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8000 - Miscellaneous Statutes and Regulations



SEC. 3A.  SWAP AGREEMENTS

(a)  [Reserved]

(b)  SECURITY-BASED SWAP AGREEMENTS.--

(1)  The definition of "security" in section 3(a)(10) of this title does not include any security-based swap agreement.

(2)  The Commission is prohibited from registering, or requiring, recommending, or suggesting, the registration under this title of any security-based swap agreement. If the Commission becomes aware that a registrant has filed a registration application with respect to such a swap agreement, the Commission shall promptly so notify the registrant. Any such registration with respect to such a swap agreement shall be void and of no force or effect.

(3)  Except as provided in section 16(a) with respect to reporting requirements, the Commission is prohibited from--

(A)  promulgating, interpreting, or enforcing rules; or

(B)  issuing orders of general applicability;

under this title in a manner that imposes or specifies reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any security-based swap agreement.

(4)  References in this title to the "purchase" or "sale" of a security-based swap agreement shall be deemed to mean the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap agreement, as the context may require.

[Codified to 15 U.S.C. 78c--1]

[Source: Section 303(a) of title III of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--452), effective December 21, 2000; as amended by section 762(d)(1) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1760), effective July 21, 2010]

SEC. 3B.  SECURITIES-RELATED DERIVATIVES.

(a)  Any agreement, contract, or transaction (or class thereof) that is exempted by the Commodity Futures Trading Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract, or transaction (or class thereof) shall be deemed a security for purposes of the securities laws.

(b)  With respect to any agreement, contract, or transaction (or class thereof) that is exempted by the Commodity Futures Trading Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1)) with the condition that the Commission exercise concurrent jurisdiction over such agreement, contract, or transaction (or class thereof), references in the securities laws to the "purchase" or "sale" of a security shall be deemed to include the execution, termination (prior to its scheduled maturity date), assignment, exchange, or similar transfer or conveyance of, or extinguishing of rights or obligations under such agreement, contract, or transaction, as the context may require.

[Codified to 15 U.S.C. 78c--2]

[Source: Section 3B added by section 717(b) of title 7 of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1651), effective July 21, 2010]

SEC. 3C.  CLEARING FOR SECURITY-BASED SWAPS.

(a)  IN GENERAL.--

(1)  STANDARD FOR CLEARING.--It shall be unlawful for any person to engage in a security-based swap unless that person submits such security-based swap for clearing to a clearing agency that is registered under this Act or a clearing agency that is exempt from registration under this Act if the security-based swap is required to be cleared.

(2)  OPEN ACCESS.--The rules of a clearing agency described in paragraph (1) shall--

(A)  prescribe that all security-based swaps submitted to the clearing agency with the same terms and conditions are economically equivalent within the clearing agency and may be offset with each other within the clearing agency; and

(B)  provide for non-discriminatory clearing of a security-based swap executed bilaterally or on or through the rules of an unaffiliated national securities exchange or security-based swap execution facility.

(b)  COMMISSION REVIEW.--

(1)  COMMISSION-INITIATED REVIEW.--

(A)  The Commission on an ongoing basis shall review each security-based swap, or any group, category, type, or class of security-based swaps to make a determination that such security-based swap, or group, category, type, or class of security-based swaps should be required to be cleared.

(B)  The Commission shall provide at least a 30-day public comment period regarding any determination under subparagraph (A).

(2)  SWAP SUBMISSIONS.--

(A)  A clearing agency shall submit to the Commission each security-based swap, or any group, category, type, or class of security-based swaps that it plans to accept for clearing and provide notice to its members (in a manner to be determined by the Commission) of such submission.

(B)  Any security-based swap or group, category, type, or class of security-based swaps listed for clearing by a clearing agency as of the date of enactment of this subsection shall be considered submitted to the Commission.

(C)  The Commission shall--

(i)  make available to the public any submission received under subparagraphs (A) and (B);

(ii)  review each submission made under subparagraphs (A) and (B), and determine whether the security-based swap, or group, category, type, or class of security-based swaps, described in the submission is required to be cleared; and

(iii)  provide at least a 30-day public comment period regarding its determination whether the clearing requirement under subsection (a)(1) shall apply to the submission.

(3)  DEADLINE.--The Commission shall make its determination under paragraph (2)(C) not later than 90 days after receiving a submission made under paragraphs (2)(A) and (2)(B), unless the submitting clearing agency agrees to an extension for the time limitation established under this paragraph.

(4)  DETERMINATION.--

(A)  In reviewing a submission made under paragraph (2), the Commission shall review whether the submission is consistent with section 17A.

(B)  In reviewing a security-based swap, group of security-based swaps or class of security-based swaps pursuant to paragraph (1) or a submission made under paragraph (2), the Commission shall take into account the following factors:

(i)  The existence of significant outstanding notional exposures, trading liquidity and adequate pricing data.

(ii)  The availability of rule framework, capacity, operational expertise and resources, and credit support infrastructure to clear the contract on terms that are consistent with the material terms and trading conventions on which the contract is then traded.

(iii)  The effect on the mitigation of systemic risk, taking into account the size of the market for such contract and the resources of the clearing agency available to clear the contract.

(iv)  The effect on competition, including appropriate fees and charges applied to clearing.

(v)  The existence of reasonable legal certainty in the event of the insolvency of the relevant clearing agency or 1 or more of its clearing members with regard to the treatment of customer and security-based swap counterparty positions, funds, and property.

(C)  In making a determination under subsection (b)(1) or paragraph (2)(C) that the clearing requirement shall apply, the Commission may require such terms and conditions to the requirement as the Commission determines to be appropriate.

(5)  RULES.--Not later than 1 year after the date of the enactment of this section, the Commission shall adopt rules for a clearing agency's submission for review, pursuant to this subsection, of a security-based swap, or a group, category, type, or class of security-based swaps, that it seeks to accept for clearing. Nothing in this paragraph limits the Commission from making a determination under paragraph (2)(C) for security-based swaps described in paragraph (2)(B).

(c)  STAY OF CLEARING REQUIREMENT.--

(1)  IN GENERAL.--After making a determination pursuant to subsection (b)(2), the Commission, on application of a counterparty to a security-based swap or on its own initiative, may stay the clearing requirement of subsection (a)(1) until the Commission completes a review of the terms of the security- based swap (or the group, category, type, or class of security-based swaps) and the clearing arrangement.

(2)  DEADLINE.--The Commission shall complete a review undertaken pursuant to paragraph (1) not later than 90 days after issuance of the stay, unless the clearing agency that clears the security-based swap, or group, category, type, or class of security-based swaps, agrees to an extension of the time limitation established under this paragraph.

(3)  DETERMINATION.--Upon completion of the review undertaken pursuant to paragraph (1), the Commission may--

(A) determine, unconditionally or subject to such terms and conditions as the Commission determines to be appropriate, that the security-based swap, or group, category, type, or class of security-based swaps, must be cleared pursuant to this subsection if it finds that such clearing is consistent with subsection (b)(4); or

(B) determine that the clearing requirement of subsection (a)(1) shall not apply to the security-based swap, or group, category, type, or class of security-based swaps.

(4)  RULES.--Not later than 1 year after the date of the enactment of this section, the Commission shall adopt rules for reviewing, pursuant to this subsection, a clearing agency's clearing of a security-based swap, or a group, category, type, or class of security-based swaps, that it has accepted for clearing.

(d)  PREVENTION OF EVASION.--

(1)  IN GENERAL.--The Commission shall prescribe rules under this section (and issue interpretations of rules prescribed under this section), as determined by the Commission to be necessary to prevent evasions of the mandatory clearing requirements under this Act.

(2)  DUTY OF COMMISSION TO INVESTIGATE AND TAKE CERTAIN ACTIONS.--To the extent the Commission finds that a particular security-based swap or any group, category, type, or class of security-based swaps that would otherwise be subject to mandatory clearing but no clearing agency has listed the security-based swap or the group, category, type, or class of security-based swaps for clearing, the Commission shall--

(A) investigate the relevant facts and circumstances;

(B) within 30 days issue a public report containing the results of the investigation; and

(C) take such actions as the Commission determines to be necessary and in the public interest, which may include requiring the retaining of adequate margin or capital by parties to the security-based swap or the group, category, type, or class of security-based swaps.

(3)  EFFECT ON AUTHORITY.--Nothing in this subsection--

(A) authorizes the Commission to adopt rules requiring a clearing agency to list for clearing a security-based swap or any group, category, type, or class of security- based swaps if the clearing of the security-based swap or the group, category, type, or class of security-based swaps would threaten the financial integrity of the clearing agency; and

(B) affects the authority of the Commission to enforce the open access provisions of subsection (a)(2) with respect to a security-based swap or the group, category, type, or class of security-based swaps that is listed for clearing by a clearing agency.

(e)  REPORTING TRANSITION RULES.--Rules adopted by the Commission under this section shall provide for the reporting of data, as follows:

(1) Security-based swaps entered into before the date of the enactment of this section shall be reported to a registered security-based swap data repository or the Commission no later than 180 days after the effective date of this section.

(2) Security-based swaps entered into on or after such date of enactment shall be reported to a registered security-based swap data repository or the Commission no later than the later of--

(A) 90 days after such effective date; or

(B) such other time after entering into the security-based swap as the Commission may prescribe by rule or regulation.

(f)  CLEARING TRANSITION RULES.--

(1) Security-based swaps entered into before the date of the enactment of this section are exempt from the clearing requirements of this subsection if reported pursuant to subsection (e)(1).

(2) Security-based swaps entered into before application of the clearing requirement pursuant to this section are exempt from the clearing requirements of this section if reported pursuant to subsection (e)(2).

(g)  EXCEPTIONS.--

(1)  IN GENERAL.--The requirements of subsection (a)(1) shall not apply to a security-based swap if 1 of the counterparties to the security-based swap--

(A) is not a financial entity;

(B) is using security-based swaps to hedge or mitigate commercial risk; and

(C) notifies the Commission, in a manner set forth by the Commission, how it generally meets its financial obligations associated with entering into non-cleared security-based swaps.

(2)  OPTION TO CLEAR.--The application of the clearing exception in paragraph (1) is solely at the discretion of the counterparty to the security-based swap that meets the conditions of subparagraphs (A) through (C) of paragraph (1).

(3)  FINANCIAL ENTITY DEFINITION.--

(A) IN GENERAL.--For the purposes of this subsection, the term 'financial entity' means--

(i) a swap dealer;

(ii) a security-based swap dealer;

(iii) a major swap participant;

(iv) a major security-based swap participant;

(v) a commodity pool as defined in section 1a(10) of the Commodity Exchange Act;

(vi) a private fund as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80--b--2(a));

(vii) an employee benefit plan as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002);

(viii) a person predominantly engaged in activities that are in the business of banking or financial in nature, as defined in section 4(k) of the Bank Holding Company Act of 1956.

(B)  EXCLUSION.--The Commission shall consider whether to exempt small banks, savings associations, farm credit system institutions, and credit unions, including--

(i) depository institutions with total assets of $10,000,000,000 or less;

(ii) farm credit system institutions with total assets of $10,000,000,000 or less; or

(iii) credit unions with total assets of $10,000,000,000 or less.

(4)  TREATMENT OF AFFILIATES.--

(A)  IN GENERAL.--An affiliate of a person that qualifies for an exception under this subsection (including affiliate entities predominantly engaged in providing financing for the purchase of the merchandise or manufactured goods of the person) may qualify for the exception only if the affiliate, acting on behalf of the person and as an agent, uses the security-based swap to hedge or mitigate the commercial risk of the person or other affiliate of the person that is not a financial entity.

(B)  PROHIBITION RELATING TO CERTAIN AFFILIATES.--The exception in subparagraph (A) shall not apply if the affiliate is--

(i) a swap dealer;

(ii) a security-based swap dealer;

(iii) a major swap participant;

(iv) a major security-based swap participant;

(v) an issuer that would be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a--3), but for paragraph (1) or (7) of subsection (c) of that Act (15 U.S.C. 80a--3(c));

(vi) a commodity pool; or

(vii) a bank holding company with over $50,000,000,000 in consolidated assets.

(C)  TRANSITION RULE FOR AFFILIATES.--An affiliate, subsidiary, or a wholly owned entity of a person that qualifies for an exception under subparagraph (A) and is predominantly engaged in providing financing for the purchase or lease of merchandise or manufactured goods of the person shall be exempt from the margin requirement described in section 15F(e) and the clearing requirement described in subsection (a) with regard to security-based swaps entered into to mitigate the risk of the financing activities for not less than a 2-year period beginning on the date of enactment of this subparagraph.

(5)  ELECTION OF COUNTERPARTY.--

(A)  SECURITY-BASED SWAPS REQUIRED TO BE CLEARED.--With respect to Any security-based swap that is subject to the mandatory clearing requirement under subsection (a) and entered into by a security-based swap dealer or a major security-based swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty shall have the sole right to select the clearing agency at which the security-based swap will be cleared.

(B)  SECURITY-BASED SWAPS NOT REQUIRED TO BE CLEARED.--With Respect To any security-based swap that is not subject to the mandatory clearing requirement under subsection (a) and entered into by a security-based swap dealer or a major security-based swap participant with a counterparty that is not a swap dealer, major swap participant, security-based swap dealer, or major security-based swap participant, the counterparty-

(i) may elect to require clearing of the security-based swap; and

(ii) shall have the sole right to select the clearing agency at which the security- Based swap will be cleared.

(6)  ABUSE OF EXCEPTION.--The Commission may prescribe such rules or issue interpretations of the rules as the Commission determines to be necessary to prevent abuse of the exceptions described in this subsection. The Commission may also request information from those persons claiming the clearing exception as necessary to prevent abuse of the exceptions described in this subsection.

(h)  TRADE EXECUTION.--

(1)  IN GENERAL.--With respect to transactions involving security-based swaps subject to the clearing requirement of subsection (a)(1), counterparties shall--

(A) execute the transaction on an exchange; or

(B) execute the transaction on a security-based swap execution facility registered under section 3D or a security-based swap execution facility that is exempt from registration under section 3D(e).

(2)  EXCEPTION.--The requirements of subparagraphs (A) and (B) of paragraph (1) shall not apply if no exchange or security-based swap execution facility makes the security-based swap available to trade or for security-based swap transactions subject to the clearing exception under subsection (g).

(i)  BOARD APPROVAL.--Exemptions from the requirements of this section to clear a security-based swap or execute a security-based swap through a national securities exchange or security-based swap execution facility shall be available to a counterparty that is an issuer of securities that are registered under section 12 or that is required to file reports pursuant to section 15(d), only if an appropriate committee of the issuer's board or governing body has reviewed and approved the issuer's decision to enter into security-based swaps that are subject to such exemptions.

(j)  DESIGNATION OF CHIEF COMPLIANCE OFFICER.--

(1)  IN GENERAL.--Each registered clearing agency shall designate an individual to serve as a chief compliance officer.

(2)  DUTIES.--The chief compliance officer shall--

(A) report directly to the board or to the senior officer of the clearing agency;

(B) in consultation with its board, a body performing a function similar thereto, or the senior officer of the registered clearing agency, resolve any conflicts of interest that may arise;

(C) be responsible for administering each policy and procedure that is required to be established pursuant to this section;

(D) ensure compliance with this title (including regulations issued under this title) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section;

(E) establish procedures for the remediation of noncompliance issues identified by the compliance officer through any--

(i) compliance office review;

(ii) look-back;

(iii) internal or external audit finding;

(iv) self-reported error; or

(v) validated complaint; and

(F) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.

(3)  ANNUAL REPORTS.--

(A)  IN GENERAL.--In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of--

(i) the compliance of the registered clearing agency or security-based swap execution facility of the compliance officer with respect to this title (including regulations under this title); and

(ii) each policy and procedure of the registered clearing agency of the compliance Officer (including the code of ethics and conflict of interest policies of the registered Clearing agency).

(B)  REQUIREMENTS.--A compliance report under subparagraph (A) shall--

(i) accompany each appropriate financial report of the registered clearing agency that is required to be furnished to the Commission pursuant to this section; and

(ii) include a certification that, under penalty of law, the compliance report is accurate and complete.

[Codified to 15 U.S.C. 78c--3]

[Source: Section 3C added by section 763a of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1762), effective July 21, 2010]

SEC. 3D.  SECURITY-BASED SWAP EXECUTION FACILITIES.

(a)  REGISTRATION.--

(1)  IN GENERAL.--No person may operate a facility for the trading or processing of security-based swaps, unless the facility is registered as a security-based swap execution facility or as a national securities exchange under this section.

(2)  DUAL REGISTRATION.--Any person that is registered as a security-based swap execution facility under this section shall register with the Commission regardless of whether the person also is registered with the Commodity Futures Trading Commission as a swap execution facility.

(b)  TRADING AND TRADE PROCESSING.--A security-based swap execution facility that is registered under subsection (a) may--

(1) make available for trading any security-based swap; and

(2) facilitate trade processing of any security-based swap.

(c)  IDENTIFICATION OF FACILITY USED TO TRADE SECURITY-BASED SWAPS BY NATIONAL SECURITIES EXCHANGES.--A national securities exchange shall, to the extent that the exchange also operates a security- based swap execution facility and uses the same electronic trade execution system for listing and executing trades of security-based swaps on or through the exchange and the facility, identify whether electronic trading of such security-based swaps is taking place on or through the national securities exchange or the security-based swap execution facility.

(d)  CORE PRINCIPLES FOR SECURITY-BASED SWAP EXECUTION FACILITIES.--

(1)  COMPLIANCE WITH CORE PRINCIPLES.--

(A)  IN GENERAL.--To be registered, and maintain registration, as a security- based swap execution facility, the security-based swap execution facility shall comply with--

(i) the core principles described in this subsection; and

(ii) any requirement that the Commission may impose by rule or regulation.

(B)  REASONABLE DISCRETION OF SECURITY-BASED SWAP EXECUTION FACILITY.--Unless otherwise determined by the Commission, by rule or regulation, a security-based swap execution facility described in subparagraph (A) shall have reasonable discretion in establishing the manner in which it complies with the core principles described in this subsection.

(2)  COMPLIANCE WITH RULES.--A security-based swap execution facility shall--

(A) establish and enforce compliance with any rule established by such security- based swap execution facility, including--

(i) the terms and conditions of the security-based swaps traded or processed on or through the facility; and

(ii) any limitation on access to the facility;

(B) establish and enforce trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce those rules, including means--

(i) to provide market participants with impartial access to the market; and

(ii) to capture information that may be used in establishing whether rule violations have occurred; and

(C) establish rules governing the operation of the facility, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the facility, including block trades.

(3)  SECURITY-BASED SWAPS NOT READILY SUSCEPTIBLE TO MANIPULATION.--The security-based swap execution facility shall permit Trading only in security-based swaps that are not readily susceptible to manipulation.

(4)  MONITORING OF TRADING AND TRADE PROCESSING.--The security-based swap execution facility shall--

(A) establish and enforce rules or terms and conditions defining, or specifications detailing--

(i) trading procedures to be used in entering and executing orders traded on or through the facilities of the security-based swap execution facility; and

(ii) procedures for trade processing of security-based swaps on or through the facilities of the security-based swap execution facility; and

(B) monitor trading in security-based swaps to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, compliance, and disciplinary practices and procedures, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.

(5)  ABILITY TO OBTAIN INFORMATION.--The security-based swap execution facility shall--

(A) establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this subsection;

(B) provide the information to the Commission on request; and

(C) have the capacity to carry out such international information-sharing agreements as the Commission may require.

(6)  FINANCIAL INTEGRITY OF TRANSACTIONS.--The security-based swap execution facility shall establish and enforce rules and procedures for ensuring the financial integrity of security-based swaps entered on or through the facilities of the security-based swap execution facility, including the clearance and settlement of security-based swaps pursuant to section 3C(a)(1).

(7)  EMERGENCY AUTHORITY.--The security-based swap execution facility shall adopt rules to provide for the exercise of emergency authority, in consultation or cooperation with the Commission, as is necessary and appropriate, including the authority to liquidate or transfer open positions in any security-based swap or to suspend or curtail trading in a security-based swap.

(8)  TIMELY PUBLICATION OF TRADING INFORMATION.--

(A)  IN GENERAL.--The security-based swap execution facility shall make public timely information on price, trading volume, and other trading data on security-based swaps to the extent prescribed by the Commission.

(B)  CAPACITY OF SECURITY-BASED SWAP EXECUTION FACILITY.--The security-based swap execution facility shall be required to have the capacity to electronically capture and transmit and disseminate trade information with respect to transactions executed on or through the facility.

(9)  RECORDKEEPING AND REPORTING.--

(A)  IN GENERAL.--A security-based swap execution facility shall--

(i) maintain records of all activities relating to the business of the facility, Including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years; and

(ii) report to the Commission, in a form and manner acceptable to the Commission, such information as the Commission determines to be necessary or appropriate for the Commission to perform the duties of the Commission under this title.

(B)  REQUIREMENTS.--The Commission shall adopt data collection and reporting requirements for security-based swap execution facilities that are comparable to corresponding requirements for clearing agencies and security-based swap data repositories.

(10)  ANTITRUST CONSIDERATIONS.--Unless necessary or appropriate to achieve the purposes of this title, the security-based swap execution facility shall not--

(A) adopt any rules or taking any actions that result in any unreasonable restraint of trade; or

(B) impose any material anticompetitive burden on trading or clearing.

(11)  CONFLICTS OF INTEREST.--The security-based swap execution facility shall--

(A) establish and enforce rules to minimize conflicts of interest in its decision-making process; and

(B) establish a process for resolving the conflicts of interest.

(12)  FINANCIAL RESOURCES.--

(A)  IN GENERAL.--The security-based swap execution facility shall have adequate financial, operational, and managerial resources to discharge each responsibility of the security-based swap execution facility, as determined by the Commission.

(B)  DETERMINATION OF RESOURCE ADEQUACY.--The financial resources of a security-based swap execution facility shall be considered to be adequate if the value of the financial resources--

(i) enables the organization to meet its financial obligations to its members and participants notwithstanding a default by the member or participant creating the largest financial exposure for that organization in extreme but plausible market conditions; and

(ii) exceeds the total amount that would enable the security-based swap execution facility to cover the operating costs of the security-based swap execution facility for a 1-year period, as calculated on a rolling basis.

(13)  SYSTEM SAFEGUARDS.--The security-based swap execution facility shall--

(A) establish and maintain a program of risk analysis and oversight to identify and minimize sources of operational risk, through the development of appropriate controls and procedures, and automated systems, that--

(i) are reliable and secure; and

(ii) have adequate scalable capacity;

(B) establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for--

(i) the timely recovery and resumption of operations; and

(ii) the fulfillment of the responsibilities and obligations of the security-based swap execution facility; and

(C) periodically conduct tests to verify that the backup resources of the security- based swap execution facility are sufficient to ensure continued--

(i) order processing and trade matching;

(ii) price reporting;

(iii) market surveillance; and

(iv) maintenance of a comprehensive and accurate audit trail.

(14)  DESIGNATION OF CHIEF COMPLIANCE OFFICER.--

(A)  IN GENERAL.--Each security-based swap execution facility shall designate an individual to serve as a chief compliance officer.

(B)  DUTIES.--The chief compliance officer shall--

(i) report directly to the board or to the senior officer of the facility;

(ii) review compliance with the core principles in this subsection;

(iii) in consultation with the board of the facility, a body performing a function similar to that of a board, or the senior officer of the facility, resolve any conflicts of interest that may arise;

(iv) be responsible for establishing and administering the policies and procedures required to be established pursuant to this section;

(v) ensure compliance with this title and the rules and regulations issued under this title, including rules prescribed by the Commission pursuant to this section;

(vi) establish procedures for the remediation of noncompliance issues found during--

(I) compliance office reviews;

(II) look backs;

(III) internal or external audit findings;

(IV) self-reported errors; or

(V) through validated complaints; and

(vii) establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.

(C)  ANNUAL REPORTS.--

(i)  IN GENERAL.--In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of--

(I) the compliance of the security-based swap execution facility with this title; and

(II) the policies and procedures, including the code of ethics and conflict of interest policies, of the security-based security-based swap execution facility.

(ii)  REQUIREMENTS.--The chief compliance officer shall--

(I) submit each report described in clause (i) with the appropriate financial report of the security-based swap execution facility that is required to be submitted to the Commission pursuant to this section; and

(II) include in the report a certification that, under penalty of law, the report is Accurate And complete.

(e)  EXEMPTIONS.--The Commission may exempt, conditionally or unconditionally, a security-based swap execution facility from registration under this section if the Commission finds that the facility is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the Commodity Futures Trading Commission.

(f)  RULES.--The Commission shall prescribe rules governing the regulation of security- based swap execution facilities under this section.

[Codified to 15 U.S.C. 78c--4]

[Source: Section 3D added by section 763(c) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1769), effective July 21, 2010]


SEC. 3E.  SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY- BASED SWAP TRANSACTIONS.

(a)  REGISTRATION REQUIREMENT.--It shall be unlawful for any person to accept any money, securities, or property (or to extend any credit in lieu of money, securities, or property) from, for, or on behalf of a security-based swaps customer to margin, guarantee, or secure a security-based swap cleared by or through a clearing agency (including money, securities, or property accruing to the customer as the result of such a security-based swap), unless the person shall have registered under this title with the Commission as a broker, dealer, or security-based swap dealer, and the registration shall not have expired nor been suspended nor revoked.

(b)  CLEARED SECURITY-BASED SWAPS.--

(1)  SEGREGATION REQUIRED.--A broker, dealer, or security-based swap dealer shall treat and deal with all money, securities, and property of any security-based swaps customer received to margin, guarantee, or secure a security-based swap cleared by or though a clearing agency (including money, securities, or property accruing to the security-based swaps customer as the result of such a security-based swap) as belonging to the security-based swaps customer.

(2)  COMMINGLING PROHIBITED.--Money, securities, and property of a security-based swaps customer described in paragraph (1) shall be separately accounted for and shall not be commingled with the funds of the broker, dealer, or security-based swap dealer or be used to margin, secure, or guarantee any trades or contracts of any security-based swaps customer or person other than the person for whom the same are held.

(c)  EXCEPTIONS.--

(1)  USE OF FUNDS.--

(A)  IN GENERAL.--Notwithstanding subsection (b), money, securities, and property of a security-based swaps customer of a broker, dealer, or security-based swap dealer described in subsection (b) may, for convenience, be commingled and deposited in the same 1 or more accounts with any bank or trust company or with a clearing agency.

(B)  WITHDRAWAL.--Notwithstanding subsection (b), such share of the money, securities, and property described in subparagraph (A) as in the normal course of business shall be necessary to margin, guarantee, secure, transfer, adjust, or settle a cleared security-based swap with a clearing agency, or with any member of the clearing agency, may be withdrawn and applied to such purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the cleared security-based swap.

(2)  COMMISSION ACTION.--Notwithstanding subsection (b), in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order, any money, securities, or property of the security-based swaps customer of a broker, dealer, or security-based swap dealer described in subsection (b) may be commingled and deposited as provided in this section with any other money, securities, or property received by the broker, dealer, or security-based swap dealer and required by the Commission to be separately accounted for and treated and dealt with as belonging to the security-based swaps customer of the broker, dealer, or security-based swap dealer.

(d)  PERMITTED INVESTMENTS.--Money described in subsection (b) may be invested in obligations of the United States, in general obligations of any State or of any political subdivision of a State, and in obligations fully guaranteed as to principal and interest by the United States, or in any other investment that the Commission may by rule or regulation prescribe, and such investments shall be made in accordance with such rules and regulations and subject to such conditions as the Commission may prescribe.

(e)  PROHIBITION.--It shall be unlawful for any person, including any clearing agency and any depository institution, that has received any money, securities, or property for deposit in a separate account or accounts as provided in subsection (b) to hold, dispose of, or use any such money, securities, or property as belonging to the depositing broker, dealer, or security-based swap dealer or any person other than the swaps customer of the broker, dealer, or security-based swap dealer.

(f)  SEGREGATION REQUIREMENTS FOR UNCLEARED SECURITY-BASED SWAPS.--

(1)  SECREGATION OF ASSETS HELD AS COLLATERAL IN UNCLEARED SECURITY-BASED SWAP TRANSACTIONS.--

(A)  NOTIFICATION.--A security-based swap dealer or major security-based swap participant shall be required to notify the counterparty of the security-based swap dealer or major security-based swap participant at the beginning of a security-based swap transaction that the counterparty has the right to require segregation of the funds of other property supplied to margin, guarantee, or secure the obligations of the counterparty.

(B)  SEGREGATION AND MAINTENANCE OF FUNDS.--At the request of a counterparty to a security-based swap that provides funds or other property to a security-based swap dealer or major security-based swap participant to margin, guarantee, or secure the obligations of the counterparty, the security-based swap dealer or major security-based swap participant shall--

(i) segregate the funds or other property for the benefit of the counterparty; and

(ii) in accordance with such rules and regulations as the Commission may promulgate, maintain the funds or other property in a segregated account separate from the assets and other interests of the security-based swap dealer or major security-based swap participant.

(2)  APPLICABILITY.--The requirements described in paragraph (1) shall--

(A) apply only to a security-based swap between a counterparty and a security- based swap dealer or major security-based swap participant that is not submitted for clearing to a clearing agency; and

(B)(i) not apply to variation margin payments; or

(ii) not preclude any commercial arrangement regarding--

(I) the investment of segregated funds or other property that may only be invested in such investments as the Commission may permit by rule or regulation; and

(II) the related allocation of gains and losses resulting from any investment of the segregated funds or other property.

(3)  USE OF INDEPENDENT THIRD-PARTY CUSTODIANS.--The segregated account described in paragraph (1) shall be--

(A) carried by an independent third-party custodian; and

(B) designated as a segregated account for and on behalf of the counterparty.

(4)  REPORTING REQUIREMENT.--If the counterparty does not choose to require segregation of the funds or other property supplied to margin, guarantee, or secure the obligations of the counterparty, the security-based swap dealer or major security- based swap participant shall report to the counterparty of the security-based swap dealer or major security-based swap participant on a quarterly basis that the back office procedures of the security-based swap dealer or major security-based swap participant relating to margin and collateral requirements are in compliance with the agreement of the counterparties.

(g)  BANKRUPTCY.--A security-based swap, as defined in section 3(a)(68) shall be considered to be a security as such term is used in section 101(53A)(B) and subchapter III of title 11, United States Code. An account that holds a security-based swap, other than a portfolio margining account referred to in section 15(c)(3)(C) shall be considered to be a securities account, as that term is defined in section 741 of title 11, United States Code. The definitions of the terms purchase' and sale' in section 3(a)(13) and (14) shall be applied to the terms purchase' and sale', as used in section 741 of title 11, United States Code. The term customer', as defined in section 741 of title 11, United States Code, excludes any person, to the extent that such person has a claim based on any open repurchase agreement, open reverse repurchase agreement, stock borrowed agreement, non-cleared option, or non-cleared security-based swap except to the extent of any margin delivered to or by the customer with respect to which there is a customer protection requirement under section 15(c)(3) or a segregation requirement.

[Codified to 15 U.S.C. 78c--5]

[Source: Section 3E added by section 763 (d) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat 1774), effective July 21, 2010]


NOTE

Membership in a national securities exchange.   Section 31(a) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), provides in part as follows:

"(a)... Neither the provisions of section 3(a)(3)... of the Securities Exchange Act of 1934 (as amended by this Act) nor any rule or regulation thereunder shall apply so as to deprive any person of membership in any

national securities exchange (or its successor) of which such person was, on the date of enactment of this Act [June 4, 1975], a member or a member firm as defined in the constitution of such exchange, or so as to deny membership in any such exchange (or its successor) to any natural person who is or becomes associated with such member or member firm."

SECURITIES AND EXCHANGE COMMISSION

SEC. 4.  (a)  There is hereby established a Securities and Exchange Commission (hereinafter referred to as the "Commission") to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. Not more than three of such commissioners shall be members of the same political party, and in making appointments members of different political parties shall be appointed alternately as nearly as may be practicable. No commissioner shall engage in any other business, vocation, or employment than that of serving as commissioner, nor shall any commissioner participate, directly or indirectly, in any stock-market operations or transactions of a character subject to regulation by the Commission pursuant to this title. Each Commissioner shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and except (1) any Commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (2) the terms of office of the Commissioners first taking office after the date of enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at the end of two years, one at the end of three years, one at the end of four years, and one at the end of five years, after the date of enactment of this title.

(b)  APPOINTMENT AND COMPENSATION OF STAFF AND LEASING AUTHORITY.--

(1)  APPOINTMENT AND COMPENSATION.-- The Commission is authorized to appoint and fix the compensation of such officers, attorneys, examiners, and other experts as may be necessary for carrying out its functions under this Act, without regard to the provisions of other laws applicable to the employment

and compensation of officers and employees of the United States, and the Commission may, subject to the civil-service laws, appoint such other officers and employees as are necessary in the execution of its functions and fix their salaries in accordance with the Classification Act of 1923, as amended.

(2)  ECONOMISTS--

(A)  COMMISSION AUTHORITY--Notwithstanding the provisions of chapter 51 of title 5, United States Code, the Commission is authorized--

(i)  to establish its own criteria for the selection of such professional economists as the Commission deems necessary to carry out the work of the Commission;

(ii)  to appoint directly such professional economists as the Commission deems qualified; and

(iii)  to fix and adjust the compensation of any professional economist appointed under this paragraph, without regard to the provisions of chapter 54 of title 5, United States Code, or subchapters II, III, or VIII of chapter 53, of title 5, United States Code.

(B)  LIMITATION ON COMPENSATION--No base compensation fixed for an economist under this paragraph may exceed the pay for Level IV of the Executive Schedule, and no payments to an economist appointed under this paragraph shall exceed the limitation on certain payments in section 5307 of title 5, United States Code.

(C)  OTHER BENEFITS--All professional economists appointed under this paragraph shall remain within the existing civil service system with respect to employee benefits.

(3)  LEASING AUTHORITY.--Notwithstanding any other provisions of law, the Commission is authorized to enter directly into leases for real property for office, meeting, storage, and such other space as is necessary to carry out its functions, and shall be exempt from any General Services Administration space management regulations or directives.

(c)  Notwithstanding any other provision of law, in accordance with regulations which the Commission shall prescribe to prevent conflicts of interest, the Commission may accept payment and reimbursement, in cash or in kind, from non-Federal agencies, organizations, and individuals for travel, subsistence, and other necessary expenses incurred by Commission members and employees in attending meetings and conferences concerning the functions or activities of the Commission. Any payment or reimbursement accepted shall be credited to the appropriated funds of the Commission. The amount of travel, subsistence, and other necessary expenses for members and employees paid or reimbursed under this subsection may exceed per diem amounts established in official travel regulations, but the Commission may include in its regulations under this subsection a limitation on such amounts.

(d)  Notwithstanding any other provision of law, former employers of participants in the Commission's professional fellows programs may pay such participants their actual expenses for relocation to Washington, District of Columbia, to facilitate their participation in such programs, and program participants may accept such payments.

(e)  Notwithstanding any other provision of law, whenever any fee is required to be paid to the Commission pursuant to any provision of the securities laws or any other law, the Commission may provide by rule that such fee shall be paid in a manner other than in cash and the Commission may also specify the time that such fee shall be determined and paid relative to the filing of any statement or document with the Commission.

(f)  REIMBURSEMENT OF EXPENSES FOR ASSISTING FOREIGN SECURITIES AUTHORITIES.--Notwithstanding any other provision of law, the Commission may accept payment and reimbursement, in cash or in kind, from a foreign securities authority, or made on behalf of such authority, for necessary expenses incurred by the Commission, its members, and employees in carrying out any investigation pursuant to section 21(a)(2) of this title or in providing any other assistance to a foreign securities authority. Any payment or reimbursement accepted shall be considered a reimbursement to the appropriated funds of the Commission.

(g)  OFFICE OF THE INVESTOR ADVOCATE.--

(1)  OFFICE ESTABLISHED.--There is established within the Commission the Office of the Investor Advocate (in this subsection referred to as the "Office").

(2)  INVESTOR ADVOCATE.--

(A)  IN GENERAL.--The head of the Office shall be the Investor Advocate, who shall--

(i)  report directly to the Chairman; and

(ii)  be appointed by the Chairman, in consultation with the Commission, from among individuals having experience in advocating for the interests of investors in securities and investor protection issues, from the perspective of investors.

(B)  COMPENSATION.--The annual rate of pay for the Investor Advocate shall be equal to the highest rate of annual pay for other senior executives who report to the Chairman of the Commission.

(C)  LIMITATION ON SERVICE.--An individual who serves as the Investor Advocate may not be employed by the Commission--

(i)  during the 2-year period ending on the date of appointment as Investor Advocate; or

(ii)  during the 5-year period beginning on the date on which the person ceases to serve as the Investor Advocate.

(3)  STAFF OF OFFICE.--The Investor Advocate, after consultation with the Chairman of the Commission, may retain or employ independent counsel, research staff, and service staff, as the Investor Advocate deems necessary to carry out the functions, powers, and duties of the Office.

(4)  FUNCTIONS OF THE INVESTOR ADVOCATE.--The Investor Advocate shall--

(A)  assist retail investors in resolving significant problems such investors may have with the Commission or with self-regulatory organizations;

(B)  identify areas in which investors would benefit from changes in the regulations of the Commission or the rules of self-regulatory organizations;

(C)  identify problems that investors have with financial service providers and investment products;

(D)  analyze the potential impact on investors of-

(i)  proposed regulations of the Commission; and

(ii)  proposed rules of self-regulatory organizations registered under this title; and

(E)  to the extent practicable, propose to the Commission changes in the regulations or orders of the Commission and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the interests of investors.

(5)  ACCESS TO DOCUMENTS.--The Commission shall ensure that the Investor Advocate has full access to the documents of the Commission and any self-regulatory organization, as necessary to carry out the functions of the Office.

(6)  ANNUAL REPORTS.--

(A)  REPORT ON OBJECTIVES.--

(i)  IN GENERAL.--Not later than June 30 of each year after 2010, the Investor Advocate shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the objectives of the Investor Advocate for the Following fiscal year.

(ii)  CONTENTS.--Each report required under clause (i) shall contain full and substantive analysis and explanation.

(B)  REPORT ON ACTIVITIES.--

(i)  IN GENERAL.--Not later than December 31 of each year after 2010, the Investor Advocate shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the activities of the Investor Advocate during the immediately preceding fiscal year.

(ii)  CONTENTS.--Each report required under clause (i) shall include-

(I)  appropriate statistical information and full and substantive analysis;

(II)  information on steps that the Investor Advocate has taken during the reporting period to improve investor services and the responsiveness of the Commission and self-regulatory organizations to investor concerns;

(III)  a summary of the most serious problems encountered by investors during the reporting period;

(IV)  an inventory of the items described in sub-clause (III) that includes--

(aa)  identification of any action taken by the Commission or the self- regulatory organization and the result of such action;

(bb)  the length of time that each item has remained on such inventory; and

(cc)  for items on which no action has been taken, the reasons for inaction, and an identification of any official who is responsible for such action;

(V)  recommendations for such administrative and legislative actions as may be appropriate to resolve problems encountered by investors; and

(VI)  any other information, as determined appropriate by the Investor Advocate.

(iii)  INDEPENDENCE.--Each report required under this paragraph shall be provided directly to the Committees listed in clause (i) without any prior review or comment from the Commission, any commissioner, any other officer or employee of the Commission, or the Office of Management and Budget.

(iv)  CONFIDENTIALITY.--No report required under clause (i) may contain confidential information.

(7)  REGULATIONS.--The Commission shall, by regulation, establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor Advocate, not later than 3 months after the date of such submission.

(8)  OMBUDSMAN.--

(A)  APPOINTMENT.--Not later than 180 days after the date on which the first Investor Advocate is appointed under paragraph (2)(A)(i), the Investor Advocate shall appoint an Ombudsman, who shall report directly to the Investor Advocate.

(B)  DUTIES.--The Ombudsman appointed under subparagraph (A) shall--

(i)  act as a liaison between the Commission and any retail investor in resolving problems that retail investors may have with the Commission or with self-regulatory organizations;

(ii)  review and make recommendations regarding policies and procedures to encourage persons to present questions to the Investor Advocate regarding compliance with the securities laws; and

(iii)  establish safeguards to maintain the confidentiality of communications between the persons described in clause (ii) and the Ombudsman.

(C)  LIMITATION.--In carrying out the duties of the Ombudsman under subparagraph (B), the Ombudsman shall utilize personnel of the Commission to the extent practicable. Nothing in this paragraph shall be construed as replacing, altering, or diminishing the activities of any ombudsman or similar office of any other agency.

(D)  REPORT.--The Ombudsman shall submit a semiannual report to the Investor Advocate that describes the activities and evaluates the effectiveness of the Ombudsman during the preceding year. The Investor Advocate shall include the Reports required under this section in the reports required to be submitted by the Inspector Advocate under paragraph (6).

(h)  EXAMINERS.--

(1)  DIVISION OF TRADING AND MARKETS.--The Division of Trading and Markets of the Commission, or any successor organizational unit, shall have a staff of examiners who shall--

(A)  perform compliance inspections and examinations of entities under the jurisdiction of that Division; and

(B)  report to the Director of that Division.

(2)  DIVISION OF INVESTMENT MANAGEMENT.--The Division of Investment Management of the Commission, or any successor organizational unit, shall have a staff of examiners who shall--

(A)  perform compliance inspections and examinations of entities under the jurisdiction of that Division; and

(B)  report to the Director of that Division.

(i)  SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.--

(1)  RESERVE FUND ESTABLISHED.--There is established in the Treasury of the United States a separate fund, to be known as the "Securities and Exchange Commission Reserve Fund" (referred to in this subsection as the "Reserve Fund").

(2)  RESERVE FUND AMOUNTS.--

(A)  In general.--Except as provided in subparagraph (B), any registration Fees collected by the Commission under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or section 24(f) of the Investment Company Act of 1940 (15 U.S.C. 80a--24(f)) shall be deposited into the Reserve Fund.

(B)  LIMITATIONS.--For any 1 fiscal year--

(i)  the amount deposited in the Fund may not exceed $50,000,000; and

(ii)  the balance in the Fund may not exceed $100,000,000.

(C)  EXCESS FEES.--Any amounts in excess of the limitations described in subparagraph (B) that the Commission collects from registration fees under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or section 24(f) of the Investment Company Act of 1940 (15 U.S.C. 80a--24(f)) shall be deposited in the General Fund of the Treasury of the United States and shall not be available for obligation by the Commission.

(3)  USE OF AMOUNTS IN RESERVE FUND.--The Commission may obligate amounts in the Reserve Fund, not to exceed a total of $100,000,000 in any 1 fiscal year, as the Commission determines is necessary to carry out the functions of the Commission. Any amounts in the reserve fund shall remain available until expended. Not later than 10 days after the date on which the Commission obligates amounts under this paragraph, the Commission shall notify Congress of the date, amount, and purpose of the obligation.

(4)  RULE OF CONSTRUCTION.--Amounts collected and deposited in the Reserve Fund shall not be construed to be Government funds or appropriated monies and shall not be subject to apportionment for the purpose of chapter 15 of title 31, United States Code, or under any other authority.

[Codified to 15 U.S.C. 78d]

[Source:  Section 4 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective July 1, 1934, as amended by section 1106(a) of title XI of the Act of October 28, 1949 (Pub. L. No. 429; 63 Stat. 972), effective October 28, 1949; section 3 of the Act of July 12, 1960 (Pub. L. No. 86--619; 74 Stat. 408), effective July 12, 1960; the Act of September 13, 1960 (Pub. L. No. 86--771; 74 Stat. 913), effective September 13, 1960; section 305(20) of title III of the Act of August 14, 1964 (Pub. L. No. 88--426; 78 Stat. 425, effective on the first day of the first pay period which begins on or after July 1, 1964; section 1 of the Act of June 6, 1983 (Pub. L. No. 98--38; 97 Stat. 205), effective June 6, 1983; sections 307 and 308 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1254), effective December 4, 1987; section 103 of title I and section 207 of title II of the Act of November 15, 1990 (Pub. L. No. 101--550; 104 Stat. 2713 and 2721), effective November 15, 1990; section 406 of title IV of the Act of October 11, 1996 (Pub. L. No. 104--290; 110 Stat. 3444), effective October 11, 1996; section 203 of title II of the Act of November 3, 1998 (Pub. L. No. 105--353; 112 Stat. 3234), effective November 3, 1998; as amended by section 915, 919D and 965 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1830, 1840, and 1911), effective July 21, 2010; section 991(e) of title IX of the Act of July, 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1954), effective October 1, 2011]

DELEGATION OF FUNCTIONS BY COMMISSION

SEC. 4A.  (a)  In addition to its existing authority, the Securities and Exchange Commission shall have the authority to delegate, by published order or rule, any of its functions to a division of the Commission, an individual Commissioner, an administrative law judge, or an employee or employee board, including functions with respect to hearing, determining, ordering, certifying, reporting, or otherwise acting as to any work, business, or matter. Nothing in this section shall be deemed to supersede the provisions of section 556(b) of title 5, or to authorize the delegation of the function of rulemaking as defined in subchapter II of chapter 5 of title 5, United States Code, with reference to general rules as distinguished from rules of particular applicability, or of the making of any rule pursuant to section 19(c) of this title.

(b)  With respect to the delegation of any of its functions, as provided in subsection (a) of this section, the Commission shall retain a discretionary right to review the action of any such division of the Commission, individual Commissioner, administrative law judge, employee, or employee board, upon its own initiative or upon petition of a party to or intervenor in such action, within such time and in such manner as the Commission by rule shall prescribe. The vote of one member of the Commission shall be sufficient to bring any such action before the Commission for review. A person or party shall be entitled to review by the Commission if he or it is adversely affected by action at a delegated level which (1) denies any request for action pursuant to section 8(a) or section 8(c) of the Securities Act of 1933 or the first sentence of section 12(d) of this title; (2) suspends trading in a security pursuant to section 12(k) of this title; or (3) is pursuant to any provision of this title in a case of adjudication, as defined in section 551 of title 5, United States Code, not required by this title to be determined on the record after notice and opportunity for hearing (except to the extent there is involved a matter described in section 554(a) (1) through (6) of such title 5).

(c)  If the right to exercise such review is declined, or if no such review is sought within the time stated in the rules promulgated by the Commission, then the action of any such division of the Commission, individual Commissioner, administrative law judge, employee, or employee board, shall, for all purposes, including appeal or review thereof, be deemed the action of the Commission.

[Codified to 15 U.S.C. 78d--1]

[Source: Section 4A of the Act of June 6, 1934 (Pub. L. No. 291), as added by section 308(a) of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1254), effective December 4, 1987]

TRANSFER OF FUNCTIONS WITH RESPECT TO ASSIGNMENT OF
PERSONNEL TO CHAIRMAN

SEC. 4B.  In addition to the functions transferred by the provisions of Reorganization Plan Numbered 10 of 1950 (64 Stat. 1265), there are hereby transferred from the Commission to the Chairman of the Commission the functions of the Commission with respect to the assignment of Commission personnel, including Commissioners, to perform such functions as may have been delegated by the Commission to the Commission personnel, including Commissioners, pursuant to section 4A of this title.

[Codified to 15 U.S.C. 78d--2]

[Source: Section 4B of the Act of June 6, 1934 (Pub. L. No. 291), as added by section 308(a) of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1255), effective December 4, 1987]

SEC. 4C.  APPEARANCE AND PRACTICE BEFORE THE COMMISSION.

(a)  AUTHORITY TO CENSURE.--The Commission may censure any person, or deny, temporarily or permanently, to any person the privilege of appearing or practicing before the Commission in any way, if that person is found by the Commission, after notice and opportunity for hearing in the matter--

(1)  not to possess the requisite qualifications to represent others;

(2)  to be lacking in character or integrity, or to have engaged in unethical or improper professional conduct; or

(3)  to have willfully violated, or willfully aided and abetted the violation of, any provision of the securities laws or the rules and regulations issued hereunder.

(b)  DEFINITION.--With respect to any registered public accounting firm or associated person, for purposes of this section, the term "improper professional conduct" means--

(1)  intentional or knowing conduct, including reckless conduct, that results in a violation of applicable professional standards; and

(2)  negligent conduct in the form of--

(A)  a single instance or highly unreasonable conduct that results in a violation of applicable professional standards in circumstances in which the registered public accounting firm or associated person knows, or should know, that heightened scrutiny is warranted; or

(B)  repeated instances of unreasonable conduct, each resulting in a violation of applicable professional standards, that indicate a lack of competence to practice before the Commission.

[Codified to 15 U.S.C. 78d--3]

[Source: Section 4C of the Act of June 6, 1934 (Pub. L. No. 291), as added be section 602 of title VI of the Act of July 30, 2002 (Pub. L. No. 107--204; 116 Stat. 794), effective July 30, 2002]


SEC. 4D.  ADDITIONAL DUTIES OF INSPECTOR GENERAL.

(a)  SUGGESTION SUBMISSIONS BY COMMISSION EMPLOYEES.--

(1)  HOTLINE ESTALBISHED.--The Inspector General of the Commission shall establish and maintain a telephone hotline or other electronic means for the receipt of--

(A)  suggestions by employees of the Commission for improvements in the work efficiency, effectiveness, and productivity, and the use of the resources, of the Commission; and

(B)  allegations by employees of the Commission of waste, abuse, misconduct, or mismanagement within the Commission.

(2)  CONFIDENTIALITY.--The Inspector General shall maintain as confidential--

(A)  the identity of any individual who provides information by the means Established under paragraph (1), unless the individual requests otherwise, in writing; and

(B)  at the request of any such individual, any specific information provided by the individual.

(b)  CONSIDERATION OF REPORTS.--The Inspector General shall consider any suggestions or allegations received by the means established under subsection (a)(1), and shall recommend appropriate action in relation to such suggestions or allegations.

(c)  RECOGNITION.--The Inspector General may recognize any employee who makes a suggestion under subsection (a)(1) (or by other means) that would or does--

(1)  increase the work efficiency, effectiveness, or productivity of the Commission; or

(2)  reduce waste, abuse, misconduct, or mismanagement within the Commission.

(d)  REPORT.--The Inspector General of the Commission shall submit to Congress an annual report containing a description of--

(1)  the nature, number, and potential benefits of any suggestions received under subsection (a);

(2)  the nature, number, and seriousness of any allegations received under subsection (a);

(3)  any recommendations made or actions taken by the Inspector General in response to substantiated allegations received under subsection (a); and

(4)  any action the Commission has taken in response to suggestions or allegations received under subsection (a).

(e)  FUNDING.--The activities of the Inspector General under this subsection shall be funded by the Securities and Exchange Commission Investor Protection Fund established under section 21F.

[Codified to 15 U.S.C. 78d--4]

[Section 4D added by section 966 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1912), effective July 21, 2010]


SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND COMPLIANCE EXAMINATIONS AND INSPECTIONS.

(a)  ENFORCEMENT INVESTIGATIONS.--

(1)  IN GENERAL.--Not later than 180 days after the date on which Commission staff provide a written Wells notification to any person, the Commission staff shall either file an action against such person or provide notice to the Director of the Division of Enforcement of its intent to not file an action.

(2)  EXCEPTIONS FOR CERTAIN COMPLEX ACTIONS.--Notwithstanding paragraph (1), if the Director of the Division of Enforcement of the Commission or the Director's designee determines that a particular enforcement investigation is sufficiently complex such that a determination regarding the filing of an action against a person cannot be completed within the deadline specified in paragraph (1), the Director of the Division of Enforcement of the Commission or the Director's designee may, after providing notice to the Chairman of the Commission, extend such deadline as needed for one additional 180-day period. If after the additional 180-day period the Director of the Division of Enforcement of the Commission or the Director's designee determines that a particular enforcement investigation is sufficiently complex such that a determination regarding the filing of an action against a person cannot be completed within the additional 180-day period, the Director of the Division of Enforcement of the Commission or the Director's designee may, after providing notice to and receiving approval of the Commission, extend such deadline as needed for one or more additional successive 180-day periods.

(b)  COMPLIANCE EXAMINATIONS AND INSPECTIONS.--

(1)  IN GENERAL.--Not later than 180 days after the date on which Commission staff completes the on-site portion of its compliance examination or inspection or receives all records requested from the entity being examined or inspected, whichever is later, Commission staff shall provide the entity being examined or inspected with written notification indicating either that the examination or inspection has concluded, has concluded without findings, or that the staff requests the entity undertake corrective action.

(2)  EXCEPTIONS FOR CERTAIN COMPLEX ACTIONS.--Notwithstanding paragraph (1), if the head of any division or office within the Commission responsible for compliance examinations and inspections or his designee determines that a particular compliance examination or inspection is sufficiently complex such that a determination regarding concluding the examination or inspection, or regarding the staff requests the entity undertake corrective action, cannot be completed within the deadline specified in paragraph (1), the head of any division or office within the Commission responsible for compliance examinations and inspections or his designee may, after providing notice to the Chairman of the Commission, extend such deadline as needed for one additional 180-day period.

[Codified to 15 U.S.C. 78d--5]

[Source: Section 4E added by section 929U of title IX of the Act of July 21, 2011 (Pub. L. No. 111--203; 124 Stat. 1867), effective July 21, 2010]


SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY CONTROLS.

(a)  ANNUAL REPORTS AND CERTIFICATION.--Not later than 90 days after the end of each fiscal year, the Commission shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the conduct by the Commission of examinations of registered entities, enforcement investigations, and review of corporate financial securities filings.

(b)  CONTENTS OF REPORTS.--Each report under subsection (a) shall contain--

(1)  an assessment, as of the end of the most recent fiscal year, of the effectiveness of--

(A)  the internal supervisory controls of the Commission; and

(B)  the procedures of the Commission applicable to the staff of the Commission who perform examinations of registered entities, enforcement investigations, and reviews of corporate financial securities filings;

(2)  a certification that the Commission has adequate internal supervisory controls to carry out the duties of the Commission described in paragraph (1)(B); and

(3)  a summary by the Comptroller General of the United States of the review carried out under subsection (d).

(c)  CERTIFICATION.—

(1)  SIGNATURE.--The certification under subsection (b)(2) shall be signed by the Director of the Division of Enforcement, the Director of the Division of Corporation Finance, and the Director of the Office of Compliance Inspections and Examinations (or the head of any successor division or office).

(2)  CONTENT OF CERTIFICATION.--Each individual described in paragraph (1) shall certify that the individual--

(A)  is directly responsible for establishing and maintaining the internal supervisory controls of the Division or Office of which the individual is the head;

(B)  is knowledgeable about the internal supervisory controls of the Division or Office of which the individual is the head;

(C)  has evaluated the effectiveness of the internal supervisory controls during the 90-day period ending on the final day of the fiscal year to which the report relates; and

(D)  has disclosed to the Commission any significant deficiencies in the design or operation of internal supervisory controls that could adversely affect the ability of the Division or Office to consistently conduct inspections, or investigations, or reviews of filings with professional competence and integrity.

(d)  NEW DIRECTOR OR ACTING DIRECTOR.--Notwithstanding subsection (a), if the Director of the Division of Enforcement, the Director of the Division of Corporate Finance, or the Director of the Office of Compliance Inspections and Examinations has served as Director of the Division or Office for less than 90 days on the date on which a report is required to be submitted under subsection (a), the Commission may submit the report on the date on which the Director has served as Director for 90 days. If there is no Director of the Division of Enforcement, the Division of Corporate Finance, or the Office of Compliance Inspections and Examinations, on the date on which a report is required to be submitted under subsection (a), the Acting Director of the Division or Office may make the certification required under subsection (c).

(e)  REVIEW BY THE COMPTROLLER GENERAL.--

(1)  REPORT.--The Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that contains a review of the adequacy and effectiveness of the internal supervisory control structure and procedures described in subsection (b)(1), not less frequently than once every 3 years, at a time to coincide with the publication of the reports of the Commission under this section.

(2)  AUTHORITY TO HIRE EXPERTS.--The Comptroller General of the United States may hire independent consultants with specialized expertise in any area relevant to the duties of the Comptroller General described in this section, in order to assist the Comptroller General in carrying out such duties.

[Codified to 12 USC 78d--6]

[Source: Section 961 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1907), effective July 21, 2010]


SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.

(a)  TRIENNIAL REPORT REQUIRED.--Once every 3 years, the Comptroller General of the United States shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the quality of personnel management by the Commission.

(b)  CONTENTS OF REPORT.--Each report under subsection (a) shall include--

(1)  an evaluation of--

(A)  the effectiveness of supervisors in using the skills, talents, and motivation of the employees of the Commission to achieve the goals of the Commission;

(B)  the criteria for promoting employees of the Commission to supervisory positions;

(C)  the fairness of the application of the promotion criteria to the decisions of the Commission;

(D)  the competence of the professional staff of the Commission;

(E)  the efficiency of communication between the units of the Commission regarding the work of the Commission (including communication between divisions and between subunits of a division) and the efforts by the Commission to promote such communication;

(F)  the turnover within subunits of the Commission, including the consideration of supervisors whose subordinates have an unusually high rate of turnover;

(G)  whether there are excessive numbers of low-level, mid-level, or senior-level managers;

(H)  any initiatives of the Commission that increase the competence of the staff of the Commission;

(I)  the actions taken by the Commission regarding employees of the Commission who have failed to perform their duties and circumstances under which the Commission has issued to employees a notice of termination; and

(J)  such other factors relating to the management of the Commission as the Comptroller General determines are appropriate;

(2)  an evaluation of any improvements made with respect to the areas described in paragraph (1) since the date of submission of the previous report; and

(3)  recommendations for how the Commission can use the human resources of the Commission more effectively and efficiently to carry out the mission of the Commission.

(c)  CONSULTATION.--In preparing the report under subsection (a), the Comptroller General shall consult with current employees of the Commission, retired employees and other former employees of the Commission, the Inspector General of the Commission, persons that have business before the Commission, any union Representing the employees of the Commission, private management consultants, academics, and any other source that the Comptroller General deems appropriate.

(d)  REPORT BY COMMISSION.--Not later than 90 days after the date on which the Comptroller General submits each report under subsection (a), the Commission shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report describing the actions taken by the Commission in response to the recommendations contained in the report under subsection (a).

(e)  REIMBURSEMENTS FOR COST OF REPORTS.--

(1)  REIMBURSEMENTS REQUIRED.--The Commission shall reimburse the Government Accountability Office for the full cost of making the reports under this section, as billed therefore by the Comptroller General.

(2)  CREDITING AND USE OF REIMBURSEMENTS.--Such reimbursements shall--

(A)  be credited to the appropriation account "Salaries and Expenses, Government Accountability Office'' current when the payment is received; and

(B)  remain available until expended.

(f)  AUTHORITY TO HIRE EXPERTS.--The Comptroller General of the United States may hire independent consultants with specialized expertise in any area Relevant to the duties of the Comptroller General described in this section, in order to assist the Comptroller General in carrying out such duties.

[Codified to 15 U.S.C. 78d--7]

[Source: Section 962 of the title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1908), effective July 21, 2010]


SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.

(a)  REPORTS OF COMMISSION.--

(1)  ANNUAL REPORTS REQUIRED.--Not later than 6 months after the end of each fiscal year, the Commission shall publish and submit to Congress a report that--

(A)  describes the responsibility of the management of the Commission for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and

(B)  contains an assessment of the effectiveness of the internal control structure and procedures for financial reporting of the Commission during that fiscal year.

(2)  ATTESTATION.--The reports required under paragraph (1) shall be attested to by the Chairman and chief financial officer of the Commission.

(b)  REPORT BY COMPTROLLER GENERAL.--

(1)  REPORT REQUIRED.--Not later than 6 months after the end of the first fiscal year after the date of enactment of this Act, the Comptroller General of the United States shall submit a report to Congress that assesses--

(A)  the effectiveness of the internal control structure and procedures of the Commission for financial reporting; and

(B)  the assessment of the Commission under subsection (a)(1)(B).

(2)  ATTESTATION.--The Comptroller General shall attest to, and report on, the assessment made by the Commission under subsection (a).

(c)  REIMBURSEMENTS FOR COST OF REPORTS.--

(1)  REIMBURSEMENTS REQUIRED.--The Commission shall reimburse the Government Accountability Office for the full cost of making the reports under subsection (b), as billed therefor by the Comptroller General.

(2)  CREDITING AND USE OF REIMBURSEMENTS.--Such reimbursements shall--

(A)  be credited to the appropriation account "Salaries and Expenses, Government Accountability Office'' current when the payment is received; and

(B)  remain available until expended.

[Codified to 15 U.S.C. 78d--8]

[Source: Section 963 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1910), effective July 21, 2010]


SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS.

(a)  REPORT REQUIRED.--Not later than 2 years after the date of enactment of this Act, and every 3 years thereafter, the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes an evaluation of the oversight by the Commission of national securities associations registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o--3) with respect to--

(1)  the governance of such national securities associations, including the identification and management of conflicts of interest by such national securities associations, together with an analysis of the impact of any conflicts of interest on the regulatory enforcement or rulemaking by such national securities associations;

(2)  the examinations carried out by the national securities associations, including the expertise of the examiners;

(3)  the executive compensation practices of such national securities associations;

(4)  the arbitration services provided by the national securities associations;

(5)  the review performed by national securities associations of advertising by the members of the national securities associations;

(6)  the cooperation with and assistance to State securities administrators by the national securities associations to promote investor protection;

(7)  how the funding of national securities associations is used to support the mission of the national securities associations, including--

(A)  the methods of funding;

(B)  the sufficiency of funds;

(C)  how funds are invested by the national securities association pending use; and

(D)  the impact of the methods, sufficiency, and investment of funds on regulatory enforcement by the national securities associations;

(8)  the policies regarding the employment of former employees of national securities associations by regulated entities;

(9)  the ongoing effectiveness of the rules of the national securities associations in achieving the goals of the rules;

(10)  the transparency of governance and activities of the national securities associations; and

(11)  any other issue that has an impact, as determined by the Comptroller General, on the effectiveness of such national securities associations in performing their mission and in dealing fairly with investors and members;

(b)  REIMBURSEMENTS FOR COST OF REPORTS.--

(1)  REIMBURSEMENTS REQUIRED.--The Commission shall reimburse the Government Accountability Office for the full cost of making the reports under subsection (a), as billed therefor by the Comptroller General.

(2)  CREDITING AND USE OF REIMBURSEMENTS.--Such reimbursements shall--

(A)  be credited to the appropriation account ''Salaries and Expenses, Government Accountability Office'' current when the payment is received; and

(B)  remain available until expended.

[Codified to 15 U.S.C. 78d--9]

[Section 964 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1910), effective July 21, 2010]

TRANSACTIONS ON UNREGISTERED EXCHANGES

SEC. 5.  It shall be unlawful for any broker, dealer, or exchange, directly or indirectly, to make use of the mails or any means or instrumentality of interstate commerce for the purpose of using any facility of an exchange within or subject to the jurisdiction of the United States to effect any transaction in a security, or to report any such transaction, unless such exchange (1) is registered as a national securities exchange under section 6 of this title, or (2) is exempted from such registration upon application by the exchange because, in the opinion of the Commission, by reason of the limited volume of transactions effected on such exchange, it is not practicable and not necessary or appropriate in the public interest or for the protection of investors to require such registration.

[Codified to 15 U.S.C. 78e]

[Source:  Section 5 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective October 1, 1934]

NATIONAL SECURITIES EXCHANGES

SEC. 6.  (a)  An exchange may be registered as a national securities exchange under the terms and conditions hereinafter provided in this section and in accordance with the provisions of section 19(a) of this title, by filing with the Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(b)  An exchange shall not be registered as a national securities exchange unless the Commission determines that--

(1)  Such exchange is so organized and has the capacity to be able to carry out the purposes of this title and to comply, and (subject to any rule or order of the Commission pursuant to section 17(d) or 19(g)(2) of this title) to enforce compliance by its members and persons associated with its members, with the provisions of this title, the rules and regulations thereunder, and the rules of the exchange.

(2)  Subject to the provisions of subsection (c) of this section, the rules of the exchange provide that any registered broker or dealer or natural person associated with a registered broker or dealer may become a member of such exchange and any person may become associated with a member thereof.

(3)  The rules of the exchange assure a fair representation of its members in the selection of its directors and administration of its affairs and provide that one or more directors shall be representative of issuers and investors and not be associated with a member of the exchange, broker, or dealer.

(4)  The rules of the exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities.

(5)  The rules of the exchange are 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 are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers, or to regulate by virtue of any authority conferred by this title matters not related to the purposes of this title or the administration of the exchange.

(6)  The rules of the exchange provide that (subject to any rule or order of the Commission pursuant to section 17(d) or 19(g)(2) of this title) its members and persons associated with its members shall be appropriately disciplined for violation of the provisions of this title, the rules or regulations thereunder, or the rules of the exchange, by expulsion, suspension, limitation of activities, functions, and operations, fine, censure, being suspended or barred from being associated with a member, or any other fitting sanction.

(7)  The rules of the exchange are in accordance with the provisions of subsection (d) of this section, and in general, provide a fair procedure for the disciplining of members and persons associated with members, the denial of membership to any person seeking membership therein, the barring of any person from becoming associated with a member thereof, and the prohibition or limitation by the exchange of any person with respect to access to services offered by the exchange or a member thereof.

(8)  The rules of the exchange do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of this title.

(9)(A)  The rules of the exchange prohibit the listing of any security issued in a limited partnership rollup transaction (as such term is defined in paragraphs (4) and (5) of section 14(h)), unless such transaction was conducted in accordance with procedures designed to protect the rights of limited partners, including--

(i)  the right of dissenting limited partners to one of the following:

(I)  an appraisal and compensation;

(II)  retention of a security under substantially the same terms and conditions as the original issue;

(III)  approval of the limited partnership rollup transaction by not less than 75 percent of the outstanding securities of each of the participating limited partnerships;

(IV)  the use of a committee of limited partners that is independent, as determined in accordance with rules prescribed by the exchange, of the general partner or sponsor, that has been approved by a majority of the outstanding units of each of the participating limited partnerships, and that has such authority as is necessary to protect the interest of limited partners, including the authority to hire independent advisors, to negotiate with the general partner or sponsor on behalf of the limited partners, and to make a recommendation to the limited partners with respect to the proposed transaction; or

(V)  other comparable rights that are prescribed by rule by the exchange and that are designed to protect dissenting limited partners;

(ii)  the right not to have their voting power unfairly reduced or abridged;

(iii)  the right not to bear an unfair portion of the costs of a proposed limited partnership rollup transaction that is rejected; and

(iv)  restrictions on the conversion of contingent interests or fees into non-contingent interests or fees and restrictions on the receipt of a non-contingent equity interest in exchange for fees for services which have not yet been provided.

(B)  As used in this paragraph, the term "dissenting limited partner" means a person who, on the date on which soliciting material is mailed to investors, is a holder of a beneficial interest in a limited partnership that is the subject of a limited partnership rollup transaction, and who casts a vote against the transaction and complies with procedures established by the exchange, except that for purposes of an exchange or tender offer, such person shall file an objection in writing under the rules of the exchange during the period during which the offer is outstanding.

(10)(A)  The rules of the exchange prohibit any member that is not the beneficial owner of a security registered under section 12 from granting a proxy to vote the security in connection with a shareholder vote described in subparagraph (B), unless the beneficial owner of the security has instructed the member to vote the proxy in accordance with the voting instructions of the beneficial owner.

(B)  A shareholder vote described in this subparagraph is a shareholder vote with respect to the election of a member of the board of directors of an issuer, executive compensation, or any other significant matter, as determined by the Commission, by rule, and does not include a vote with respect to the uncontested election of a member of the board of directors of any investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80b--1 et seq.).

(C)  Nothing in this paragraph shall be construed to prohibit a national securities exchange from prohibiting a member that is not the beneficial owner of a security registered under section 12 from granting a proxy to vote the security in connection with a shareholder vote not described in subparagraph (A).

(c)(1)  A national securities exchange shall deny membership to (A) any person, other than a natural person, which is not a registered broker or dealer or (B) any natural person who is not, or is not associated with, a registered broker or dealer.

(2)  A national securities exchange may, and in cases in which the Commission, by order, directs as necessary or appropriate in the public interest or for the protection of investors broker or dealer or natural person associated with a registered broker or dealer, and bar from becoming associated with a member any person, who is subject to a statutory disqualification. A national securities exchange shall file notice with the Commission not less than thirty days prior to admitting any person to membership or permitting any person to become associated with a member, if the exchange knew, or in the exercise of reasonable care should have known, that such person was subject to a statutory disqualification. The notice shall be in such form and contain such information as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.

(3)(A)  A national securities exchange may deny membership to, or condition the membership of, a registered broker or dealer if (i) such broker or dealer does not meet such standards of financial responsibility or operational capability or such broker or dealer or anynatural person associated of training, experience, and competence as are prescribed by the rules of the exchange or (ii) such broker or dealer or person associated with such broker or dealer has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a member and the natural persons associated with such an applicant in accordance with procedures established by the rules of the exchange.

(B)  A national securities exchange may bar a natural person from becoming a member or associated with a member, or condition the membership of a natural person or association of a natural person with a member, if such natural person (i) does not meet such standards of training, experience, and competence as are prescribed by the rules of the exchange or (ii) has engaged and there is a reasonable likelihood he may again engage in acts or practices inconsistent with just and equitable principles of trade. A national securities exchange may examine and verify the qualifications of an applicant to become a person associated with a member in accordance with procedures established by the rules of the exchange and require any person associated with a member, or any class of such persons, to be registered with the exchange in accordance with procedures so established.

(C)  A national securities exchange may bar any person from becoming associated with a member if such person does not agree (i) to supply the exchange with such information with respect to its relationship and dealings with the member as may be specified in the rules of the exchange and (ii) to permit the examination of its books and records to verify the accuracy of any information so supplied.

(4)  A national securities exchange may limit (A) the number of members of the exchange and (B) the number of members and designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker: Provided, however, That no national securities exchange shall have the authority to decrease the number of memberships in such exchange, or the number of members and designated representatives of members permitted to effect transactions on the floor of such exchange without the services of another person acting as broker, below such number in effect on May 1, 1975, or the date such exchange was registered with the Commission, whichever is later: And provided further, That the Commission, in accordance with the provisions of section 19(c) of this title, may amend the rules of any national securities exchange to increase (but not to decrease) or to remove any limitation on the number of memberships in such exchange or the number of members or designated representatives of members permitted to effect transactions on the floor of the exchange without the services of another person acting as broker, if the Commission finds that such limitation imposes a burden on competition not necessary or appropriate in furtherance of the purposes of this title.

(d)(1)  In any proceeding by a national securities exchange to determine whether a member or person associated with a member should be disciplined (other than a summary proceeding pursuant to paragraph (3) of this subsection), the exchange shall bring specific charges, notify such member or person of, and give him an opportunity to defend against, such charges, and keep a record. A determination by the exchange to impose a disciplinary sanction shall be supported by a statement setting forth--

(A)  Any act or practice in which such member or person associated with a member has been found to have engaged, or which such member or person has been found to have omitted;

(B)  the specific provision of this title, the rules or regulations thereunder, or the rules of the exchange which any such act or practice, or omission to act, is deemed to violate; and

(C)  the sanction imposed and the reasons therefor.

(2)  In any proceeding by a national securities exchange to determine whether a person shall be denied membership, barred from becoming associated with a member, or prohibited or limited with respect to access to services offered by the exchange or a member thereof (other than a summary proceeding pursuant to paragraph (3) of this subsection), the exchange shall notify such person of, and give him an opportunity to be heard upon, the specific grounds for denial, bar, or prohibition or limitation under consideration and keep a record. A determination by the exchange to deny membership, bar a person from becoming associated with a member, or prohibit or limit a person with respect to access to services offered by the exchange or a member thereof shall be supported by a statement setting forth the specific grounds on which the denial, bar, or prohibition or limitation is based.

(3)  A national securities exchange may summarily (A) suspend a member or person associated with a member who has been and is expelled or suspended from any self-regulatory organization or barred or suspended from being associated with a member of any self-regulatory organization, (B) suspend a member who is in such financial or operating difficulty that the exchange determines and so notifies the Commission that the member cannot be permitted to continue to do business as a member with safety to investors, creditors, other members, or the exchange, or (C) limit or prohibit any person with respect to access to services offered by the exchange if subparagraph (A) or (B) of this paragraph is applicable to such person or, in the case of a person who is not a member, if the exchange determines that such person does not meet the qualification requirements or other prerequisites for such access and such person cannot be permitted to continue to have such access with safety to investors, creditors, members, or the exchange. Any person aggrieved by any such action shall be promptly afforded an opportunity for a hearing by the exchange in accordance with the provisions of paragraph (1) or (2) of this subsection. The Commission, by order, may stay any such summary action on its own motion or upon application by any person aggrieved thereby, if the Commission determines summarily or after notice and opportunity for hearing (which hearing may consist solely of the submission of affidavits or presentation of oral arguments) that such stay is consistent with the public interest and the protection of investors.

(e)(1)  On and after the date of enactment of the Securities Acts Amendments of 1975, no national securities exchange may impose any schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members: Provided, however, That until May 1, 1976, the preceding provisions of this paragraph shall not prohibit any such exchange from imposing or fixing any schedule of commissions, allowances, discounts, or other fees to be charged by its members for acting as broker on the floor of the exchange or as odd-lot dealer: And provided further, That the Commission, in accordance with the provisions of section 19(b) of this title as modified by the provisions of paragraph (3) of this subsection, may--

(A)  permit a national securities exchange, by rule, to impose a reasonable schedule or fix reasonable rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange prior to November 1, 1976, if the Commission finds that such schedule or fixed rates of commissions, allowances, discounts, or other fees are in the public interest; and

(B)  permit a national securities exchange, by rule, to impose a schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange after November 1, 1976, if the Commission finds that such schedule or fixed rates of commissions, allowances, discounts, or other fees (i) are reasonable in relation to the costs of providing the service for which such fees are charged (and the Commission publishes the standards employed in adjudging reasonableness) and (ii) do not impose any burden on competition not necessary or appropriate in furtherance of the purposes of this title, taking into consideration the competitive effects of permitting such schedule or fixed rates weighed against the competitive effects of other lawful actions which the Commission is authorized to take under this title.

(2)  Notwithstanding the provisions of section 19(c) of this title, the Commission, by rule, may abrogate any exchange rule which imposes a schedule or fixes rates of commissions, allowances, discounts, or other fees, if the Commission determines that such schedule or fixed rates are no longer reasonable, in the public interest, or necessary to accomplish the purposes of this title.

(3)(A)   Before approving or disapproving any proposed rule change submitted by a national securities exchange which would impose a schedule or fix rates of commissions, allowances, discounts, or other fees to be charged by its members for effecting transactions on such exchange, the Commission shall afford interested persons (i) an opportunity for oral presentation of data, views, and arguments and (ii) with respect to any such rule concerning transactions effected after November 1, 1976, if the Commission determines there are disputed issues of material fact, to present such rebuttal submissions and to conduct (or have under subparagraph (B) of this paragraph) such cross-examination as the Commission determines to be appropriate and required for full disclosure and proper resolution of such disputed issues of material fact.

(B)  The Commission shall prescribe rules and make rulings concerning any proceeding in accordance with subparagraph (A) of this paragraph designed to avoid unnecessary costs or delay. Such rules or rulings may (i) impose reasonable time limits on each interested person's oral presentations, and (ii) require any cross-examination to which a person may be entitled under subparagraph (A) of this paragraph to be conducted by the Commission on behalf of that person in such manner as the Commission determines to be appropriate and required for full disclosure and proper resolution of disputed issues of material fact.

(C)(i)  If any class of persons, the members of which are entitled to conduct (or have conducted) cross-examination under subparagraphs (A) and (B) of this paragraph and which have, in the view of the Commission, the same or similar interests in the proceeding, cannot agree upon a single representative of such interests for purposes of cross-examination, the Commission may make rules and rulings specifying the manner in which such interests shall be represented and such cross-examination conducted.

(ii)  No member of any class of persons with respect to which the Commission has specified the manner in which its interests shall be represented pursuant to clause (i) of this subparagraph shall be denied, pursuant to such clause (i), the opportunity to conduct (or have conducted) cross-examination as to issues affecting his particular interests if he satisfies the Commission that he has made a reasonable and good faith effort to reach agreement upon group representation and there are substantial and relevant issues which would not be presented adequately by group representation.

(D)  A transcript shall be kept of any oral presentation and cross-examination.

(E)  In addition to the bases specified in subsection 25(a), a reviewing Court may set aside an order of the Commission under section 19(b) approving an exchange rule imposing a schedule or fixing rates of commissions, allowances, discounts, or other fees, if the Court finds--

(1)  a Commission determination under subparagraph (A) of this paragraph conduct cross-examination or make rebuttal submissions, or

(2)  a Commission rule or ruling under subparagraph (B) of this paragraph rebuttal submissions,

has precluded full disclosure and proper resolution of disputed issues of material fact which were necessary for fair determination by the Commission.

(f)  The Commission, by rule or order, as it deems necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to assure equal regulation, may require--

(1)  any person not a member or a designated representative of a member of a national securities exchange effecting transactions on such exchange without the services of another person acting as a broker, or

(2)  any broker or dealer not a member of a national securities exchange effecting transactions on such exchange on a regular basis,

to comply with such rules of such exchange as the Commission may specify.

(g)  NOTICE REGISTRATION OF SECURITY FUTURES PRODUCT EXCHANGES.--

(1)  REGISTRATION REQUIRED.--An exchange that lists or trades security futures products may register as a national securities exchange solely for the purposes of trading security futures products if--

(A)  the exchange is a board of trade, as that term is defined by the Commodity Exchange Act (7 U.S.C. 1a(2)), that has been designated a contract market by the Commodity Futures Trading Commission and such designation is not suspended by order of the Commodity Futures Trading Commission; and

(B)  such exchange does not serve as a market place for transactions in securities other than--

(i)  security futures products; or

(ii)  futures on exempted securities or groups or indexes of securities or options thereon that have been authorized under section 2(a)(1)(C) of the Commodity Exchange Act.

(2)  REGISTRATION BY NOTICE FILING.--

(A)  FORM AND CONTENT.--An exchange required to register only because such exchange lists or trades security futures products may register for purposes of this section by filing with the Commission a written notice in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents concerning such exchange, comparable to the information and documents required for national securities exchanges under section 6(a), as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. If such exchange has filed documents with the Commodity Futures Trading Commission, to the extent that such documents contain information, satisfying the Commission's informational requirements, copies of such documents may be filed with the Commission in lieu of the required written notice.

(B)  IMMEDIATE EFFECTIVENESS.--Such registration shall be effective contemporaneously with the submission of notice, in written or electronic form, to the Commission, except that such registration shall not be effective if such registration would be subject to suspension or revocation.

(C)  TERMINATION.--Such registration shall be terminated immediately if any of the conditions for registration set forth in this subsection are no longer satisfied.

(3)  PUBLIC AVAILABILITY.--The Commission shall promptly publish in the Federal Register an acknowledgment of receipt of all notices the Commission receives under this subsection and shall make all such notices available to the public.

(4)  EXEMPTION OF EXCHANGES FROM SPECIFIED PROVISIONS.--

(A)  TRANSACTION EXEMPTIONS.--An exchange that is registered under paragraph (1) of this subsection shall be exempt from, and shall not be required to enforce compliance by its members with, and its members shall not, solely with respect to those transactions effected on such exchange in security futures products, be required to comply with, the following provisions of this title and the rules thereunder.

(i)  Subsections (b)(2), (b)(3), (b)(4), (b)(7), (b)(9), (c), (d), and (e) of this section.

(ii)  Section 8.

(iii)  Section 11.

(iv)  Subsections (d), (f), and (k) of section 17.

(v)  Subsections (a), (f), and (h) of section 19.

(B)  RULE CHANGE EXEMPTIONS.--An exchange that registered under paragraph (1) of this subsection shall also be exempt from submitting proposed rule changes pursuant to section 19(b) of this title, except that--

(i)  such exchange shall file proposed rule changes related to higher margin levels, fraud or manipulation, recordkeeping, reporting, listing standards, or decimal pricing for security futures products, sales practices for security futures products for persons who effect transactions in security futures products, or rules effectuating such exchange's obligation to enforce the securities law pursuant to section 19(b)(7);

(ii)  such exchange shall file pursuant to sections 19(b)(1) and 19(b)(2) proposed rule changes related to margin, except for changes resulting in higher margin levels; and

(iii)  such exchange shall file pursuant to sections 19(b)(1) proposed rule changes that have been abrogated by the Commission pursuant to section 19(b)(7)(C).

(5)  TRADING IN SECURITY FUTURES PRODUCTS.--

(A)  IN GENERAL.--Subject to subparagraph (B), it shall be unlawful for any person to execute or trade a security futures product until the later of--

(i)  1 year after the date of the enactment of the Commodity Futures Modernization Act of 2000; or

(ii)  such date that a futures association registered under section 17 of the Commodity Exchange Act has met the requirements set forth in section 15A(k)(2) of this title.

(B)  PRINCIPAL-TO-PRINCIPAL TRANSACTIONS.--Notwithstanding subparagraph (A), a person may execute or trade a security futures product transaction if--

(i)  the transaction is entered into--

(I)  on a principal-to-principal basis between parties trading for their own accounts or as described in section 1a(18)(B)(ii) of the Commodity Exchange Act; and

(II)  only between eligible contract participants (as defined in subparagraphs (A), (B)(ii), and (C) of such section 1a(18)) at the time at which the persons enter into the agreement, contract, or transaction; and

(ii)  the transaction is entered into on or after the later of--

(I)  8 months after the date of the enactment of the Commodity Futures Modernization Act of 2000; or

(II)  such date that a futures association registered under section 17 of the Commodity Exchange Act has met the requirements set forth in section 15A(k)(2) of this title.

(h)  TRADING IN SECURITY FUTURES PRODUCTS.--

(1)  TRADING ON EXCHANGE OR ASSOCIATION REQUIRED.--It shall be unlawful for any person to effect transactions in security futures products that are not listed on a national securities exchange or a national securities association registered pursuant to section 15A(a).

(2)  LISTING STANDARDS REQUIRED.--Except as otherwise provided in paragraph (7), a national securities exchange or a national securities association registered pursuant to section 15A(a) may trade only security futures products that (A) conform with listing standards that such exchange or association files with the Commission under section 19(b) and (B) meet the criteria specified in section 2(a)(1)(D)(i) of the Commodity Exchange Act.

(3)  REQUIREMENTS FOR LISTING STANDARDS AND CONDITIONS FOR TRADING.--Such listing standards shall--

(A)  except as otherwise provided in a rule, regulation, or order issued pursuant to paragraph (4), require that any security underlying the security future, including each component security of a narrow-based security index, be registered pursuant to section 12 of this title;

(B)  require that if the security futures product is not cash settled, the market on which the security futures product is traded have arrangements in place with a registered clearing agency for the payment and delivery of the securities underlying the security futures product;

(C)  be no less restrictive than comparable listing standards for options traded on a national securities exchange or national securities association registered pursuant to section 15A(a) of this title;

(D)  except as otherwise provided in a rule, regulation, or order issued pursuant to paragraph (4), require that the security future be based upon common stock and such other equity securities as the Commission and the Commodity Futures Trading Commission jointly determine appropriate;

(E)  require that the security futures product is cleared by a clearing agency that has in place provisions for linked and coordinated clearing with other clearing agencies that clear security futures products, which permits the security futures product to be purchased on one market and offset on another market that trades such product;

(F)  require that only a broker or dealer subject to suitability rules comparable to those of a national securities association registered pursuant to section 15A(a) effect transactions in the security futures product;

(G)  require that the security futures product be subject to the prohibition against dual trading in section 4j of the Commodity Exchange Act (7 U.S.C. 6j) and the rules and regulations thereunder or the provisions of section 11(a) of this title and the rules and regulations thereunder, except to the extent otherwise permitted under this title and the rules and regulations thereunder;

(H)  require that trading in the security futures product not be readily susceptible to manipulation of the price of such security futures product, nor to causing or being used in the manipulation of the price of any underlying security, option on such security, or option on a group or index including such securities;

(I)  require that procedures be in place for coordinated surveillance among the market on which the security futures product is traded, any market on which any security underlying the security futures product is traded, and other markets on which any related security is traded to detect manipulation and insider trading;

(J)  require that the market on which the security futures product is traded has in place audit trails necessary or appropriate to facilitate the coordinated surveillance required in subparagraph (I);

(K)  require that the market on which the security futures product is traded has in place procedures to coordinate trading halts between such market and any market on which any security underlying the security futures product is traded and other markets on which any related security is traded; and

(L)  require that the margin requirements for a security futures product comply with the regulations prescribed pursuant to section 7(c)(2)(B), except that nothing in this subparagraph shall be construed to prevent a national securities exchange or national securities association from requiring higher margin levels for a security futures product when it deems such action to be necessary or appropriate.

(4)  AUTHORITY TO MODIFY CERTAIN LISTING STANDARD REQUIREMENTS.--

(A)  AUTHORITY TO MODIFY.--The Commission and the Commodity Futures Trading Commission, by rule, regulation, or order, may jointly modify the listing standard requirements specified in subparagraph (A) or (D) of paragraph (3) to the extent such modification fosters the development of fair and orderly markets in security futures products, is necessary or appropriate in the public interest, and is consistent with the protection of investors.

(B)  AUTHORITY TO GRANT EXEMPTIONS.--The Commission and the Commodity Futures Trading Commission, by order, may jointly exempt any person from compliance with the listing standard requirement specified in subparagraph (E) of paragraph (3) to the extent such exemption fosters the development of fair and orderly markets in security futures products, is necessary or appropriate in the public interest, and is consistent with the protection of investors.

(5)  REQUIREMENTS FOR OTHER PERSONS TRADING SECURITY FUTURE PRODUCTS.--It shall be unlawful for any person (other than a national securities exchange or a national securities association registered pursuant to section 15A(a)) to constitute, maintain, or provide a marketplace or facilities for bringing together purchasers and sellers of security future products or to otherwise perform with respect to security future products the functions commonly performed by a stock exchange as that term is generally understood, unless a national securities association registered pursuant to section 15A(a) or a national securities exchange of which such person is a member--

(A)  has in place procedures for coordinated surveillance among such person, the market trading the securities underlying the security future products, and other markets trading related securities to detect manipulation and insider trading;

(B)  has rules to require audit trails necessary or appropriate to facilitate the coordinated surveillance required in subparagraph (A); and

(C)  has rules to require such person to coordinate trading halts with markets trading the securities underlying the security future products and other markets trading related securities.

(6)  DEFERRAL OF OPTIONS ON SECURITY FUTURES TRADING.--No person shall offer to enter into, enter into, or confirm the execution of any put, call, straddle, option, or privilege on a security future, except that, after 3 years after the date of the enactment of this subsection, the Commission and the Commodity Futures Trading Commission may by order jointly determine to permit trading of puts, calls, straddles, options, or privileges on any security future authorized to be traded under the provisions of this Act and the Commodity Exchange Act.

(7)  DEFERRAL OF LINKED AND COORDINATED CLEARING.--

(A)  Notwithstanding paragraph (2), until the compliance date, a national securities exchange or national securities association registered pursuant to section 15A(a) may trade a security futures product that does not--

(i)  conform with any listing standard promulgated to meet the requirement specified in subparagraph (E) of paragraph (3); or

(ii)  meet the criterion specified in section 2(a)(1)(D)(i)(IV) of the Commodity Exchange Act.

(B)  The Commission and the Commodity Futures Trading Commission shall jointly publish in the Federal Register a notice of the compliance date no later than 165 days before the compliance date.

(C)  For purposes of this paragraph, the term compliance date' means the later of--

(i)  180 days after the end of the first full calendar month period in which the average aggregate comparable share volume for all security futures products based on single equity securities traded on all national securities exchanges, any national securities associations registered pursuant to section 15A(a), and all persons equals or exceeds 10 percent of the average aggregate comparable share volume of options on single equity securities traded on all national securities exchanges and any national securities associations registered pursuant to section 15A(a); or

(ii)  2 years after the date on which trading in any security futures product commences under this title.

(i)  Consistent with this title, each national securities exchange registered pursuant to subsection (a) of this section shall issue such rules as are necessary to avoid duplicative or conflicting rules applicable to any broker or dealer registered with the Commission pursuant to section 15(b) (except paragraph (11) thereof), that is also registered with the Commodity Futures Trading Commission pursuant to section 4f(a) of the Commodity Exchange Act (except paragraph (2) thereof), with respect to the application of--

(1)  rules of such national securities exchange of the type specified in section 15(c)(3)(B) involving security futures products; and

(2)  similar rules of national securities exchanges registered pursuant to section 6(g) and national securities associations registered pursuant to section 15A(k) involving security futures products.

(j)  PROCEDURES AND RULES FOR SECURITY FUTURE PRODUCTS.--A national securities exchange registered pursuant to subsection (a) shall implement the procedures specified in section 6(h)(5)(A) of this title and adopt the rules specified in subparagraphs (B) and (C) of section 6(h)(5) of this title not later than 8 months after the date of receipt of a request from an alternative trading system for such implementation and rules.

(k)(1)  To the extent necessary or appropriate in the public interest, to promote fair competition, and consistent with the promotion of market efficiency, innovation, and expansion of investment opportunities, the protection of investors, and the maintenance of fair and orderly markets, the Commission and the Commodity Futures Trading Commission shall jointly issue such rules, regulations, or orders as are necessary and appropriate to permit the offer and sale of a security futures product traded on or subject to the rules of a foreign board of trade to United States persons.

(2)  The rules, regulations, or orders adopted under paragraph (1) shall take into account, as appropriate, the nature and size of the markets that the securities underlying the security futures product reflect.

(l)  SECURITY-BASED SWAPS.--It shall be unlawful for any person to effect a transaction in a security-based swap with or for a person that is not an eligible contract participant, unless such transaction is effected on a national securities exchange registered pursuant to subsection (b).

[Codified to 15 U.S.C. 78f]

[Source:  Section 6 of the Act of June 6, 1934 (Pub. L. No. 291; 48 Stat. 885), effective September 1, 1934, as amended by section 4 of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 104), effective December 1, 1975, except amendments to sections 6(e) and (f) effective June 4, 1975; sections 309--312 of title III of the Act of December 4, 1987 (Pub. L. No. 100--181; 101 Stat. 1255 and 1256), effective December 4, 1987; and section 303(b) of title III of the Act of December 17, 1993 (Pub. L. No. 103--202; 107 Stat. 2365, effective December 17, 1994; sections 202(a) and 206(a), (i), (k)(2) and (6) of title II of the Act of December 21, 2000 (Pub. L. No. 106--554; 114 Stat. 2763A--416, 426, 433, and 434, respectively), effective December 21, 2000; sections 721(e)(8), 734(b)(3), and 763(9)(e) of title VII of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat. 1671--1672, 1718, and 1777, respectively), effective July 21, 2010; section 957 of title IX of the Act of July 21, 2010 (Pub. L. No. 111--203; 124 Stat, 1906), effective July 21, 2010]


NOTES

Membership in a national securities exchange.   Section 31(a) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), provides in part as follows:

"(a)... Neither the provisions of section ... 6(b)(2), or 6(c)(1) of the Securities Exchange Act of 1934 (as amended by this Act) nor any rule or regulation thereunder shall apply so as to deprive any person of membership in any national securities exchange (or its successor) of which such person was, on the date of enactment of this Act [June 4, 1975], a member or a member firm as defined in the constitution of such exchange, or so as to deny membership in any such exchange (or its successor) to any natural person who is or becomes associated with such member or member firm."

Compliance with the Securities Exchange Act of 1934, as amended.  Section 31(b) of the Act of June 4, 1975 (Pub. L. No. 94--29; 89 Stat. 170), reads as follows:

"(b)  If it appears to the Commission at any time within one year of the effective date of any amendment made by this Act to the Securities Exchange Act of 1934 that the organization or rules of any national securities exchange or registered securities association registered with the Commission on the date of enactment of this Act do not comply with such Act as amended, the Commission shall so notify such exchange or association in writing, specifying the respects in which the exchange or association is not in compliance with such Act. On and after the one hundred eightieth day following the date of receipt of such notice by a national securities exchange or registered securities association, the Commission, without regard to the provisions of section 19(h) of the Securities Exchange Act of 1934, as amended by this Act, is authorized by order, to suspend the registration of any such exchange or association or impose limitations on the activities, functions, and operations of any such exchange or association, if the Commission finds, after notice and opportunity for hearing, that the organization or rules of such exchange or association do not comply with such Act. Any such suspension or limitation shall continue in effect until the Commission, by order, declares that such exchange or association is in compliance with such requirements."

EFFECTIVE DATE.--The amendments made by this subsection shall take effect on October 1, 2011, except that for fiscal year 2012, the Commission shall publish the rate established under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)), as amended by this Act, on August 31, 2011.

(c)  AUTHORIZATION OF APPROPRIATIONS.--Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read as follows.


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Last updated September 16, 2013 regs@fdic.gov