[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