<enum>XVII</enum><header>LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY CERTAIN SECURITIES INDUSTRY PARTICIPANTS</header><section id="H66B4704CC4914B8CBB7B95F0B8C692A1"><enum>1701.</enum><header>Limitation</header><subsection id="HD65ED992F39942DA8C64777296A7C8E2"><enum>(a)</enum><header>In general</header><text>No State or political subdivision thereof may impose a direct or indirect tax upon a securities industry participant where that tax is based upon—</text><paragraph id="H460C1CB1B4284DD996C66BB8E758D635"><enum>(1)</enum><text>the number or volume of securities transactions that the securities industry participant consummates or processes, in whole or in part, within that State or political subdivision or by utilizing personnel, resources, systems, facilities, vendors, technology, or infrastructure that are located in or that traverse that State or political subdivision; or</text></paragraph><paragraph id="H256A9AE403DD4738B63D42EB294E3F98"><enum>(2)</enum><text>the value of such securities transactions.</text></paragraph></subsection><subsection id="H34E64E4A639B4D3890A8FFBD1682D23C"><enum>(b)</enum><header>Preservation of State and local taxing authority</header><text>Except as provided in this section, nothing in this title shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation that is otherwise permissible by or under the Constitution of the United States or other Federal law and in effect on the date of enactment of this Act.</text></subsection><subsection id="H796595B8FA1D403FB00E6675AABE9186"><enum>(c)</enum><header>Exception</header><paragraph id="H1D12CB8CCB6D4F75A1FABD591E3E4990"><enum>(1)</enum><header>In general</header><text>Individual States may impose taxes and collections of those taxes on covered persons for transactions, which may have occurred within the national market system, to buy or sell securities of their own accord.</text></paragraph><paragraph id="H1E44BE13EE464B06BFFFE2427665C35F"><enum>(2)</enum><header>Covered person defined</header><text>For purposes of paragraph (1) and with respect to a State, the term <term>covered person</term> means—</text><subparagraph id="H2EB5C96875A34AF996DDB7BF467C315E"><enum>(A)</enum><text>an individual with primary residence and domicile in that State; and</text></subparagraph><subparagraph id="H21AA39C39F83401C92BF65D735CBB1FC"><enum>(B)</enum><text>businesses, corporations, and other entities that—</text><clause id="HCFC766B029364A0B878E98CD29316809"><enum>(i)</enum><text>are not part of the national market system; and</text></clause><clause id="HE34AF3B0EBBB4B7DACE96891C9E09BBD"><enum>(ii)</enum><text>are domiciled in and subject to that State’s legal requirements.</text></clause></subparagraph></paragraph></subsection><subsection id="HB64B462B7CBC4E9F928EA44779E61D5C"><enum>(d)</enum><header>Definitions</header><text>For purposes of this section:</text><paragraph id="H8588C3AE7A7449D48CE27973D4D956D5"><enum>(1)</enum><header>Alternative trading system</header><text>The term <term>alternative trading system</term> shall have the meaning set forth in section 242.300 of title 17, Code of Federal Regulations.</text></paragraph><paragraph id="H21BC686A9A9D43FEA3068E1E6C799699"><enum>(2)</enum><header>Commodity</header><text display-inline="yes-display-inline">The term <term>commodity</term> shall have the meaning set forth in section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a(9)</external-xref>).</text></paragraph><paragraph id="H34E706ED34824E558D12F3FFFA5099FE"><enum>(3)</enum><header>National securities exchange</header><text display-inline="yes-display-inline">The term <term>national securities exchange</term> shall have the meaning given such term under section 6 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78f">15 U.S.C. 78f(a)</external-xref>).</text></paragraph><paragraph id="H88EB4360B71041CBAE044129091BB96E"><enum>(4)</enum><header>Process</header><text>The term <term>process</term> shall include all activities involved directly or indirectly in effectuating a securities transaction, including entering, transmitting, routing, matching, and executing orders in securities, as well as clearing, settling, reporting, and consolidation and dissemination of data and any other incidental activity relating to securities transactions, including to the maintenance and operation of backup and disaster recovery facilities and systems.</text></paragraph><paragraph id="H3E9B2880C9FF47F1A393D2F4C464F33F"><enum>(5)</enum><header>Securities industry participant</header><text>The term <term>securities industry participant</term> means a federally regulated self-regulatory organization, national securities exchange, alternative trading system, securities information processor, commodities exchange, clearing agency, trade reporting facility, broker, dealer, or securities trading system or platform owned or operated by a broker or dealer.</text></paragraph><paragraph id="H653669439DDA4D3AA26C5E0E1E98252A"><enum>(6)</enum><header>Securities transaction</header><text>The term <term>securities transaction</term> means the purchase or sale of a security.</text></paragraph><paragraph id="HB5EF846A5AE8481C8DF959711D9B406C"><enum>(7)</enum><header>Other securities definitions</header><text display-inline="yes-display-inline">The terms <term>broker</term>, <term>clearing agency</term>, <term>dealer</term>, <term>exchange</term>, <term>securities information processor</term>, <term>security</term>, and <term>self-regulatory organization</term> shall have the meanings given those terms, respectively, under section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>).</text></paragraph></subsection></section>

Findings

Congress finds the following:(1)The United States capital markets are sophisticated, complex, diverse, and highly interconnected interstate marketplaces that effect and process millions of trades daily for the benefit of individual and institutional investors throughout the United States, including the retirement accounts of union members, pensioners, teachers, policemen, firemen, first responders, and other working Americans, as well as the endowments of colleges and universities and charitable organizations.(2)The United States capital markets are the deepest, most liquid markets in the world in large measure because of the low transaction costs that investors pay to trade securities.(3)Under the Federal securities laws, the Securities and Exchange Commission serves as the primary supervisor and regulator of the United States capital markets (with the assistance of other Federal regulators), while under State securities laws, State regulators serve a secondary function of helping to protect investors with respect to securities offered and sold within their States.(4)Also pursuant to the Federal securities laws, Congress directs the Securities and Exchange Commission to assess transaction fees upon the United States capital markets that are designed to recover the Commission’s costs of supervising and regulating the United States capital markets.(5)Some States have proposed taxes and fees that are based on securities transactions and processing activity related thereto from investors from other States and would raise costs for all United States investors, even investors outside of the States levying the taxes and fees.

Limitation on taxation and fees on transactions by certain securities industry participants

(a)

In general

The Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by adding at the end the following new title:

<enum>XVII</enum><header>LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY CERTAIN SECURITIES INDUSTRY PARTICIPANTS</header><section id="H66B4704CC4914B8CBB7B95F0B8C692A1"><enum>1701.</enum><header>Limitation</header><subsection id="HD65ED992F39942DA8C64777296A7C8E2"><enum>(a)</enum><header>In general</header><text>No State or political subdivision thereof may impose a direct or indirect tax upon a securities industry participant where that tax is based upon—</text><paragraph id="H460C1CB1B4284DD996C66BB8E758D635"><enum>(1)</enum><text>the number or volume of securities transactions that the securities industry participant consummates or processes, in whole or in part, within that State or political subdivision or by utilizing personnel, resources, systems, facilities, vendors, technology, or infrastructure that are located in or that traverse that State or political subdivision; or</text></paragraph><paragraph id="H256A9AE403DD4738B63D42EB294E3F98"><enum>(2)</enum><text>the value of such securities transactions.</text></paragraph></subsection><subsection id="H34E64E4A639B4D3890A8FFBD1682D23C"><enum>(b)</enum><header>Preservation of State and local taxing authority</header><text>Except as provided in this section, nothing in this title shall be construed to modify, impair, or supersede, or authorize the modification, impairment, or superseding of, any State or local law pertaining to taxation that is otherwise permissible by or under the Constitution of the United States or other Federal law and in effect on the date of enactment of this Act.</text></subsection><subsection id="H796595B8FA1D403FB00E6675AABE9186"><enum>(c)</enum><header>Exception</header><paragraph id="H1D12CB8CCB6D4F75A1FABD591E3E4990"><enum>(1)</enum><header>In general</header><text>Individual States may impose taxes and collections of those taxes on covered persons for transactions, which may have occurred within the national market system, to buy or sell securities of their own accord.</text></paragraph><paragraph id="H1E44BE13EE464B06BFFFE2427665C35F"><enum>(2)</enum><header>Covered person defined</header><text>For purposes of paragraph (1) and with respect to a State, the term <term>covered person</term> means—</text><subparagraph id="H2EB5C96875A34AF996DDB7BF467C315E"><enum>(A)</enum><text>an individual with primary residence and domicile in that State; and</text></subparagraph><subparagraph id="H21AA39C39F83401C92BF65D735CBB1FC"><enum>(B)</enum><text>businesses, corporations, and other entities that—</text><clause id="HCFC766B029364A0B878E98CD29316809"><enum>(i)</enum><text>are not part of the national market system; and</text></clause><clause id="HE34AF3B0EBBB4B7DACE96891C9E09BBD"><enum>(ii)</enum><text>are domiciled in and subject to that State’s legal requirements.</text></clause></subparagraph></paragraph></subsection><subsection id="HB64B462B7CBC4E9F928EA44779E61D5C"><enum>(d)</enum><header>Definitions</header><text>For purposes of this section:</text><paragraph id="H8588C3AE7A7449D48CE27973D4D956D5"><enum>(1)</enum><header>Alternative trading system</header><text>The term <term>alternative trading system</term> shall have the meaning set forth in section 242.300 of title 17, Code of Federal Regulations.</text></paragraph><paragraph id="H21BC686A9A9D43FEA3068E1E6C799699"><enum>(2)</enum><header>Commodity</header><text display-inline="yes-display-inline">The term <term>commodity</term> shall have the meaning set forth in section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a(9)</external-xref>).</text></paragraph><paragraph id="H34E706ED34824E558D12F3FFFA5099FE"><enum>(3)</enum><header>National securities exchange</header><text display-inline="yes-display-inline">The term <term>national securities exchange</term> shall have the meaning given such term under section 6 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78f">15 U.S.C. 78f(a)</external-xref>).</text></paragraph><paragraph id="H88EB4360B71041CBAE044129091BB96E"><enum>(4)</enum><header>Process</header><text>The term <term>process</term> shall include all activities involved directly or indirectly in effectuating a securities transaction, including entering, transmitting, routing, matching, and executing orders in securities, as well as clearing, settling, reporting, and consolidation and dissemination of data and any other incidental activity relating to securities transactions, including to the maintenance and operation of backup and disaster recovery facilities and systems.</text></paragraph><paragraph id="H3E9B2880C9FF47F1A393D2F4C464F33F"><enum>(5)</enum><header>Securities industry participant</header><text>The term <term>securities industry participant</term> means a federally regulated self-regulatory organization, national securities exchange, alternative trading system, securities information processor, commodities exchange, clearing agency, trade reporting facility, broker, dealer, or securities trading system or platform owned or operated by a broker or dealer.</text></paragraph><paragraph id="H653669439DDA4D3AA26C5E0E1E98252A"><enum>(6)</enum><header>Securities transaction</header><text>The term <term>securities transaction</term> means the purchase or sale of a security.</text></paragraph><paragraph id="HB5EF846A5AE8481C8DF959711D9B406C"><enum>(7)</enum><header>Other securities definitions</header><text display-inline="yes-display-inline">The terms <term>broker</term>, <term>clearing agency</term>, <term>dealer</term>, <term>exchange</term>, <term>securities information processor</term>, <term>security</term>, and <term>self-regulatory organization</term> shall have the meanings given those terms, respectively, under section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>).</text></paragraph></subsection></section>

(b)

Clerical amendment

The table of contents under section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by adding at the end the following:

TITLE XVII—LIMITATION ON TAXATION AND FEES ON TRANSACTIONS BY CERTAIN SECURITIES INDUSTRY PARTICIPANTS.

Sec. 1701. Limitation.