I
103D CONGRESS
1ST SESSION
H. R. 618
To extend and revise rulemaking authority with respect to government
securities under the Federal securities laws, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 26, 1993
Mr. MARKEY (for himself, Mr. FIELDS of Texas, Mr. DINGELL, Mr. WYDEN,
Mr. SYNAR, and Mr. COOPER) introduced the following bill; which was
referred to the Committee on Energy and Commerce
A BILL
To extend and revise rulemaking authority with respect to
government securities under the Federal securities laws,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Government Securities
Reform Act of 1993’’.
SEC. 2. EXTENSION OF GOVERNMENT SECURITIES RULE-
MAKING AUTHORITY.
Section 15C(g)(1) of the Securities Exchange Act of
1934 (15 U.S.C. 78o–5(g)(1)) is amended by striking
‘‘October 1, 1991’’ and inserting ‘‘October 1, 1997’’.
SEC. 3. RECORDKEEPING.
Section 17 of the Securities Exchange Act of 1934
(15 U.S.C. 78q) is amended by adding at the end thereof
the following new subsection:
‘‘(i) GOVERNMENT SECURITIES RECORDKEEPING.—
‘‘(1) MAINTENANCE OF RECORDS.—The Com-
mission may prescribe rules to require any govern-
ment securities broker or government securities deal-
er to make, keep, and maintain for prescribed peri-
ods, in a form and containing such information as
may be specified by the Commission, records of gov-
ernment securities transactions, including (but not
limited to) records of the date and time of execution
of trades.
‘‘(2) EXAMINATION OF RECORDS.—Every gov-
ernment securities broker and government securities
dealer shall make such records available for exam-
ination to representatives of the appropriate regu-
latory agency for such government securities broker
or government securities dealer and furnish copies
thereof to such representatives on request.
‘‘(3) FURNISHING RECORDS TO RECONSTRUCT
TRADING.—Every government securities broker and
government securities dealer shall furnish to the
Commission on request such of the information re-
quired to be made, kept, or maintained under this
subsection as the Commission may require to recon-
struct trading in furtherance of the purposes of this
title. In requiring information pursuant to this para-
graph, the Commission shall specify the information
required, the period for which it is required, the time
and date on which the information must be fur-
nished, and whether the information is to be fur-
nished directly to the Commission, to the Federal
Reserve Bank of New York, or to an appropriate
regulatory agency or self-regulatory organization
with responsibility for examining the government se-
curities broker or government securities dealer. The
Commission may require that such information be
furnished in machine readable form.
‘‘(4) LIMITATION; CONSTRUCTION.—The Com-
mission shall not utilize its authority under this sub-
section to develop regular reporting requirements for
information concerning a substantial segment of all
daily transactions in government securities; however,
the Commission may require information to be fur-
‘‘(B) to assure that such information is
timely reported;
‘‘(C) to assure that such information is
made available to investors generally on a fair,
reasonable, and nondiscriminatory basis; and
‘‘(D) to assure the ability of investors to
obtain and retain such information for analyt-
ical purposes.
‘‘(c) STANDBY AUTHORITY WITH RESPECT TO MAR-
KET INFORMATION.—
‘‘(1) AUTHORITY.—Subject to paragraph (2),
the Commission by rule—
‘‘(A) may require any government securi-
ties broker or government securities dealer that
regularly trades a security as to which the Sec-
retary of the Treasury has made a determina-
tion under paragraph (2) to report any pur-
chase or sale of such a security to any securities
information processor that has the capability
and agrees to disseminate such reports or, if
there is no such processor, to a self-regulatory
organization designated by the Commission to
receive such reports, and may require such se-
curities information processor or self-regulatory
organization to make information with respect
ing with an order of a court of the United States in
an action brought by the United States, the Com-
mission, or the appropriate regulatory agency. For
purposes of section 552 of title 5, United States
Code, this subsection shall be considered a statute
described in subsection (b)(3)(B) of such section
552.
‘‘(f) VIOLATIONS OF RULES PROHIBITED.—No gov-
ernment securities broker, government securities dealer,
securities information processor, or government securities
information system shall make use of the mails or any
means or instrumentality of interstate commerce to effect
any transaction in, to induce the purchase or sale of, or
to distribute or disseminate any quotation or transaction
report for, any government security in contravention of
any rule adopted pursuant to this section.
‘‘(g) EFFECTIVE DATE OF RULEMAKING AUTHOR-
ITY.—The authority of the Commission to prescribe rules
under subsections (b) and (c) is effective on October 1,
1993.
‘‘(h) DEFINITION.—For purposes of this section, the
term ‘government securities’ does not include a security
secured by an interest in pools of mortgages representing
liens on residential real estate.’’.
(b) CONFORMING
AMENDMENTS.—The Securities
Exchange Act of 1934 is amended—
(1) by striking ‘‘(other than an exempted secu-
rity)’’ in section 3(a)(22)(A);
(2) by adding at the end of section 3(a) the fol-
lowing:
‘‘(53) The term ‘government securities informa-
tion system’ means any person engaged in the busi-
ness of operating a system for the timely, automated
dissemination to more than 10 persons of (A)
quotations for government securities of or through
government securities interdealer brokers (or their
functional equivalents), or (B) reports of purchases
or sales of government securities by or through gov-
ernment securities interdealer brokers (or their func-
tional equivalents).’’; and
(3) by inserting at the end of section 11A(b)(1)
the following: ‘‘The Commission shall not require
any securities information processor to register
under this section in connection with its activities
with respect to quotations for or transactions in ex-
empted securities.’’.
(c) STUDIES WITH RESPECT TO MORTGAGE-BACKED
GOVERNMENT SECURITIES.—
(1) STUDIES REQUIRED.—With respect to gov-
ernment securities (as defined in section 3(a)(42) of
the Securities Exchange Act of 1934) that are se-
cured by an interest in pools of mortgages represent-
ing liens on residential real estate (hereafter in this
subsection referred to as ‘mortgage-backed govern-
ment securities’), the Secretary of the Treasury, the
Securities and Exchange Commission, and the
Board of Governors of the Federal Reserve System
shall monitor and evaluate the effectiveness of pri-
vate sector efforts to disseminate mortgage-backed
government securities price and volume information,
and determine whether such efforts—
(A) assure the prompt, accurate, reliable,
and fair reporting, collection, processing, dis-
tribution, and publication of information with
respect to quotations for and transactions in
mortgage-backed government securities and the
fairness and usefulness of the form and content
of such information;
(B) assure that all mortgage-backed gov-
ernment securities information processors may,
for the purpose of distribution and publication,
obtain on fair and reasonable terms such infor-
mation with respect to quotations for and
transactions in mortgage-backed government se-
curities, as reported, collected, processed, or
prepared for distribution or publication by any
processor of such information (including self-
regulatory organizations) acting in an exclusive
capacity; and
(C) assure that all mortgage-backed gov-
ernment securities brokers, mortgage-backed
government securities dealers, mortgage-backed
government securities information processors,
and other appropriate persons may obtain on
nondiscriminatory terms such information with
respect to quotations for and transactions in
mortgage-backed government securities as is
distributed or published.
(2) REPORTS.—The Secretary of the Treasury,
the Securities and Exchange Commission, and the
Board of Governors of the Federal Reserve System
shall each submit a report to the Congress describ-
ing its findings under this subsection and any rec-
ommendations for legislation not later than 18
months after the date of enactment of this Act.
SEC. 9. STUDY OF REGULATORY SYSTEM FOR GOVERN-
MENT SECURITIES.
(a) JOINT STUDY.—The Secretary of the Treasury,
the Securities and Exchange Commission, and the Board
of Governors of the Federal Reserve System shall—
(1) evaluate the effectiveness of any rules pro-
mulgated or amended after October 1, 1991, pursu-
ant to section 15C of the Securities Exchange Act
of 1934 or any amendment made by this title, and
any national securities association rule changes ap-
plicable principally to government securities trans-
actions approved after October 1, 1991, in carrying
out the purposes of such Act;
(2) evaluate the effectiveness of surveillance
and enforcement with respect to government securi-
ties, and the impact on such surveillance and en-
forcement of defects in any available audit trails
with respect to transactions in such securities; and
(3) submit to the Congress, not later than
March 31, 1997, any recommendations they may
consider appropriate concerning—
(A) the regulation of government securities
brokers and government securities dealers,
(B) the dissemination of information con-
cerning quotations for and transactions in gov-
ernment securities,
(C) the prevention of sales practice abuses
in connection with transactions in government
securities, and
(D) such other matters as they consider
appropriate.
(b) GAO STUDY.—The Comptroller General shall—
(1) conduct a study of the effectiveness of regu-
lation of government securities brokers and govern-
ment securities dealers pursuant to section 15C of
the Securities Exchange Act of 1934 and the effec-
tiveness of the amendments made by this title; and
(2) submit to the Congress, not later than
March 31, 1996, the Comptroller General’s rec-
ommendations for change, if any, or such other rec-
ommendations as the Comptroller General considers
appropriate.
SEC. 10. TECHNICAL AMENDMENTS.
(a) AMENDMENTS TO DEFINITIONS.—Section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))
is amended—
(1) in paragraph (34)(G) (relating to the defini-
tion of appropriate regulatory agency), by amending
clauses (ii), (iii), and (iv) to read as follows:
‘‘(ii) the Board of Governors of the
Federal Reserve System, in the case of a
State member bank of the Federal Reserve
System, a foreign bank, an uninsured
State branch or State agency of a foreign
bank, a commercial lending company
owned or controlled by a foreign bank (as
such terms are used in the International
Banking Act of 1978), or a corporation or-
ganized or having an agreement with the
Board of Governors of the Federal Reserve
System pursuant to section 25 or section
25A of the Federal Reserve Act;
‘‘(iii) the Federal Deposit Insurance
Corporation, in the case of a bank insured
by the Federal Deposit Insurance Corpora-
tion (other than a member of the Federal
Reserve System or a Federal savings bank)
or an insured State branch of a foreign
bank (as such terms are used in the Inter-
national Banking Act of 1978);
‘‘(iv) the Director of the Office of
Thrift Supervision, in the case of a savings
association (as defined in section 3(b) of
the Federal Deposit Insurance Act) the de-
posits of which are insured by the Federal
Deposit Insurance Corporation;’’;
(2) by amending paragraph (46) (relating to
the definition of financial institution) to read as fol-
lows:
‘‘(46) The term ‘financial institution’ means—
‘‘(A) a bank (as defined in paragraph (6)
of this subsection);
‘‘(B) a foreign bank (as such term is used
in the International Banking Act of 1978); and
‘‘(C) a savings association (as defined in
section 3(b) of the Federal Deposit Insurance
Act) the deposits of which are insured by the
Federal Deposit Insurance Corporation.’’; and
(3) by redesignating paragraph (51) (as added
by section 204 of the International Securities En-
forcement Cooperation Act) as paragraph (52).
(b) EFFECTIVE DATE
OF BROKER/DEALER REG-
ISTRATION.—
(1) GOVERNMENT
SECURITIES
BROKERS
AND
DEALERS.—Section 15C(a)(2)(ii) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o–5(a)(2)(ii)) is
amended by inserting before ‘‘At the conclusion’’ the
following: ‘‘The order granting registration shall not
be effective until such government securities broker
or government securities dealer has become a mem-
ber of a national securities exchange registered
under section 6 of this title, or a securities associa-
tion registered under section 15A of this title, unless
the Commission has exempted such government se-
curities broker or government securities dealer, by
rule or order, from such membership.’’.
(2) OTHER BROKERS AND DEALERS.—Section
15(b)(1)(B) of such Act (15 U.S.C. 78o(b)(1)(B)) is
amended by inserting before ‘‘At the conclusion’’ the
following: ‘‘The order granting registration shall not
be effective until such broker or dealer has become
a member of a registered securities association, or
until such broker or dealer has become a member of
a national securities exchange if such broker or deal-
er effects transactions solely on that exchange, un-
less the Commission has exempted such broker or
dealer, by rule or order, from such membership.’’.
SEC. 11. OFFERINGS OF CERTAIN GOVERNMENT SECURI-
TIES.
Section 15 of the Securities Exchange Act of 1934
(15 U.S.C. 78o) is amended by inserting after paragraph
(6) of subsection (c) the following new paragraph:
‘‘(7) In connection with any bid for or purchase
of a government security related to an offering of
government securities by or on behalf of an issuer,
no government securities broker, government securi-
ties dealer, or bidder for or purchaser of securities
in such offering shall knowingly or willfully make
any false or misleading written statement or omit
any fact necessary to make any written statement
made not misleading. For purposes of the preceding
sentence, the term ‘government security’ shall not
include any obligation subject to the public debt
limit established in section 3101 of title 31, United
States Code.’’.
SEC. 12. RULE OF CONSTRUCTION.
(a) IN GENERAL.—No provision of, or amendment
made by, this title may be construed—
(1) to apply to the initial issuance of any public
debt obligation, or
(2) to grant any authority to (or extend any au-
thority of) the Securities and Exchange Commis-
sion—
(A) to prescribe any procedure, term, or
condition governing such initial issuance,
(B) to require any recordkeeping, or the
furnishing of any information, with respect to
such initial issuance, or
(C) to otherwise regulate in any manner
such initial issuance.
(b) PUBLIC DEBT OBLIGATION.—For purposes of
this section, the term ‘‘public debt obligation’’ means an
obligation subject to the public debt limit established in
section 3101 of title 31, United States Code.
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HR 618 IH——2
HR 618 IH——3