§ 78k. Trading by members of exchanges, brokers, and dealers

Footnotes

1. 1 So in original. Probably should be followed by a comma.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1934

   Pub. L. 73–404 · 48 Stat. 881

   Enacted · 15 U.S.C. § 78k

   June 6, 1934, ch. 404, title I, § 11, 48 Stat. 891

   Source evidence

   Code source credit
   June 6, 1934, ch. 404, title I, § 11, 48 Stat. 891

2. 1954

   Public Law not identified

   Changed · 15 U.S.C. § 78k(d)

   Subsec. (d). Act Aug. 10, 1954, reduced from 6 months to 30 days the prohibition period against extending credit to purchasers of a new issue by dealers

   Unresolved: No Public Law or Statutes at Large citation in the Code source.

   Source evidence

   Code amendment note
   Subsec. (d). Act Aug. 10, 1954, reduced from 6 months to 30 days the prohibition period against extending credit to purchasers of a new issue by dealers.

3. 1975

   Securities Acts Amendments of 1975

   Pub. L. 94–29 § 6(2) · 89 Stat. 97

   Changed · 15 U.S.C. § 78k(a)

   Pub. L. 94–29, § 6(2), prohibited stock exchange members from effecting any transaction on the exchange for its own account, the account of an associated person, or an account with respect to which the member or an associated person exercises investment discretion, exempted from that prohibition 8 types of transactions, and authorized the Commission, as it deems necessary or appropriate in the public interest or for the protection of investors, to regulate or prohibit the specifically exempted transactions, certain transactions otherwise that on a national securities exchange, and transactions on a national securities exchange effected by a broker or dealer not a member thereof for the account of such broker or dealer, the account of an associated person, or an account with respect to which such broker, dealer, or associated person exercises investment discretion

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 94–29, § 6(2), prohibited stock exchange members from effecting any transaction on the exchange for its own account, the account of an associated person, or an account with respect to which the member or an associated person exercises investment discretion, exempted from that prohibition 8 types of transactions, and authorized the Commission, as it deems necessary or appropriate in the public interest or for the protection of investors, to regulate or prohibit the specifically exempted transactions, certain transactions otherwise that on a national securities exchange, and transactions on a national securities exchange effected by a broker or dealer not a member thereof for the account of such broker or dealer, the account of an associated person, or an account with respect to which such broker, dealer, or associated person exercises investment discretion.

   Enacted provision · exact public law section
   (2) Subsections (a) and (b) thereof are amended to read as follows: “(a) (1) It shall be unlawful for any member of a national securities exchange to effect any transaction on such exchange for its own account, the account of an associated person, or an account with respect to which it or an associated person thereof exercises investment discretion: Provided, however, That this paragraph shall not make unlawful— “(A) any transaction by a dealer acting in the capacity of market maker; “(B) any transaction for the account of an odd-lot dealer in a security in which he is so registered; “(C) any stabilizing transaction effected in compliance with 15 USC 78j. rules under section 10(b) of this title to facilitate a distribution of a security in which the, member effecting such transaction is participating; “(D) any bona fide arbitrage transaction, any bona fide hedge, transaction involving a long or short position in an equity security and a long or short position in a security entitling the holder to acquire or sell such equity security, or any risk arbitrage transaction in connection with a merger, acquisition, tender offer, or similar transaction involving a recapitalization; “(E) any transaction for the account of a natural person, the estate of a natural person, or a trust (other than an investment company) created by a natural person for himself or another natural person; “(F) any transaction to offset a transaction made in error; “(G) any other transaction for a member’s own account provided that (i) such member is primarily engaged in the business of underwriting and distributing securities issued by other persons, selling securities to customers, and acting as broker, or any one or more of such activities, and whose gross income normally is derived principally from such business and related activities and (ii) such transaction is effected in compliance with rules of the Commission which, as a minimum, assure that the transaction is not inconsistent with the maintenance of fair and orderly markets and yields priority, parity, and precedence in execution to orders for the account of persons who are not members or associated with members of the exchange; and “(H) any other transaction of a kind which the Commission, by rule, determines is consistent with the purposes of this paragraph, the protection of investors, and the maintenance of fair and orderly markets. “(2) The Commission, by rule, as it deems necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to assure equal regulation of exchange markets and markets occurring otherwise, than on an exchange, may regulate or prohibit: “(A) transactions on a national securities exchange not unlawful under paragraph (1) of this subsection effected by any member thereof for its own account (unless such member is acting in the capacity of market maker or odd-lot dealer), the account of an associated person, or an account with respect to which such member or an associated person thereof exercises investment discretion; “(B) transactions otherwise than on a national securities exchange effected by use of the mails or any means or instrumentality of interstate commerce by any member of a national securities exchange, broker, or dealer for the account of such member, broker, or dealer (unless such member, broker, or dealer is acting in the capacity of a market maker) the account of an associated person, or an account with respect to which such member, broker, or dealer or associated person thereof exercises investment discretion; and “(C) transactions on a national securities exchange effected by any broker or dealer not a member thereof for the account of such broker or dealer (unless such broker or dealer is acting in the capacity of market maker), the account of an associated person, or an account with respect to which such broker or dealer or associated person thereof exercises investment discretion. “(3) The provisions of paragraph (1) of this subsection insofar as Effective date. they apply to transactions on a national securities exchange effected by a member thereof who was a member on May 1, 1975 shall not become effective until May 1, 1978. Nothing in this paragraph shall be construed to impair or limit the authority of the Commission to regulate or prohibit such transactions prior to May 1, 1978, pursuant to paragraph (2) of this subsection. “(b) When not in contravention of such rules and regulations as Odd-lot dealers and specialists. the Commission may prescribe as necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to remove impediments to and perfect the mechanism of a national market system, the rules of a national securities exchange may permit (1) a member to be registered as an odd-lot dealer and as such to buy and sell for his own account so far as may be reasonably necessary to carry on such odd-lot transactions, and (2) a member to be registered as a specialist. Under the rules and regulations of the Commission a specialist may be permitted to act as a broker and dealer or limited to acting as a broker or dealer. It shall he unlawful for a specialist or an official of the exchange, to disclose information in regard to orders placed with such specialist which is not available to all members of the exchange, to any person other than an official of the exchange, a representative of the Commission, or a special 1st who may be acting for such specialist: Provided, however, That the Commission, by rule, may require disclosure to all members of the exchange of all orders placed with specialists, under such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. It shall also be unlawful for a specialist permitted to act as a broker and dealer to effect on the exchange as broker any transaction except upon a market or limited price order.”.

4. 1975

   Securities Acts Amendments of 1975

   Pub. L. 94–29 § 6(2) · 89 Stat. 97

   1. Struck · 15 U.S.C. § 78k(b)

      Pub. L. 94–29, § 6(2), struck out requirement that specialist’s dealings be limited to those transactions reasonably necessary to permit him to maintain a fair and orderly market, expanded the Commission’s rulemaking authority in the area of specialist’s dealings so that the Commission may define responsibilities and restrict activities of specialists in response to changing conditions in the market, expanded the standards to be followed by the Commission in exercising its rulemaking power to include the maintenance of fair and orderly markets and the removal of impediments to and the perfection of the mechanism of a national market system

   2. Inserted · 15 U.S.C. § 78k(b)

      Pub. L. 94–29, § 6(2), inserted specific reference to the Commission’s power to limit the activity of a specialist to that of a broker or dealer

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 94–29, § 6(2), struck out requirement that specialist’s dealings be limited to those transactions reasonably necessary to permit him to maintain a fair and orderly market, expanded the Commission’s rulemaking authority in the area of specialist’s dealings so that the Commission may define responsibilities and restrict activities of specialists in response to changing conditions in the market, expanded the standards to be followed by the Commission in exercising its rulemaking power to include the maintenance of fair and orderly markets and the removal of impediments to and the perfection of the mechanism of a national market system, and inserted specific reference to the Commission’s power to limit the activity of a specialist to that of a broker or dealer.

   Enacted provision · exact public law section
   (2) Subsections (a) and (b) thereof are amended to read as follows: “(a) (1) It shall be unlawful for any member of a national securities exchange to effect any transaction on such exchange for its own account, the account of an associated person, or an account with respect to which it or an associated person thereof exercises investment discretion: Provided, however, That this paragraph shall not make unlawful— “(A) any transaction by a dealer acting in the capacity of market maker; “(B) any transaction for the account of an odd-lot dealer in a security in which he is so registered; “(C) any stabilizing transaction effected in compliance with 15 USC 78j. rules under section 10(b) of this title to facilitate a distribution of a security in which the, member effecting such transaction is participating; “(D) any bona fide arbitrage transaction, any bona fide hedge, transaction involving a long or short position in an equity security and a long or short position in a security entitling the holder to acquire or sell such equity security, or any risk arbitrage transaction in connection with a merger, acquisition, tender offer, or similar transaction involving a recapitalization; “(E) any transaction for the account of a natural person, the estate of a natural person, or a trust (other than an investment company) created by a natural person for himself or another natural person; “(F) any transaction to offset a transaction made in error; “(G) any other transaction for a member’s own account provided that (i) such member is primarily engaged in the business of underwriting and distributing securities issued by other persons, selling securities to customers, and acting as broker, or any one or more of such activities, and whose gross income normally is derived principally from such business and related activities and (ii) such transaction is effected in compliance with rules of the Commission which, as a minimum, assure that the transaction is not inconsistent with the maintenance of fair and orderly markets and yields priority, parity, and precedence in execution to orders for the account of persons who are not members or associated with members of the exchange; and “(H) any other transaction of a kind which the Commission, by rule, determines is consistent with the purposes of this paragraph, the protection of investors, and the maintenance of fair and orderly markets. “(2) The Commission, by rule, as it deems necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to assure equal regulation of exchange markets and markets occurring otherwise, than on an exchange, may regulate or prohibit: “(A) transactions on a national securities exchange not unlawful under paragraph (1) of this subsection effected by any member thereof for its own account (unless such member is acting in the capacity of market maker or odd-lot dealer), the account of an associated person, or an account with respect to which such member or an associated person thereof exercises investment discretion; “(B) transactions otherwise than on a national securities exchange effected by use of the mails or any means or instrumentality of interstate commerce by any member of a national securities exchange, broker, or dealer for the account of such member, broker, or dealer (unless such member, broker, or dealer is acting in the capacity of a market maker) the account of an associated person, or an account with respect to which such member, broker, or dealer or associated person thereof exercises investment discretion; and “(C) transactions on a national securities exchange effected by any broker or dealer not a member thereof for the account of such broker or dealer (unless such broker or dealer is acting in the capacity of market maker), the account of an associated person, or an account with respect to which such broker or dealer or associated person thereof exercises investment discretion. “(3) The provisions of paragraph (1) of this subsection insofar as Effective date. they apply to transactions on a national securities exchange effected by a member thereof who was a member on May 1, 1975 shall not become effective until May 1, 1978. Nothing in this paragraph shall be construed to impair or limit the authority of the Commission to regulate or prohibit such transactions prior to May 1, 1978, pursuant to paragraph (2) of this subsection. “(b) When not in contravention of such rules and regulations as Odd-lot dealers and specialists. the Commission may prescribe as necessary or appropriate in the public interest and for the protection of investors, to maintain fair and orderly markets, or to remove impediments to and perfect the mechanism of a national market system, the rules of a national securities exchange may permit (1) a member to be registered as an odd-lot dealer and as such to buy and sell for his own account so far as may be reasonably necessary to carry on such odd-lot transactions, and (2) a member to be registered as a specialist. Under the rules and regulations of the Commission a specialist may be permitted to act as a broker and dealer or limited to acting as a broker or dealer. It shall he unlawful for a specialist or an official of the exchange, to disclose information in regard to orders placed with such specialist which is not available to all members of the exchange, to any person other than an official of the exchange, a representative of the Commission, or a special 1st who may be acting for such specialist: Provided, however, That the Commission, by rule, may require disclosure to all members of the exchange of all orders placed with specialists, under such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. It shall also be unlawful for a specialist permitted to act as a broker and dealer to effect on the exchange as broker any transaction except upon a market or limited price order.”.

5. 1975

   Securities Acts Amendments of 1975

   Pub. L. 94–29 § 6(3) · 89 Stat. 97

   Struck · 15 U.S.C. § 78k(e)

   Pub. L. 94–29, § 6(3), struck out subsec. (e) which directed the Commission to make a study, to be submitted on or before Jan. 3, 1936, of the feasibility of segregating the functions of dealer and broker

   Source evidence

   Code amendment note
   Subsec. (e). Pub. L. 94–29, § 6(3), struck out subsec. (e) which directed the Commission to make a study, to be submitted on or before Jan. 3, 1936, of the feasibility of segregating the functions of dealer and broker.

   Enacted provision · exact public law section
   (3) Subsection (e) thereof is repealed. Repeal. 15 USC 78k.

6. 1978

   Securities Investor Protection Act Amendments of 1978

   Pub. L. 95–283 § 18(a) · 92 Stat. 249

   1. Substituted · 15 U.S.C. § 78k(a)(3)

      Pub. L. 95–283 substituted “February 1, 1978” for “May 1, 1975” in two places

   2. Substituted · 15 U.S.C. § 78k(a)(3)

      Pub. L. 95–283 substituted “February 1, 1979” for “May 1, 1978” in two places

   Source evidence

   Code amendment note
   Subsec. (a)(3). Pub. L. 95–283 substituted “February 1, 1978” for “May 1, 1975”, and “February 1, 1979” for “May 1, 1978” in two places.

   Enacted provision · exact public law section
   Sec. 18. small issue exemption Section 3(b) of the Securities Act of 1933 (15 U.S.C. 77c(b)) is amended by striking out “$500,000” and inserting in lieu thereof “$1,500,000”.

   Effective date note
   Pub. L. 95–283, § 18(b), May 21, 1978, 92 Stat. 275, provided that: “The amendment made by subsection (a) of this section [amending this section] shall be effective as of May 1, 1978.”

7. 1984

   Secondary Mortgage Market Enhancement Act of 1984

   Pub. L. 98–440 title I § 104 · 98 Stat. 1689

   1. Amended · 15 U.S.C. § 78k(d)(1)

      Pub. L. 98–440 designated existing provisions of par. (1) as cl. (i)

   2. Added · 15 U.S.C. § 78k(d)(1)

      Pub. L. 98–440 added cl. (ii)

   Source evidence

   Code amendment note
   Subsec. (d)(1). Pub. L. 98–440 designated existing provisions of par. (1) as cl. (i) and added cl. (ii).

   Enacted provision · exact public law section
   Sec. 104. mortgage related securities as collateral Section 11(d)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78k(d)(1) is amended by— (1) inserting “(i)” between “of” and “any”; and (2) inserting the following immediately after “thirty-five days after such purchase”: “or (ii) any mortgage related security against full payment of the entire purchase price thereof upon such delivery within one hundred and eighty days after such purchase, or within such shorter period as the Commission may prescribe by rule or regulation”.

8. 1993

   Pub. L. 103–68 § 1(1) · 107 Stat. 691

   Struck · 15 U.S.C. § 78k(a)(1)(E)

   Pub. L. 103–68, § 1(1), struck out “(other than an investment company)” after “trust”

   Source evidence

   Code amendment note
   Subsec. (a)(1)(E). Pub. L. 103–68, § 1(1), struck out “(other than an investment company)” after “trust”.

   Enacted provision · exact public law section
   (1) in subparagraph (E), by striking “(other than an investment company)”;

9. 1993

   Pub. L. 103–68 § 1(2) · 107 Stat. 691

   1. Added · 15 U.S.C. § 78k(a)(1)(H); 15 U.S.C. § 78k(a)(1)(I)

      Pub. L. 103–68, § 1(2)–(4), added subpar. (H)

   2. Redesignated · 15 U.S.C. § 78k(a)(1)(H); 15 U.S.C. § 78k(a)(1)(I)

      Pub. L. 103–68, § 1(2)–(4), redesignated former subpar. (H) as (I)

   Source evidence

   Code amendment note
   Subsec. (a)(1)(H), (I). Pub. L. 103–68, § 1(2)–(4), added subpar. (H) and redesignated former subpar. (H) as (I).

   Enacted provision · exact public law section
   (2) by striking “and” at the end of subparagraph (G);

10. 1994

    Small Business Loan Securitization and Secondary Market Enhancement Act of 1994

    Pub. L. 103–325 title II § 205 · 108 Stat. 2160

    Inserted · 15 U.S.C. § 78k(d)(1)(ii)

    Pub. L. 103–325 inserted “or any small business related security” after “mortgage related security”

    Source evidence

    Code amendment note
    Subsec. (d)(1)(ii). Pub. L. 103–325 inserted “or any small business related security” after “mortgage related security”.

    Enacted provision · exact public law section
    SEC. 205. SMALL BUSINESS RELATED SECURITIES AS COLLATERAL. Clause (ii) of section 11(d)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78k(d)(1)) is amended by inserting “or any small business related security” after “mortgage related security”.

12 of 14 references resolved to an enrolled provision · 1 partial · 1 unresolved