legislation: 100-hr-4997
Data license: Public Domain (U.S. Government data) · Data source: Federal Register API & Regulations.gov API
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| 100-hr-4997 | 100 | hr | 4997 | Securities Market Reform Act of 1988 | Finance and Financial Sector | 1988-07-07 | 1988-07-26 | Hearings Held by Subcommittee on Telecommunications and Finance Prior to Referral (Jul 14, 88). | House | Rep. Markey, Edward J. [D-MA-7] | MA | D | M000133 | 1 | Securities Market Reform Act of 1988 - Amends the Securities Exchange Act of 1934, the Securities Act of 1933, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Securities Investor Protection Act to treat securities derivative instruments as securities for purposes of such Acts and to place the registration and trading of such instruments under the jurisdiction of the Securities and Exchange Commission (SEC). Defines a "securities derivative instrument" as any contract of sale (or option on such contract) for future delivery of a group or index of equity securities (or any interest in such a group or index or based upon the value of such a group or index). Prohibits the registration or trading of a securities derivative instrument unless the terms and conditions of such instrument have been reviewed and approved by the SEC and such instrument meets certain minimum requirements. Specifies such minimum requirements as: (1) the trading of such instrument being consistent with the public interest and the protection of investors and not adversely affecting the maintenance of fair and orderly securities markets; (2) the trading of such instrument not being readily susceptible to price manipulations; and (3) such instrument being predominantly composed of the securities of unaffiliated issuers. Provides for public comment on the application for registration on a national securities exchange of any securities derivative instrument. Authorizes the SEC to exempt members of any exchange from certain registration requirements with respect to securities derivative instruments. Authorizes the SEC to deny, suspend, or revoke the registration of any securities derivative instrument. Specifies that the SEC shall have exclusive jurisdiction with regard to securities derivative instruments. Authorizes the Federal Reserve Board to prescribe the minimum amount of margin necessary to establish or maintain a position in any securities derivative instrument. Requires the Federal Reserve Board, in establishing such margin requirements, to take into account: (1) the need to provide comparable costs for, and leverage in, establishing and maintaining positions in equity securities and securities derivative instruments; (2) the need to prevent sudden and unreasonable price fluctuations and excessive speculation; and (3) other requirements established for securities transactions. Authorizes the SEC to take whatever actions it deems necessary in an emergency situation to: (1) maintain or restore fair and orderly securities markets; or (2) assure prompt and accurate clearance and settlement of transactions in any security. Specifies that such authority shall include (but not be limited to) the authority to alter, supplement, suspend, or impose requirements, conditions, or restrictions with respect to: (1) temporary emergency margin levels on any security; (2) hours of trading; (3) reporting of, and limits on, positions and changes in positions; and (4) clearance and settlement of transactions in any security. Limits to 30 days any such action by the SEC. Authorizes the SEC to suspend trading in any or all securities for a period of up to 24 hours in an emergency situation. Allows the SEC to extend such a suspension by two 24-hour time periods with the approval of the President. Defines "emergency" to mean any circumstance which the Commission has reason to believe is, or may be, a major risk to: (1) fair and orderly markets for equity securities or securities derivative instruments; or (2) prompt and accurate clearance and settlement of transactions in any equity security or securities derivative instrument. Requires the SEC to require large traders to make available certain records and reports for the purpose of permitting contemporaneous monitoring of the impact on securities markets of program and block trading. Provides for the confidential treatment of the identities of those effecting such trades. Directs the SEC to establish procedures for providing contemporaneous disclosure to the securities markets of information concerning program and block trades without disclosure of the identities of the large traders effecting such transactions. Directs the SEC to facilitate the establishment of: (1) a national system for the prompt and accurate clearance and settlement of transactions in securities; and (2) linked and coordinated facilities for clearance and settlement of transactions in securities and related options and securities derivative instruments. Authorizes the SEC to prescribe uniform rules for creditors to perfect secured interests in certificated and uncertificated securities. Requires every person who is a registered broker or dealer or a government securities broker or dealer under the regulatory jurisdiction of the SEC to make certain reports to the SEC concerning the financial or operational conditions of its associated persons that the Commission determines are reasonably likely to have a material impact on the financial or operational condition of such registered broker or dealer, government securities broker or dealer, or municipal securities dealer. Exempts from such requirement information concerning financial institutions, bank holding companies savings and loan holding companies, insurance companies, and future commission merchants so long as information substantially similar to that required is available to a supervisory agency, a State insurance commission or similar State agency, or the Commodity Futures Trading Commission. Allows the SEC to grant other exemptions to such reporting requirement. Provides for the confidentiality of any reported information. Requires the SEC to use its existing authority to prescribe rules, regulations, and orders to prohibit intramarket and intermarket frontrunning. Defines "frontrunning" as trading securities while in possession of material, nonpublic information regarding impending transactions in any securities market. | 2025-08-28T20:07:43Z |