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SEC Rule 15a-6: Difference between revisions
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{{a|brokerage|}}[[Rule 15a-6]] under the {{t|Securities Exchange Act of 1934}} provides conditional exemptions from [[broker-dealer]] registration for [[foreign broker-dealer]]s that engage in certain specified activities with [[U.S. investor]]s including: | |||
*Effecting [[Reverse solicitation|unsolicited]] securities transactions; | |||
*Providing research reports to major U.S. institutional investors, and effecting transactions in the subject securities with or for those investors; | |||
*[[Solicitation|Soliciting]] and [[Effect|effecting]] transactions with or for U.S. institutional investors or major U.S. institutional investors through a “[[chaperoning broker/dealer]]”; and | |||
*Soliciting and effecting transactions with or for [[registered broker-dealer]]s, banks acting as [[broker/dealer]]s, certain international organizations, foreign persons temporarily present in the U.S., U.S. citizens resident abroad, and foreign branches and agencies of [[U.S. person]]s. | |||
In adopting Rule [[15a-6]], the [[SEC]] sought “to facilitate access to foreign markets by U.S. institutional investors through [[foreign broker-dealer]]s and the research that they provide, consistent with maintaining the safeguards afforded by [[Registered broker-dealer|broker-dealer registration]],” and “to provide clear guidance to [[foreign broker-dealer]]s seeking to operate in compliance with U.S. broker-dealer registration requirements.” | |||
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 | [https://www.law.cornell.edu/cfr/text/17/240.15a-6 Rule 15a-6] | ||
{{Box| | {{Box| | ||
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===Summary=== | ===Summary=== | ||
[[Rule 15a-6]] allows a [[foreign broker-dealer]] to engage in US securities transactions without registering as a registered [[broker-dealer]] in certain circumstances. | |||
===Terminology=== | ===Terminology=== | ||
*'''US client''': a U.S. institutional investor or a major U.S. institutional investor. | *'''US client''': a U.S. institutional investor or a major U.S. institutional investor. | ||
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====Full exemption – Broker dealers and certain other clients==== | ====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: | 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; | *'''[[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); | *'''[[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 persons''': Foreign persons, with whom the [[foreign broker-dealer]] had a pre-existing relationship, who happen to be temporarily present in the US; | ||
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====Cash transactions==== | ====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: | 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; | *'''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; | *'''Capital''': maintaining necessary capital; | ||
*Credit: extending any credit to US clients; | *'''Credit''': extending any credit to US clients; | ||
*Books and records: maintaining all books and records; | *'''Books and records''': maintaining all books and records; | ||
*Settlement of transactions: delivering and receiving the assets and settlement proceeds. | *'''Settlement of transactions''': delivering and receiving the assets and settlement proceeds. | ||
}} | |||
<blockquote>"The Commission's goals in adopting | <blockquote>"The Commission's goals in adopting [[Rule 15a-6]] at this time are (i) to facilitate access lo foreign markets by U.S. institutional investors through foreign {{tag|broker-dealer}}s and the research that they provide, consistent with maintaining the safeguards afforded by broker-dealer registration; and (ii) to provide clear guidance to foreign broker-dealers seeking to operate in compliance with U.S. broker-dealer registration requirements."</blockquote> | ||
<blockquote>"If foreign broker-dealers are effecting trades outside the United States with or for individual US. citizens resident abroad, but have no other contacts within the jurisdiction of the United States, the Commission generally would not expect these foreign broker-dealers to register."</blockquote> | <blockquote>"If foreign broker-dealers are effecting trades outside the United States with or for individual US. citizens resident abroad, but have no other contacts within the jurisdiction of the United States, the Commission generally would not expect these foreign broker-dealers to register."</blockquote> | ||
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Sayeth Dorsey & Witney: | Sayeth Dorsey & Witney: | ||
[[Rule 15a-6]], as supplemented by {{tag|SEC}} no-action letters, can be used, at the federal level, to permit contacts by representatives of a Canadian firm with “U.S. Institutional Investors” and “Major U.S. Institutional Investors” (as defined in each case) if the account is maintained by a U.S. registered broker-dealer (which can either be affiliated or unaffiliated with the Foreign firm). | |||
Non-U.S. dealers, including foreign affiliates of U.S. dealers, should also limit their contacts to institutional investors and registered broker-dealers, thereby benefiting from state broker-dealer registration exemptions. | Non-U.S. dealers, including foreign affiliates of U.S. dealers, should also limit their contacts to institutional investors and registered broker-dealers, thereby benefiting from state broker-dealer registration exemptions. | ||
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:(c) Receive, deliver and safeguard funds and securities on behalf of the customer; | :(c) Receive, deliver and safeguard funds and securities on behalf of the customer; | ||
:(d) Maintain required books and records related to the transaction; | :(d) Maintain required books and records related to the transaction; | ||
__NOTOC__ | |||