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SEC Rule 15a-6: Difference between revisions
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Primary source is here on the Cornell University website: | Primary source is here on the Cornell University website: | ||
[https://www.law.cornell.edu/cfr/text/17/240.15a-6 Rule 16a-6] | [https://www.law.cornell.edu/cfr/text/17/240.15a-6 Rule 16a-6] | ||
{{Box| | |||
==Need to know== | |||
===Summary=== | |||
{{tag|Rule 15a-6}} allows a [[foreign broker-dealer]] to engage in US securities transactions without registering as a {{tag|registered broker-dealer}} in certain circumstances. | |||
===Terminology=== | |||
*'''US client''': a U.S. institutional investor or a major U.S. institutional investor. | |||
*'''US securities transaction''': any transaction with a US client in a debt or equity security (whether a cash transaction or a derivative transaction). | |||
*'''Cash transaction''': a US securities transaction in physical form (i.e., not a derivative transaction). | |||
*'''Derivative transaction''': a US securities transaction in derivative form (including a repurchase or securities lending transaction). | |||
*'''[[Foreign broker-dealer]]''': a [[broker-dealer]] who is not located in the US or registered with the SEC. | |||
*'''[[Registered broker-dealer]]''': an {{tag|SEC}} registered US [[broker dealer]]. | |||
===SEC Rule 15a-6 exemptions for US securities transactions=== | |||
====Full exemption – Broker dealers and certain other clients==== | |||
Foreign broker-dealers may engage in transactions without restrictions under Rule 15a-6 with the following types of client: | |||
*[[Broker-dealers]]: Registered broker-dealers (or US banks acting in a broker-dealer capacity), in each case as long as there is no direct contact with their clients; | |||
*'''[[Supranationals]]''': Certain supranational organisations (the African Development Bank, the Asian Development Bank, the Inter-American Development Bank, the IBRD, the IMF, the UN and certain related agencies); | |||
*'''Foreign persons''': Foreign persons, with whom the [[foreign broker-dealer]] had a pre-existing relationship, who happen to be temporarily present in the US; | |||
*'''Foreign branches of US persons''': Permanently-established branches of a US client situated outside the US. | |||
===Intermediary exemption: US securities transactions “effected” by registered broker-dealer as intermediary=== | |||
====Cash transactions==== | |||
For US securities transactions other than those described above a registered broker-dealer must “effect” the transaction on behalf of the foreign broker-dealer. This means handling all aspects of the US securities transaction (except the negotiation of its terms) being responsible (among other things) for the following functions to the standard required by SEC rules, to make them subject to direct SEC oversight: | |||
*Confirmations: issuing all required confirmations and account statements: the foreign broker-dealer may prepare confirmations as long as they clearly reflect that they have been issued as agent for the registered broker-dealer; | |||
*Capital: maintaining necessary capital; | |||
*Credit: extending any credit to US clients; | |||
*Books and records: maintaining all books and records; | |||
*Settlement of transactions: delivering and receiving the assets and settlement proceeds. | |||