMISSION   SEC. 4.  (a)  There is hereby established a Securities and Exchange Commission (hereinafter referred to as the "Commission") to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. Not more than three of such commissioners shall be members of the same political party, and in making appointments members of different political parties shall be appointed alternately as nearly as may be practicable. No commissioner shall engage in any other business, vocation, or employment than that of serving as commissioner, nor shall any commissioner participate, directly or indirectly, in any stockmarket operations or transactions of a character subject to regulation by the Commission pursuant to this title. Each Commissioner {{10-31-07 p.9186.05}} shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and except (1) any Commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (2) the terms of office of the Commissioners first taking office after the date of enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at the end of two years, one at the end of three years, one at the end of four years, and one at the end of five years, after the date of enactment of this title.   (b)  Appointment and Compensation of Staff and Leasing Authority.--     (1)  APPOINTMENT AND COMPENSATION.-- The Commission is authorized to appoint and fix the compensation of such officers, attorneys, examiners, and other experts as may be necessary for carrying out its functions under this Act, without regard to the provisions of other laws applicable to the employment and compensation of officers and employees of the United States, and the Commission may, subject to the civil-service laws, appoint such other officers and employees as are necessary in the execution of its functions and fix their salaries in accordance with the Classification Act of 1923, as amended.     (2)  ECONOMISTS--       (A)  COMMISSION AUTHORITY--Notwithstanding the provisions of chapter 51 of title 5, United States Code, the Commission is authorized--         (i)  to establish its own criteria for the selection of such professional economists as the Commission deems necessary to carry out the work of the Commission;         (ii)  to appoint directly such professional economists as the Commission deems qualified; and         (iii)  to fix and adjust the compensation of any professional economist appointed under this paragraph, without regard to the provisions of chapter 54 of title 5, United States Code, or subchapters II, III, or VIII of chapter 53, of title 5, United States Code.       (B)  LIMITATION ON COMPENSATION--No base compensation fixed for an economist under this paragraph may exceed the pay for Level IV of the Executive Schedule, and no payments to an economist appointed under this paragraph shall exceed the limitation on certain payments in section 5307 of title 5, United States Code.       (C)  OTHER BENEFITS--All professional economists appointed under this paragraph shall remain within the existing civil service system with respect to employee benefits.     (3)  LEASING AUTHORITY.--Notwithstanding any other provisions of law, the Commission is authorized to enter directly into leases for real property for office, meeting, storage, and such other space as is necessary to carry out its functions, and shall be exempt from any General Services Administration space management regulations or directives.   (c)  Notwithstanding any other provision of law, in accordance with regulations which the Commission shall prescribe to prevent conflicts of interest, the Commission may accept payment and reimbursement, in cash or in kind, from non-Federal agencies, organizations, and individuals for travel, subsistence, and other necessary expenses incurred by Commission members and employees in attending meetings and conferences concerning the functions or activities of the Commission. Any payment or reimbursement accepted shall be credited to the appropriated funds of the Commission. The amount of travel, subsistence, and other necessary expenses for members and employees paid or reimbursed under this subsection may exceed per diem amounts established in official travel regulations, but the Commission may include in its regulations under this subsection a limitation on such amounts.   (d)  Notwithstanding any other provision of law, former employers of participants in the Commission's professional fellows programs may pay such participants their actual expenses for relocation to Washington, District of Columbia, to facilitate their participation in such programs, and program participants may accept such payments.   (e)  Notwithstanding any other provision of law, whenever any fee is required to be paid to the Commission pursuant to any provision of the securities laws or any other law, the Commission may provide by rule that such fee shall be paid in a manner other than in cash {{10-31-07 p.9186.06}}and the Commission may also specify the time that such fee shall be determined and paid relative to the filing of any statement or document with the Commission.   (f)  Reimbursement of Expenses for Assisting Foreign Securities Authorities.--Notwithstanding any other provision of law, the Commission may accept payment and reimbursement, in cash or in kind, from a foreign securities authority, or made on behalf of such authority, for necessary expenses incurred by the Commission, its members, and employees in carrying out any investigation pursuant to section 21(a)(2) of this title or in providing any other assistance to a foreign securities authority. Any payment or reimbursement accepted shall be considered a reimbursement to the appropriated funds of the Commission. [Codified to 15 U.S.C. 78d] [Source:  Section 4 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective July 1, 1934, as amended by section 1106(a) of title XI of the Act of October 28, 1949 (Pub. L. No. 429; 63 Stat. 972), effective October 28, 1949; section 3 of the Act of July 12, 1960 (Pub. L. No. 86--619; 74 Stat. 408), effective July 12, 1960; the Act of September 13, 1960 (Pub. L. No. 86--771; 74 Stat. 913), effective September 13, 1960; section 305(20) of title III of the Act of August 14, 1964 (Pub. L. No. 88--426; 78 Stat. 425, effective on the first day of the first pay period which begins on or after July 1, 1964; section 1 of the Act of June 6, 1983 (Pub. L. No. 98--38; 97 Stat. 205), effective June 6, 1983; sections 307 and 308 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1254), effective December 4, 1987; section 103 of title I and section 207 of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2713 and 2721), effective November 15, 1990; section 406 of title IV of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3444), effective October 11, 1996; section 203 of title II of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3234), effective November 3, 1998] DELEGATION OF FUNCTIONS BY COMMISSION   SEC. 4A.  (a)  In addition to its existing authority, the Securities and Exchange Commission shall have the authority to delegate, by published order or rule, any of its functions to a division of the Commission, an individual Commissioner, an administrative law judge, or an employee or employee board, including functions with respect to hearing, determining, ordering, certifying, reporting, or otherwise acting as to any work, business, or matter. Nothing in this section shall be deemed to supersede the provisions of section 556(b) of title 5, or to authorize the delegation of the function of rulemaking as defined in subchapter II of chapter 5 of title 5, United States Code, with reference to general rules as distinguished from rules of particular applicability, or of the making of any rule pursuant to section 19(c) of this title.   (b)  With respect to the delegation of any of its functions, as provided in subsection (a) of this section, the Commission shall retain a discretionary right to review the action of any such division of the Commission, individual Commissioner, administrative law judge, employee, or employee board, upon its own initiative or upon petition of a party to or intervenor in such action, within such time and in such manner as the Commission by rule shall prescribe. The vote of one member of the Commission shall be sufficient to bring any such action before the Commission for review. A person or party shall be entitled to review by the Commission if he or it is adversely affected by action at a delegated level which (1) denies any request for action pursuant to section 8(a) or section 8(c) of the Securities Act of 1933 or the first sentence of section 12(d) of this title; (2) suspends trading in a security pursuant to section 12(k) of this title; or (3) is pursuant to any provision of this title in a case of adjudication, as defined in section 551 of title 5, United States Code, not required by this title to be determined on the record after notice and opportunity for hearing (except to the extent there is involved a matter described in section 554(a) (1) through (6) of such title 5).   (c)  If the right to exercise such review is declined, or if no such review is sought within the time stated in the rules promulgated by the Commission, then the action of any such division of the Commission, individual Commissioner, administrative law judge, employee, or employee board, shall, for all purposes, including appeal or review thereof, be deemed the action of the Commission. {{2-29-08 p.9186.07}} [Codified to 15 U.S.C. 78d--1] [Source: Section 4A of the Act of June 6, 1934 (Pub. L. No. 291), as added by section 308(a) of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1254), effective December 4, 1987] TRANSFER OF FUNCTIONS WITH RESPECT TO ASSIGNMENT OF PERSONNEL TO CHAIRMAN   SEC. 4B.  In addition to the functions transferred by the provisions of Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), there are hereby transferred from the Commission to the Chairman of the Commission the functions of the Commission with respect to the assignment of Commission personnel, including Commissioners, to perform such functions as may have been delegated by the Commission to the Commission personnel, including Commissioners, pursuant to section 4A of this title. [Codified to 15 U.S.C. 78d--2] [Source: Section 4B of the Act of June 6, 1934 (Pub. L. No. 291), as added by section 308(a) of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1255), effective December 4, 1987]   SEC. 4C.  APPEARANCE AND PRACTICE BEFORE THE COMMISSION.   (a)  AUTHORITY TO CENSURE.--The Commission may censure any person, or deny, temporarily or permanently, to any person the privilege of appearing or practicing before the Commission in any way, if that person is found by the Commission, after notice and opportunity for hearing in the matter--     (1)  not to possess the requisite qualifications to represent others;     (2)  to be lacking in character or integrity, or to have engaged in unethical or improper professional conduct; or     (3)  to have willfully violated, or willfully aided and abetted the violation of, any provision of the securities laws or the rules and regulations issued hereunder.   (b)  DEFINITION.--With respect to any registered public accounting firm or associated person, for purposes of this section, the term "improper professional conduct" means--     (1)  intentional or knowing conduct, including reckless conduct, that results in a violation of applicable professional standards; and     (2)  negligent conduct in the form of--         (A)  a single instance or highly unreasonable conduct that results in a violation of applicable professional standards in circumstances in which the registered public accounting firm or associated person knows, or should know, that heightened scrutiny is warranted; or         (B)  repeated instances of unreasonable conduct, each resulting in a violation of applicable professional standards, that indicate a lack of competence to practice before the Commission. [Codified to 15 U.S.C. 78d--3] [Source: Section 4C of the Act of June 6, 1934 (Pub. L. No. 291), as added be section 602 of title VI of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 794), effective July 30, 2002] TRANSACTIONS ON UNREGISTERED EXCHANGES   SEC. 5.  It shall be unlawful for any broker, dealer, or exchange, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce for the purpose of using any facility of an exchange within or subject to the jurisdiction of the United States to effect any transaction in a security, or to report any such transaction, unless such exchange (1) is registered as a national securities exchange under section 6 of this title, or (2) is exempted from such registration upon application by the exchange because, in the opinion of the Commission, by reason of the limited volume of transactions effected on such exchange, it is not practicable and not necessary or appropriate in the public interest or for the protection of investors to require such registration. {{2-29-08 p.9186.08}} [Codified to 15 U.S.C. 78e] [Source:  Section 5 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective October 1, 1934] NATIONAL SECURITIES EXCHANGES   SEC. 6.  (a)  An exchange may be registered as a national securities exchange under the terms and conditions hereinafter provided in this section and in accordance with the provisions of section 19(a) of this title, by filing with the Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.   (b)  An exchange shall not be registered as a national securities exchange unless the Commission determines that--     (1)  Such exchange is so organized and has the capacity to be able to carry out the purposes of this title and to comply, and (subject to any rule or order of the Commission pursuant to section 17(d) or 19(g)(2) of this title) to enforce compliance by its members and persons associated with its members, with the provisions of this title, the rules and regulations thereunder, and the rules of the exchange. {{2-28-94 p.9187}}     (2)  Subject to the provisions of subsection (c) of this section, the rules of the exchange provide that any registered broker or dealer or natural person associated with a registered broker or dealer may become a member of such exchange and any person may become associated with a member thereof.     (3)  The rules of the exchange assure a fair representation of its members in the selection of its directors and administration of its affairs and provide that one or more directors shall be representative of issuers and investors and not be associated with a member of the exchange, broker, or dealer.     (4)  The rules of the exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.     (5)  The rules of the exchange are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority conferred by this title matters not related to the purposes of this title or the administration of the exchange.     (6)  The rules of the exchange provide that (subject to any rule or order of the Commission pursuant to section 17(d) or 19(g)(2) of this title) its members and persons associated with its members shall be appropriately disciplined for violation of the provisions of this title, the rules or regulations thereunder, or the rules of the exchange, by expulsion, suspension, limitation of activities, functions, and operations, fine, censure, being suspended or barred from being associated with a member, or any other fitting sanction.     (7)  The rules of the exchange are in accordance with the provisions of subsection (d) of this section, and in general, provide a fair procedure for the disciplining of members and persons associated with members, the denial of membership to any person seeking membership therein, the barring of any person from becoming associated with a member thereof, and the prohibition or limitation by the exchange of any person with respect to access to services offered by the exchange or a member thereof.     (8)  The rules of the exchange do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of this title.     (9)  The rules of the exchange prohibit the listing of any security issued in a limited partnership rollup transaction (as such term is defined in paragraphs (4) and (5) of section 14(h)), unless such transaction was conducted in accordance with procedures designed to protect the rights of limited partners, including--       (A)  the right of dissenting limited partners to one of the following:         (i)  an appraisal and compensation;         (ii)  retention of a security under substantially the same terms and conditions as the original issue;         (iii)  approval of the limited partnership rollup transaction by not less than 75 percent of the outstanding securities of each of the participating limited partnerships;         (iv)  the use of a committee of limited partners that is independent, as determined in accordance with rules prescribed by the exchange, of the general partner or sponsor, that has been approved by a majority of the outstanding units of each of the participating limited partnerships, and that has such authority as is necessary to protect the interest of limited partners, including the authority to hire independent advisors, to negotiate with the general partner or sponsor on behalf of the limited partners, and to make a recommendation to the limited partners with respect to the proposed transaction; or         (v)  other comparable rights that are prescribed by rule by the exchange and that are designed to protect dissenting limited partners;       (B)  the right not to have their voting power unfairly reduced or abridged; {{2-28-94 p.9188}}       (C)  the right not to bear an unfair portion of the costs of a proposed limited partnership rollup transaction that is rejected; and       (D)  restrictions on the conversion of contingent interests or fees into non-contingent interests or fees and restrictions on the receipt of a non-contingent equity interest in exchange for fees for services which have not yet been provided. As used in this paragraph, the term "dissenting limited partner" means a person who, on the date on which soliciting material is mailed to investors, is a holder of a beneficial interest in a limited partnership that is the subject of a limited partnership rollup transaction, and who casts a vote against the transaction and complies with procedures established by the exchange, except that for purposes of an exchange or tender offer, such person shall file an objection in writing under the rules of the exchange during the period during which the offer is outstanding.   (c)(1)  A national securities exchange shall deny membership to (A) any person, other than a natural person, which is not a registered broker or dealer or (B) any natural person who is not, or is not associated with, a registered broker or dealer.     (2)  A national securities exchange may, and in cases in which the Commission, by order, directs as necessary or appropriate in the public interest or for the protection of investors broker or dealer or natural person associated with a registered broker or dealer, and bar from becoming associated with a member any person, who is subject to a statutory disqualification. A national securities exchange shall file notice with the Commission not less than thirty days prior to admitting any person to membership or permitting any person to become associated with a member, if the exchange knew, or in the exercise of reasonable care should have known, that such person was subject to a statutory disqualification. The notice shall be in such form and contain such information as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.     (3)(A)  A national securities exchange may deny membership to, or condition the membership of, a registered broker or dealer if (i) such broker or dealer does not meet such standards of financial responsibility or operational capability or such broker or dealer or any natural person associated of training, experience, and competence as are prescribed by the rules of the exchange or (ii) such broker or dealer or person associated with such broker or dealer has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a member and the natural persons associated with such an applicant in accordance with procedures established by the rules of the exchange.       (B)  A national securities exchange may bar a natural person from becoming a member or associated with a member, or condition the membership of a natural person or association of a natural person with a member, if such natural person (i) does not meet such standards of training, experience, and competence as are prescribed by the rules of the exchange or (ii) has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a person associated with a member in accordance with procedures established by the rules of the exchange and require any person associated with a member, or any class of such persons, to be registered with the exchange in accordance with procedures so established.       (C)  A national securities exchange may bar any person from becoming associated with a member if such person does not agree (i) to supply the exchange with such information with respect to its relationship and dealings with the member as may be specified in the rules of the exchange and (ii) to permit the examination of its books and records to verify the accuracy of any information so supplied.     (4)  A national securities exchange may limit (A) the number of members of the exchange and (B) the number of members and designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker: Provided, however, That no national securities exchange shall have {{2-28-94 p.9188.01}}the authority to decrease the number of memberships in such exchange, or the number of members and designated representatives of members permitted to effect transactions on the floor of such exchange without the services of another person acting as broker, below such number in effect on May 1, 1975, or the date such exchange was registered with the Commission, whichever is later: And provided further, That the Commission, in accordance with the provisions of section 19(c) of this title, may amend the rules of any national securities exchange to increase (but not to decrease) or to remove any limitation on the number of memberships in such exchange or the number of members or designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker, if the Commission finds that such limitation imposes a burden on competition not necessary or appropriate in furtherance of the purposes of this title.   (d)(1)  In any proceeding by a national securities exchange to determine whether a member or person associated with a member should be disciplined (other than a summary proceeding pursuant to paragraph (3) of this subsection), the exchange shall bring specific charges, notify such member or person of, and give him an opportunity to defend against, such charges, and keep a record. A determination by the exchange to impose a disciplinary sanction shall be supported by a statement setting forth--       (A)  Any act or practice in which such member or person associated with a member has been found to have engaged, or which such member or person has been found to have omitted;       (B)  the specific provision of this title, the rules or regulations thereunder, or the rules of the exchange which any such act or practice, or omission to act, is deemed to violate; and       (C)  the sanction imposed and the reasons therefor.     (2)  In any proceeding by a national securities exchange to determine whether a person shall be denied membership, barred from becoming associated with a member, or prohibited or limited with respect to access to services offered by the exchange or a member thereof (other than a summary proceeding pursuant to paragraph (3) of this subsection), the exchange shall notify such person of, and give him an opportunity to be heard upon, the specific grounds for denial, bar, or prohibition or limitation under consideration and keep a record. A determination by the exchange to deny membership, bar a person from becoming associated with a member, or prohibit or limit a person with respect to access to services offered by the exchange or a member thereof shall be supported by a statement setting forth the specific grounds on which the denial, bar, or prohibition or limitation is based.     (3)  A national securities exchange may summarily (A) suspend a member or person associated with a member who has been and is expelled or suspended from any self-regulatory organization or barred or suspended from being associated with a member of any self-regulatory organization, (B) suspend a member who is in such financial or operating difficulty that the exchange determines and so notifies the Commission that the member cannot be permitted to continue to do business as a member with safety to investors, creditors, other members, or the exchange, or (C) limit or prohibit any person with respect to access to services offered by the exchange if subparagraph (A) or (B) of this paragraph is applicable to such person or, in the case of a person who is not a member, if the exchange determines that such person does not meet the qualification requirements or other prerequisites for such access and such person cannot be permitted to continue to have such access with safety to investors, creditors, members, or the exchange. Any person aggrieved by any such action shall be promptly afforded an opportunity for a hearing by the exchange in accordance with the provisions of paragraph (1) or (2) of this subsection. The Commission, by order, may stay any such summary action on its own motion or upon application by any person aggrieved thereby, if the Commission determines summarily or after notice and opportunity for hearing (which hearing may consist solely of the submission of affidavits or presentation of oral arguments) that such stay is consistent with the public interest and the protection of investors. {{2-28-94 p.9188.02}}   (e)(1)  On and after the date of enactment of the Securities Acts Amendments of 1975, no national securities exchange may impose any schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members: Provided, however, That until May 1, 1976, the preceding provisions of this paragraph shall not prohibit any such exchange from imposing or fixing any schedule of commissions, allowances, discounts, or other fees to be charged by its members for acting as broker on the floor of the exchange or as odd-lot dealer: And provided further, That the Commission, in accordance with the provisions of section 19(b) of this title as modified by the provisions of paragraph (3) of this subsection, may--       (A)  permit a national securities exchange, by rule, to impose a reasonable schedule or fix reasonable rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange prior to November 1, 1976, if the Commission finds that such schedule or fixed rates of commissions, allowances, discounts, or other fees are in the public interest; and       (B)  permit a national securities exchange, by rule, to impose a schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange after November 1, 1976, if the Commission finds that such schedule or fixed rates of commissions, allowances, discounts, or other fees (i) are reasonable in relation to the costs of providing the service for which such fees are charged (and the Commission publishes the standards employed in adjudging reasonableness) and (ii) do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of this title, taking into consideration the competitive effects of permitting such schedule or fixed rates weighed against the competitive effects of other lawful actions which the Commission is authorized to take under this title.     (2)  Notwithstanding the provisions of section 19(c) of this title, the Commission, by rule, may abrogate any exchange rule which imposes a schedule or fixes rates of commissions, allowances, discounts, or other fees, if the Commission determines that such schedule or fixed rates are no longer reasonable, in the public interest, or necessary to accomplish the purposes of this title.     (3)(A)   Before approving or disapproving any proposed rule change submitted by a national securities exchange which would impose a schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange, the Commission shall afford interested persons (i) an opportunity for oral presentation of data, views, and arguments and (ii) with respect to any such rule concerning transactions effected after November 1, 1976, if the Commission determines there are disputed issues of material fact, to present such rebuttal submissions and to conduct (or have under subparagraph (B) of this paragraph) such cross-examination as the Commission determines to be appropriate and required for full disclosure and proper resolution of such disputed issues of material fact.       (B)  The Commission shall prescribe rules and make rulings concerning any proceeding in accordance with subparagraph (A) of this paragraph disigned to avoid unnecessary costs or delay. Such rules or rulings may (i) impose reasonable time limits on each interested person's oral presentations, and (ii) require any cross-examination to which a person may be entitled under subparagraph (A) of this paragraph to be conducted by the Commission on behalf of that person in such manner as the Commission determines to be appropriate and required for full disclosure and proper resolution of disputed issues of material fact.       (C)(i)  If any class of persons, the members of which are entitled to conduct (or have conducted) cross-examination under subparagraphs (A) and (B) of this paragraph and which have, in the view of the Commission, the same or similar interests in the proceeding, cannot agree upon a single representative of such interests for purposes of cross-examination, the Commission may make rules and rulings specifying the manner in which such interests shall be represented and such cross-examination conducted.         (ii)  No member of any class of persons with respect to which the Commission has specified the manner in which its interests shall be represented pursuant to clause (i) of {{6-29-01 p.9188.02-A}}this subparagraph shall be denied, pursuant to such clause (i), the opportunity to conduct (or have conducted cross-examination as to issues affecting his particular interests if he satisfies the Commission that he has made a reasonable and good faith effort to reach agreement upon group representation and there are substantial and relevant issues which would not be presented adequately by group representation.       (D)  A transcript shall be kept of any oral presentation and cross-examination.       (E)  In addition to the bases specified in subsection 25(a), a reviewing Court may set aside an order of the Commission under section 19(b) approving an exchange rule imposing a schedule or fixing rates of commissions, allowances, discounts, or other fees, if the Court finds--         (1)  a Commission determination under subparagraph (A) of this paragraph conduct cross-examination or make rebuttal submissions, or         (2)  a Commission rule or ruling under subparagraph (B) of this paragraph rebuttal submissions, has precluded full disclosure and proper resolution of disputed issues of material fact which were necessary for fair determination by the Commission.   (f)  The Commission, by rule or order, as it deems necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to assure equal regulation, may require--     (1)  any person not a member or a designated representative of a member of a national securities exchange effecting transactions on such exchange without the services of another person acting as a broker, or     (2)  any broker or dealer not a member of a national securities exchange effecting transactions on such exchange on a regular basis, to comply with such rules of such exchange as the Commission may specify.   (g)  Notice Registration of Security Futures Product Exchanges.--     (1)  REGISTRATION REQUIRED.--An exchange that lists or trades security futures products may register as a national securities exchange solely for the purposes of trading security futures products if--       (A)  the exchange is a board of trade, as that term is defined by the Commodity Exchange Act (7 U.S.C. 1a(2)), that--         (i)  has been designated a contract market by the Commodity Futures Trading Commission and such designation is not suspended by order of the Commodity Futures Trading Commission; or         (ii)  is registered as a derivative transaction execution facility under section 5a of the Commodity Exchange Act and such registration is not suspended by the Commodity Futures Trading Commission; and       (B)  such exchange does not serve as a market place for transactions in securities other than--         (i)  security futures products; or         (ii)  futures on exempted securities or groups or indexes of securities or options thereon that have been authorized under section 2(a)(1)(C) of the Commodity Exchange Act.     (2)  REGISTRATION BY NOTICE FILING.--       (A)  FORM AND CONTENT.--An exchange required to register only because such exchange lists or trades security futures products may register for purposes of this section by filing with the Commission a written notice in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents concerning such exchange, comparable to the information and documents required for national securities exchanges under section 6(a), as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. If such exchange has filed documents with the Commodity Futures Trading Commission, to the extent that such documents contain information, satisfying the Commission's informational requirements, copies of such documents may be filed with the Commission in lieu of the required written notice. {{6-29-01 p.9188.02-B}}       (B)  IMMEDIATE EFFECTIVENESS.--Such registration shall be effective contemporaneously with the submission of notice, in written or electronic form, to the Commission, except that such registration shall not be effective if such registration would be subject to suspension or revocation.       (C)  TERMINATION.--Such registration shall be terminated immediately if any of the conditions for registration set forth in this subsection are no longer satisfied.     (3)  PUBLIC AVAILABILITY.--The Commission shall promptly publish in the Federal Register an acknowledgment of receipt of all notices the Commission receives under this subsection and shall make all such notices available to the public.     (4)  EXEMPTION OF EXCHANGES FROM SPECIFIED PROVISIONS.--       (A)  TRANSACTION EXEMPTIONS.--An exchange that is registered under paragraph (1) of this subsection shall be exempt from, and shall not be required to enforce compliance by its members with, and its members shall not, solely with respect to those transactions effected on such exchange in security futures products, be required to comply with, the following provisions of this title and the rules thereunder.         (i)  Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9), (c), (d), and (e) of this section.         (ii)  Section 8.         (iii)  Section 11.         (iv)  Subsections (d), (f), and (k) of section 17.         (v)  Subsections (a), (f), and (h) of section 19.       (B)  RULE CHANGE EXEMPTIONS.--An exchange that registered under paragraph (1) of this subsection shall also be exempt from submitting proposed rule changes pursuant to section 19(b) of this title, except that--         (i)  such exchange shall file proposed rule changes related to higher margin levels, fraud or manipulation, recordkeeping, reporting, listing standards, or decimal pricing for security futures products, sales practices for security futures products for persons who effect transactions in security futures products, or rules effectuating such exchange's obligation to enforce the securities law pursuant to section 19(b)(7);         (ii)  such exchange shall file pursuant to sections 19(b)(1) and 19(b)(2) proposed rule changes related to margin, except for changes resulting in higher margin levels; and         (iii)  such exchange shall file pursuant to sections 19(b)(1) proposed rule changes that have been abrogated by the Commission pursuant to section 19(b)(7)(C).     (5)  TRADING IN SECURITY FUTURES PRODUCTS.--       (A)  IN GENERAL.--Subject to subparagraph (B), it shall be unlawful for any person to execute or trade a security futures product until the later of--         (i)  1 year after the date of the enactment of the Commodity Futures Modernization Act of 2000; or         (ii)  such date that a futures association registered under section 17 of the Commodity Exchange Act has met the requirements set forth in section 15A(k)(2) of this title.       (B)  Principal-to-principal transactions.--Notwithstanding subparagraph (A), a person may execute or trade a security futures product transaction if--         (i)  the transaction is entered into--           (I)  on a principal-to-principal basis between parties trading for their own accounts or as described in section 1a(12)(B)(ii) of the Commodity Exchange Act; and           (II)  only between eligible contract participants (as defined in subparagraphs (A), (B)(ii), and (C) of such section 1a(12)) at the time at which the persons enter into the agreement, contract, or transaction; and         (ii)  the transaction is entered into on or after the later of--           (I)  8 months after the date of the enactment of the Commodity Futures Modernization Act of 2000; or           (II)  such date that a futures association registered under section 17 of the Commodity Exchange Act has met the requirements set forth in section 15A(k)(2) of this title. {{6-29-01 p.9188.02-C}}   (h)  TRADING IN SECURITY FUTURES PRODUCTS.--     (1)  TRADING ON EXCHANGE OR ASSOCIATION REQUIRED.--It shall be unlawful for any person to effect transactions in security futures products that are not listed on a national securities exchange or a national securities association registered pursuant to section 15A(a).     (2)  LISTING STANDARDS REQUIRED.--Except as otherwise provided in paragraph (7), a national securities exchange or a national securities association registered pursuant to section 15A(a) may trade only security futures products that (A) conform with listing standards that such exchange or association files with the Commission under section 19(b) and (B) meet the criteria specified in section 2(a)(1)(D)(i) of the Commodity Exchange Act.     (3)  Requirements for listing standards and conditions for trading.--Such listing standards shall--       (A)  except as otherwise provided in a rule, regulation, or order issued pursuant to paragraph (4), require that any security underlying the security future, including each component security of a narrow-based security index, be registered pursuant to section 12 of this title;       (B)  require that if the security futures product is not cash settled, the market on which the security futures product is traded have arrangements in place with a registered clearing agency for the payment and delivery of the securities underlying the security futures product;       (C)  be no less restrictive than comparable listing standards for options traded on a national securities exchange or national securities association registered pursuant to section 15A(a) of this title;       (D)  except as otherwise provided in a rule, regulation, or order issued pursuant to paragraph (4), require that the security future be based upon common stock and such other equity securities as the Commission and the Commodity Futures Trading Commission jointly determine appropriate;       (E)  require that the security futures product is cleared by a clearing agency that has in place provisions for linked and coordinated clearing with other clearing agencies that clear security futures products, which permits the security futures product to be purchased on one market and offset on another market that trades such product;       (F)  require that only a broker or dealer subject to suitability rules comparable to those of a national securities association registered pursuant to section 15A(a) effect transactions in the security futures product;       (G)  require that the security futures product be subject to the prohibition against dual trading in section 4j of the Commodity Exchange Act (7 U.S.C. 6j) and the rules and regulations thereunder or the provisions of section 11(a) of this title and the rules and regulations thereunder, except to the extent otherwise permitted under this title and the rules and regulations thereunder;       (H)  require that trading in the security futures product not be readily susceptible to manipulation of the price of such security futures product, nor to causing or being used in the manipulation of the price of any underlying security, option on such security, or option on a group or index including such securities;       (I)  require that procedures be in place for coordinated surveillance among the market on which the security futures product is traded, any market on which any security underlying the security futures product is traded, and other markets on which any related security is traded to detect manipulation and insider trading;       (J)  require that the market on which the security futures product is traded has in place audit trails necessary or appropriate to facilitate the coordinated surveillance required in subparagraph (I);       (K)  require that the market on which the security futures product is traded has in place procedures to coordinate trading halts between such market and any market on which any security underlying the security futures product is traded and other markets on which any related security is traded; and       (L)  require that the margin requirements for a security futures product comply with the regulations prescribed pursuant to section 7(c)(2)(B), except that nothing in this {{6-29-01 p.9188.02-D}}subparagraph shall be construed to prevent a national securities exchange or national securities association from requiring higher margin levels for a security futures product when it deems such action to be necessary or appropriate.     (4)  Authority to modify certain listing standard requirements.--       (A)  AUTHORITY TO MODIFY.--The Commission and the Commodity Futures Trading Commission, by rule, regulation, or order, may jointly modify the listing standard requirements specified in subparagraph (A) or (D) of paragraph (3) to the extent such modification fosters the development of fair and orderly markets in security futures products, is necessary or appropriate in the public interest, and is consistent with the protection of investors.       (B)  AUTHORITY TO GRANT EXEMPTIONS.--The Commission and the Commodity Futures Trading Commission, by order, may jointly exempt any person from compliance with the listing standard requirement specified in subparagraph (E) of paragraph (3) to the extent such exemption fosters the development of fair and orderly markets in security futures products, is necessary or appropriate in the public interest, and is consistent with the protection of investors.     (5)  Requirements for other persons trading security future products.--It shall be unlawful for any person (other than a national securities exchange or a national securities association registered pursuant to section 15A(a)) to constitute, maintain, or provide a marketplace or facilities for bringing together purchasers and sellers of security future products or to otherwise perform with respect to security future products the functions commonly performed by a stock exchange as that term is generally understood, unless a national securities association registered pursuant to section 15A(a) or a national securities exchange of which such person is a member--       (A)  has in place procedures for coordinated surveillance among such person, the market trading the securities underlying the security future products, and other markets trading related securities to detect manipulation and insider trading;       (B)  has rules to require audit trails necessary or appropriate to facilitate the coordinated surveillance required in subparagraph (A); and       (C)  has rules to require such person to coordinate trading halts with markets trading the securities underlying the security future products and other markets trading related securities.     (6)  DEFERRAL OF OPTIONS ON SECURITY FUTURES TRADING.--No person shall offer to enter into, enter into, or confirm the execution of any put, call, straddle, option, or privilege on a security future, except that, after 3 years after the date of the enactment of this subsection, the Commission and the Commodity Futures Trading Commission may by order jointly determine to permit trading of puts, calls, straddles, options, or privileges on any security future authorized to be traded under the provisions of this Act and the Commodity Exchange Act.     (7)  DEFERRAL OF LINKED AND COORDINATED CLEARING.--       (A)  Notwithstanding paragraph (2), until the compliance date, a national securities exchange or national securities association registered pursuant to section 15A(a) may trade a security futures product that does not--         (i)  conform with any listing standard promulgated to meet the requirement specified in subparagraph (E) of paragraph (3); or         (ii)  meet the criterion specified in section 2(a)(1)(D)(i)(IV) of the Commodity Exchange Act.       (B)  The Commission and the Commodity Futures Trading Commission shall jointly publish in the Federal Register a notice of the compliance date no later than 165 days before the compliance date.       (C)  For purposes of this paragraph, the term compliance date' means the later of--         (i)  180 days after the end of the first full calendar month period in which the average aggregate comparable share volume for all security futures products based on single equity securities traded on all national securities exchanges, any national securities {{6-29-01 p.9188.02-E}}associations registered pursuant to section 15A(a), and all persons equals or exceeds 10 percent of the average aggregate comparable share volume of options on single equity securities traded on all national securities exchanges and any national securities associations registered pursuant to section 15A(a); or         (ii)  2 years after the date on which trading in any security futures product commences under this title.   (i)  Consistent with this title, each national securities exchange registered pursuant to subsection (a) of this section shall issue such rules as are necessary to avoid duplicative or conflicting rules applicable to any broker or dealer registered with the Commission pursuant to section 15(b) (except paragraph (11) thereof), that is also registered with the Commodity Futures Trading Commission pursuant to section 4f(a) of the Commodity Exchange Act (except paragraph (2) thereof), with respect to the application of--     (1)  rules of such national securities exchange of the type specified in section 15(c)(3)(B) involving security futures products; and     (2)  similar rules of national securities exchanges registered pursuant to section 6(g) and national securities associations registered pursuant to section 15A(k) involving security futures products.   (j)  PROCEDURES AND RULES FOR SECURITY FUTURE PRODUCTS.--A national securities exchange registered pursuant to subsection (a) shall implement the procedures specified in section 6(h)(5)(A) of this title and adopt the rules specified in subparagraphs (B) and (C) of section 6(h)(5) of this title not later than 8 months after the date of receipt of a request from an alternative trading system for such implementation and rules.   (k)(1)  To the extent necessary or appropriate in the public interest, to promote fair competition, and consistent with the promotion of market efficiency, innovation, and expansion of investment opportunities, the protection of investors, and the maintenance of fair and orderly markets, the Commission and the Commodity Futures Trading Commission shall jointly issue such rules, regulations, or orders as are necessary and appropriate to permit the offer and sale of a security futures product traded on or subject to the rules of a foreign board of trade to United States persons.     (2)  The rules, regulations, or orders adopted under paragraph (1) shall take into account, as appropriate, the nature and size of the markets that the securities underlying the security futures product reflect. [Codified to 15 U.S.C. 78f] [Source:  Section 6 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective September 1, 1934, as amended by section 4 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 104), effective December 1, 1975, except amendments to sections 6(e) and (f) effective June 4, 1975; sections 309--312 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1255 and 1256), effective December 4, 1987; and section 303(b) of title III of the Act of December 17, 1993 (Pub. L. No. 103--202; 107 Stat. 2365, effective December 17, 1994; sections 202(a) and 206(a), (i), (k)(2) and (6) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--416, 426, 433, and 434, respectively), effective December 21, 2000] {{6-29-01 p.9189}} NOTES   Membership in a national securities exchange.   Section 31(a) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), provides in part as follows:   "(a)... Neither the provisions of section ... 6(b)(2), or 6(c)(1) of the Securities Exchange Act of 1934 (as amended by this Act) nor any rule or regulation thereunder shall apply so as to deprive any person of membership in any national securities exchange (or its successor) of which such person was, on the date of enactment of this Act [June 4, 1975], a member or a member firm as defined in the constitution of such exchange, or so as to deny membership in any such exchange (or its successor) to any natural person who is or becomes associated with such member or member firm."   Compliance with the Securities Exchange Act of 1934, as amended.  Section 31(b) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), reads as follows:   "(b)  If it appears to the Commission at any time within one year of the effective date of any amendment made by this Act to the Securities Exchange Act of 1934 that the organization or rules of any nationalsecurities exchange or registered securities association registered with the Commission on the date of enactment of this Act do not comply with such Act as amended, the Commission shall so notify such exchange or association in writing, specifying the respects in which the exchange or association is not in compliance with such Act. On and after the one hundred eightieth day following the date of receipt of such notice by a national securities exchange or registered securities association, the Commission, without regard to the provisions of section 19(h) of the Securities Exchange Act of 1934, as amended by this Act, is authorized by order, to suspend the registration of any such exchange or association or impose limitations on the activities, functions, and operations of any such exchange or association, if the Commission finds, after notice and opportunity for hearing, that the organization or rules of such exchange or association do not comply with such Act. Any such suspension or limitation shall continue in effect until the Commission, by order, declares that such exchange or association is in compliance with such requirements." [Main Tabs]     [Table of Contents - 8000]     [Index]     [Previous Page]     [Next Page]     [Search]

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