(a) Congressional findings; facilitating establishment of system.
(1) The Congress finds that—
(A) The prompt and accurate clearance and settlement of securities
transactions, including the transfer of record ownership and the safeguarding
of securities and funds related thereto, are necessary for the protection
of investors and persons facilitating transactions by and acting on
behalf of investors.
(B) Inefficient procedures for clearance and settlement impose unnecessary
costs on investors and persons facilitating transactions by and acting
on behalf of investors.
(C) New data processing and communications
techniques create the opportunity for more efficient, effective, and
safe procedures for clearance and settlement.
(D) The linking of all clearance and
settlement facilities and the development of uniform standards and
procedures for clearance and settlement will reduce unnecessary costs
and increase the protection of investors and persons facilitating
transactions by and acting on behalf of investors.
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(2) (A)
The Commission is directed, therefore, having due regard for the public
interest, the protection of investors, the safeguarding of securities
and funds, and maintenance of fair competition among brokers and dealers,
clearing agencies, and transfer agents, to use its authority under
this title—
(i) to facilitate the establishment of a national
system for the prompt and accurate clearance and settlement of transactions
in securities (other than exempt securities); and
(ii) to facilitate the establishment of linked
or coordinated facilities for clearance and settlement of transactions
in securities, securities options, contracts of sale for future delivery
and options thereon, and commodity options;
in accordance with the findings and to carry out the objectives
set forth in paragraph (1) of this subsection.
(B) The Commission shall use its authority
under this title to assure equal regulation under this title of registered
clearing agencies and registered transfer agents. In carrying out
its responsibilities set forth in subparagraph (A)(ii) of this paragraph,
the Commission shall coordinate with the Commodity Futures Trading
Commission and consult with the Board of Governors of the Federal
Reserve System.
5-175
(b) Registration of clearing agencies; application;
determinations by Commission requisite to registration of applicant
as clearing agency; denial of participation; discipline; summary proceedings.
(1) Except as otherwise provided
in this section, it shall be unlawful for any clearing agency, unless
registered in accordance with this subsection, directly or indirectly,
to make use of the mails or any means or instrumentality of interstate
commerce to perform the functions of a clearing agency with respect
to any security (other than an exempted security). The Commission,
by rule or order, upon its own motion or upon application, may conditionally
or unconditionally exempt any clearing agency or security or any class
of clearing agencies or securities from any provisions of this section
or the rules or regulations thereunder, if the Commission finds that
such exemption is consistent with the public interest, the protection
of investors, and the purposes of this section, including the prompt
and accurate clearance and settlement of securities
transactions and the safeguarding of securities and funds. A clearing
agency or transfer agent shall not perform the functions of both a
clearing agency and a transfer agent unless such clearing agency or
transfer agent is registered in accordance with this subsection and
subsection (e) of this section.
5-176
(2) A clearing agency may be registered
under the terms and conditions hereinafter provided in this subsection
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 clearing agency and such other information and documents as
the Commission, by rule, may prescribe as necessary or appropriate
in the public interest or for the prompt and accurate clearance and
settlement of securities transactions.
5-177
(3) A clearing agency shall not be registered
unless the Commission determines that—
(A) Such clearing agency
is so organized and has the capacity to be able to facilitate the
prompt and accurate clearance and settlement of securities transactions
and derivative agreements, contracts, and transactions for which it
is responsible, to safeguard securities and funds in its custody or
control or for which is it responsible, to comply with the provisions
of this title and the rules and regulations thereunder, to enforce
(subject to any rule or order of the Commission pursuant to section
17(d) or 19(g)(2) of this title) compliance by its participants with
the rules of the clearing agency, and to carry out the purposes of
this section.
(B)
Subject to the provisions of paragraph (4) of this subsection, the
rules of the clearing agency provide that any (i) registered broker
or dealer, (ii) other registered clearing agency, (iii) registered
investment company, (iv) bank, (v) insurance company, or (vi) other
person or class of persons as the Commission, by rule, may from time
to time designate as appropriate to the development of a national
system for the prompt and accurate clearance and settlement of securities
transactions may become a participant in such clearing agency.
(C) The rules of the
clearing agency assure a fair representation of its shareholders (or
members) and participants in the selection of its directors and administration
of its affairs. (The Commission may determine that the representation
of participants is fair if they are afforded a reasonable opportunity
to acquire voting stock of the clearing agency, directly or indirectly,
in reasonable proportion to their use of such clearing agency.)
(D) The rules of the
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges among its participants.
(E) The rules of the clearing
agency do not impose any schedule of prices, or fix rates or other
fees, for services rendered by its participants.
(F) The rules of the clearing agency
are designed to promote the prompt and accurate clearance and settlement
of securities transactions and, to the extent applicable, derivative
agreements, contracts, and transactions, to assure the safeguarding
of securities and funds which are in the custody or control of the
clearing agency or for which it is responsible, to foster cooperation
and coordination with persons engaged in the clearance and settlement
of securities transactions, to remove impediments to and perfect the
mechanism of a national system for the prompt and accurate clearance
and settlement of securities transactions, and, in general, to protect
investors and the public interest; and are not designed to permit
unfair discrimination in the admission of participants or among participants
in the use of the clearing agency, or to regulate by virtue of any
authority conferred by this title matters not related to the
purposes of this section or the administration of the clearing agency.
(G) The rules of the
clearing agency provide that (subject to any rule or order of the
Commission pursuant to section 17(d) or 19(g)(2) of this title) its
participants shall be appropriately disciplined for violation of any
provision of the rules of the clearing agency by expulsion, suspension,
limitation of activities, functions, and operations, fine, censure,
or any other fitting sanction.
(H) The rules of the clearing agency
are in accordance with the provisions of paragraph (5) of this subsection,
and, in general, provide a fair procedure with respect to the disciplining
of participants, the denial of participation to any person seeking
participation therein, and the prohibition or limitation by the clearing
agency of any person with respect to access to services offered by
the clearing agency.
(I) The rules of the clearing agency do not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of this title.
5-178
(4) (A) A registered
clearing agency may, and in cases in which the Commission, by order,
directs as appropriate in the public interest shall, deny participation
to any person subject to a statutory disqualification. A registered
clearing agency shall file notice with Commission not less than thirty
days prior to admitting any person to participation, if the clearing
agency 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.
5-179
(B) A registered clearing agency may
deny participation to, or condition the participation of, any person
if such person does not meet such standards of financial responsibility,
operational capability, experience, and competence as are prescribed
by the rules of the clearing agency. A registered clearing agency
may examine and verify the qualifications of an applicant to be a
participant in accordance with procedures established by the rules
of the clearing agency.
5-180
(5) (A) In
any proceeding by a registered clearing agency to determine whether
a participant should be disciplined (other than a summary proceeding
pursuant to subparagraph (C) of this paragraph), the clearing agency
shall bring specific charges, notify such participant of, and give
him an opportunity to defend against such charges, and keep a record.
A determination by the clearing agency to impose a disciplinary sanction
shall be supported by a statement setting forth—
(i) any act or
practice in which such participant has been found to have engaged,
or which such participant has been found to have omitted;
(ii) the specific provisions of
the rules of the clearing agency which any such act or practice, or
omission to act, is deemed to violate; and
(iii) the sanction imposed and the reasons
therefor.
5-181
(B) In any proceeding by a registered
clearing agency to determine whether a person shall be denied participation
or prohibited or limited with respect to access to services offered
by the clearing agency, the clearing agency shall notify such person
of, and give him an opportunity to be heard upon, the specific grounds
for denial or prohibition or limitation under consideration and keep
a record. A determination by the clearing agency to deny participation
or prohibit or limit a person with respect to access to services offered
by the clearing agency shall be supported by a statement setting
forth the specific grounds on which the denial or prohibition or limitation
is based.
5-182
(C) A registered clearing
agency may summarily suspend and close the accounts of a participant
who (i) has been and is expelled or suspended from any self-regulatory
organization, (ii) is in default of any delivery of funds or securities
to the clearing agency, or (iii) is in such financial or operating
difficulty that the clearing agency determines and so notifies the
appropriate regulatory agency for such participant that such suspension
and closing of accounts are necessary for the protection of the clearing
agency, its participants, creditors, or investors. A participant so
summarily suspended shall be promptly afforded an opportunity for
a hearing by the clearing agency in accordance with the provisions
of subparagraph (A) of this paragraph. The appropriate regulatory
agency for such participant, by order, may stay any such summary suspension
on its own motion or upon application by any person aggrieved thereby,
if such appropriate regulatory agency 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 protection
of investors.
(6) No registered clearing agency shall
prohibit or limit access by any person to services offered by any
participant therein.
5-182.1
(7) (A)
A clearing agency that is regulated directly or indirectly by the
Commodity Futures Trading Commission through its association with
a designated contract market for security futures products that is
a national securities exchange registered pursuant to section 6(g),
and that would be required to register pursuant to paragraph (1) of
this subsection only because it performs the functions of a clearing
agency with respect to security futures products effected pursuant
to the rules of the designated contract market with which such agency
is associated, is exempted from the provisions of this section and
the rules and regulations thereunder, except that if such a clearing
agency performs the functions of a clearing agency with respect to
a security futures product that is not cash settled, it must have
arrangements in place with a registered clearing agency to effect
the payment and delivery of the securities underlying the security
futures product.
(B) Any clearing agency that performs the functions of a clearing
agency with respect to security futures products must coordinate with
and develop fair and reasonable links with any and all other clearing
agencies that perform the functions of a clearing agency with respect
to security futures products, in order to permit, as of the compliance
date (as defined in section 6(h)(6)(C)), security futures products
to be purchased on one market and offset on another market that trades
such products.
(8) A registered clearing agency shall
be permitted to provide facilities for the clearance and settlement
of any derivative agreements, contracts, or transactions that are
excluded from the Commodity Exchange Act, subject to the requirements
of this section and to such rules and regulations as the Commission
may prescribe as necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of this title.
5-183
(c) Registration of transfer agents.
(1) Except as otherwise provided in this
section, it shall be unlawful for any transfer agent, unless registered
in accordance with this section, directly or indirectly, to make use
of the mails or any means or instrumentality of interstate commerce
to perform the function of a transfer agent with respect to any security
registered under section 12 of this title or which would be required
to be registered except for the exemption from registration provided
by subsection (g)(2)(B) or (g)(2)(G) of that section. The appropriate
regulatory agency, by rule or order, upon its own motion or upon application,
may conditionally or unconditionally exempt any person or security
or class of persons or securities from any provision of this section
or any rule or regulation prescribed under this section, if the appropriate
regulatory agency finds (A) that such exemption is in the public interest
and consistent with the protection of investors and the purposes of
this section, including the prompt and accurate clearance and settlement
of securities transactions and the safeguarding of securities and
funds, and (B) the Commission does not object to such exemption.
5-184
(2) A transfer agent may be
registered by filing with the appropriate regulatory agency for such
transfer agent an application for registration in such form and containing
such information and documents concerning such transfer agent and
any persons associated with the transfer agent as such appropriate
regulatory agency may prescribe as necessary or appropriate in furtherance
of the purposes of this section. Except as hereinafter provided, such
registration shall become effective 45 days after receipt of such
application by such appropriate regulatory agency or within such shorter
period of time as such appropriate regulatory agency may determine.
5-185
(3) The appropriate regulatory
agency for a transfer agent, by order, shall deny registration to,
censure, place limitations on the activities, functions, or operations,
of, suspend for a period not exceeding twelve months, or revoke the
registration of such transfer agent, if such appropriate regulatory
agency funds, on the record after notice and opportunity for hearing,
that such denial censure, placing of limitations, suspension, or revocation
is in the public interest and that such transfer agent, whether prior
or subsequent to becoming such, or any person associated with such
transfer agent, whether prior or subsequent to becoming so associated—
(A) has committed or omitted any act, or is subject to an order or
finding, enumerated in subparagraph (A), (D), (E), (H), or (G) of
paragraph (4) of section 15(b) of this title, has been convicted of
any offense specified in subparagraph (B) of such paragraph (4) within
ten years of the commencement of the proceedings under this paragraph,
or is enjoined from any action, conduct, or practice specified in
subparagraph (C) of such paragraph (4); or
(B) is subject to an order entered pursuant
to subparagraph (C) of paragraph (4) of this subsection barring or
suspending the right of such person to be associated with a transfer
agent.
5-186
(4) (A) Pending final determination
whether any registration by a transfer agent under this subsection
shall be denied, the appropriate regulatory agency for such transfer
agent, by order, may postpone the effective date of such registration
for a period not to exceed fifteen days, but if, after notice and
opportunity for hearing (which may consist solely of affidavits and
oral arguments), it shall appear to such appropriate regulatory agency
to be necessary or appropriate in the public interest or for the protection
of investors to postpone the effective date of such registration until
final determination, such appropriate regulatory agency shall so order.
Pending final determination whether any registration under this subsection
shall be revoked, such appropriate regulatory agency, by order, may
suspend such registration, if such suspension appears to such appropriate
regulatory agency, after notice and opportunity for hearing, to be
necessary or appropriate in the public interest or for the protection
of investors.
5-187
(B) A registered transfer
agent may, upon such terms and conditions as the appropriate regulatory
agency for such transfer agent deems necessary or appropriate in the
public interest, for the protection of investors, or in furtherance
of the purposes of this section, withdraw from registration by filing
a written notice of withdrawal with such appropriate regulatory agency.
If such appropriate regulatory agency finds that any transfer agent
for which it is the appropriate regulatory agency, is no longer in
existence or has ceased to do business as a transfer agent, such appropriate
regulatory agency, by order, shall cancel or deny the registration.
5-187.1
(C) The appropriate
regulatory agency for a transfer agent, by order, shall censure or
place limitations on the activities or functions of any person associated,
seeking to become associated, or, at the time of the alleged misconduct,
associated or seeking to become associated with the transfer agent,
or suspend for a period not exceeding 12 months or bar any such person
from being associated with any transfer agent, broker, dealer, investment
adviser, municipal securities dealer, municipal advisor, or nationally
recognized statistical rating organization, if the appropriate regulatory
agency finds, on the record after notice and opportunity for hearing,
that such censure, placing of limitations, suspension, or bar is in
the public interest and that such person has committed or omitted
any act, or is subject to an order or finding, enumerated in subparagraph
(A), (D), (E), (H), or (G) of paragraph (4) of section 15(b) of this
title, has been convicted of any offense specified in subparagraph
(B) of such paragraph (4) within ten years of the commencement of
the proceedings under this paragraph, or is enjoined from any action,
conduct, or practice specified in subparagraph (C) of such paragraph
(4). It shall be unlawful for any person as to whom such an order
suspending or barring him from being associated with a transfer agent
is in effect willfully to become, or to be, associated with a transfer
agent without the consent of the appropriate regulatory agency that
entered the order and the appropriate regulatory agency for that transfer
agent. It shall be unlawful for any transfer agent to permit such
a person to become, or remain, a person associated with it without
the consent of such appropriate regulatory agencies, if the transfer
agent knew, or in the exercise of reasonable care should have known,
of such order. The Commission may establish, by rule, procedures by
which a transfer agent reasonably can determine whether a person associated
or seeking to become associated with it is subject to any such order,
and may require, by rule, that any transfer agent comply with such
procedures.
5-188
(d) Activities of clearing agencies and transfer
agents; enforcement by appropriate regulatory agencies.
(1) No registered clearing agency or registered
transfer agent shall, directly or indirectly, engage in any activity
as clearing agency or transfer agent in contravention of such rules
and regulations (A) as the Commission may prescribe as necessary or
appropriate in the public interest, for the protection of investors,
or otherwise in furtherance of the purposes of this title, or (B)
as the appropriate regulatory agency for such clearing agency or transfer
agent may prescribe as necessary or appropriate for the safeguarding
of securities and funds.
5-189
(2) With respect to any clearing agency
or transfer agent for which the Commission is not the appropriate
regulatory agency, the appropriate regulatory agency for such clearing
agency or transfer agent may, in accordance with section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818), enforce compliance
by such clearing agency or transfer agent with the provisions of
this section, sections 17 and 19 of this title, and the rules and
regulations thereunder. For purposes of the preceding sentence, any
violation of any such provision shall constitute adequate basis for
the issuance of an order under section 8(b) or 8(c) of the Federal
Deposit Insurance Act, and the participants in any such clearing agency
and the persons doing business with any such transfer agent shall
be deemed to be “depositors” as that term is used in section
8(c) of that Act.
5-190
(3) (A) With respect to
any clearing agency or transfer agent for which the Commission is
not the appropriate regulatory agency, the Commission and the appropriate
regulatory agency for such clearing agency or transfer agent shall
consult and cooperate with each other, and, as may be appropriate,
with State banking authorities having supervision over such clearing
agency or transfer agent toward the end that, to the maximum extent
practicable, their respective regulatory responsibilities may be fulfilled
and the rules and regulations applicable to such clearing agency or
transfer agent may be in accord with both sound banking practices
and a national system for the prompt and accurate clearance and settlement
of securities transactions. In accordance with this objective—
(i) the Commission and such appropriate regulatory agency shall,
at least fifteen days prior to the issuance for public comment of
any proposed rule or regulation or adoption of any rule or regulation
concerning such clearing agency or transfer agent, consult and request
the views of the other; and
(ii) such appropriate regulatory agency shall assume primary responsibility
to examine and enforce compliance by such clearing agency or transfer
agent with the provisions of this section and sections 17 and 19 of
this title.
5-191
(B) Nothing in the preceding subparagraph
or elsewhere in this title shall be construed to impair or limit (other
than by the requirement or notification) the Commission’s authority
to make rules under any provision of this title or to enforce compliance
pursuant to any provision of this title by any clearing agency, transfer
agent, or person associated with a transfer agent with the provisions
of this title and the rules and regulations thereunder.
(4) Nothing in this section
shall be construed to impair the authority of any State banking authority
or other State or Federal regulatory authority having jurisdiction
over a person registered as a clearing agency, transfer agent, or
person associated with a transfer agent to make and enforce rules
governing such person which are not inconsistent with this title and
the rules and regulations thereunder.
5-191.1
(5) A registered transfer agent may not,
directly or indirectly, engage in any activity in connection with
the guarantee of a signature of an endorser of a security, including
the acceptance or rejection of such guarantee, in contravention of
such rules and regulations as the Commission may prescribe as necessary
or appropriate in the public interest, for the protection of investors,
to facilitate the equitable treatment of financial institutions which
issue such guarantees, or otherwise in furtherance of the purposes
of this title.
5-192
(e) Physical movement of securities certificates. The Commission shall use its authority under this title to end the
physical movement of securities certificates in connection with the
settlement among brokers and dealers of transactions in securities
consummated by means of the mails or any means or instrumentalities
of interstate commerce.
5-192.1
(f) Transfer and pledge of securities.
(1) Notwithstanding any provision
of State law, except as provided in paragraph (3), if the Commission
makes each of the findings described in paragraph (2)(A), the Commission
may adopt rules concerning—
(A) the transfer of certificated
or uncertificated securities (other than government securities issued
pursuant to chapter 31 of title 31, United States Code, or securities
otherwise processed within a book-entry system operated by the Federal
Reserve banks pursuant to a Federal book-entry regulation) or limited
interests (including security interests) therein; and
(B) rights and obligations
of purchasers, sellers, owners, lenders, borrowers, and financial
intermediaries (including brokers, dealers, banks, and clearing agencies)
involved in or affected by such transfers, and the rights of third
parties whose interests in such securities devolve from such transfers.
5-192.2
(2) (A) The findings described
in this paragraph are findings by the Commission that—
(i) such rule
is necessary or appropriate for the protection of investors or in
the public interest and is reasonably designed to promote the prompt,
accurate, and safe clearance and settlement of securities transactions;
(ii) in the absence of a
uniform rule, the safe and efficient operation of the national system
for clearance and settlement of securities transactions will be, or
is, substantially impeded; and
(iii) to the extent such rule will impair
or diminish, directly or indirectly, rights of persons specified in
paragraph (1)(B) under State law concerning transfers of securities
(or limited interests therein), the benefits of such rule outweigh
such impairment or diminution of rights.
(B) In making the findings
described in subparagraph (A), the Commission shall give consideration
to the recommendations of the Advisory Committee established under
paragraph (4), and it shall consult with and consider the views of
the Secretary of the Treasury and the Board of Governors of the Federal
Reserve System. If the Secretary of the Treasury objects, in writing,
to any proposed rule of the Commission on the basis of the Secretary’s
view on the issues described in clauses (i), (ii), and (iii) of subparagraph
(A), the Commission shall consider all feasible alternatives to the
proposed rule, and it shall not adopt any such rule unless the Commission
makes an explicit finding that the rule is the most practicable method
for achieving safe and efficient operation of the national clearance
and settlement system.
5-192.3
(3) Any State may, prior to the expiration
of 2 years after the Commission adopts a rule under this subsection,
enact a statute that specifically refers to this subsection and the
specific rule thereunder and establishes, prospectively from the date
of enactment of the State statute, a provision that differs from that
applicable under the Commission’s rule.
(4) (A)
Within 90 days after the date of enactment of this subsection, the
Commission shall (and at such times thereafter as the Commission may
determine, the Commission may), after consultation with the Secretary
of the Treasury and the Board of Governors of the Federal Reserve
System, establish an advisory committee under chapter 10 of title
5, United States Code. The Advisory Committee shall be directed to
consider and report to the Commission on such matters as the Commission,
after consultation with the Secretary of the Treasury and the Board
of Governors of the Federal Reserve System, determines, including
the areas, if any, in which State commmercial laws and related Federal
laws concerning the transfer of certificated or uncertificated securities,
limited interests (including security interests) in such securities,
or the creation or perfection of security interests in such securities
do not provide the necessary certainty, uniformity, and clarity for
purchasers, sellers, owners, lenders, borrowers, and financial intermediaries
concerning their respective rights and obligations.
(B) The Advisory Committee shall consist
of 15 members, of which—
(i) 11 shall be designated by
the Commission in accordance with chapter 10 of title 5, United States
Code; and
(ii) 2 each shall
be designated by the Board of Governors of the Federal Reserve System
and the Secretary of the Treasury.
(C) The Advisory Committee shall conduct
its activities in accordance with chapter 10 of title 5, United States
Code. Within 6 months of its designation, or such longer time as the
Commission may designate, the Advisory Committee shall issue a report
to the Commission, and shall cause copies of that report to be delivered
to the Secretary of the Treasury and the Chairman of the Board of
Governors of the Federal Reserve System.
(g)
* Due diligence for the delivery
of dividends, interest, and other valuable property rights. (1) The Commission shall revise its regulations
in section 240.17Ad-17 of title 17, Code of Federal Regulations, as
in effect on December 8, 1997, to extend the application of such section
to brokers and dealers and to provide for the following:
(A) A requirement
that the paying agent provide a single written notification to each
missing security holder that the missing security holder has been
sent a check that has not yet been negotiated. The written notification
may be sent along with a check or other mailing subsequently sent
to the missing security holder but must be provided no later than
7 months after the sending of the not yet negotiated check.
(B) An exclusion for paying
agents from the notification requirements when the value of the not
yet negotiated check is less than $25.
(C) A provision clarifying that the
requirements described in subparagraph (A) shall have no effect on
State escheatment laws.
(D) For purposes of such revised regulations—
(i) a security
holder shall be considered a “missing security holder”
if a check is sent to the security holder and the check is not negotiated
before the earlier of the paying agent sending the next regularly
scheduled check or the elapsing of 6 months after the sending of the
not yet negotiated check; and
(ii) the term “paying agent” includes
any issuer, transfer agent, broker, dealer, investment adviser, indenture
trustee, custodian, or any other person that accepts payments from
the issuer of a security and distributes the payments to the holders
of the security.
(2) The Commission shall adopt such rules,
regulations, and orders necessary to implement this subsection no
later than 1 year after the date of enactment of this subsection.
In proposing such rules, the Commission shall seek to minimize disruptions
to current systems used by or on behalf of paying agents to process
payment to account holders and avoid requiring multiple paying agents
to send written notification to a missing security holder regarding
the same not yet negotiated check.
(g) Registration requirement. It shall be unlawful
for a clearing agency, unless registered with the Commission, directly
or indirectly to make use of the mails or any means or instrumentality
of interstate commerce to perform the functions of a clearing agency
with respect to a security-based swap.
(h) Voluntary registration. A person that clears
agreements, contracts, or transactions that are not required to be
cleared under this title may register with the Commission as a clearing
agency.
(i) Standards
for clearing agencies clearing security-based swap transactions. To be registered and to maintain registration as a clearing agency
that clears security-based swap transactions, a clearing agency shall
comply with such standards as the Commission may establish by rule.
In establishing any such standards, and in the exercise of its oversight
of such a clearing agency pursuant to this title, the Commission may
conform such standards or oversight to reflect evolving United States
and international standards. Except where the Commission determines
otherwise by rule or regulation, a clearing agency shall have reasonable
discretion in establishing the manner in which it complies with any
such standards.
(j) Rules. The Commission shall adopt rules governing persons that are registered
as clearing agencies for security-based swaps under this title.
(k) Exemptions. The
Commission may exempt, conditionally or unconditionally, a clearing
agency from registration under this section for the clearing of security-based
swaps if the Commission determines that the clearing agency is subject
to comparable, comprehensive supervision and regulation by the Commodity
Futures Trading Commission or the appropriate government authorities
in the home country of the agency. Such conditions may include, but
are not limited to, requiring that the clearing agency be available
for inspection by the Commission and make available all information
requested by the Commission.
(l) Existing depository institutions and derivative
clearing organizations.
(1) A depository institution or derivative
clearing organization registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act that is required to be
registered as a clearing agency under this section is deemed to be
registered under this section solely for the purpose of clearing security-based
swaps to the extent that, before the date of enactment of this subsection—
(A) the depository institution cleared swaps as a multilateral clearing
organization; or
(B) the derivative clearing organization cleared swaps pursuant to
an exemption from registration as a clearing agency.
(2) A depository institution
to which this subsection applies may, by the vote of the shareholders
owning not less than 51 percent of the voting interests of the depository
institution, be converted into a State corporation, partnership, limited
liability company, or similar legal form pursuant to a plan of conversion,
if the conversion is not in contravention of applicable State law.
(3) The Commodity Futures
Trading Commission shall make available to the Commission, upon request,
all information determined to be relevant by the Commodity Futures
Trading Commission regarding a derivatives clearing organization deemed
to be registered with the Commission under paragraph (1).
(m) Modification of core
principles. The Commission may conform the core principles established
in this section to reflect evolving United States and international
standards.
[15 USC 78q-1. As amended by acts of June 4, 1975 (89 Stat. 141);
Dec. 4, 1987 (101 Stat. 1257); Oct. 15, 1990 (104 Stat. 941); Oct.
16, 1990 (104 Stat. 973); Nov. 15, 1990 (104 Stat. 2718); Dec. 21,
2000 (114 Stat. 2763A-431, 434); July 30, 2002 (116 Stat. 796); July
21, 2010 (124 Stat. 1768, 1851, 1869); and Dec. 27, 2022 (136 Stat.
4312).]
