[Federal Register Volume 59, Number 34 (Friday, February 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3702]
[[Page Unknown]]
[Federal Register: February 18, 1994]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-33621]
Proprietary Trading Systems
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule, proposed rule amendment; withdrawal.
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SUMMARY: The Commission today is withdrawing proposed Rule 15c2-10
under the Securities Exchange Act of 1934 (``Act''), published in the
Federal Register on April 18, 1989, which would have applied to the
operation of securities trading systems that are not operated as
facilities of national securities exchanges or associations. The
Commission is also withdrawing a proposed amendment to Rule 3a12-7
under the Act, which would have conformed that rule to the provisions
of proposed Rule 15c2-10. The Commission is withdrawing these proposals
because: a substantial period of time has lapsed since their
publication by the Commission; subsequent developments suggest that
consideration of Rule 15c2-10 as proposed may not be appropriate at
this time; and the Commission has proposed Rule 17a-23 under the Act,
which would apply to certain automated systems that would also have
been subject to proposed Rule 15c2-10.
FOR FURTHER INFORMATION CONTACT: Gordon K. Fuller, Esq., Special
Counsel, Division of Market Regulation, Securities and Exchange
Commission, room 5205 (Mail Stop 5-1), 450 Fifth Street, NW.,
Washington, DC 20549, 202/272-2414.
SUPPLEMENTARY INFORMATION: Rule 15c2-10, proposed in 1989,1 would
have applied to certain securities trading and information systems that
are not operated as facilities of a registered national securities
exchange or association (``proprietary trading systems''). Among other
things, the proposed Rule would have required each operator of a
proprietary trading system to submit to the Commission a plan covering
the system. The Commission would publish and review the plan, and, if
the Commission determined that it met the requirements of the Rule, it
would declare the plan effective. Under the Commission's proposal, a
broker or dealer or municipal securities dealer or government
securities dealer would be prohibited from sponsoring or entering an
indication of interest, quotation, or order to purchase or sell a
security in the trading system unless the plan had been declared
effective.
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\1\Securities Exchange Act Release No. 26708 (April 11, 1989),
54 FR 15429. The Commission received substantial comment on this
proposal. A summary of these comments is available in File S7-3-94
in the Commission's Public Reference Room.
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A companion proposal to amend Rule 3a12-7 under the Act also was
published with Rule 15c2-10. That proposal would have conformed Rule
3a12-7 to the provisions of Rule 15c2-10. The effect of this amendment
would have been to require that government securities options systems
comply with the proposed rule if adopted, and to clarify that entities
that meet the definition of ``clearing agency'' set forth in the Act
and that clear transactions in options on government securities
executed through proprietary trading systems may be subject to the
clearing agency registration requirements of the Act.
In light of the Commission's experience since 1989, the Commission
does not believe that it would be appropriate to adopt the structure
contemplated by Rule 15c2-10 at this time.2 The Commission has
proposed Rule 17a-23 under the Act,3 which would require enhanced
recordkeeping and reporting by sponsors of proprietary trading systems
and other automated trading systems, which are defined in proposed Rule
17a-23 as ``broker-dealer trading systems.''
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\2\Cf. Market 2000: An Examination of Current Equity Market
Developments, Division of Market Regulation, pp. 27 and III-12-III-
13 (January 1994) (Division recommended that the Commission adopt
enhanced recordkeeping and reporting requirements).
\3\Securities Exchange Act Release No. 33605 (February 9, 1994).
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For these reasons, and because five years have passed since the
Commission proposed Rule 15c2-10, the Commission has determined to
withdraw Proposed Rule 15c2-10, and the proposed amendment to Rule
3a12-7 at this time pursuant to its statutory authority under Section
23 of the Act.4
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\4\15 U.S.C. 78w.
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Dated: February 14, 1994.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-3702 Filed 2-17-94; 8:45 am]
BILLING CODE 8010-01-P
