Text: H.R.3662 — 101st Congress (1989-1990)All Information (Except Text)

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HR 3662 IH
101st CONGRESS
1st Session
 H. R. 3662
To amend the Securities Exchange Act of 1934, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
November 15, 1989
Mr. ECKART introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce and Agriculture
A BILL
To amend the Securities Exchange Act of 1934, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Orderly Markets Act of 1989'.
SEC. 2. TREATMENT OF SECURITIES DERIVATIVE INSTRUMENTS AS SECURITIES.
  (a) DEFINITION OF SECURITIES DERIVATIVE INSTRUMENT- Section 3(a) of the
  Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
  at the end thereof the following:
  `(50) The term `securities derivative instrument' means any contract of sale
  (or option on such contract) for future delivery of a group or index of
  equity securities (or any interest therein or based upon the value thereof).
  (b) DEFINITION OF SECURITY-
  (1) SECURITIES ACT OF 1933- Section 2(1) of the Securities Act of 1933
  (15 U.S.C. 77b(1)) is amended by inserting after `value thereof),' the
  following: `any securities derivative instrument (as such term is defined
  in section 3(a)(50) of the Securities Exchange Act of 1934),'.
  (2) SECURITIES EXCHANGE ACT OF 1934- Section 3(a)(10) of the Securities
  Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by inserting after
  `value thereof),' the following: `any securities derivative instrument,'.
  (3) INVESTMENT COMPANY ACT OF 1940- Section 2(a)(36) of the Investment
  Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by inserting after
  `value thereof),' the following: `any securities derivative instrument
  (as such term is defined in section 3(a)(50) of the Securities Exchange
  Act of 1934),'.
  (4) INVESTMENT ADVISERS ACT OF 1940- Section 202(a)(18) of the Investment
  Advisers Act of 1940 is amended by inserting after `value thereof),' the
  following: `any securities derivative instrument (as such term is defined
  in section 3(a)(50) of the Securities Exchange Act of 1934),'.
  (5) SECURITIES INVESTOR PROTECTION ACT- Section 16(14) of the Securities
  Investor Protection Act (15 U.S.C. 78111(14)) is amended by inserting after
  `value thereof),' the following: `any securities derivative instrument
  (as such term is defined in section 3(a)(50) of the Securities Exchange
  Act of 1934),'.
  (c) AUTHORITY TO REGULATE EXCHANGES WITH RESPECT TO DERIVATIVE INSTRUMENTS-
  Section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781) is
  amended by adding at the end thereof the following new subsection:
  `(m)(1) No securities derivative instrument shall be registered or traded
  on a national securities exchange, or traded on any interdealer quotation
  system operated by a national securities association, unless the terms
  and conditions of the instrument have been reviewed and approved by the
  Commission pursuant to section 19(b) of this title and the instrument
  meets the following minimum requirements:
  `(A) trading of such instrument on such exchange is consistent with the
  public interest and the protection of investors and will not adversely
  affect the maintenance of fair and orderly securities markets;
  `(B) trading such instrument shall not be readily susceptible to
  manipulation of the price of such instrument, nor to causing or being
  used in the manipulation of the price of any underlying security, option
  on such security, or option on a securities derivative instrument; and
  `(C) such instrument shall be predominately composed of the securities
  of unaffiliated issuers and shall be a widely published measure of, and
  shall reflect, the market for all publicly traded equity securities or a
  substantial segment thereof, or shall be comparable to such measure.
  `(2) Upon application for registration on a national securities exchange
  of any securities derivative instrument, the exchange shall provide an
  opportunity for public comment on whether such instrument meets the minimum
  requirements set forth in paragraph (1) of this subsection.
  `(3) The Commission may, subject to such terms and conditions as the
  Commission may require, exempt members of any exchange on which a securities
  derivative instrument is registered from the requirements of section 11(a)
  of this title with respect to one or more of such instruments.
  `(4) The Commission is authorized to deny, to suspend the effective date
  of, to suspend for a period not exceeding 12 months, or to revoke the
  registration of any securities derivative instrument if the Commission
  finds, on the record after notice and opportunity for hearing, that
  such instrument fails to meet the requirements of paragraph (1) of this
  subsection. An order providing for the revocation of the registration of
  such an instrument shall provide for the orderly liquidation of positions
  in such instruments. No member of a national securities exchange, broker,
  or dealer shall make use of the mails or any means or instrumentality of
  interstate commerce to effect any transaction in, or to induce the purchase
  or sale of, any securities derivative instrument the registration of which
  has been and is suspended or revoked pursuant to the preceding sentence.'.
  (d) CONFORMING AMENDMENTS-
  (1) SECURITIES EXCHANGE ACT OF 1934- (A) Section 9(g) of the Securities
  Exchange Act of 1934 (15 U.S.C. 78i) is amended--
  (i) by inserting after `value thereof),' the following: `any securities
  derivative instrument,'; and
  (ii) by inserting `that is not a securities derivative instrument' after
  `an option on a contract for future delivery'.
  (B) Section 9 of such Act is further amended by adding at the end thereof
  the following:
  `(h)(1) The Commission's authority under subsection (b) of this section
  shall extend to any securities derivative instrument.
  `(2) It shall be unlawful for any person to offer to enter into, enter
  into, or confirm the execution of any contract of sale (or option on such
  contract) for future delivery of a security (or any interest therein or
  based on the value thereof), other than a securities derivative instrument
  or an exempted security that is not a municipal security.'.
  (2) COMMISSION JURISDICTION EXCLUSIVE- On and after the effective date of
  this section, the Securities and Exchange Commission shall have exclusive
  jurisdiction in the Federal Government with respect to any contract for
  future delivery (or option on such a contract) of a group or index of
  equity securities (or any interest therein or based on the value thereof).
  (e) EFFECTIVE DATES-
  (1) IN GENERAL- Except as provided in paragraph (2), this section and the
  amendments made by this section shall take effect one hundred and eighty
  days after the date of enactment of this Act or on such earlier date as
  the Commission prescribes and publishes in the Federal Register.
  (2) AUTHORITY TO PRESCRIBE RULES AND TO TAKE OTHER TRANSITIONAL ACTIONS-
  Notwithstanding subsection (a)--
  (A) the authority of the Securities and Exchange Commission to prescribe
  rules to implement the amendments made by this Act is effective on the
  date of enactment of this Act; and
  (B) the Commission may, at any time after such date of enactment, conduct
  any activity necessary to permit the granting or denial of registration of
  securities derivative instruments, or exchanges or clearing agencies for,
  or brokers or dealers in, such instruments on or before the effective date
  specified in paragraph (1), subject to such terms and conditions as the
  Commission may prescribe by rule or order.

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