[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