[Federal Register Volume 59, Number 165 (Friday, August 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21009]


[[Page Unknown]]

[Federal Register: August 26, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34556; File No. SR-BSE-94-07]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Boston Stock Exchange, Inc. Relating to the Reporting of 
Outside Assets and Liabilities Attributable to Broker-Dealers.

August 19, 1994.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. Sec. 78s(b)(1), notice is hereby given that on May 
2, 1994, the Boston Stock Exchange, Inc. (``BSE'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change\1\ as described in Items I, II and III below, 
which Items have been prepared by the self-regulatory organization. On 
August 16, 1994, the Exchange submitted Amendment No. 2 to the proposed 
rule change.\2\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\On May 12, 1994, the BSE filed Amendment No. 1 which corrects 
a technical mistake in the original rule filing in the text of the 
Rule, which no longer applies because in Amendment No. 2 the BSE 
reformulated the proposed rule change. See letter from Karen Aluise, 
Assistant Vice President, Boston Stock Exchange, to Sandy Sciole, 
Branch Chief Commission, dated May 5, 1994.
    \2\In Amendment No. 2 the Exchange submitted a revised Exhibit 2 
to its filing. See letter from Karen Aluise, Assistant Vice 
President, Boston Stock Exchange, to Amy Bilbija, Commission, dated 
August 10, 1994.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Boston Stock Exchange seeks to adopt a rule requiring broker-
dealers assigned to the Exchange as their Designated Examining 
Authority to report to the Exchange all outside assets and liabilities 
attributable to the broker-dealer. The text of the proposed rule is as 
follows:

Chapter XXII--Financial Reports and Requirements--Aggregate 
Indebtedness--Net Capital

Reporting of Assets and Liabilities Attributable to Broker-Dealers

    Sec. 2(n) Broker-Dealers assigned to the Boston Stock Exchange as 
their Designated Examining Authority (``DEA'') are required to:
    (1) Submit to the Exchange Financial and Operational Combined 
Uniform Single Report (``FOCUS'') reports, in compliance with 
Securities and Exchange Commission Rule 17a-5, which must include all 
assets and liabilities attributable to the broker-dealer.
    (2) Report to the Exchange on a quarterly basis (or more often as 
deemed appropriate by the Exchange) the following:
    (a) All assets and liabilities attributable to the broker-dealer or 
held by another entity for the broker-dealer's account. This shall 
include:
    (i) All checking accounts, brokerage accounts, debts, etc. in the 
broker-dealer's name or guaranteed by the broker-dealer; and
    (ii) Liabilities of other entities, broker-dealers or individuals 
assumed by the broker-dealer;
    (b) A description of any outstanding litigation or contracts which 
may have a material financial impact on the broker-dealer or its 
business; and
    (c) A pro-forma consolidated capital computation of assets and 
liabilities of any subsidiary or affiliate for which the broker-dealer 
guarantees, endorses or assumes directly or indirectly the obligations 
or liabilities.
    (3) Immediately notify the Exchange of any financial matters, 
including but not limited to litigation and contracts, which may have a 
material impact on its capital and/or its equity requirements pursuant 
to Exchange Rules.

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 self-regulatory organization 
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 statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to ensure that all 
broker-dealers assigned to the Exchange as their Designated Examining 
Authority (``DEA'') provide the Exchange with reports of all outside 
assets and liabilities attributable to the broker-dealer. This will 
enable the Exchange to independently review and confirm the capital 
computations and consolidated financial condition of Exchange DEA 
assigned broker-dealers, thereby enhancing its oversight 
responsibilities in conjunction with the Commission's more stringent 
reporting requirements under the Net Capital Rule.
2. Statutory Basis
    The statutory basis for the proposed rule change is Section 6(b)(5) 
of the Act, in that the rule is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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; and is not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.

B. Self-Regulatory Organization's Statement on Burden on Competition

    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

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the publication of this notice in the Federal 
Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriated and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at the principal office of the BSE. All 
submissions should refer to File No. SR-BSE-94-07 and should be 
submitted by September 16, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-21009 Filed 8-25-94; 8:45 am]
BILLING CODE 8010-01-M