11022 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Rules and Regulations

1Securities Exchange Act Release No. 28927

(February 20, 1991), 56 FR 9124 (March 5, 1991).

2Securities Exchange Act Release No. 31511

(November 24, 1992), 57 FR 56973 (December 2,

1992).

3Securities Exchange Act Release No. 31512

(November 24, 1992), 57 FR 57027 (December 2,

1992).

4 17 CFR 240.15c3–1.

5The Treasury would have acted sooner on these

amendments but its rulemaking authority under the

GSA expired on October 1, 1991, and was not

reauthorized until December 17, 1993. (107 Stat.

2344, Pub. L. 103–202).

6 59 FR 32155 (June 22, 1994).

7 17 CFR 402.2.

8 17 CFR 402.2(c).

9 17 CFR 402.2(b).

Issued in Renton, Washington, on February

3, 1995.

S.R. Miller,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 95–3246 Filed 2–28–95; 8:45 am]

BILLING CODE 4910–13–U

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

14 CFR Part 1241

Contract Appeals

AGENCY: National Aeronautics and

Space Administration, (NASA).

ACTION: Final rule.

SUMMARY: NASA is amending Title 14 of

the Code of Federal Regulations (CFR)

by removing Part 1241, ‘‘Contract

Appeals.’’ The NASA Board of Contract

Appeals no longer exists as a separate

entity at NASA and its functions were

assumed by the Armed Services Board

of Contract Appeals. Section 18–33.211

of the NASA Federal Acquisition

Regulation (FAR) Supplement

adequately advises contracting officers

and contractors that the Armed Services

Board of Contract Appeals (ASBCA) is

now NASA’s authorized contract

dispute forum.

EFFECTIVE DATE: February 9, 1995.

FOR FURTHER INFORMATION CONTACT:

David P. Forbes, 202 358–2440.

SUPPLEMENTARY INFORMATION:

List of Subjects in 14 CFR Part 1241

Board of Contract Appeals,

Administrative practice and procedure,

Government contracts.

Under the authority, 42 U.S.C. 2473,

14 CFR Part 1241 is amended as follows:

PART 1241—[REMOVED AND

RESERVED]

14 CFR Part 1241, consisting of

§§ 1241.10 through 1241.234, is

removed and reserved.

Edward A. Frankle,

General Counsel.

[FR Doc. 95–5044 Filed 2–28–95; 8:45 am]

BILLING CODE 7510–01–M

DEPARTMENT OF THE TREASURY

Office of the Under Secretary for

Domestic Finance

17 CFR Parts 400, 401, 402, 403, 404,

405, and 450

RIN 1505–AA44

Amendments to Regulations for the

Government Securities Act of 1986

AGENCY: Office of the Under Secretary

for Domestic Finance, Treasury.

ACTION: Final rule.

SUMMARY: The Department of the

Treasury (‘‘Department’’) is publishing,

as a final rule, amendments to the

financial responsibility rules in part 402

and a conforming amendment to a

recordkeeping requirement in part 404

of the regulations issued under the

Government Securities Act of 1986

(‘‘GSA’’). The amendments raise the

minimum capital requirements for all

government securities brokers and

dealers subject to the requirements of

§ 402.2 and establish a written

notification requirement for certain

withdrawals of capital. The

amendments parallel the Securities and

Exchange Commission’s (‘‘SEC’’) final

and proposed amendments to the

minimum net capital requirements for

brokers and dealers subject to the

requirements of 17 CFR 240.15c3–1

(Rule 15c3–1) and final rules regarding

the withdrawal of capital. The

Department is adopting the amendments

unchanged from their proposed form.

DATES: Effective date: March 31, 1995.

Further dates: see § 402.2e (Appendix E

to § 402.2) for the phase-in schedule for

the increased minimum capital levels.

FOR FURTHER INFORMATION CONTACT: Don

Hammond (Assistant Director) or Kerry

Lanham (Government Securities

Specialist) at 202–219–3632. (TDD for

the hearing impaired: 202–219–3988.)

SUPPLEMENTARY INFORMATION:

I. Background

The amendments to the Department’s

financial responsibility rules in part 402

raise the minimum capital requirements

and establish written notification

requirements for certain capital

withdrawals for those government

securities brokers and dealers subject to

the provisions of § 402.2. Additionally,

the Department is making a conforming

change to the recordkeeping

requirements of part 404 which is

necessitated by the revisions to the

minimum capital levels. The

amendments parallel rule amendments

adopted or proposed by the SEC. The

Department’s amendments will increase

investor confidence in the financial

responsibility of government securities

brokers and dealers without

overburdening the government

securities market.

The SEC published its final capital

withdrawal regulations on March 5,

1991,1 finalized its first change in

minimum capital levels on November

24, 1992,2 but has not yet finalized its

second proposal 3 on minimum capital

levels for certain introducing firms. It is

Treasury’s objective, where practical, to

have consistency with the SEC capital

standard 4 and, ultimately, develop a

uniform capital rule for all government

securities brokers and dealers registered

with the SEC.5

The Department first published these

amendments in proposed form on June

22, 1994,6 and the comment period

closed on August 22, 1994. In addition,

the National Association of Securities

Dealers distributed the proposed

changes to its potentially affected

members. Treasury received no

comments in response to the proposal.

II. Analysis

A. Minimum Capital Requirements

The SEC has either increased or

proposed increasing the minimum net

capital requirements for most brokers

and dealers subject to Rule 15c3–1 to an

amount ranging up to $250,000,

depending on the type of business

conducted by the broker or dealer. The

Treasury minimum dollar capital levels

are based on liquid capital after

deducting haircuts, which is

comparable to the SEC’s calculation of

net capital. The Treasury capital rule 7

currently has a $5,000 minimum liquid

capital requirement for introducing

brokers 8 and a $25,000 minimum liquid

capital requirement for all other

government securities brokers and

dealers 9 subject to the rule. The

Department believes that increasing the

minimum levels is appropriate in order

to provide better protection to investors
Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Rules and Regulations 11023

10The Treasury capital rule requires that a

government securities broker or dealer maintain a

capital level of the greater of (i) 120% of total

haircuts; or (ii) the minimum dollar capital

amounts, computed by deducting total haircuts

from liquid capital, applicable to its business.

11 17 CFR 240.15c3–3(k)(2)(i).

12See Supra note 1.

13 17 CFR 402.2(i).

14Excess liquid capital is that amount of liquid

capital which exceeds the greater of the amount of

capital required under (i) § 402.2(a); or (ii) § 402.2

(b) or (c) as applicable.

15 If prior notification is required, the postwithdrawal notification must also be filed.

16 17 CFR 405.2 requires certain government

securities brokers and dealers to file monthly and

quarterly financial reports.

17 17 CFR 240.15c3–1(e)(3).

in the event of a government securities

broker’s or dealer’s insolvency and to

reflect the current realities of the

government securities market.

Accordingly, the Department is

increasing the minimum capital

requirements for all government

securities brokers and dealers subject to

the provisions of § 402.2. The other

capital requirement—that liquid capital

be equal to at least 120% of haircuts 10—

is unaffected by this action.

The increases are implemented by

creating four minimum capital

standards from the two current

requirements, reflecting a better

differentiation of the risks related to a

government securities broker’s or

dealer’s operations based on the type of

government securities business it

conducts. The four minimum capital

requirements being adopted are as

follows: (1) Government securities

brokers and dealers that carry customer

or broker-dealer accounts are subject to

a minimum level of $250,000; (2)

government securities brokers and

dealers that carry customer accounts but

that operate under the exemption

provided by Rule 15c3–3(k)(2)(i) 11 have

a minimum requirement of $100,000; (3)

government securities brokers that

introduce accounts on a fully disclosed

basis and receive but do not hold

customer securities are subject to a

minimum requirement of $50,000; and

(4) introducing firms that never handle

customer funds or securities are subject

to a minimum requirement of $25,000.

These changes represent increases

from the current minimum levels of

between $20,000 and $225,000,

depending on the type of business

conducted by the government securities

broker or dealer. The Department is

establishing fewer levels than the SEC

has proposed since the operations of

registered government securities brokers

and dealers do not encompass all the

activities available to diversified brokers

or dealers. The increases that the

Department is adopting are modest

relative to the size and complexity of

the government securities market and

the operations of government securities

brokers and dealers.

An analysis of the government

securities brokers and dealers subject to

the provisions of § 402.2 indicates that,

as of September 30, 1994, only four, out

of a total of 32, would not be in

compliance with the fully phased-in

minimum capital levels. One of these

firms would not be in compliance with

the new requirements for introducing

firms, two would be out of compliance

with the $100,000 requirement and one

would not meet the $250,000 level. The

aggregate capital shortfall of these four

firms is less than $150,000. To ease the

compliance burden and to provide a

period for the affected government

securities brokers and dealers to raise

additional capital, if necessary, the

Department is adding an Appendix E to

§ 402.2 which phases in the increases

over approximately an 18-month time

frame from the effective date. This

corresponds to the phase-in time frames

that were used by the SEC.

B. Capital Withdrawal Requirements

The SEC promulgated final rules

regarding the withdrawal of capital by

brokers and dealers.12 These rules

require written notification to the SEC

and the broker’s or dealer’s designated

examining authority of certain capital

withdrawals, add a restriction on the

withdrawal of capital based on the ratio

of net capital to securities haircuts,

provide additional definitions, and

permit the SEC, by order, to prohibit the

withdrawal of capital in certain

described circumstances. The

Department is amending its capital

withdrawal provisions 13 to include the

notification requirements and certain

definitions but has determined not to

adopt the other two requirements for the

reasons described in the preamble to the

proposed rule.

The notification provisions require

post-withdrawal notification of certain

significant capital withdrawals as well

as prior notification for larger

withdrawals. The timing of the

notification is determined by the

aggregate size of total withdrawals

relative to the government securities

broker’s or dealer’s excess liquid

capital 14 over a 30 calendar day period.

Once aggregate withdrawals have

exceeded 20 percent of a government

securities broker’s or dealer’s excess

liquid capital in a 30 calendar day

period, the government securities broker

or dealer has two business days

thereafter in which to file notification of

the withdrawals. Aggregate withdrawals

that would result in a government

securities broker or dealer exceeding in

the aggregate 30 percent of excess liquid

capital in any 30 calendar day period

require notification two business days

prior to such withdrawal.15 A

government securities broker or dealer

may use the level of excess liquid

capital calculated in its most recent

Form G–405, ‘‘Report on Finances and

Operations of Government Securities

Brokers and Dealers (FOGS)’’ filing,16

provided the firm assures itself that this

amount has not materially changed

since that time. A government securities

broker or dealer is not required to

provide notice to the Department, but

instead notice is to be sent to the SEC

and to the broker’s or dealer’s

designated examining authority.

Net withdrawals that, in the aggregate,

are less than $500,000 in any 30

calendar day period or those that

represent securities or commodities

transactions between affiliates are

excluded from the reporting

requirement. The exclusion for

securities and commodities transactions

requires that the transactions be

conducted in the ordinary course of

business and settled no later than two

business days after the date of the

transaction. Forward settling

transactions between affiliates are not

eligible for this exclusion. Therefore, net

losses on forward contracts or net

payments on swap agreements, if due an

affiliate, could trigger the notice

requirement. The Department

specifically requested comment about

the limitations on this exception. As

stated earlier, no comments were

received on any aspect of the rule and,

therefore, the Department is adopting

this provision and the rule as proposed.

The SEC’s capital withdrawal rule has

a provision giving the SEC authority to

prohibit a withdrawal of capital by a

broker or dealer, for up to 20 business

days, if the withdrawal would exceed 30

percent of excess net capital and is

deemed detrimental to the financial

integrity of the broker or dealer or may

unduly jeopardize the broker’s or

dealer’s ability to repay its creditors.17

The SEC intends that this provision be

used in emergency situations and the

rule provides for an expeditious review

of the SEC’s action. For the reasons

discussed in the preamble to the

proposed rule and after receiving no

comments to the contrary, the

Department has determined that a

similar provision will not be

incorporated in the Treasury capital

rule.

The Department’s decision not to

enact a corresponding order provision is
11024 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Rules and Regulations

18 15 U.S.C. 78u–3(c)(1).

supported by the fact that the SEC has

existing temporary cease and desist

authority. A temporary cease and desist

order, while different from a capital

withdrawal order, serves a similar

purpose. Both are emergency remedies

that can be expeditiously applied. Prior

to issuing a temporary cease and desist

order, the SEC must provide notice and

opportunity for a hearing unless the SEC

‘‘* * * determines that notice and

hearing prior to entry would be

impracticable or contrary to the public

interest.’’ 18

The more limited scope of the

temporary cease and desist order is not

problematic to the Department because

the authority provides the SEC with the

ability to issue such an order not only

if a rule violation has occurred but also

if one is threatened. Because the SEC is

the appropriate regulatory agency for

government securities brokers or dealers

subject to § 402.2, an impending

violation of a § 402.2 requirement could

be cause for the issuance of a temporary

cease and desist order. As discussed

more fully in the preamble to the

proposed rule, the Department believes

that, in lieu of developing a separate

capital withdrawal order provision, it

should rely on the SEC’s existing cease

and desist order authority.

Consistent with this approach, the

Department also is excluding this

provision of Rule 15c3–1 from the

compliance requirements for those

government securities brokers and

dealers registered under Section 15C of

the Securities Exchange Act of 1934 (15

U.S.C. 78o–5) that are subject to the SEC

capital rule (i.e., interdealer brokers

operating under § 402.1(e) and futures

commission merchants).

In adopting the withdrawal

provisions, the Department has

restructured certain related definitions

of terms into a Miscellaneous Provisions

paragraph (i)(3) and has added a

description of what constitutes an

advance or loan of liquid capital, which

is one component of the restricted

activities.

C. Conforming Change

Due to the revisions of the minimum

capital requirements under both the SEC

and Treasury capital rules, a conforming

change is required in the recordkeeping

provisions of part 404. Specifically,

paragraph 404.2(a)(4) contains

references to the minimum dollar

capital amounts required of government

securities clearing brokers and dealers.

The Department is revising these

references in accordance with the fully

phased-in minimum capital level of

$250,000 required of clearing firms.

III. Special Analyses

It has been determined that these

amendments are not a ‘‘significant

regulatory action’’ as defined in

Executive Order 12866. Therefore, a

Regulatory Assessment is not required.

In the preamble to the proposed rules,

pursuant to the Regulatory Flexibility

Act (5 U.S.C. 601, et seq.), the

Department certified that these

amendments, if adopted, would not

have a significant economic impact on

a substantial number of small entities.

Accordingly, a regulatory flexibility

analysis was not prepared. In reviewing

the final rules being adopted herein and

in light of the fact that no comments

were received, the Department has

concluded that there is no reason to

alter the previous certification.

The collections of information

contained in the final regulations have

been reviewed and approved by the

Office of Management and Budget in

accordance with the Paperwork

Reduction Act (44 U.S.C. 3504(h)) under

control number 1535–0089.

Estimated total annual reporting burden: 5

hours.

Estimated average annual burden per

respondent: 1 hour.

Estimated number of respondents: 5.

Estimated annual frequency of response:

Twice.

Comments concerning the accuracy of

this burden estimate and suggestions for

reducing this burden should be directed

to the Forms Management Branch,

Bureau of the Public Debt, Department

of the Treasury, Parkersburg, West

Virginia 26106–1328; and to the Office

of Management and Budget, Paperwork

Reduction Project 1535–0089, Attention:

Desk Officer for Department of the

Treasury, Washington, DC 20503.

List of Subjects

17 CFR Part 402

Brokers, Government securities.

17 CFR Part 404

Banks, banking, Brokers, Government

securities, Reporting and recordkeeping

requirements.

For the reasons set out in the

preamble, 17 CFR chapter IV is

amended as follows:

PART 402—FINANCIAL

RESPONSIBILITY

1. The authority citation for part 402

is revised to read as follows:

Authority: 15 U.S.C. 78o–5(b)(1)(A), (b)(4).

2. Section 402.1 is amended by

revising paragraphs (d) and (e)(1) to read

as follows:

§ 402.1 Application of part to registered

brokers and dealers and financial

institutions; special rules for futures

commission merchants and government

securities interdealer brokers; effective

date.

* * * * *

(d) Futures commission merchants. A

futures commission merchant subject to

§ 1.17 of this title that is a government

securities broker or dealer but is not a

registered broker or dealer shall not be

subject to the limitations of § 402.2 but

rather to the capital requirement of

§ 1.17 or § 240.15c3–1, except paragraph

(e)(3) thereof, of this title, whichever is

greater.

(e) Government securities interdealer

broker. (1) A government securities

interdealer broker, as defined in

paragraph (e)(2) of this section, may,

with the prior written consent of the

Secretary, elect not to be subject to the

limitations of § 402.2 but rather to be

subject to the requirements of

§ 240.15c3–1 of this title (SEC Rule

15c3–1), except paragraphs (c)(2)(ix)

and (e)(3) thereof, and paragraphs (e)(3)

through (8) of this section by filing such

election in writing with its designated

examining authority. A government

securities interdealer broker may not

revoke such election without the written

consent of its designated examining

authority.

* * * * *

3. Section 402.2 is amended by

revising paragraphs (b), (c) and (i), and

by adding an OMB parenthetical at the

end of the section to read as follows:

§ 402.2 Capital requirements for registered

government securities brokers or dealers.

* * * * *

(b)(1) Minimum liquid capital for

brokers or dealers that carry customer

accounts. Notwithstanding the

provisions of paragraph (a) of this

section, a government securities broker

or dealer that carries customer or broker

or dealer accounts and receives or holds

funds or securities for those persons

within the meaning of § 240.15c3–

1(a)(2)(i) of this title, shall have and

maintain liquid capital in an amount

not less than $250,000 (see paragraph (a)

of Appendix E to this section, § 402.2e,

for temporary minimum requirements),

after deducting total haircuts as defined

in paragraph (g) of this section.

(2) Minimum liquid capital for

brokers or dealers that carry customer

accounts, but do not generally hold

customer funds or securities.

Notwithstanding the provisions of
Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Rules and Regulations 11025

paragraphs (a) and (b)(1) of this section,

a government securities broker or dealer

that carries customer or broker or dealer

accounts and is exempt from the

provisions of § 240.15c3–3 of this title,

as made applicable to government

securities brokers and dealers by § 403.4

of this chapter, pursuant to paragraph

(k)(2)(i) thereof (17 CFR 240.15c3–

3(k)(2)(i)), shall have and maintain

liquid capital in an amount not less than

$100,000 (see paragraph (b) of Appendix

E to this section, § 402.2(e), for

temporary minimum requirements),

after deducting total haircuts as defined

in paragraph (g) of this section.

(c)(1) Minimum liquid capital for

introducing brokers that receive

securities. Notwithstanding the

provisions of paragraphs (a) and (b) of

this section, a government securities

broker or dealer that introduces on a

fully disclosed basis transactions and

accounts of customers to another

registered or noticed government

securities broker or dealer but does not

receive, directly or indirectly, funds

from or for, or owe funds to, customers,

and does not carry the accounts of, or

for, customers shall have and maintain

liquid capital in an amount not less than

$50,000 (see paragraph (c) of Appendix

E to this section, § 402.2(e), for

temporary minimum requirements),

after deducting total haircuts as defined

in paragraph (g) of this section. A

government securities broker or dealer

operating pursuant to this paragraph

(c)(1) may receive, but shall not hold

customer or other broker or dealer

securities.

(2) Minimum liquid capital for

introducing brokers that do not receive

or handle customer funds or securities.

Notwithstanding the provisions of

paragraphs (a), (b) and (c)(1) of this

section, a government securities broker

or dealer that does not receive, directly

or indirectly, or hold funds or securities

for, or owe funds or securities to,

customers, and does not carry accounts

of, or for, customers and that effects ten

or fewer transactions in securities in any

one calendar year for its own

investment account shall have and

maintain liquid capital in an amount

not less than $25,000 (see paragraph (d)

of Appendix E to this section, § 402.2(e),

for temporary minimum requirements),

after deducting total haircuts as defined

in paragraph (g) of this section.

* * * * *

(i) Provisions relating to the

withdrawal of equity capital.

(1) Notice Provisions. No equity

capital of the government securities

broker or dealer or a subsidiary or

affiliate consolidated pursuant to

Appendix C to this section, § 402.2c,

may be withdrawn by action of a

stockholder or partner, or by

redemption or repurchase of shares of

stock by any of the consolidated entities

or through the payment of dividends or

any similar distribution, nor may any

unsecured advance or loan be made to

a stockholder, partner, sole proprietor,

employee or affiliate without providing

written notice, given in accordance with

paragraph (i)(1)(iv) of this section, when

specified in paragraphs (i)(1) (i) and (ii)

of this section:

(i) Two business days prior to any

withdrawals, advances or loans if those

withdrawals, advances or loans on a net

basis exceed in the aggregate in any 30

calendar day period, 30 percent of the

government securities broker’s or

dealer’s excess liquid capital. A

government securities broker or dealer,

in an emergency situation, may make

withdrawals, advances or loans that on

a net basis exceed 30 percent of the

government securities broker’s or

dealer’s excess liquid capital in any 30

calendar day period without giving the

advance notice required by this

paragraph, with the prior approval of its

designated examining authority. When a

government securities broker or dealer

makes a withdrawal with the consent of

its designated examining authority, it

shall in any event comply with

paragraph (i)(1)(ii) of this section; and

(ii) Two business days after any

withdrawals, advances or loans if those

withdrawals, advances or loans on a net

basis exceed in the aggregate in any 30

calendar day period, 20 percent of the

government securities broker’s or

dealer’s excess liquid capital.

(iii) This paragraph (i)(1) of this

section does not apply to:

(A) Securities or commodities

transactions in the ordinary course of

business between a government

securities broker or dealer and an

affiliate where the government

securities broker or dealer makes

payment to or on behalf of such affiliate

for such transaction and then receives

payment from such affiliate for the

securities or commodities transaction

within two business days from the date

of the transaction; or

(B) Withdrawals, advances or loans

which in the aggregate in any such 30

calendar day period, on a net basis,

equal $500,000 or less.

(iv) Each required notice shall be

effective when received by the

Commission in Washington, DC, the

regional or district office of the

Commission for the area in which the

government securities broker or dealer

has its principal place of business, and

the government securities broker’s or

dealer’s designated examining authority.

(2) Withdrawal Limitations. No equity

capital of the government securities

broker or dealer or a subsidiary or

affiliate consolidated pursuant to

Appendix C to this section, § 402.2c,

may be withdrawn by action of a

stockholder or a partner, or by

redemption or repurchase of shares of

stock by any of the consolidated entities

or through the payment of dividends or

any similar distribution, nor may any

unsecured advance or loan be made to

a stockholder, partner, sole proprietor,

employee or affiliate if, after giving

effect thereto and to any other such

withdrawals, advances or loans and any

Payments of Payment Obligations (as

defined in § 240.15c3–1d of this title,

Appendix D to SEC Rule 15c3–1,

modified as provided in Appendix D to

this section, § 402.2d) under satisfactory

subordination agreements which are

scheduled to occur within 180 calendar

days following such withdrawal,

advance or loan, either:

(i) The ratio of liquid capital to total

haircuts, determined as provided in

§ 402.2, would be less than 150 percent;

or

(ii) Liquid capital minus total haircuts

would be less than 120 percent of the

minimum capital required by § 402.2(b)

or § 402.2(c) as applicable; or

(iii) In the case of any government

securities broker or dealer included in

such consolidation, the total

outstanding principal amounts of

satisfactory subordination agreements of

the government securities broker or

dealer (other than such agreements

which qualify as equity under

§ 240.15c3–1(d) of this title) would

exceed 70% of the debt-equity total as

defined in § 240.15c3–1(d).

(3) Miscellaneous Provisions. (i)

Excess liquid capital is that amount in

excess of the amount required by the

greater of § 402.2(a) or, §§ 402.2 (b) or

(c), as applicable. For the purposes of

paragraphs (i)(1) and (i)(2) of this

section, a government securities broker

or dealer may use the amount of excess

liquid capital, liquid capital and total

haircuts reported in its most recently

required filed Form G–405 for the

purposes of calculating the effect of a

projected withdrawal, advance or loan

relative to excess liquid capital or total

haircuts. The government securities

broker or dealer must assure itself that

the excess liquid capital, liquid capital

or the total haircuts reported on the

most recently required filed Form G–

405 have not materially changed since

the time such report was filed.

(ii) The term equity capital includes

capital contributions by partners, par or
11026 Federal Register / Vol. 60, No. 40 / Wednesday, March 1, 1995 / Rules and Regulations

stated value of capital stock, paid-in

capital in excess of par, retained

earnings or other capital accounts. The

term equity capital does not include

securities in the securities accounts of

partners and balances in limited

partners’ capital accounts in excess of

their stated capital contributions.

(iii) Paragraphs (i)(1) and (i)(2) of this

section shall not preclude a government

securities broker or dealer from making

required tax payments or preclude the

payment to partners of reasonable

compensation, and such payments shall

not be included in the calculation of

withdrawals, advances or loans for

purposes of paragraphs (i)(1) and (i)(2)

of this section.

(iv) For the purposes of this

subsection (i), any transaction between

a government securities broker or dealer

and a stockholder, partner, sole

proprietor, employee or affiliate that

results in a diminution of the

government securities broker’s or

dealer’s liquid capital shall be deemed

to be an advance or loan of liquid

capital.

* * * * *

(Approved by the Office of Management and

Budget under control number 1535–0089)

4. By adding § 402.2e (Appendix E) as

follows:

§ 402.2e Appendix E—Temporary

Minimum Requirements.

(a) A government securities broker or

dealer that falls within the provisions of

paragraph (b)(1) of § 402.2 shall

maintain not less than the greater of:

(1) The amount of liquid capital

required under paragraph (a) of

§ 402.2(a); or

(2) The amount of liquid capital, after

deducting total haircuts, of:

(i) $25,000 through June 30, 1995;

(ii) $100,000 from July 1, 1995

through December 31, 1995;

(iii) $175,000 from January 1, 1996

through June 30, 1996; and

(iv) $250,000 from July 1, 1996 and

thereafter.

(b) A government securities broker or

dealer that falls within the provisions of

paragraph (b)(2) of § 402.2 shall

maintain not less than the greater of:

(1) The amount of liquid capital

required under paragraph (a) of § 402.2;

or

(2) The amount of liquid capital, after

deducting total haircuts, of:

(i) $25,000 through June 30, 1995;

(ii) $50,000 from July 1, 1995 through

December 31, 1995;

(iii) $75,000 from January 1, 1996

through June 30, 1996; and

(iv) $100,000 from July 1, 1996 and

thereafter.

(c) A government securities broker

that falls within the provisions of

paragraph (c)(1) of § 402.2 shall

maintain not less than the greater of:

(1) The amount of liquid capital

required under paragraph (a) of § 402.2;

or

(2) The amount of liquid capital, after

deducting total haircuts, of:

(i) $5,000 through June 30, 1995;

(ii) $20,000 from July 1, 1995 through

December 31, 1995;

(iii) $35,000 from January 1, 1996

through June 30, 1996; and

(iv) $50,000 from July 1, 1996 and

thereafter.

(d) A government securities broker

that falls within the provisions of

paragraph (c)(2) of § 402.2 shall

maintain not less than the greater of:

(1) The amount of liquid capital

required under paragraph (a) of § 402.2;

or

(2) The amount of liquid capital, after

deducting total haircuts, of:

(i) $5,000 through June 30, 1995;

(ii) $11,000 from July 1, 1995 through

December 31, 1995;

(iii) $18,000 from January 1, 1996

through June 30, 1996; and

(iv) $25,000 from July 1, 1996 and

thereafter.

* * * * *

PART 404—RECORDKEEPING AND

PRESERVATION OF RECORDS

5. The authority citation for Part 404

is revised to read as follows:

Authority: 15 U.S.C. 78o–5(b)(1)(B),

(b)(1)(C), (b)(4).

6. Section 404.2 is amended by

revising paragraph (a)(4) to read as

follows:

§ 404.2 Records to be made and kept

current by registered government securities

brokers and dealers; records of nonresident registered government securities

brokers and dealers.

(a) * * *

(4) Paragraph 240.17a–3(b)(1) is

modified to read as follows:

‘‘(1) This section shall not be deemed

to require a government securities

broker or dealer registered pursuant to

Section 15C(a)(1)(A) of the Act (15

U.S.C. 78o–5(a)(1)(A)) to make or keep

such records of transactions cleared for

such government securities broker or

dealer as are customarily made and kept

by a clearing broker or dealer pursuant

to the requirements of §§ 240.17a–3 and

240.17a–4: Provided, that the clearing

broker or dealer has and maintains net

capital of not less than $250,000 (or, in

the case of a clearing broker or dealer

that is a registered government

securities broker or dealer, liquid capital

less total haircuts, determined as

provided in § 402.2 of this title, of not

less than $250,000) and is otherwise in

compliance with § 240.15c3–1, § 402.2

of this title, or the capital rules of the

exchange of which such clearing broker

or dealer is a member if the members of

such exchange are exempt from

§ 240.15c3–1 by paragraph (b)(2)

thereof.’’.

* * * * *

§§ 400.4, 400.5, 401.9, 403.5, 404.2, 404.3,

404.4, 404.5, 405.2, and 450.4 [Amended]

7. For each section indicated in the

list above, remove the Office of

Management and Budget control

number from the parenthetical

statement at the end of each section, and

add in its place ‘‘1535–0089’’:

Dated: February 15, 1995.

Frank N. Newman,

Deputy Secretary.

[FR Doc. 95–4941 Filed 2–28–95; 8:45 am]

BILLING CODE 4810–39–W

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 450

[Docket No. 94N–0302]

Antibiotic Drugs; Bleomycin Sulfate;

Stay of Regulation

AGENCY: Food and Drug Administration,

HHS.

ACTION: Final rule; stay of regulation.

SUMMARY: The Food and Drug

Administration (FDA) is staying a

regulation that established standards for

an antibiotic drug, bleomycin sulfate

bulk drug substance. This action is

being taken in response to a petition for

stay of action.

EFFECTIVE DATE: November 9, 1994.

FOR FURTHER INFORMATION CONTACT:

Tamar S. Nordenberg, Center for Drug

Evaluation and Research (HFD–366),

Food and Drug Administration, 7500

Standish Pl., Rockville, MD 20855, 301–

594–2041.

SUPPLEMENTARY INFORMATION: In the

Federal Register of October 4, 1994 (59

FR 50484), FDA published, as a final

rule to become effective on November 3,

1994, a new antibiotic regulation setting

forth standards for a bleomycin sulfate

bulk drug substance (21 CFR 450.10).

This new regulation differed from the

monograph standards for sterile

bleomycin sulfate bulk drug, set forth in

21 CFR 450.10a, in two respects: The

new regulation did not require sterility

at the bulk stage, and the new regulation