[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Rules and Regulations]
[Pages 42594-42596]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20099]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 200, 240 and 249
[Release No. 34-41672; File No. S7-16-99]
RIN 3235-AH73
Broker-Dealer Registration and Reporting
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission is taking several steps
as contingency planning in the event that the implementation of Web CRD
is postponed and Legacy CRD must be reinstated. These steps include
redesignating Form BD currently in effect until July 30, 1999 as
Interim Form BD, redesignating Form BDW currently in effect until
August 1, 1999 as Interim Form BDW, and extending the effectiveness of
these forms indefinitely; amending Rules 15b3-1(c), 15b6-1, 15Ba2-2(e),
15Bc3-1, 15Ca2-1(c), and 15Cc1-1 under the Securities Exchange Act of
1934 to allow the Commission, by order, to conditionally exempt broker-
dealers from the filing instructions contained in those rules and Forms
BD and BDW, respectively; and amending the Commission's Rules of
Practice to delegate the authority to issue orders under all these
rules to the Director of the Division of Market Regulation. These
actions will permit the Commission to require use of Interim Form BD
and Interim Form BDW after July 30, 1999 and August 1, 1999,
respectively, in the event the full implementation of Web CRD is
delayed and it becomes necessary to return to the Legacy CRD system.
EFFECTIVE DATE: July 30, 1999.
FOR FURTHER INFORMATION CONTACT: Catherine McGuire, Chief Counsel,
Barbara A. Stettner, Special Counsel, or Brian R. Baysinger, Special
Counsel at (202) 942-0073, Office of Chief Counsel, Division of Market
Regulation, Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549-1001.
SUPPLEMENTARY INFORMATION:
I. Description of Amendments
On April 30, 1999, the Securities and Exchange Commission
(``Commission'') adopted amendments to Form BDW (``Revised Form BDW'')
and Rules 15b3-1, 15b6-1, 15Ba2-2, 15Bc3-1, 15Ca1-1 and 15Cc1-1 under
the Securities Exchange Act of 1934 (``Exchange Act'').\1\ On July 2,
1999, the Commission adopted amendments to Form BD (``Revised Form
BD'') and Rules 15b3-1, 15Ba2-2, and 15Ca2-1 under the Exchange Act.\2\
These amendments were mainly technical and formatting changes needed to
accommodate electronic filing in ``Web CRD,'' the new, Internet-based
Central Registration Depository (``CRD'') system. Revised Form BDW was
intended to supercede Form BDW, currently in effect until August 1,
1999, beginning August 1, 1999, and Revised Form BD was intended to
supercede Form BD, currently in effect until July 30, 1999,\3\
beginning July 30, 1999.
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\1\ Securities Exchange Act Release No. 41356 (April 30, 1999),
64 FR 25143 (May, 10, 1999) (``BDW Adopting Release'').
\2\ Securities Exchange Act Release No. 41594 (July 2, 1999); 64
FR 37586 (July 12, 1999) (``BD Adopting Release'').
\3\ The current Form BD is referred to in the Adopting Release
as ``Interim Form BD.''
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Since the time the Commission adopted these amendments, the
National Association of Securities Dealers Inc., which operates the CRD
system, has engaged in more extensive testing of Web CRD. While it
appears at this time that the implementation of Web CRD will continue
to go forward as planned, we believe it is prudent to implement a
contingency plan in the event the full implementation of Web CRD is
delayed for any reason.
This contingency plan consists of three elements. First, the
Commission is redesignating the old Form BD and Form BDW, respectively,
as Interim Form BD and Interim Form BDW and extending their effective
dates indefinitely. This is intended to preserve the effectiveness of
these forms in the event it becomes necessary to return to the Legacy
CRD system.\4\ However, registrants must continue to file on Revised
Forms BD and BDW until notified otherwise by the Commission.
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\4\ The CRD system that is currently in effect is referred to as
``Legacy CRD.'' As explained in the BD Adopting Release and the BDW
Adopting Release, the interim forms are compatible with Legacy CRD,
not with Web CRD. See BD Adopting Release and BDW Adopting Release
for details.
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Second, the Commission is amending Rules 15b3-1, 15b6-1, 15Ba2-2,
15Bc3-1, 15Ca2-1, and 15Cc1-1 to provide the Commission with the
authority to, by order, conditionally exempt broker-
[[Page 42595]]
dealers from the filing instructions for Form BD and Form BDW. This
authority is needed to provide the Commission with sufficient
flexibility to continuously maintain the registration system for
broker-dealers in the event the full implementation of Web CRD is
delayed.
Third, the Commission is amending Rule 30-3 of its Rules of
Practice to add a new paragraph (a)(67). This paragraph will delegate
the authority to issue orders under Rules 15b3-1(c)(4), 15b6-1(e),
15Ba2-2(e)(4), 15Bc3-1(e), 15Ca2-1(c)(4), and 15Cc1-1(d) to the
Director of the Division of Market Regulation.\5\ The Commission
believes that this is necessary to effectively respond to any event
that may delay the full implementation of Web CRD.
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\5\ 17 CFR 200.30-3
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The Commission is adopting these amendments immediately, without
notice and comment, which would otherwise be required by the
Administrative Procedure Act. The Commission for good cause finds that,
based on the reasons cited above, notice and solicitation of comment
regarding the Commission's contingency planning for CRD is
impracticable, unnecessary, and contrary to the public interest.\6\
Furthermore, the Commission for good cause finds that, based on the
reasons cited above, the rules and amendments shall be effective July
30, 1999. The Commission believes that the benefits of having a
contingency plan to handle any problems with implementing Web CRD
justify any minimal cost or inconvenience to broker-dealers. If the
Commission does not adopt a contingency plan, and Web CRD fails to
timely and adequately replace Legacy CRD, the marketplace could be
disrupted: new broker-dealers could be delayed when trying to enter the
market and important information about broker-dealers and their
employees may be temporarily unavailable or difficult to access. This
contingency plan needs to be adopted prior to the expiration of the old
Form BD on July 30, 1999.
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\6\ 5 U.S.C. 553(b)(3)(B) (an agency may dispense with prior
notice and comment when it finds, for good cause, that notice and
comment are ``impracticable, unnecessary, or contrary to the public
interest.''). 5 U.S.C. 553(d) (an agency may dispense with
publication of a rule less than thirty days before its effective
date only for good cause).
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There will be little or no additional costs if Interim Forms BD and
BDW are retained concurrently with new Forms BD and BDW because the
forms are virtually identical. Furthermore, the Commission will inform
broker-dealers which forms to file and does not intend to discipline
firms that inadvertently file on the wrong form.
The Commission would like to stress that we still expect Web CRD to
be implemented as planned. However, the Commission believes that, given
the size and complexity of the Web CRD system, and the importance of
the CRD system in the broker-dealer regulatory scheme, it is prudent to
have a contingency plan in place.
II. Cost Benefit Analysis
The Commission believes that the benefits of the rule amendments
clearly justify any costs that may be incurred. The amendments will
benefit broker-dealers by providing a contingency plan in the event the
full implementation of Web CRD is delayed. Also, the Commission would
like to stress that there would be little or no additional costs to
industry participants if Interim Forms BD and BDW are retained
concurrently with Revised Forms BD and BDW.
III. Competitive Effects/NSMIA
Pursuant to Section 23(a) of the Exchange Act, the Commission does
not believe the rule amendments will impose any burden on competition
not necessary or appropriate in furtherance of the purposes of the
Exchange Act.
IV. Regulatory Flexibility Analysis
Pursuant to Section 605(b) of the Regulatory Flexibility Act, the
Chairman has certified that the rule amendments will not have a
significant impact on a substantial number of small entities.\7\ A copy
of the Certification is attached as Exhibit A.
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\7\ 15 U.S.C. 78w(a).
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List of Subjects
17 CFR Part 200
Administrative practice and procedure, Authority delegations
(Government agencies).
17 CFR Parts 240 and 249
Broker-dealers, Reporting and recordkeeping requirements,
Securities.
Statutory Basis and Text of Final Amendments
In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is amended as follows:
PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS
1. The authority citation for part 200 continues to read in part as
follows:
Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 79t,
77sss, 80a-37, 80b-11, unless otherwise noted.
* * * * *
2. Section 200.30-3 is amended by adding paragraph (a)(67) to read
as follows:
Sec. 200.30-3 Delegation of authority to Director of Division of
Market Regulation.
* * * * *
(a) * * *
(67) To issue orders under Rules 15b3-1(c)(4), 15b6-1(e), 15Ba2-
2(e)(4), 15Bc3-1(e), 15Ca2-1(c)(4), and 15Cc1-1(d) (17 CFR 240.15b3-
1(c)(4), 240.15b6-1(e), 240.15Ba2-2(e)(4), 240.15Bc3-1(e), 240.15Ca2-
1(c)(4), and 240.15Cc1-1(d)).
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
3. The authority citation for part 240 continues to read in part as
follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.
* * * * *
4. By amending Sec. 240.15b3-1 by adding paragraph (c)(4) to read
as follows:
Sec. 240.15b3-1 Amendments to application.
* * * * *
(c) Temporary re-filing instructions. * * *
(4) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BD (17 CFR 249.501) and
paragraphs (c)(1), (c)(2), and (c)(3) of this section under conditions
that differ from the filing instructions contained in Form BD and
paragraphs (c)(1), (c)(2), and (c)(3) of this section.
5. By amending Sec. 240.15b6-1 by adding paragraph (e) to read as
follows.
Sec. 240.15b6-1 Withdrawal from registration.
* * * * *
(e) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BDW (17 CFR 249.501a) under
conditions that differ from the filing instructions contained in Form
BDW.
6. By amending Sec. 240.15Ba2-2 by adding paragraph (e)(4) to read
as follows:
Sec. 240.15Ba2-2 Application for registration of non-bank municipal
securities dealers whose business is exclusively intrastate.
* * * * *
[[Page 42596]]
(e) Temporary re-filing instructions. * * *
(4) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BD (17 CFR 249.501) and
paragraphs (e)(1), (e)(2), and (e)(3) of this section under conditions
that differ from the filing instructions contained in Form BD and
paragraphs (e)(1), (e)(2), and (e)(3) of this section.
7. By amending Sec. 240.15Bc3-1 by adding paragraph (e) to read as
follows:
Sec. 240.15Bc3-1 Withdrawal from registration of municipal securities
dealers.
* * * * *
(e) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BDW (17 CFR 249.501a) under
conditions that differ from the filing instructions contained in Form
BDW.
8. By amending Sec. 240.15Ca2-1 by adding paragraph (c)(4) to read
as follows:
Sec. 240.15Ca2-1 Application for registration as a government
securities broker or government securities dealer.
* * * * *
(c) Temporary re-filing instructions. * * *
(4) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BD (17 CFR 249.501) and
paragraphs (c)(1), (c)(2), and (c)(3) of this section under conditions
that differ from the filing instructions contained in Form BD and
paragraphs (c)(1), (c)(2), and (c)(3) of this section.
9. By amending Sec. 240.15Cc1-1 by adding paragraph (d) to read as
follows:
Sec. 240.15Cc1-1 Withdrawal from registration of municipal securities
dealers.
* * * * *
(d) The Commission, by order, may exempt any broker or dealer from
the filing requirements provided in Form BDW (17 CFR 249.501a) under
conditions that differ from the filing instructions contained in Form
BDW.
PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934
10. The authority citation for part 249 continues to read in part
as follows:
Authority: 15 U.S.C. 78a, et. seq., unless otherwise noted;
* * * * *
11. By amending Sec. 249.501 by designating the current text as
paragraph (a) and by adding paragraph (b) to read as follows:
Sec. 249.501 Form BD, for application for registration as a broker and
dealer or to amend or supplement such an application.
(a) * * *
(b) Interim Form BD shall be used for application for registration
as broker-dealer under the Securities Exchange Act of 1934, or to amend
such application, only by order of the Commission. In the event broker-
dealers are required to comply with their filing obligations on Interim
Form BD, the form will be made available at the Commission's
Publication Office at (202) 942-4040.
12. By amending Sec. 249.501a by designating the current text as
paragraph (a) and by adding paragraph (b) to read as follows:
Sec. 249.501a Form BDW, notice of withdrawal from registration as
broker-dealer pursuant to Sec. 240.15b6-1, Sec. 240.15Bc3-1, or
Sec. 240.15Cc1-1 of this chapter.
(a) * * *
(b) Interim Form BDW shall be used for application for registration
as broker-dealer under the Securities Exchange Act of 1934, or to amend
such application, only by order of the Commission. In the event broker-
dealers are required to comply with their filing obligations on Interim
Form BD, the form will be made available at the Commission's
Publication Office at (202) 942-4040.
By the Commission.
Dated: July 30, 1999.
Margaret H. McFarland,
Deputy Secretary.
Note: This Appendix A to the preamble will not appear in the
Code of Federal Regulations.
Appendix A to the Preamble--Securities and Exchange Commission
Regulatory Flexibility Act Certification
I, Arthur Levitt, Jr., Chairman of the U.S. Securities and
Exchange Commission (``Commission''), hereby certify, pursuant to 5
U.S.C. Sec. 605(b), that (1) the redesignation of Form BD and Form
BDW, as currently in effect until July 30, 1999 and August 1, 1999,
respectively, as Interim Form BD and Interim Form BDW and (2) the
amendments to Rules 15b3-1(c), 15b6-1, 15Ba2-2(e), 15Bc3-1, 15Ca2-
1(c), and 15Cc1-1(``Rules'') and 17 CFR Sec. Sec. 249.501 and 501a
under the Securities Exchange Act of 1934 (``Exchange Act'') would
not, if adopted, have a significant economic impact on a substantial
number of small entities. The redesignation of Form BD and Form BDW
is intended to preserve the effectiveness of these forms in the
event it is necessary to return to the legacy CRD system. The rule
amendments would allow the Commission, by order, to conditionally
exempt broker-dealers from the filing instructions contained in
those rules and Forms BD and BDW, respectively. This authority is
needed to provide the Commission with sufficient flexibility to
continuously maintain the registration system for broker-dealers in
the event the full implementation of Web CRD is delayed. The
amendments would impose little or no new recordkeeping requirements
or compliance burdens on small entities. Accordingly, the amendments
would not have a significant economic impact on a substantial number
of small entities.
Dated: July 30, 1999.
Arthur Levitt, Jr.,
Chairman.
[FR Doc. 99-20099 Filed 7-30-99; 4:34 pm]
BILLING CODE 8010-01-P