
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC78k-1]

 
                      TITLE 15--COMMERCE AND TRADE
 
                    CHAPTER 2B--SECURITIES EXCHANGES
 
Sec. 78k-1. National market system for securities; securities 
        information processors
        

(a) Congressional findings; facilitating establishment of national 
        market system for securities; designation of qualified 
        securities

    (1) The Congress finds that--
        (A) The securities markets are an important national asset which 
    must be preserved and strengthened.
        (B) New data processing and communications techniques create the 
    opportunity for more efficient and effective market operations.
        (C) It is in the public interest and appropriate for the 
    protection of investors and the maintenance of fair and orderly 
    markets to assure--
            (i) economically efficient execution of securities 
        transactions;
            (ii) fair competition among brokers and dealers, among 
        exchange markets, and between exchange markets and markets other 
        than exchange markets;
            (iii) the availability to brokers, dealers, and investors of 
        information with respect to quotations for and transactions in 
        securities;
            (iv) the practicability of brokers executing investors' 
        orders in the best market; and
            (v) an opportunity, consistent with the provisions of 
        clauses (i) and (iv) of this subparagraph, for investors' orders 
        to be executed without the participation of a dealer.

        (D) The linking of all markets for qualified securities through 
    communication and data processing facilities will foster efficiency, 
    enhance competition, increase the information available to brokers, 
    dealers, and investors, facilitate the offsetting of investors' 
    orders, and contribute to best execution of such orders.

    (2) The Commission is directed, therefore, having due regard for the 
public interest, the protection of investors, and the maintenance of 
fair and orderly markets, to use its authority under this chapter to 
facilitate the establishment of a national market system for securities 
(which may include subsystems for particular types of securities with 
unique trading characteristics) in accordance with the findings and to 
carry out the objectives set forth in paragraph (1) of this subsection. 
The Commission, by rule, shall designate the securities or classes of 
securities qualified for trading in the national market system from 
among securities other than exempted securities. (Securities or classes 
of securities so designated hereinafter \1\ in this section referred to 
as ``qualified securities''.)
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    \1\ So in original. Probably should be ``are hereinafter''.
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    (3) The Commission is authorized in furtherance of the directive in 
paragraph (2) of this subsection--
        (A) to create one or more advisory committees pursuant to the 
    Federal Advisory Committee Act (which shall be in addition to the 
    National Market Advisory Board established pursuant to subsection 
    (d) of this section) and to employ one or more outside experts;
        (B) by rule or order, to authorize or require self-regulatory 
    organizations to act jointly with respect to matters as to which 
    they share authority under this chapter in planning, developing, 
    operating, or regulating a national market system (or a subsystem 
    thereof) or one or more facilities thereof; and
        (C) to conduct studies and make recommendations to the Congress 
    from time to time as to the possible need for modifications of the 
    scheme of self-regulation provided for in this chapter so as to 
    adapt it to a national market system.

(b) Securities information processors; registration; withdrawal of 
        registration; access to services; censure; suspension or 
        revocation of registration

    (1) Except as otherwise provided in this section, it shall be 
unlawful for any securities information processor 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 securities information processor. The 
Commission, by rule or order, upon its own motion or upon application, 
may conditionally or unconditionally exempt any securities information 
processor or class of securities information processors or security or 
class of securities from any provision 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 maintenance of fair and 
orderly markets in securities and the removal of impediments to and 
perfection of the mechanism of a national market system: Provided, 
however, That a securities information processor not acting as the 
exclusive processor of any information with respect to quotations for or 
transactions in securities is exempt from the requirement to register in 
accordance with this subsection unless the Commission, by rule or order, 
finds that the registration of such securities information processor is 
necessary or appropriate in the public interest, for the protection of 
investors, or for the achievement of the purposes of this section.
    (2) A securities information processor may be registered by filing 
with the Commission an application for registration in such form as the 
Commission, by rule, may prescribe containing the address of its 
principal office, or offices, the names of the securities and markets 
for which it is then acting and for which it proposes to act as a 
securities information processor, and such other information and 
documents as the Commission, by rule, may prescribe with regard to 
performance capability, standards and procedures for the collection, 
processing, distribution, and publication of information with respect to 
quotations for and transactions in securities, personnel qualifications, 
financial condition, and such other matters as the Commission determines 
to be germane to the provisions of this chapter and the rules and 
regulations thereunder, or necessary or appropriate in furtherance of 
the purposes of this section.
    (3) The Commission shall, upon the filing of an application for 
registration pursuant to paragraph (2) of this subsection, publish 
notice of the filing and afford interested persons an opportunity to 
submit written data, views, and arguments concerning such application. 
Within ninety days of the date of the publication of such notice (or 
within such longer period as to which the applicant consents) the 
Commission shall--
        (A) by order grant such registration, or
        (B) institute proceedings to determine whether registration 
    should be denied. Such proceedings shall include notice of the 
    grounds for denial under consideration and opportunity for hearing 
    and shall be concluded within one hundred eighty days of the date of 
    publication of notice of the filing of the application for 
    registration. At the conclusion of such proceedings the Commission, 
    by order, shall grant or deny such registration. The Commission may 
    extend the time for the conclusion of such proceedings for up to 
    sixty days if it finds good cause for such extension and publishes 
    its reasons for so finding or for such longer periods as to which 
    the applicant consents.

The Commission shall grant the registration of a securities information 
processor if the Commission finds that such securities information 
processor is so organized, and has the capacity, to be able to assure 
the prompt, accurate, and reliable performance of its functions as a 
securities information processor, comply with the provisions of this 
chapter and the rules and regulations thereunder, carry out its 
functions in a manner consistent with the purposes of this section, and, 
insofar as it is acting as an exclusive processor, operate fairly and 
efficiently. The Commission shall deny the registration of a securities 
information processor if the Commission does not make any such finding.
    (4) A registered securities information processor may, upon such 
terms and conditions as the Commission deems necessary or appropriate in 
the public interest or for the protection of investors, withdraw from 
registration by filing a written notice of withdrawal with the 
Commission. If the Commission finds that any registered securities 
information processor is no longer in existence or has ceased to do 
business in the capacity specified in its application for registration, 
the Commission, by order, shall cancel the registration.
    (5)(A) If any registered securities information processor prohibits 
or limits any person in respect of access to services offered, directly 
or indirectly, by such securities information processor, the registered 
securities information processor shall promptly file notice thereof with 
the Commission. 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. 
Any prohibition or limitation on access to services with respect to 
which a registered securities information processor is required by this 
paragraph to file notice shall be subject to review by the Commission on 
its own motion, or upon application by any person aggrieved thereby 
filed within thirty days after such notice has been filed with the 
Commission and received by such aggrieved person, or within such longer 
period as the Commission may determine. Application to the Commission 
for review, or the institution of review by the Commission on its own 
motion, shall not operate as a stay of such prohibition or limitation, 
unless the Commission otherwise orders, summarily or after notice and 
opportunity for hearing on the question of a stay (which hearing may 
consist solely of the submission of affidavits or presentation of oral 
arguments). The Commission shall establish for appropriate cases an 
expedited procedure for consideration and determination of the question 
of a stay.
    (B) In any proceeding to review the prohibition or limitation of any 
person in respect of access to services offered by a registered 
securities information processor, if the Commission finds, after notice 
and opportunity for hearing, that such prohibition or limitation is 
consistent with the provisions of this chapter and the rules and 
regulations thereunder and that such person has not been discriminated 
against unfairly, the Commission, by order, shall dismiss the 
proceeding. If the Commission does not make any such finding or if it 
finds that such prohibition or limitation imposes any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of this chapter, the Commission, by order, shall set aside the 
prohibition or limitation and require the registered securities 
information processor to permit such person access to services offered 
by the registered securities information processor.
    (6) The Commission, by order, may censure or place limitations upon 
the activities, functions, or operations of any registered securities 
information processor or suspend for a period not exceeding twelve 
months or revoke the registration of any such processor, if the 
Commission finds, on the record after notice and opportunity for 
hearing, that such censure, placing of limitations, suspension, or 
revocation is in the public interest, necessary or appropriate for the 
protection of investors or to assure the prompt, accurate, or reliable 
performance of the functions of such securities information processor, 
and that such securities information processor has violated or is unable 
to comply with any provision of this chapter or the rules or regulations 
thereunder.

(c) Rules and regulations covering use of mails or other means or 
        instrumentalities of interstate commerce; reports of purchase or 
        sale of qualified securities; limiting registered securities 
        transactions to national securities exchanges

    (1) No self-regulatory organization, member thereof, securities 
information processor, broker, or dealer shall make use of the mails or 
any means or instrumentality of interstate commerce to collect, process, 
distribute, publish, or prepare for distribution or publication any 
information with respect to quotations for or transactions in any 
security other than an exempted security, to assist, participate in, or 
coordinate the distribution or publication of such information, or to 
effect any transaction in, or to induce or attempt to induce the 
purchase or sale of, any such security in contravention of such rules 
and regulations as the Commission shall prescribe as necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of this chapter to--
        (A) prevent the use, distribution, or publication of fraudulent, 
    deceptive, or manipulative information with respect to quotations 
    for and transactions in such securities;
        (B) assure the prompt, accurate, reliable, and fair collection, 
    processing, distribution, and publication of information with 
    respect to quotations for and transactions in such securities and 
    the fairness and usefulness of the form and content of such 
    information;
        (C) assure that all securities information processors may, for 
    purposes of distribution and publication, obtain on fair and 
    reasonable terms such information with respect to quotations for and 
    transactions in such securities as is collected, processed, or 
    prepared for distribution or publication by any exclusive processor 
    of such information acting in such capacity;
        (D) assure that all exchange members, brokers, dealers, 
    securities information processors, and, subject to such limitations 
    as the Commission, by rule, may impose as necessary or appropriate 
    for the protection of investors or maintenance of fair and orderly 
    markets, all other persons may obtain on terms which are not 
    unreasonably discriminatory such information with respect to 
    quotations for and transactions in such securities as is published 
    or distributed by any self-regulatory organization or securities 
    information processor;
        (E) assure that all exchange members, brokers, and dealers 
    transmit and direct orders for the purchase or sale of qualified 
    securities in a manner consistent with the establishment and 
    operation of a national market system; and
        (F) assure equal regulation of all markets for qualified 
    securities and all exchange members, brokers, and dealers effecting 
    transactions in such securities.

    (2) The Commission, by rule, as it deems necessary or appropriate in 
the public interest or for the protection of investors, may require any 
person who has effected the purchase or sale of any qualified security 
by use of the mails or any means or instrumentality of interstate 
commerce to report such purchase or sale to a registered securities 
information processor, national securities exchange, or registered 
securities association and require such processor, exchange, or 
association to make appropriate distribution and publication of 
information with respect to such purchase or sale.
    (3)(A) The Commission, by rule, is authorized to prohibit brokers 
and dealers from effecting transactions in securities registered 
pursuant to section 78l(b) of this title otherwise than on a national 
securities exchange, if the Commission finds, on the record after notice 
and opportunity for hearing, that--
        (i) as a result of transactions in such securities effected 
    otherwise than on a national securities exchange the fairness or 
    orderliness of the markets for such securities has been affected in 
    a manner contrary to the public interest or the protection of 
    investors;
        (ii) no rule of any national securities exchange unreasonably 
    impairs the ability of any dealer to solicit or effect transactions 
    in such securities for his own account or unreasonably restricts 
    competition among dealers in such securities or between dealers 
    acting in the capacity of market makers who are specialists in such 
    securities and such dealers who are not specialists in such 
    securities, and
        (iii) the maintenance or restoration of fair and orderly markets 
    in such securities may not be assured through other lawful means 
    under this chapter.

The Commission may conditionally or unconditionally exempt any security 
or transaction or any class of securities or transactions from any such 
prohibition if the Commission deems such exemption consistent with the 
public interest, the protection of investors, and the maintenance of 
fair and orderly markets.
    (B) For the purposes of subparagraph (A) of this paragraph, the 
ability of a dealer to solicit or effect transactions in securities for 
his own account shall not be deemed to be unreasonably impaired by any 
rule of an exchange fairly and reasonably prescribing the sequence in 
which orders brought to the exchange must be executed or which has been 
adopted to effect compliance with a rule of the Commission promulgated 
under this chapter.
    (4) The Commission is directed to review any and all rules of 
national securities exchanges which limit or condition the ability of 
members to effect transactions in securities otherwise than on such 
exchanges.
    (5) No national securities exchange or registered securities 
association may limit or condition the participation of any member in 
any registered clearing agency.

(d) National Market Advisory Board

    (1) Not later than one hundred eighty days after June 4, 1975, the 
Commission shall establish a National Market Advisory Board (hereinafter 
in this section referred to as the ``Advisory Board'') to be composed of 
fifteen members, not all of whom shall be from the same geographical 
area of the United States, appointed by the Commission for a term 
specified by the Commission of not less than two years or more than five 
years. The Advisory Board shall consist of persons associated with 
brokers and dealers (who shall be a majority) and persons not so 
associated who are representative of the public and, to the extent 
feasible, have knowledge of the securities markets of the United States.
    (2) It shall be the responsibility of the Advisory Board to 
formulate and furnish to the Commission its views on significant 
regulatory proposals made by the Commission or any self-regulatory 
organization concerning the establishment, operation, and regulation of 
the markets for securities in the United States.
    (3)(A) The Advisory Board shall study and make recommendations to 
the Commission as to the steps it finds appropriate to facilitate the 
establishment of a national market system. In so doing, the Advisory 
Board shall assume the responsibilities of any advisory committee 
appointed to advise the Commission with respect to the national market 
system which is in existence at the time of the establishment of the 
Advisory Board.
    (B) The Advisory Board shall study the possible need for 
modifications of the scheme of self-regulation provided for in this 
chapter so as to adapt it to a national market system, including the 
need for the establishment of a new self-regulatory organization 
(hereinafter in this section referred to as a ``National Market 
Regulatory Board'' or ``Regulatory Board'') to administer the national 
market system. In the event the Advisory Board determines a National 
Market Regulatory Board should be established, it shall make 
recommendations as to:
        (i) the point in time at which a Regulatory Board should be 
    established;
        (ii) the composition of a Regulatory Board;
        (iii) the scope of the authority of a Regulatory Board;
        (iv) the relationship of a Regulatory Board to the Commission 
    and to existing self-regulatory organizations; and
        (v) the manner in which a Regulatory Board should be funded.

The Advisory Board shall report to the Congress, on or before December 
31, 1976, the results of such study and its recommendations, including 
such recommendations for legislation as it deems appropriate.
    (C) In carrying out its responsibilities under this paragraph, the 
Advisory Board shall consult with self-regulatory organizations, 
brokers, dealers, securities information processors, issuers, investors, 
representatives of Government agencies, and other persons interested or 
likely to participate in the establishment, operation, or regulation of 
the national market system.

(e) National markets system for security futures products

              (1) Consultation and cooperation required

        With respect to security futures products, the Commission and 
    the Commodity Futures Trading Commission shall consult and cooperate 
    so that, to the maximum extent practicable, their respective 
    regulatory responsibilities may be fulfilled and the rules and 
    regulations applicable to security futures products may foster a 
    national market system for security futures products if the 
    Commission and the Commodity Futures Trading Commission jointly 
    determine that such a system would be consistent with the 
    congressional findings in subsection (a)(1) of this section. In 
    accordance with this objective, the Commission shall, at least 15 
    days prior to the issuance for public comment of any proposed rule 
    or regulation under this section concerning security futures 
    products, consult and request the views of the Commodity Futures 
    Trading Commission.

              (2) Application of rules by order of CFTC

        No rule adopted pursuant to this section shall be applied to any 
    person with respect to the trading of security futures products on 
    an exchange that is registered under section 78f(g) of this title 
    unless the Commodity Futures Trading Commission has issued an order 
    directing that such rule is applicable to such persons.

(June 6, 1934, ch. 404, title I, Sec. 11A, as added Pub. L. 94-29, 
Sec. 7, June 4, 1975, 89 Stat. 111; amended Pub. L. 98-620, title IV, 
Sec. 402(14), Nov. 8, 1984, 98 Stat. 3358; Pub. L. 100-181, title III, 
Secs. 313, 314, Dec. 4, 1987, 101 Stat. 1256; Pub. L. 106-554, 
Sec. 1(a)(5) [title II, Sec. 206(c)], Dec. 21, 2000, 114 Stat. 2763, 
2763A-430.)

                       References in Text

    The Federal Advisory Committee Act, referred to in subsec. 
(a)(3)(A), is Pub. L. 92-436, Oct. 6, 1972, 86 Stat. 770, as amended, 
which is set out in the Appendix to Title 5, Government Organization and 
Employees.


                               Amendments

    2000--Subsec. (e). Pub. L. 106-554 added subsec. (e).
    1987--Subsec. (b)(2). Pub. L. 100-181, Sec. 313(1), substituted 
``transactions'' for ``transaction''.
    Subsec. (c)(4). Pub. L. 100-181, Sec. 313(2), struck out ``On or 
before the ninetieth day following June 4, 1975, the Commission shall 
(i) report to the Congress the results of its review, including the 
effects on competition of such rules, and (ii) commence a proceeding in 
accordance with the provisions of section 78s(c) of this title to amend 
any such rule imposing a burden on competition which does not appear to 
the Commission to be necessary or appropriate in furtherance of the 
purposes of this chapter. The Commission shall conclude any such 
proceeding within ninety days of the date of publication of notice of 
its commencement.''
    Subsec. (e). Pub. L. 100-181, Sec. 314, struck out subsec. (e) which 
read as follows: ``The Commission is authorized and directed to make a 
study of the extent to which persons excluded from the definitions of 
`broker' and `dealer' maintain accounts on behalf of public customers 
for buying and selling securities registered under section 78l of this 
title and whether such exclusions are consistent with the protection of 
investors and the other purposes of this chapter. The Commission shall 
report to the Congress, on or before December 31, 1976, the results of 
its study together with such recommendations for legislation as it deems 
advisable.''
    1984--Subsec. (c)(4). Pub. L. 98-620 struck out designation ``(A)'' 
after ``(4)'', and struck out subpar. (B) which provided that review 
pursuant to section 78y(b) of this title of any rule promulgated by the 
Commission in accordance with any proceeding commenced pursuant to this 
paragraph would, except as to causes the court considers of greater 
importance, take precedence on the docket over all other causes and had 
to be assigned for consideration at the earliest practicable date and 
expedited in every way.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-620 not applicable to cases pending on Nov. 
8, 1984, see section 403 of Pub. L. 98-620, set out as an Effective Date 
note under section 1657 of Title 28, Judiciary and Judicial Procedure.


                             Effective Date

    Section effective June 4, 1975, except for subsec. (b) which is 
effective 180 days after June 4, 1975, see section 31(a) of Pub. L. 94-
29, set out as a note under section 78b of this title.


                   Termination of Advisory Committees

    Advisory committees established after Jan. 5, 1973, to terminate not 
later than the expiration of the 2-year period beginning on the date of 
their establishment, unless, in the case of a committee established by 
the President or an officer of the Federal Government, such committee is 
renewed by appropriate action prior to the expiration of such 2-year 
period, or in the case of a committee established by the Congress, its 
duration is otherwise provided for by law. See section 14 of Pub. L. 92-
463, Oct. 6, 1972, 86 Stat. 776, set out in the Appendix to Title 5, 
Government Organization and Employees.

                  Section Referred to in Other Sections

    This section is referred to in sections 78n, 78y of this title.
