[Federal Register Volume 59, Number 108 (Tuesday, June 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13732]
[[Page Unknown]]
[Federal Register: June 7, 1994]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240 and 249
[Release No. 34-34140; File No. S7-17-94]
RIN 3235-AG15
Proposed Rule Changes of Self Regulatory Organizations; Annual
Filing of Amendments to Registration Statements of National Securities
Exchanges, Securities Associations, and Reports of the Municipal
Securities Rulemaking Board
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rulemaking.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
proposing to amend Rule 19b-4 and Form 19b-4, the rule and form that
set forth the procedures for the filing by self-regulatory
organizations (``SROs'') of proposed rule changes under the Securities
Exchange Act of 1934. The amendments would expand the scope of those
proposed rule changes that may become effective under Section
19(b)(3)(A) of the Act. The proposed amendments are intended to
expedite and streamline the process through which proposed rule changes
are filed and become effective. The Commission also is proposing to
amend the rules and forms applicable to the annual filing of amendments
to registration statements of national securities exchanges, securities
associations, and reports of the Municipal Securities Rulemaking Board,
to streamline those requirements.
DATES: Comments should be received on or before August 8, 1994.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street,
NW., Mail Stop 6-9, Washington, DC 20549. Comment letters should refer
to File No. S7-17-94. All comment letters received will be made
available for public inspection and copying in the Commission's Public
Reference Room, 450 Fifth Street, NW., Washington, DC 20549.
FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel, or
Andrew S. Margolin, Attorney, at (202) 942-0073, Office of Chief
Counsel, Division of Market Regulation, Securities and Exchange
Commission, 450 Fifth Street, NW., Mail Stop 7-10, Washington, DC
20549.
SUPPLEMENTARY INFORMATION:
I. Background on SRO Rule Filings
A. Statutory Framework for Filing of Proposed Rule Changes
Section 19(b)(1)1 of the Securities Exchange Act of 19342
(``Exchange Act'' or ``Act'') requires a self-regulatory
organization3 to file with the Commission its proposed rule
changes4 accompanied by a concise general statement of the basis
and purpose of the proposed rule change. Once a proposed rule change
has been filed, the Commission is required to publish notice of it and
provide an opportunity for public comment. The proposed rule change may
not take effect unless it is approved by the Commission or is otherwise
permitted to become effective under Section 19(b) of the Act.5
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\1\15 U.S.C. 78s(b)(1).
\2\15 U.S.C. 78a et seq.
\3\Section 3(a)(26) of the Act, 15 U.S.C. Sec. 78c(a)(26),
defines the term ``self-regulatory organization'' to mean any
national securities exchange, registered securities association,
registered clearing agency, and, for purposes of Section 19(b) and
other limited purposes, the Municipal Securities Rulemaking Board
(``MSRB'').
\4\Section 19(b)(1) of the Act defines the term ``proposed rule
change'' to mean ``any proposed rule or rule change in addition to,
or deletion from the rules of [a] self-regulatory organization.'' In
turn, Sections 3(a)(27) and 3(a)(28) of the Act provide,
essentially, that the term ``rules of a self-regulatory
organization'' means (i) the rules of the MSRB and the constitution,
articles of incorporation, bylaws, and rules, or instruments
corresponding to the foregoing, of any other SRO and (ii) such
stated policies, practices, and interpretations of an SRO (other
than the MSRB) as the Commission, by rule, may determine to be
necessary or appropriate in the public interest or for the
protection of investors to be deemed to be rules. The Commission has
exercised this rulemaking authority in paragraph (b) of Rule 19b-4
under the Act, which defines the term ``stated policy, practice, or
interpretation.'' See description, infra, at note 9.
\5\See generally Senate Comm. on Banking, Housing & Urb. Affs.,
Report to Accompany S. 249: Securities Acts Amendments of 1975, S.
Rep. No. 94-75, 94th Cong., 1st Sess. 22-38 (Comm. Print
1975)(``Senate Report''), reprinted in, [1975] U.S. Code Cong. & Ad.
News 179, 200-15 (excerpt on ``Self-Regulation and SEC Oversight'');
Note, Informal Bargaining Process: An Analysis of the SEC's
Regulation of the New York Stock Exchange, 80 Yale L.J. 811 (1971).
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Section 19(b)(2) of the Act6 sets forth the standards and time
periods for Commission action either to approve a proposed rule change
or to institute and conclude a proceeding to determine whether a
proposed rule change should be disapproved. Generally, the Commission
must either approve the proposed rule change or institute disapproval
proceedings within 35 days of the publication of notice of the filing
or within such longer period if the Commission finds appropriate or to
which the SRO consents. The Commission must approve a proposed rule
change if it finds that the rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to the SRO proposing the rule change. If the Commission does
not make that finding, it must institute proceedings to determine
whether to disapprove the proposed rule change. The Commission also may
approve a proposed rule change on an accelerated basis prior to 30 days
after publication of the notice if the Commission finds good cause for
so doing and publishes its reasons for so finding.7
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\6\15 U.S.C. 78s(b)(2).
\7\Section 19(b)(2)(B), 15 U.S.C. 78s(b)(2)(B).
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Section 19(b)(3) of the Act8 provides that, in certain
circumstances, a proposed rule change may become effective without the
notice and approval procedures required by Section 19(b)(2). Paragraph
(A) of Section 19(b)(3) permits certain types of proposed rule changes
to take effect in this manner if appropriately designated by the SRO as
within the following categories: (1) Constituting a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the SRO;9
(2) establishing or changing a due, fee, or other charge imposed by the
SRO;10 or (3) concerned solely with the administration of the SRO.
Section 19(b)(3)(A)(iii) also gives the Commission the authority to
expand by rule the scope of proposed rule changes that may become
effective under Section 19(b)(3)(A) if the Commission determines that
the expansion is consistent with the public interest and the purposes
of Section 19(b). Rule 19b-4(e) implements the authority of Section
19(b)(3)(A) by detailing further the scope of proposed rule changes
that may be filed under Section 19(b)(3)(A). The rule tracks those
categories enumerated in Section 19(b)(3)(A) mentioned above and also
includes a category adopted in 1980 relating to registered clearing
agencies.11
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\8\15 U.S.C. 78s(b)(3).
\9\Rule 19b-4(b) defines the term ``stated policy, practice or
interpretation'' to mean generally any material aspect of the
operation of the facilities of the SRO or any statement made
available to the membership, participants, or specified persons
thereof that establishes or changes any standard, limit, or
guideline with respect to rights and obligations of specified
persons or the meaning, administration, or enforcement of an
existing rule. 17 CFR 240.19b-4(b).
\1\0The Commission has stated that as a matter of general
policy, a proposed rule change of an SRO, other than the MSRB, that
establishes or changes a due, fee, or other charge applicable to a
non-member or non-participant should be filed under Section 19(b)(2)
for full notice and comment. Securities Exchange Act Release No.
17258 (October 30, 1980), 45 FR 73906, at 73910.
\1\1The 1980 amendment, which is similar to the amendments
proposed today, expanded the category of filings that qualify to
take effect under Section 19(b)(3)(A) to include those proposed rule
changes that relate to mechanical or operational details of existing
clearing agency services and thus are similar to ``solely
administrative'' rules. The adopting release stated that the
Commission was not expanding the category at that time to include
rule changes of SROs other than registered clearing agencies, but
that it could become appropriate to do so as other SROs developed
more varied and complex services. Id. at note 51.
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B. The Market 2000 Report
In its Market 2000 Report (``Report''), the Commission's Division
of Market Regulation (``Division'') committed to working with the SROs
to streamline the review of proposed rule changes.12 The Division
noted in the Report that SROs have argued that the process for the
filing, review, and approval of proposed rule changes is too lengthy
and hampers the efforts of the SROs to provide prompt, flexible, and
innovative order-entry and trading services to their members and the
investing public.13 The Division agreed that the rule review
process should be expedited for routine procedural and administrative
modifications to existing order-entry and trading systems, but noted
that modifications that would restrict access, burden competition, or
modify provisions or procedures designed for the protection of
investors should continue to be considered after the applicable notice
and comment period under Section 19(b)(2).14 The Report also
indicated that the Division would consider other types of proposed rule
changes that could be subject to an expedited review process.
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\1\2SEC, Division of Market Regulation, Market 2000: An
Examination of Current Equity Market Developments VI-10 (Jan. 1994).
\1\3See Letter from Thomas M. O'Donnell, Chairman and Marc E.
Lackritz, President, Securities Industry Association, to Jonathan G.
Katz, Secretary, SEC (July 1, 1993); Letter from James E. Buck,
Senior Vice President and Secretary, New York Stock Exchange, to
Jonathan G. Katz, Secretary, SEC (November 24, 1992).
\1\4Market 2000 Report at VI-10.
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II. Expanding the Scope of Proposed Rule Changes Filed Under
Section 19(b)(3)(A)
A. Systems Changes
Pursuant to authority in Section 19(b)(3)(A)(iii) of the Act, and
consistent with recommendations made in the Market 2000 Report, the
Commission proposes to amend Rule 19b-4 and the instructions to Form
19b-4 by expanding the scope of proposed rule changes that may become
effective under Section 19(b)(3)(A). In particular, routine procedural
and administrative modifications to existing order-entry and trading
systems would become eligible for filing under this provision.
The Commission believes that proposed modifications to existing
systems that are operational in nature are not likely to raise the
policy concerns that warrant the full notice and comment procedures of
Section 19(b)(2).15 Accordingly, the Commission proposes to expand
the category of rule filings that are eligible for filing under Section
19(b)(3)(A) to include systems changes that do not significantly affect
the protection of investors or the public interest, do not impose any
significant burden on competition, and do not have the effect of
limiting access to or availability of the system.
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\1\5The Commission's Automated Review Policy II (``ARP II'')
sets forth the Commission's views on, among other things, the
circumstances under which an SRO is expected to notify the
Commission of expected changes to its automated systems. As
indicated in greater detail therein, the Commission believes that an
SRO should provide notification of certain systems changes not only
to inform the Commission for purposes of ARP II, but also to help
determine whether the systems change would require a filing under
Rule 19b-4. Securities Exchange Act Release No. 29185 (May 9, 1991),
56 FR 22490.
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Under the amendment, a proposed rule change that, for example,
would increase marginally the maximum number of shares per order that
could be executed through an SRO's small order routing and execution
system may be eligible to become effective upon filing.16 Another
example would be a proposed rule change expanding the number of series
or classes eligible for options routing and execution systems.
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\1\6In a 1983 letter to the exchanges and the NASD, the staff of
the Commission's Division of Market Regulation took the position
that rule changes relating to small-order systems should be filed
under Section 19(b)(2). See, e.g., Letter from Richard T. Chase,
Assistant Director, SEC, to Frank Wilson, Executive Vice President,
NASD (February 4, 1983). If adopted, the proposed amendments in the
release will supersede the staff's position to the extent of any
conflict.
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In contrast, a proposed rule change involving a systems change that
would affect the surveillance or oversight capabilities of the SRO or
other appropriate regulatory authority would not be properly filed
under Section 19(b)(3)(A). Such a rule change could directly impair the
protection of investors and thus should be filed under Section
19(b)(2). Another example of a proposed rule change that would not be
eligible for filing under Section 19(b)(3)(A) is one that would make
mandatory the use of a particular order-entry or trading system by
members. Because such a rule change could impose burdens on
competition, it should be filed for consideration under the more
comprehensive procedures of Section 19(b)(2). Similarly, it would be
inappropriate to permit a proposed rule change to become effective
immediately if it could have the effect of limiting the access to or
availability of the system to members or investors.
B. Other Noncontroversial Rule Filings After Prior Notice to the
Commission
The Commission also proposes to amend Rule 19b-4 and the
instructions to Form 19b-4, pursuant to authority in Section
19(b)(3)(A)(iii) of the Exchange Act, to expand the scope of proposed
rule changes that may become effective under Section 19(b)(3)(A) to
include certain noncontroversial filings, if the proposed rule change,
by its terms, does not become operative for 30 days after the date of
publication of the notice of filing or such shorter time as the
Commission may designate.17 For these filings, SROs also would be
required to provide written notice to the Commission five business days
prior to the filing.18 Filing this type of proposed rule change
under Section 19(b)(3)(A) should allow SROs to implement these rule
changes more quickly than if they were filed under Section 19(b)(2).
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\1\7This 30 day provision resembles a 1979 proposal by the
Commission that featured a 60 day post-filing operation date which
was never adopted. SROs objected primarily because the 60 day
provision, when combined with a 30 day pre-filing circulation period
among members, did not provide sufficient incentive to forego filing
the proposed rule change under Section 19(b)(2). The Commission
believes that today's proposal addresses these concerns. See
Securities Exchange Act Release No. 15838 (May 18, 1979), 44 FR
30924; Securities Exchange Act Release No. 17258 (October 30, 1980),
45 FR 73906.
\1\8For every clearing agency for which the Commission is not
the appropriate regulatory agency, this notice also would be filed
with the appropriate regulatory agency for the clearing agency as
required by Section 17(c)(1) of the Exchange Act, 15 U.S.C.
78q(c)(1). Consistent with the requirements of that section, the
Commission also would expect the MSRB to file such notices with each
agency enumerated in Section 3(a)(34)(A) of the Exchange Act, 15
U.S.C. 78c(a)(34)(A).
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This new provision only would apply to those proposed rule changes
that are properly designated by the SRO as not significantly affecting
the protection of investors and not imposing any significant burden on
competition. For purposes of meeting this requirement, the impact or
burden of a proposed rule change would be significant if, in the view
of the Commission staff or industry participants, the change would
require more than a cursory analysis to determine whether the impact or
burden was necessary or appropriate under the Exchange Act. Proposed
rule changes meeting these criteria generally are less likely to
engender adverse comments or require the degree of review attendant
with more controversial filings.
For example, a proposed rule change that adds an existing rule to
an SRO's minor rule violation plan, that is objective in nature, such
as a reporting obligation, and that does not involve a violation of the
federal securities laws or the rules thereunder, could be properly
filed under this provision. Another example would be a proposed rule
change permitting the transmission of data to or from the SRO by
computer interface or other electronic means. A proposed rule change,
however, that would reduce public representation in the administration
of the affairs of an SRO or that would amend the procedures for
arbitration or disciplinary proceedings would not be a proper candidate
to become effective under Section 19(b)(3)(A). These types of filings
implicate basic policy considerations with respect to the protection of
investors, and should be filed under Section 19(b)(2) to allow for more
careful scrutiny.
Under this new provision, the SRO would have to provide the
Commission with written notice of its intent to file the proposed rule
change, along with a brief description and the text of the proposed
rule change, at least five business days prior to the filing
date.19 The Commission expects that such notices will be brief and
informal and often will be transmitted by facsimile. This prior notice
would give Commission staff an opportunity to discuss with the SRO
whether there exists an adequate basis upon which the proposed rule
change may properly qualify under this provision. Furthermore, the
notice could elicit guidance from Commission staff to help the SRO
identify those aspects of a proposed rule change that the Commission
deems important. This should help the SRO articulate in its subsequent
filing the purpose and effects of the proposed rule change, which in
turn should further facilitate and expedite the filing process.20
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\1\9This notice would be directed to the appropriate Division
staff responsible for reviewing that SRO's filings of proposed rule
changes. The Commission intends to place this notice in a public
file. See Exchange Act Section 23(a)(3), 15 U.S.C. 78w(a)(3).
\2\0The Commission emphasizes that SROs should take extreme care
in assuring that all filings express the information necessary for
the Commission's review. Any filings that fail to comply with the
requirements of Form 19b-4 may be returned to the SRO and will be
deemed not to have been filed with the Commission.
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The requirement that a proposed rule change filed in this manner
cannot, by its terms, become operative prior to 30 days after the date
of publication of the notice of filing would provide a meaningful
opportunity for public comment prior to the rule's operation. This
would allow the Commission, if necessary, to abrogate the rule change
before it became operative in the least disruptive manner possible, if
the proposed rule change was determined to be inconsistent with the
requirements of the Exchange Act and the rules and regulations
thereunder. This 30-day requirement, however, could be shortened or
waived by the Commission if consistent with the protection of investors
and the public interest.
The Commission notes that it presently has the authority under
Section 19(b)(3)(C)21 of the Act to abrogate summarily within
sixty days of filing any proposed rule change that becomes effective
under Section 19(b)(3)(A). If the proposals to expand the scope of
proposed rule changes that may become effective under Section
19(b)(3)(A) are adopted, however, the Commission intends to revise its
rules to delegate this abrogation authority to the Director of the
Division. This would be necessary to facilitate an expected increase in
the volume of proposed rule changes that would be filed under Section
19(b)(3)(A).
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\2\115 U.S.C. 78s(b)(3)(C).
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C. Submission of Form 19b-4 on Paper and on Computer Diskette
During the past five years, the staff of the Commission has acted
on over 2,000 SRO rule filings. In addition to submitting a proposed
rule change on Form 19b-4, the SRO is responsible for preparing and
attaching an exhibit to the form containing the complete notice of the
proposed rule change for publication in the Federal Register. Staff of
the Commission may amend or supplement this notice in preparing it for
publication. If and when the proposed rule change is approved, staff
also prepares an approval order for similar publication. Thus
significant staff resources are devoted to processing these filings and
preparing them for publication.
The Commission therefore is encouraging SROs to submit certain
portions of all filings on computer diskette in an appropriate
wordprocessing format. This only would apply to Form 19b-4 and the
notice for publication (Exhibit 1 to Form 19b-4). The paper version of
these documents would continue to be required, but the electronic
version would provide a more efficient way for Commission staff to
review and prepare the initial notice for publication in the Federal
Register.
D. Miscellaneous Amendments to Form 19b-4
The Commission also is proposing to reduce the number of copies of
Form 19b-4 and Exhibit 1 that SROs must submit, from twelve to eight,
including the manually signed original. The Commission also is
correcting miscellaneous outdated references contained in Form 19b-4
with respect to the Commission's address and appropriate offices within
the Division to which filings of proposed rule changes should be
directed.
III. Background on Annual Filing of Amendments to Registration
Statements of National Securities Exchanges, Securities Associations,
and Reports of the Municipal Securities Rulemaking Board
Section 5 of the Exchange Act22 generally prohibits securities
transactions on a national securities exchange unless the exchange is
registered with the Commission pursuant to Section 6 of the Act.23
Section 6 sets forth the conditions for exchange registration and
requires that an exchange file an application for registration under
Rule 6a-1 under the Act.24 That rule requires an applicant for
registration, or for exemption from registration, to file an
application on Form 1,25 together with accompanying exhibits
containing, among other things, the rules of the exchange, its
financial statements, and its various forms, schedules, and membership
lists.
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\2\215 U.S.C. 78e.
\2\315 U.S.C. 78f.
\2\417 CFR 240.6a-1.
\2\517 CFR 249.1.
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Pursuant to Rule 6a-2, a registered or exempted exchange generally
must update its registration annually by filing amendments on Form 1-A
to reflect any changes in specified information contained in the
registration statement of the exchange or its accompanying exhibits
that were not previously reported in an amendment.26 The
Commission adopted amendments in 1983 to permit exchanges to update
exhibits containing the constitution, by-laws, and rules of the
exchange and its affiliates only once every three years.27 The
Commission believes that it can streamline the requirement to file
annual amendments for certain exhibits to exchange registration. This
information is either publicly available, becomes available to the
Commission through other means, or is not useful enough to justify the
burden placed on the exchanges in collecting and filing it with the
Commission each year. The Commission notes that for certain of these
exhibits, Exchange Act rules will continue to require national
securities exchanges to provide the Commission with prompt notification
after any action that renders those exhibits inaccurate.28 In
addition, Rule 17a-1 will continue to require exchanges to maintain and
preserve for prescribed periods all documents and other records made or
received by it in the course of its business and in the conduct of its
self-regulatory activity, and upon request of any representative of the
Commission, to promptly furnish such documents.29
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\2\6Exchange Act Rule 6a-2, 17 CFR 240.6a-2.
\2\7The Commission found the annual submission of these exhibits
to be unnecessary, particularly because Section 19(b) of the
Exchange Act requires exchanges to submit all proposed rule changes
to the Commission. Securities Exchange Act Release No. 19814 (May
26, 1983), 48 FR 24663.
\2\8Rule 6a-3 requires each exchange to notify the Commission
within 10 days after any action that renders inaccurate its
registration statement or any exhibit except exhibits E, F, L and M.
17 CFR 240.6a-3.
\2\915 U.S.C. 78q(a)(1); 17 CFR 240.17a-1.
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For the same reasons, the Commission proposes to amend the
analogous rules and forms applicable to national securities
associations (namely, the National Association of Securities Dealers,
Inc. (``NASD''))30 and the MSRB. The NASD has similar requirements
to update and file certain information annually, although the form used
for this purpose differs significantly from that used for
exchanges.31 For example, the registration and amendment forms
used by the NASD are organized along the lines of rule categories,
whereas the format for exchanges focuses on exhibits and lists. The
MSRB also has an annual reporting requirement.32 The Commission
believes that it would be appropriate to streamline the reporting
requirements for these SROs as well, and to the extent the reports
concern matters analagous to those applicable to exchanges, to conform
them with the requirements for exchanges.
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\3\0Currently, the NASD is the only national securities
association registered with the Commission.
\3\1See Exchange Act Rule 15Aj-1, 17 CFR 240.15Aj-1; Form X-
15AJ-2, 17 CFR 249.803.
\3\2See Exchange Act Rule 17a-21, 17 CFR 240.17a-21.
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IV. Description of Proposal To Amend Requirements for the Annual Filing
of Amendments to Registration Statements of National Securities
Exchanges, Securities Associations, and Reports of the Municipal
Securities Rulemaking Board
As described above, Rule 6a-2 of the Exchange Act requires an
exchange to update and file annually certain amendments to its
registration with the Commission. Exchanges submit these filings on
Form 1-A by referencing the appropriate exhibit to the exchange
registration being amended. Because the Commission believes that this
is unnecessary for much of this information, the Commission is
proposing amendments to Rule 6a-2 that would eliminate or reduce this
annual filing requirement for the following: Exhibit B (forms
pertaining to application for membership and approval as a person
associated with a member); Exhibit C (forms of financial statements,
reports, or questionnaires relating to financial responsibility);
Exhibit D (documents comprising listing applications including
agreements required in connection therewith, and a schedule of listing
fees); Exhibit I (list of all individual members and related
information); Exhibit J (certain information related to a list of all
member organizations of the exchange); and Exhibit K (schedule of
securities listed on the exchange). For all the remaining exhibits,
with the exception of Exhibits E and F, which concern financial
statements,\33\ exchanges would have the option, in lieu of the annual
filing, to publish or cooperate in the publication of this information
on an annual or more frequent basis, and to certify to the accuracy of
the information. Exchanges would have the further option of keeping the
information in Exhibits A(1), A(2), A(3), L, and M up to date, and
certifying that the information is up to date and available to the
Commission and the public upon request.\34\ In addition, the Commission
is proposing to add the date of election to membership, if available,
as an item to be filed by exchanges annually under Exhibit J. This is
necessary to enable the Commission to monitor the obligation of broker-
dealers to be a member of an SRO.\35\ It also will help the Commission
to designate an appropriate examining authority for each broker-
dealer.\36\
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\33\The annual filing requirement for these exhibits would be
retained because they are necessary to enable the Commission to
comply with Section 23(b) of the Exchange Act, 15 U.S.C. 78w(b).
That section requires the Commission to include in its report to
Congress each year a statement and analysis of the expenses and
operations of each SRO.
\34\Exhibit A(1) contains the constitution, articles of
incorporation, by-laws, and rules of the exchange; Exhibit A(2)
contains written rulings, settled practices, and interpretations not
contained in A(1); Exhibit A(3) contains the constitution, articles
of incorporation, by-laws, and rules of each affiliate or subsidiary
of the exchange; Exhibit L contains a schedule of securities
admitted to unlisted trading practices; and Exhibit M contains a
schedule of unregistered securities admitted to trading on the
exchange which are exempt from registration.
\35\Section 15(b)(8) of the Exchange Act, 15 U.S.C. 78o(b)(8).
\36\The Securities Investor Protection Act of 1970 contemplates
a designated examining authority for broker-dealers. 15 U.S.C. 78aaa
et seq.
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The Commission also is proposing to make corresponding changes,
where applicable, to the requirements for the NASD and MSRB. Thus, the
requirement to file certain information annually would be streamlined,
and the reporting requirements for the NASD and the MSRB would be
conformed, where appropriate, to the requirements for the exchanges. In
addition, similar to the proposal for exchanges discussed above, for
certain information, these SROs would have the option, in lieu of an
annual filing, of identifying the publication in which this information
is available or keeping such information up to date and making it
available to the Commission and the public. The Commission is
requesting specific comment on these proposals.
V. Conclusion and Request for Comments
The Commission believes that the proposals described above, if
adopted, would expedite and streamline the process through which SROs
file proposed rule changes with the Commission.\37\ The proposals also
would streamline the requirements to file amendments to registration
statements of national securities exchanges, securities associations,
and reports of the Municipal Securities Rulemaking Board. The
Commission requests comment on each of these proposals. The Commission
requests specific comment on the amendments to the annual filing
requirements for securities exchanges, securities associations, and the
MSRB, with a view toward maintaining comparable requirements for all
SROs.
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\37\These amendments may affect clearing agencies for which the
Commission is not the appropriate regulatory agency as defined in
Section 3(a)(34) of the Exchange Act, 15 U.S.C. 78c(a)(34).
Therefore, in accordance with Section 17A(d)(3)(A)(i) of the
Exchange Act, 15 U.S.C. 78q-1(d)(3)(A)(i), at least 15 days before
this announcement, the Commission consulted and requested the views
of the Board of Governors of the Federal Reserve System.
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VI. Effects on Competition and Regulatory Flexibility Act
Considerations
Section 23(a) of the Exchange Act\38\ requires the Commission, in
adopting rules under the Exchange Act, to consider the impact on
competition of those rules, if any, and to balance that impact against
the regulatory benefits gained in terms of furthering the purposes of
the Exchange Act. The Commission preliminarily is of the view that
adoption of the proposed amendments to Rule 19b-4, Form 19b-4, and Rule
6a-2 would not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act. The
Commission requests comment, however, on any competitive burdens that
might result from adoption of these amendments.
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\38\15 U.S.C. 78w(a)(2).
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In addition, Section 3(a) of the Regulatory Flexibility Act
(``RFA'')\39\ requires the Commission to undertake an initial
regulatory flexibility analysis of the proposed amendments on small
entities unless the Chairman certifies that the rule, if adopted, would
not have a significant economic impact on a substantial number of small
entities.\40\ Rule 19b-4 and Form 19b-4 apply only to SROs. Rule 6a-2
applies only to national securities exchanges. Furthermore, the
proposed amendments are intended to streamline a process to which these
SROs already are subject. The Chairman has certified that the proposed
amendments, if adopted, would not have a significant economic impact on
a substantial number of small entities.
---------------------------------------------------------------------------
\39\5 U.S.C. 603(a).
\40\5 U.S.C. 605(b).
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List of Subjects in 17 CFR Parts 240 and 249
Reporting and recordkeeping requirements, Securities.
Statutory Basis and Text of Proposed Amendments
In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is proposed to be amended as follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
1. The authority citation for Part 240 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,
78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37,
80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
2. Paragraph (a)(1) of Sec. 240.6a-2 is amended by removing ``, or
in Exhibits B, C and D,'' and ``and Exhibits B, C and D''.
3. Revise paragraph (a)(3) of Sec. 240.6a-2 to read as follows:
Sec. 240.6a-2 Periodic amendments to registration statements or
exemption statements of exchanges.
(a) * * *
(3) Complete Exhibits G, H, J, L and M, except that Exhibit J need
only contain the name, principle place of business, and, if available,
the date of election to membership for each member organization. The
information contained in these exhibits shall be up to date as of the
latest practicable date within 3 months of the date on which the annual
amendment is filed. If a national securities exchange publishes or
cooperates in the publication of the information required in these
exhibits on an annual or more frequent basis, in lieu of filing such an
exhibit a national securities exchange may:
(i) Identify the publication in which such information is
available, the name, address, and telephone number of the person from
whom such publication may be obtained, and the price thereof; and
(ii) Certify to the accuracy of such information as of its date. If
a national securities exchange keeps the information required in
Exhibits L and M up to date and makes it available to the Commission
and the public on request, in lieu of filing such an exhibit a national
securities exchange may certify that the information is kept up to date
and is available to the Commission and the public upon request.
* * * * *
4. Section 240.6a-2 is amended by revising paragraph (b) to read as
follows:
Sec. 240.6a-2 Periodic amendments to registration statements or
exemption statements of exchanges.
* * * * *
(b) Unless exempted pursuant to paragraph (c) of this rule, on or
before June 30, 1983, and every three years thereafter each exchange
registered as a national securities exchange shall file complete
Exhibits A(1), A(2) and A(3) to its registration statement. The
information contained in these exhibits shall be up to date as of the
latest practicable date within 3 months of the date on which these
exhibits are filed. If a national securities exchange publishes or
cooperates in the publication of the information required in these
exhibits on an annual or more frequent basis, in lieu of filing such an
exhibit a national securities exchange may:
(1) Identify the publication in which such information is
available, the name, address, and telephone number of the person from
whom such publication may be obtained, and the price thereof; and
(2) Certify to the accuracy of such information as of its date. If
a national securities exchange keeps the information required in these
exhibits up to date and makes it available to the Commission and the
public on request, in lieu of filing such an exhibit a national
securities exchange may certify that the information is kept up to date
and is available to the Commission and the public upon request.
* * * * *
5. Paragraph (e) of Sec. 240.19b-4 is revised to read as follows:
Sec. 240.19b-4 Filings with respect to proposed rule changes by self-
regulatory organizations.
* * * * *
(e) A proposed rule change may take effect upon filing with the
Commission pursuant to Section 19(b)(3)(A) of the Act if properly
designated by the self-regulatory organization as:
(1) Constituting a stated policy, practice, or interpretation with
respect to the meaning, administration, or enforcement of an existing
rule;
(2) Establishing or changing a due, fee, or other charge;
(3) Concerned solely with the administration of the self-regulatory
organization;
(4) Effecting a change in an existing service of a registered
clearing agency that:
(i) Does not adversely affect the safeguarding of securities or
funds in the custody or control of the clearing agency or for which it
is responsible; and
(ii) Does not significantly affect the respective rights or
obligations of the clearing agency or persons using the service;
(5) Effecting a change in an existing order-entry or trading system
of a self-regulatory organization that:
(i) Does not significantly affect the protection of investors or
the public interest;
(ii) Does not impose any significant burden on competition; and
(iii) Does not have the effect of limiting the access to or
availability of the system; or
(6) Effecting a change that:
(i) Does not significantly affect the protection of investors or
the public interest;
(ii) Does not impose any significant burden on competition; and
(iii) By its terms, does not become operative for 30 days after the
date of publication of the notice of the filing, or such shorter time
as the Commission may designate if consistent with the protection of
investors and the public interest; provided that the self-regulatory
organization has given the Commission written notice of its intent to
file the proposed rule change, along with a brief description and text
of the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change.
* * * * *
PART 249--FORM, SECURITIES EXCHANGE ACT OF 1934
6. The authority citation for part 249 continues to read in part as
follows:
Authority: 15 U.S.C. 78a, et seq., unless otherwise noted.
* * * * *
7. By revising the first sentence of instruction F of the general
instructions of Form 19b-4 (Sec. 249.819) to read as follows, and by
removing the asterisk contained therein along with its accompanying
footnote:
Note: Form 19b-4 does not and these amendments will not appear
in the Code of Federal Regulations.
Form 19b-4
* * * * *
General Instructions
* * * * *
F. Signature and Filing of the Completed Form
Eight copies of Form 19b-4, eight copies of Exhibit 1, four
copies of Exhibits 2 and 3, and two copies of Exhibit 4 shall be
filed with, in the case of filings by securities exchanges, the
Assistant Director for Derivatives and Exchange Oversight, in the
case of filings by securities associations or the Municipal
Securities Rulemaking Board, the Assistant Director for NMS and OTC,
and in the case of filings by clearing agencies, the Assistant
Director for Securities Processing, Division of Market Regulation,
Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington DC 20549. * * *
* * * * *
8. Item 7 of the information to be included in the completed form
of Form 19b-4 (Sec. 249.819) is amended by removing the word ``or''
from the end of paragraph (b)(iii) and adding paragraphs (b)(v) and
(b)(vi) to read as follows:
Note: Form 19b-4 does not and these amendments will not appear
in the Code of Federal Regulations.
Form 19b-4
* * * * *
7. Basis for Summary Effectiveness Pursuant to Section 19(b)(3) or for
Accelerated Effectiveness Pursuant to Section 19(b)(2)
* * * * *
(b) * * *
(v) effects a change in an existing order-entry or trading
system of a self-regulatory organization that (A) does not
significantly affect the protection of investors or the public
interest; (B) does not impose any significant burden on competition;
and (C) does not have the effect of limiting the access to or
availability of the system, or (vi) effects a change that (A) does
not significantly affect the protection of investors or the public
interest; (B) does not impose any significant burden on competition;
and (C) by its terms, does not become operative for 30 days after
the date of publication of the notice of the filing, or such shorter
time as the Commission may designate if consistent with the
protection of investors and the public interest; provided that the
self-regulatory organization has given the Commission written notice
of its intent to file the proposed rule change, along with a brief
description and text of the proposed rule change, at least five
business days prior to the date of filing of the proposed rule
change,
* * * * *
9. Section IV of Exhibit 1 of Form 19b-4 (Sec. 249.819) is amended
by removing ``500 North Capitol Street,'' and adding in its place ``450
Fifth Street, NW.,'' and removing ``1100 L Street NW.,'' and adding in
its place ``450 Fifth Street, NW.,''.
Dated: June 1, 1994.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13732 Filed 6-6-94; 8:45 am]
BILLING CODE 8010-01-P
