Home > 104th Congressional Bills > H.R. 1063 (ih) To provide a framework for Securities and Exchange Commission supervision and regulation of derivatives activities, and for other purposes. [Introduced in House] ...H.R. 1063 (ih) To provide a framework for Securities and Exchange Commission supervision and regulation of derivatives activities, and for other purposes. [Introduced in House] ...
Union Calendar No. 74
104th CONGRESS
1st Session
H. R. 1062
[Report No. 104-127, Parts I, II, and III]
_______________________________________________________________________
A BILL
To enhance competition in the financial services industry by providing
a prudential framework for the affiliation of banks, securities firms,
and other financial service providers.
_______________________________________________________________________
June 22, 1995
Reported with an amendment without recommendation, committed to the
Committee of the Whole House on the State of the Union, and ordered to
be printed
Union Calendar No. 74
104th CONGRESS
1st Session
H. R. 1062
[Report No. 104-127, Parts I, II, and III]
To enhance competition in the financial services industry by providing
a prudential framework for the affiliation of banks, securities firms,
and other financial service providers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 27, 1995
Mr. Leach introduced the following bill; which was referred to the
Committee on Banking and Financial Services and, in addition, to the
Committee on Commerce, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
May 18, 1995
Reported from the Committee on Banking and Financial Services with an
amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
May 18, 1995
Referral to the Committee on Commerce extended for a period ending not
later than June 16, 1995
June 16, 1995
Referral to the Committee on Commerce extended for a period ending not
later than June 22, 1995
June 22, 1995
Reported from the Committee on Commerce with an amendment without
recommendation, committed to the Committee of the Whole House on the
State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on
February 27, 1995]
_______________________________________________________________________
A BILL
To enhance competition in the financial services industry by providing
a prudential framework for the affiliation of banks, securities firms,
and other financial service providers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Financial Services
Competitiveness Act of 1995''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--BANK SECURITIES ACTIVITIES AND AFFILIATIONS WITH SECURITIES
FIRMS AND OTHER FINANCIAL COMPANIES
Subtitle A--Securities Activities
Sec. 101. Anti-affiliation provision of the Banking Act of 1933
repealed.
Sec. 102. Financial services holding companies authorized to have
securities affiliates.
Sec. 103. Establishment and operations of securities affiliates.
Sec. 104. Safeguards relating to securities affiliates.
Sec. 105. Ownership of shares of certain companies by financial
services holding companies.
Sec. 106. Provisions applicable to limited purpose banks.
Sec. 107. Securities company affiliations of FDIC--insured banks.
Sec. 108. Authority to terminate grandfather rights under the
International Banking Act of 1978.
Sec. 109. Effect on State laws prohibiting the affiliation of banks and
securities companies.
Sec. 110. Municipal securities.
Sec. 111. Interagency agreement relating to retail sales of certain
nondeposit investment products.
Sec. 112. Effective date.
Subtitle B--Investment Bank Holding Companies
Sec. 116. Investment bank holding companies.
Sec. 117. Wholesale financial institutions.
Subtitle C--Financial Activities
Sec. 121. Financial activities.
Sec. 122. No prior approval required for well capitalized and well
managed financial services holding
companies.
Sec. 123. Streamlined examination and reporting requirements for all
financial services holding companies.
Sec. 124. Holding company supervision for financial services holding
companies engaged primarily in nonbanking
activities.
Sec. 125. Conversion of unitary savings and loan holding companies to
financial services holding companies.
Sec. 126. Financial services advisory committee.
Sec. 127. Coordination with State law.
Sec. 128. Conforming amendments to the Bank Holding Company Act of
1956.
Sec. 129. Conforming amendments to the Bank Holding Company Act
Amendments of 1970.
Sec. 130. Credit cards for business purposes.
Subtitle D--Interagency Banking and Financial Services Advisory
Committee
Sec. 141. Interagency banking and financial services advisory
committee.
TITLE II--FUNCTIONAL REGULATION
Subtitle A--Brokers and Dealers
Sec. 201. Definition of broker.
Sec. 202. Definition of dealer.
Sec. 203. Power to exempt from the definitions of broker and dealer.
Sec. 204. Margin requirements.
Sec. 205. Effective date.
Subtitle B--Bank Investment Company Activities
Sec. 211. Custody of investment company assets by affiliated bank.
Sec. 212. Indebtedness to affiliated person.
Sec. 213. Lending to an affiliated investment company.
Sec. 214. Independent directors.
Sec. 215. Additional SEC disclosure authority.
Sec. 216. Definition of broker under the Investment Company Act of
1940.
Sec. 217. Definition of dealer under the Investment Company Act of
1940.
Sec. 218. Removal of the exclusion from the definition of investment
adviser for banks that advise investment
companies.
Sec. 219. Definition of broker under the Investment Advisers Act of
1940.
Sec. 220. Definition of dealer under the Investment Advisers Act of
1940.
Sec. 221. Interagency consultation.
Sec. 222. Treatment of bank common trust funds.
Sec. 223. Investment advisers prohibited from having controlling
interest in registered investment company.
Sec. 224. Conforming change in definition.
Sec. 225. Effective date.
TITLE I--BANK SECURITIES ACTIVITIES AND AFFILIATIONS WITH SECURITIES
FIRMS AND OTHER FINANCIAL COMPANIES
Subtitle A--Securities Activities
SEC. 101. ANTI-AFFILIATION PROVISION OF THE BANKING ACT OF 1933
REPEALED.
(a) Section 20 Repealed.--Section 20 (12 U.S.C. 377) of the Banking
Act of 1933 (commonly referred to as the ``Glass-Steagall Act'') is
repealed.
(b) Conforming Amendment to Section 32.--Section 32 (12 U.S.C. 78)
of the Banking Act of 1933 is amended by adding at the end the
following sentence: ``This section shall not apply so as to prohibit an
officer, director, or employee of a securities affiliate (as defined in
section 2 of the Financial Services Company Act of 1995) from serving
at the same time as an officer, director, or employee of a member bank
affiliated with that securities affiliate pursuant to section 10 of
such Act. This section shall not apply so as to prohibit an officer,
director, or employee of an investment company registered under the
Investment Company Act of 1940 or an investment adviser registered
under the Investment Advisers Act of 1940 from serving at the same time
as an officer, director, or employee of a member bank.''.
SEC. 102. FINANCIAL SERVICES HOLDING COMPANIES AUTHORIZED TO HAVE
SECURITIES AFFILIATES.
Section 4(c) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)) is amended--
(1) by striking ``or'' at the end of paragraph (13);
(2) by striking the period at the end of paragraph (14) and
inserting ``; or''; and
(3) by adding after paragraph (14) the following new
paragraph:
``(15) shares of a securities affiliate in accordance with
section 10.''.
SEC. 103. ESTABLISHMENT AND OPERATIONS OF SECURITIES AFFILIATES.
(a) In General.--Section 10 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841 et seq.) is amended to read as follows:
``SEC. 10. SECURITIES ACTIVITIES.
``(a) Activities Permissible for Securities Affiliates.--
``(1) In general.--A securities affiliate may engage in 1
or more of the following activities:
``(A) Underwrite, deal in, broker, place, or
distribute securities of any type, provide investment
advice regarding securities of any type, and engage in
other securities activities as determined by the Board.
``(B) Sponsor, organize, control, manage, and act
as investment adviser to an investment company.
``(C) Engage in, or acquire the shares of a company
engaged in, any activity if--
``(i) a provision of section 4(c) permits
financial services holding companies generally
to engage in that activity or acquire those
shares; and
``(ii) either--
``(I) the Board permits the
financial services holding company to
engage in that activity or acquire
those shares through the securities
affiliate; or
``(II) a provision of section 4(c)
permits the financial services holding
company to engage in such activity or
acquire such shares without the Board's
approval.
``(2) Factor to be considered.--In making determinations
pursuant to this section, the Board shall take into account the
need for securities firms affiliated with banks to be
innovative and competitive.
``(b) Acquiring Interest in Securities Affiliate.--
``(1) Notice required.--A financial services holding
company shall not, without complying with and receiving
approval pursuant to the notice procedure in section 4(j)(1),
directly or indirectly acquire or retain more than 5 percent of
the voting shares of, or all or substantially all of the assets
of, a securities affiliate (or a company that would be a
securities affiliate if the Board permitted the financial
services holding company to acquire that company).
``(2) Criteria for approval.--The Board shall disapprove a
notice required under paragraph (1) unless the Board determines
that the requirements of the following subparagraphs have been
met:
``(A) Capital.--
``(i) Depository institutions.--
``(I) The lead depository
institution of the financial services
holding company is well capitalized.
``(II) Well capitalized depository
institutions control at least 80
percent of the aggregate total risk-
weighted assets of depository
institutions controlled by the
financial services holding company.
``(III) All depository institutions
controlled by the financial services
holding company are well capitalized or
adequately capitalized.
``(ii) Recently acquired depository
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