Order Extending Temporary Exemption of Banks, Savings Associations, and Savings Banks From the Definition of “Broker” Under Section 3(a)(4) of the Securities Exchange Act of 1934, 54596-54597 [E5-5025]
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Federal Register / Vol. 70, No. 178 / Thursday, September 15, 2005 / Notices
securities issued by employees’
securities companies, and (C) securities
issued by majority-owned subsidiaries
of the owner which (i) are not
investment companies, and (ii) are not
relying on the exception from the
definition of investment company in
paragraph (1) or (7) of subsection (c).’’
Applicant states that it is no longer an
investment company as defined in
section 3(a)(1)(A) or section 3(a)(1)(C).
Applicant states that it is primarily
engaged in the business of developing
its subsidiaries’ real estate businesses,
and also actively engaged in conducting
a business review, development, and
acquisition program for additional real
estate business opportunities. Applicant
further states that its holdings of money
market fund shares are awaiting
deployment in its real estate and
services industries business strategy.
Applicant states it is thus qualified for
an order of the Commission pursuant to
section 8(f) of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–5026 Filed 9–14–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52405/ File No. S7–12–01]
Order Extending Temporary Exemption
of Banks, Savings Associations, and
Savings Banks From the Definition of
‘‘Broker’’ Under Section 3(a)(4) of the
Securities Exchange Act of 1934
September 9, 2005.
I. Background
The Gramm-Leach-Bliley Act
(‘‘GLBA’’) repealed the blanket
exception of banks from the definitions
of ‘‘broker’’ and ‘‘dealer’’ under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and replaced it with
functional exceptions incorporated in
amended definitions of ‘‘broker’’ and
‘‘dealer.’’ Under the GLBA, banks that
engage in securities activities either
must conduct those activities through a
registered broker-dealer or ensure that
their securities activities fit within the
terms of a functional exception to the
amended definitions of ‘‘broker’’ and
‘‘dealer.’’
The GLBA provided that the amended
definitions of ‘‘broker’’ and ‘‘dealer’’
were to become effective May 12, 2001.
1 As defined in Exchange Act Sections 3(a)(4) and
3(a)(5) [15 U.S.C. 78c(a)(4) and 78c(a)(5)].
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On May 11, 2001, the Securities and
Exchange Commission (‘‘Commission’’)
issued interim final rules (‘‘Interim
Rules’’) to define certain terms used in,
and grant additional exemptions from,
the amended definitions of ‘‘broker’’
and ‘‘dealer.’’ 2 Among other things, the
Interim Rules extended the exceptions
and exemptions granted to banks under
the GLBA and Interim Rules to savings
associations and savings banks. These
Rules also included a temporary
exemption that gave banks time to come
into full compliance with the more
narrowly-tailored exceptions from
broker-dealer registration.3 To further
accommodate the banking industry’s
continuing compliance concerns, the
Commission delayed the effective date
of the bank ‘‘broker’’ and ‘‘dealer’’ rules
through a series of orders that, among
other things, ultimately extended the
temporary exemption from the
definition of ‘‘broker’’ to September 30,
2005.4
In previous extension orders, the
Commission acknowledged ‘‘that banks
may need as much as a year to develop
compliance systems to adapt to the
GLBA in light of amended Rules. The
Commission does not expect banks to
develop compliance systems for the
provisions of the GLBA discussed in the
Rules until the Commission has
amended the Rules.’’ 5 Consistent with
those statements, when the Commission
proposed Regulation B in June 2004, to
replace the Interim Rules, the
2 See Definition of Terms in and Specific
Exemptions for Banks, Savings Associations, and
Savings Banks Under Sections 3(a)(4) and 3(a)(5) of
the Securities Exchange Act of 1934, Exchange Act
Release No. 44291 (May 11, 2001), 66 FR 27760
(May 18, 2001).
3 17 CFR 240.15a–7.
4 See Exchange Act Release No. 44570 (July 18,
2001); Exchange Act Release No. 45897 (May 8,
2002); Exchange Act Release No. 46751 (Oct. 30,
2002); Exchange Act Release No. 47649 (April 8,
2003); Exchange Act Release No. 50618 (Nov. 1,
2004); and Exchange Act Release No. 51328 (March
8, 2005) (extending the exemption from the
definition of ‘‘broker’’ until September 30, 2005).
During this time, the Commission also extended the
temporary exemption from the definition of
‘‘dealer’’ to September 30, 2003. See Exchange Act
Release No. 47366 (Feb. 13, 2003). On February 13,
2003, the Commission adopted amendments to
certain parts of the Interim Rules that define terms
used in the dealer exceptions, as well as certain
dealer exemptions (‘‘Dealer Release’’), see Exchange
Act Release No. 47364 (Feb. 13, 2003), 68 FR 8686
(Feb. 24, 2003). Therefore, this order is limited to
an extension of the temporary exemption from the
definition of ‘‘broker.’’
5 See, e.g., Order Extending Temporary
Exemption of Banks, Savings Associations, and
Savings Banks from the Definitions of ‘‘Broker’’ and
‘‘Dealer’’ under Sections 3(a)(4) and 3(a)(5) of the
Securities Exchange Act of 1934; Notice of Intent
to Amend Rules, Release No. 34–45897 (May 8,
2002), https://www.sec.gov/rules/other/34–
45897.htm.
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
Commission also proposed a one-year
delay in the Regulation’s effective date.6
Although the comment period for
Regulation B expired on September 1,
2004,7 the Commission has continued to
receive comments. To date, the
Commission has received over 120
comments on the proposal, including
comments from the banking industry,
banking regulators, and members of
Congress. The Commission has
reviewed these comments and has had
further discussions with several
commenters.
II. Extension of Temporary Exemption
From Definition of ‘‘Broker’’
The Commission is carefully
considering comments to determine
what final action should be taken with
regard to the Regulation B proposal. The
Commission anticipates that this review
process will not be completed before the
exemption from the Interim Rules
relating to the definition of ‘‘broker’’
expires on September 30, 2005.8
Therefore, the Commission finds that
extending the temporary exemption for
banks, savings associations, and savings
banks from the definition of ‘‘broker’’ is
necessary and appropriate in the public
interest, and is consistent with the
protection of investors. The Commission
believes that extending the exemption
from the definition of ‘‘broker’’ until
September 30, 2006, will prevent banks
and other financial institutions from
unnecessarily incurring costs to comply
with the statutory scheme based on the
current Interim Rules and will give the
Commission time to consider fully
comments received on Regulation B and
take any final action on the proposal as
necessary, including consideration of
any modification necessary to the
proposed compliance date.
III. Conclusion
Accordingly, pursuant to Section 36
of the Exchange Act,9
It is hereby ordered that banks,
savings associations, and savings banks
are exempt from the definition of the
term ‘‘broker’’ under the Exchange Act
until September 30, 2006.
6 Exchange Act Release No. 49879 (June 17, 2004),
69 FR 39682 (June 30, 2004).
7 See Exchange Act Release No. 50056 (July 22,
2004) 69 FR 44988 (July 28, 2004) (extending
comment period on Regulation B until September
1, 2004).
8 In the Interim Rules, the Commission adopted
Exchange Act Rule 15a–7, 17 CFR 240.15a–7,
which, as proposed to be amended, would provide
banks and other financial institutions until January
1, 2006, to begin complying with the GLBA. In
proposing Regulation B, the Commission proposed
Rule 781 as a re-designation of Rule 15a–7. See 17
CFR 242.781.
9 15 U.S.C. 78mm.
E:\FR\FM\15SEN1.SGM
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Federal Register / Vol. 70, No. 178 / Thursday, September 15, 2005 / Notices
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. E5–5025 Filed 9–14–05; 8:45 am]
statements may be examined at the
places specified in Item IV below. The
CBOE has prepared summaries, set forth
in Sections A, B, and C below, of the
most significant aspects of such
statements.
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52398; File No. SR–CBOE–
2005–74]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend CBOE Rule 8.4
Relating to Remote Market-Maker
Appointments
September 8, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 2, 2005, the Chicago Board
Options Exchange, Incorporated
(‘‘Exchange’’ or ‘‘CBOE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal pursuant to Section 19(b)(3)(A)
of the Act 3 and Rule 19b–4(f)(6)
thereunder,4 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
CBOE proposes to amend CBOE Rule
8.4 relating to Remote Market-Maker
appointments. The text of the proposed
rule change is available on the CBOE’s
Web site (https://www.cboe.com), at the
CBOE’s Office of the Secretary, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
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54597
promote just and equitable principles of
trade, 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.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
B. Self-Regulatory Organization’s
Statement on Burden on Competition
1. Purpose
The purpose of this rule change is to
amend CBOE Rule 8.4 relating to
Remote Market-Maker (‘‘RMM’’)
appointments. Rule 8.4 provides that
RMMs will have a Virtual Trading
Crowd (‘‘VTC’’) Appointment, which
confers the right to quote electronically
in a certain number of products selected
from various ‘‘tiers’’. There are five tiers
that are structured according to trading
volume statistics and an ‘‘A+’’ Tier
which consists of two option classes—
options on Standard & Poor’s Depositary
Receipts and options on the Nasdaq-100
Index Tracking Stock.5 Rule 8.4(d)
assigns ‘‘appointment costs’’ to products
based on the tier in which they are
located, and an RMM may select for
each Exchange membership it owns or
leases any combination of products
trading on the Hybrid 2.0 Platform
whose aggregate ‘‘appointment cost’’
does not exceed 1.0.
CBOE proposes to amend Rule 8.4(d)
relating to the ‘‘A+’’ Tier in two
respects. First, CBOE proposes to
include an additional option class in the
‘‘A+’’ Tier, namely options on
Diamonds (DIA). CBOE believes it is
appropriate to include this option class
in this tier based on its trading volume.6
Second, CBOE proposes to lower the
‘‘appointment cost’’ for the ‘‘A+’’ Tier
from .60 to .25 for each option class in
this tier. CBOE believes that an
‘‘appointment cost’’ of .25, or one
quarter of a CBOE membership, is a
more appropriate ‘‘appointment cost’’
for each product in the ‘‘A+’’ Tier.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act 7 in general and
furthers the objectives of Section
6(b)(5) 8 in particular, in that it is
designed to prevent fraudulent and
manipulative acts and practices, to
5 See Securities Exchange Act Release No. 51543
(April 14, 2005), 70 FR 20952 (April 22, 2005),
approving SR–CBOE–2005–23.
6 Currently, DIA options are traded on CBOE’s
Hybrid Trading System, but not on the Hybrid 2.0
Platform. Thus, there are no RMMs currently
appointed in the DIA option class.
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
(i) significantly affect the protection of
investors or the public interest;
(ii) impose any significant burden on
competition; and
(iii) become operative for 30 days
from the date on which it was filed, or
such shorter time as the Commission
may designate, if consistent with the
protection of investors and the public
interest, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 9 and Rule 19b–4(f)(6) thereunder.10
As required under Rule 19b-4(f)(6)(iii)
under the Act,11 the Exchange provided
the Commission with 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 the filing of the proposed rule change.
A proposed rule change filed under
19b–4(f)(6) normally may not become
operative prior to 30 days after the date
of filing.12 However, Rule 19b–
4(f)(6)(iii) 13 permits the Commission to
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. In
addition, the Exchange has requested
that the Commission waive the 30-day
operative delay and render the proposed
rule change to become operative
immediately. The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
11 17 CFR 240.19b–4(f)(6)(iii).
12 Id.
13 Id.
10 17
E:\FR\FM\15SEN1.SGM
15SEN1
]]>Agencies
[Federal Register Volume 70, Number 178 (Thursday, September 15, 2005)]
[Notices]
[Pages 54596-54597]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-5025]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52405/ File No. S7-12-01]
Order Extending Temporary Exemption of Banks, Savings
Associations, and Savings Banks From the Definition of ``Broker'' Under
Section 3(a)(4) of the Securities Exchange Act of 1934
September 9, 2005.
I. Background
The Gramm-Leach-Bliley Act (``GLBA'') repealed the blanket
exception of banks from the definitions of ``broker'' and ``dealer''
under the Securities Exchange Act of 1934 (``Exchange Act'') \1\ and
replaced it with functional exceptions incorporated in amended
definitions of ``broker'' and ``dealer.'' Under the GLBA, banks that
engage in securities activities either must conduct those activities
through a registered broker-dealer or ensure that their securities
activities fit within the terms of a functional exception to the
amended definitions of ``broker'' and ``dealer.''
---------------------------------------------------------------------------
\1\ As defined in Exchange Act Sections 3(a)(4) and 3(a)(5) [15
U.S.C. 78c(a)(4) and 78c(a)(5)].
---------------------------------------------------------------------------
The GLBA provided that the amended definitions of ``broker'' and
``dealer'' were to become effective May 12, 2001. On May 11, 2001, the
Securities and Exchange Commission (``Commission'') issued interim
final rules (``Interim Rules'') to define certain terms used in, and
grant additional exemptions from, the amended definitions of ``broker''
and ``dealer.'' \2\ Among other things, the Interim Rules extended the
exceptions and exemptions granted to banks under the GLBA and Interim
Rules to savings associations and savings banks. These Rules also
included a temporary exemption that gave banks time to come into full
compliance with the more narrowly-tailored exceptions from broker-
dealer registration.\3\ To further accommodate the banking industry's
continuing compliance concerns, the Commission delayed the effective
date of the bank ``broker'' and ``dealer'' rules through a series of
orders that, among other things, ultimately extended the temporary
exemption from the definition of ``broker'' to September 30, 2005.\4\
---------------------------------------------------------------------------
\2\ See Definition of Terms in and Specific Exemptions for
Banks, Savings Associations, and Savings Banks Under Sections
3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934, Exchange
Act Release No. 44291 (May 11, 2001), 66 FR 27760 (May 18, 2001).
\3\ 17 CFR 240.15a-7.
\4\ See Exchange Act Release No. 44570 (July 18, 2001); Exchange
Act Release No. 45897 (May 8, 2002); Exchange Act Release No. 46751
(Oct. 30, 2002); Exchange Act Release No. 47649 (April 8, 2003);
Exchange Act Release No. 50618 (Nov. 1, 2004); and Exchange Act
Release No. 51328 (March 8, 2005) (extending the exemption from the
definition of ``broker'' until September 30, 2005). During this
time, the Commission also extended the temporary exemption from the
definition of ``dealer'' to September 30, 2003. See Exchange Act
Release No. 47366 (Feb. 13, 2003). On February 13, 2003, the
Commission adopted amendments to certain parts of the Interim Rules
that define terms used in the dealer exceptions, as well as certain
dealer exemptions (``Dealer Release''), see Exchange Act Release No.
47364 (Feb. 13, 2003), 68 FR 8686 (Feb. 24, 2003). Therefore, this
order is limited to an extension of the temporary exemption from the
definition of ``broker.''
---------------------------------------------------------------------------
In previous extension orders, the Commission acknowledged ``that
banks may need as much as a year to develop compliance systems to adapt
to the GLBA in light of amended Rules. The Commission does not expect
banks to develop compliance systems for the provisions of the GLBA
discussed in the Rules until the Commission has amended the Rules.''
\5\ Consistent with those statements, when the Commission proposed
Regulation B in June 2004, to replace the Interim Rules, the Commission
also proposed a one-year delay in the Regulation's effective date.\6\
---------------------------------------------------------------------------
\5\ See, e.g., Order Extending Temporary Exemption of Banks,
Savings Associations, and Savings Banks from the Definitions of
``Broker'' and ``Dealer'' under Sections 3(a)(4) and 3(a)(5) of the
Securities Exchange Act of 1934; Notice of Intent to Amend Rules,
Release No. 34-45897 (May 8, 2002), https://www.sec.gov/rules/other/
34-45897.htm.
\6\ Exchange Act Release No. 49879 (June 17, 2004), 69 FR 39682
(June 30, 2004).
---------------------------------------------------------------------------
Although the comment period for Regulation B expired on September
1, 2004,\7\ the Commission has continued to receive comments. To date,
the Commission has received over 120 comments on the proposal,
including comments from the banking industry, banking regulators, and
members of Congress. The Commission has reviewed these comments and has
had further discussions with several commenters.
---------------------------------------------------------------------------
\7\ See Exchange Act Release No. 50056 (July 22, 2004) 69 FR
44988 (July 28, 2004) (extending comment period on Regulation B
until September 1, 2004).
---------------------------------------------------------------------------
II. Extension of Temporary Exemption From Definition of ``Broker''
The Commission is carefully considering comments to determine what
final action should be taken with regard to the Regulation B proposal.
The Commission anticipates that this review process will not be
completed before the exemption from the Interim Rules relating to the
definition of ``broker'' expires on September 30, 2005.\8\
---------------------------------------------------------------------------
\8\ In the Interim Rules, the Commission adopted Exchange Act
Rule 15a-7, 17 CFR 240.15a-7, which, as proposed to be amended,
would provide banks and other financial institutions until January
1, 2006, to begin complying with the GLBA. In proposing Regulation
B, the Commission proposed Rule 781 as a re-designation of Rule 15a-
7. See 17 CFR 242.781.
---------------------------------------------------------------------------
Therefore, the Commission finds that extending the temporary
exemption for banks, savings associations, and savings banks from the
definition of ``broker'' is necessary and appropriate in the public
interest, and is consistent with the protection of investors. The
Commission believes that extending the exemption from the definition of
``broker'' until September 30, 2006, will prevent banks and other
financial institutions from unnecessarily incurring costs to comply
with the statutory scheme based on the current Interim Rules and will
give the Commission time to consider fully comments received on
Regulation B and take any final action on the proposal as necessary,
including consideration of any modification necessary to the proposed
compliance date.
III. Conclusion
Accordingly, pursuant to Section 36 of the Exchange Act,\9\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78mm.
---------------------------------------------------------------------------
It is hereby ordered that banks, savings associations, and savings
banks are exempt from the definition of the term ``broker'' under the
Exchange Act until September 30, 2006.
[[Page 54597]]
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. E5-5025 Filed 9-14-05; 8:45 am]
BILLING CODE 8010-01-P
