14366 Federal Register / Vol. 60, No. 52 / Friday, March 17, 1995 / Rules and Regulations

1Securities Exchange Act Release No. 34902

(October 27, 1994), 59 FR 55006.

Federal Aviation Regulations (14 CFR

part 97) is amended by establishing,

amending, suspending, or revoking

Standard Instrument Approach

Procedures, effective at 0901 UTC on

the dates specified, as follows:

PART 97—STANDARD INSTRUMENT

APPROACH PROCEDURES

1. The authority citation for part 97

continues to read as follows:

Authority: 49 U.S.C. app. 1348, 1354(a),

1421 and 1510; 49 U.S.C. 106(g); and 14 CFR

11.49(b)(2).

2. Part 97 is amended to read as

follows:

§§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33,

97.35 [Amended]

By amending: § 97.23 VOR, VOR/

DME, VOR or TACAN, and VOR/DME

or TACAN; § 97.25 LOC, LOC/DME,

LDA, LDA/DME, SDF, SDF/DME;

§ 97.27 NDB, NDB/DME; § 97.29 ILS,

ILS/DME, ISMLS, MLS, MLS/DME,

MLS/RNAV; § 97.31 RADAR SIAPs;

§ 97.33 RNAV SIAPs; and § 97.35

COPTER SIAPs, identified as follows:

Effective March 17, 1995

FDC date State City Airport FDC No. SIAP

02/22/95 ....... FL Fort Myers .................... Page Field ....................................... FDC 5/0832 ILS RWY 5 AMDT 6A...

02/22/95 ....... FL Fort Myers .................... Page Field ....................................... FDC 5/0833 NDB RWY 5 AMDT 5...

02/22/95 ....... MO Kansas City .................. Kansas City Intl ............................... FDC 5/0842 ILS RWY 19L, ORIG...

02/22/95 ....... WI Superior ........................ Richard I. Bong ................................ FDC 5/0843 NDB RWY 31 AMDT 4...

02/23/95 ....... PA Pittsburgh ..................... Pittsburgh International .................... FDC 5/0853 ILS RWY 28R AMDT 6...

02/24/95 ....... AK Nome ............................ Nome ............................................... FDC 5/0869 NDB/DME OR GPS–1, RWY 2,

ORIG B...

03/01/95 ....... GA Atlanta .......................... Peachtree City-Falcon Field ............ FDC 5/0970 VOR/DME RNAV OR GPS RWY

TWY 31, ORIG...

03/02/95 ....... KY Covington ..................... Cincinnati/Northern Kentucky Intl .... FDC 5/1007 ILS RWY 36L, AMDT 36...

03/02/95 ....... NC Greenville ..................... Pitt-Greenville .................................. FDC 5/1058 ILS RWY 19 AMDT 2...

03/02/95 ....... ND Mohall ........................... Mohall Muni ..................................... FDC 5/1002 VOR/DME OR GPS RWY 31

AMDT 2...

03/08/95 ....... NC Hickory ......................... Hickory Regional ............................. FDC 5/1073 VOR RWY 24 AMDT 23...

03/08/95 ....... NC Hickory ......................... Hickory Regional ............................. FDC 5/1074 NDB OR GPS RWY 24 AMDT

4...

03/08/95 ....... NC Hickory ......................... Hickory Regional ............................. FDC 5/1075 ILS RWY 24 AMDT 6...

03/08/95 ....... NC North Wilkesboro .......... Wilkes County .................................. FDC 5/1071 NDB OR GPS RWY 1 AMDT

1A...

03/08/95 ....... NC North Wilkesboro .......... Wilkes County .................................. FDC 5/1072 LOC RWY 1 AMDT 1...

03/08/95 ....... NC Statesville ..................... Statesville Muni ............................... FDC 5/1077 VOR/DME RWY 10 AMDT 6A...

03/08/95 ....... NC Statesville ..................... Statesville Muni ............................... FDC 5/1079 NDB RWY 20 AMDT 8A...

03/08/95 ....... NC Washington .................. Warren Field .................................... FDC 5/1078 VOR/DME RWY 5, AMDT 2...

[FR Doc. 95–6687 Filed 3–16–95; 8:45 am]

BILLING CODE 4910–13–M

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Part 240

[Release No. 35473; File Nos. S7–29–93;

S7–6–94]

RIN 3235–AG00; 3235–AF84

Payment for Order Flow, Confirmation

of Transactions

AGENCY: Securities and Exchange

Commission.

ACTION: Final rule; change of effective

date.

SUMMARY: The Commission is

postponing the effective date of Rule

11Ac1–3 and certain amendments to

Rule 10b–10 under the Securities

Exchange Act of 1934 from April 3,

1995 to October 2, 1995 in order to

facilitate the orderly implementation of

the enhanced disclosure requirements

relating to payment for order flow and

non-SIPC membership by brokerdealers.

EFFECTIVE DATES: The effective date of

the final rule published on November 2,

1994 (59 FR 55006) is postponed until

October 2, 1995. The effective date of

§ 240.10b–10(a) (9), which was

published on November 17, 1995 (59 FR

59612) and which applies to non-SIPC

broker-dealers other than government

securities broker-dealers, is postponed

until October 2, 1995. The effective date

of the other amendments to § 240.10b–

10 that was published on November 17,

1995, remains April 3, 1995.

FOR FURTHER INFORMATION CONTACT:

Carlene Kim, Senior Counsel, at 202/

942–4180, Office of Trading Practices,

Division of Market Regulation,

Securities and Exchange Commission,

450 Fifth Street, N.W. Mail Stop 5–1,

Washington, D.C. 20549. For questions

relating to compliance with new Rule

11Ac1–3 and amendments to Rule 10b–

10 concerning payment for order flow,

please contact Gail Marshall, Attorney,

at 202/942–7129, Office of Market

Supervision, Division of Market

Regulation. For questions relating to

compliance with the amendment to

Rule 10b–10 relating to disclosure of a

broker-dealer’s non-SIPC status, please

contact C. Dirk Peterson, Senior

Counsel, at 202/942–0073, Office of

Chief Counsel, Division of Market

Regulation.

SUPPLEMENTARY INFORMATION:

A. Payment for Order Flow

On October 27, 1994, the Commission

adopted Rule 11Ac1–3 [17 CFR

240.11Ac1–3] and amendments to Rule

10b–10 [17 CFR 240.10b–10] under the

Securities Exchange Act of 1934.1 Rule

11Ac1–3 requires broker-dealers to

disclose, in annual account statements

and new account forms, their policies

regarding the receipt of payment for

order flow and to provide a detailed

description of the nature of the

compensation received. Rule 11Ac1–3

also requires broker-dealers to provide

information about order routing policies

for orders subject to payment for order

flow, including an explanation of the

extent to which orders can be executed

at prices superior to the best bid and

offer. Rule 10b–10, as amended, requires

broker-dealers to state on confirmations

whether they receive payment for order

flow, and that the source and nature of
Federal Register / Vol. 60, No. 52 / Friday, March 17, 1995 / Rules and Regulations 14367

2Securities Exchange Release No. 34903 (October

27, 1994), 59 FR 55014.

3 In the intervening period, the Commission may

also consider further regulatory initiatives regarding

payment for order flow in light of the comments

received on the proposed amendments, and in light

of the pending inquiries into the Nasdaq market by

the Commission and the U.S. Department of Justice.

4The staff of the Division will not recommend

that the Commission take enforcement action under

Rule 10b–10, if broker-dealers comply with the

requirements of amended Rule 10b–10 as of April

3, 1995. With respect to new customer and annual

account statements, broker-dealers may, of course,

also elect to comply with the requirements of Rule

11Ac1–3 prior to October 2, 1995.

5See Securities Exchange Act Release No. 34962

(Nov. 10, 1994), 59 FR 59612. All broker-dealers

registered as government securities brokers and

dealers under Section 15C of the Exchange Act, 15

U.S.C. 78o–5, are excluded from SIPC membership.

While most brokers and dealers registered with the

Commission under Section 15(b) of the Exchange

Act, 15 U.S.C. 78o(b) are required to be SIPC

members, some of these persons are excluded from

SIPC membership, as well. 15 U.S.C. 78lll(12).

Among those excluded from SIPC membership

under the Securities Investor Protection Act of 1970

are broker-dealers whose business consists

exclusively of (a) the distribution of shares of

registered investment open-end companies or unit

investment trusts, (b) the sale of variable annuities,

(c) the business of insurance, or (d) the business of

rendering investment advisory services to registered

investment companies or insurance company

separate accounts. 15 U.S.C. 78ccc(a)(2)(A)(ii).

6 In a report to Congress, the GAO recommended

that government securities brokers and dealers be

required to become members of SIPC, or in the

absence of membership, disclose that they are not

SIPC members. See S. Rep. No. 422, 103rd Cong.,

1st Sess. 16 (1993). Congress subsequently amended

Section 15C of the Exchange Act to prohibit

government securities brokers and dealers from

effecting a transaction in any security in

contravention of Commission rules requiring the

timely disclosure that a customer’s account is not

protected by SIPC. See 15 U.S.C. 78o–5(a)(4).

7Securities Exchange Act Release No. 34962

(November 10, 1994), 59 FR 59612.

8 15 U.S.C. 78ccc(a)(2)(A)(ii).

The effective date of this provision remains April

3, 1995, however, for all other brokers and dealers.

the compensation will be provided

upon written request. The effective date

is April 3, 1995.

On October 27, 1994, the Commission

also proposed for comment amendments

to Rules 11Ac1–3 and 10b–10.2 The

proposed amendments would require

broker-dealers to disclose on

confirmations the range of payment for

order flow received on a per share basis

and to provide a statement that, upon

written customer request, additional

transaction-specific information will be

provided. In new customer and annual

account statements, broker-dealers

would be required to disclose the range

of payment for order flow received on

a per share basis, as well as the

aggregate amount or estimated value of

payment for order flow received on an

annual basis. The proposals also would

require parallel disclosure for orders

subject to internalization/affiliate order

routing. Finally, the proposals would

require broker-dealers to describe their

order-routing policies for all orders,

including those that are subject of

internalization/affiliate order routing,

and describe the extent to which such

orders may enjoy price improvement

opportunities.

The Division of Market Regulation

(‘‘Division’’) is analyzing the issues

raised by the 22 comment letters that

were received. A majority of the

commenters responding to the

proposing release requested that the

effective date of any further changes be

delayed. Several broker-dealers stated

that it would be extremely burdensome

for them to make the systems changes

required by any additional amendments,

given the time and resources demanded

by requirements of the newly-adopted

changes and the transition to three day

settlement. The Division is receiving an

increasing number of inquiries from

broker-dealers regarding

implementation of the adopted rules.

Many broker-dealers indicate that

systems changes must be made soon in

order to be ready for the April 3

effective date. The Division believes that

similar systems changes will be

necessary to implement any additional

requirements based upon the proposed

amendments. 3 It would enhance

efficiency and reduce costs if brokerdealers could make systems changes at

one time rather than potentially be

required to make changes twice to

implement payment for order flow

requirements. The Commission believes,

however, that it is not feasible to have

any additional changes take effect on

April 3.

Accordingly, the Commission believes

that an effective date of October 2, 1995

for Rule 11Ac1–3 and amendments to

Rule 10b–10 relating to payment for

order flow disclosures, adopted on

October 27, 1994 and any additional

amendments would promote an orderly

adjustment to the enhanced disclosure

regime.4 For the reasons discussed

above, the Commission for good cause

finds that notice and solicitation of

comment regarding the effective date is

impracticable, unnecessary, and

contrary to the public interest.

B. SIPC Status Disclosure

In addition, on November 10, 1994,

the Commission adopted amendments

to Rule 10b–10 which, among other

things, require a broker or dealer that is

not a member of the Securities Investor

Protection Corporation (‘‘SIPC’’) to

affirmatively disclose its non-SIPC

status on customer confirmations.5 This

requirement is consistent with the

Commission’s authority under the

Government Securities Act

Amendments of 1993 to require

government securities broker-dealers,

which are excluded from SIPC

membership, to disclose that they are

not SIPC members rather than require

them to become members.6 Congress

believed that disclosure was the

appropriate approach to remedy the gap

in SIPC coverage.

When the Commission adopted this

amendment, it stated that confirmation

disclosure is necessary ‘‘to ensure that

customers are not led to believe that

their accounts are subject to protection

beyond what actually is the case

* * *.’’ 7 The Commission recognized

that in some situations, however, the

costs would exceed the benefits of

disclosure, and thus, adopted an

exclusion from the disclosure

requirement for transactions in

investment company shares where the

investor sends purchase money directly

to a non-affiliated transfer agent,

custodian, or other designated agent of

the issuing investment company.

In a letter dated February 16, 1995,

the Investment Company Institute

(‘‘ICI’’) expressed concern about the

operational consequences, as well as the

policy and investor protection

implications of non-SIPC status

disclosure, and requested that the

Commission consider further amending

Rule 10b–10. In addition, the ICI

requested that the Commission consider

extending the effective date of the

amendment to Rule 10b–10 requiring

disclosure of non-SIPC status. In the

ICI’s view, it will be particularly

burdensome for mutual fund groups to

obtain information about the SIPC status

of their underwriters. By letter dated

December 19, 1994, the College

Retirement Equities Fund raised similar

concerns with respect to broker-dealers

whose business consists exclusively of

the sale of variable annuities.

The Commission, therefore, is

postponing the effective date from April

3, 1995 to October 2, 1995 of the Rule

10b–10 amendment pertaining to nonSIPC disclosure by broker-dealers that

are excluded from SIPC membership

pursuant to Section 3(a)(2)(A)(ii) of the

Securities Investor Protection Act of

1970. 8

Dated: March 10, 1995.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–6576 Filed 3–16–95; 8:45 am]

BILLING CODE 8010–01–M