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F e d e r a l R e s e r v e Ba n k
DALLAS, TEXAS

of

D allas

75222
Circular No. 76-98
July 14, 1976

American Revolution Bicentennial

o pe r a t io n s

of se c u r it ie s

c l e a r in g a g e n c ie s

P r o p o s e d A m e n d m e n ts to R e g u l a ti o n s H a n d Y

TO ALL MEMBER BANKS,
BANK HOLDING COMPANIES,
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
Q u o ted b elo w is t h e t e x t o f a s t a t e m e n t i s s u e d J u n e 21 b y t h e B o a r d of
G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y ste m :
T h e B o a rd of G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y s te m to d a y p r o ­
p o s e d a m e n d m e n t s to two of its r e g u l a t i o n s r e l a t i v e to t h e o p e r a t i o n s of
c e r t a i n c l e a r i n g a g e n c i e s f o r s to c k m a r k e t t r a n s a c t i o n s .
T h e B o a r d will r e c e i v e co m m en t on its p r o p o s a l s t h r o u g h J u l y 30,
1976.
T h e p r o p o s a l s w e r e m a d e in c o n fo r m ity w ith r e q u i r e m e n t s of th e
S e c u r i t i e s A cts A m e n d m e n ts o f 1975. T h e y w o u ld affec t S ta te m e m b e r
b a n k s o r th e ir s u b sid ia rie s th a t a r e re g is te re d c le a rin g ag en cies and
S ta t e m e m b e r b a n k s , b a n k h o ld i n g c o m p a n i e s , a n d n o n b a n k s u b s i d i ­
a r i e s of b a n k h o l d i n g c o m p a n ie s t h a t c l e a r t h e i r s e c u r i t i e s t r a n s a c t i o n s
th ro u g h b a n k s th a t a r e cle a rin g a g en c ies.
T h e B o a r d ' s p r o p o s a l w o u ld a m e n d its R e g u l a ti o n H ( M e m b e r s h ip
of S ta t e B a n k i n g I n s t i t u t i o n s in t h e F e d e r a l R e s e r v e S y ste m ) to r e q u i r e
th a t S tate m em ber b a n k s o r th e ir s u b s i d ia r i e s , th a t a re r e g is te r e d
c l e a r i n g a g e n c i e s m u s t file n o ti c e w ith t h e B o a rd on a ll final d i s c i p l i n ­
a r y s a n c t i o n s im p o se d b y th e m on a n y firm p a r t i c i p a t i n g in t h e o p e r a ­
tio n s of t h e c l e a r i n g a g e n c y . T h e p r o p o s a l a l s o r e q u i r e s t h a t S ta te
m e m b e r b a n k s a c t i n g a s c l e a r i n g a g e n c i e s file n o tic e w ith t h e B o a r d
of a n y d e n i a l s of a p p l i c a t i o n s to p a r t i c i p a t e in t h e i r c l e a r i n g
o p eratio n s.
In a d d i t i o n , t h e B o a rd p r o p o s e d to a m e n d R e g u l a ti o n Y ( B an k Hold­
ing C o m p a n ie s ) a n d R e g u l a ti o n H t o e s t a b l i s h p r o c e d u r e s fo r r e q u e s t i n g

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

- 2 -

sta y s an d rev iew b y th e B oard of d is c ip lin a ry san ctio n s an d d e n ia ls
o f p a r t i c i p a t i o n im p o s e d b y b a n k c l e a r i n g a g e n c i e s , w h e n t h e B o a r d
is t h e a p p r o p r i a t e r e g u l a t o r y a g e n c y .
T h e S e c u r i t i e s a n d E x c h a n g e C o m m is s io n a n d t h e C o m p t r o ll e r of
t h e C u r r e n c y a r e i s s u i n g s i m i l a r p r o p o s e d r u l e s fo r c l e a r i n g a g e n c i e s
or p articip an ts u n d e r th e ir ju risd ictio n s.
P r i n t e d o n t h e e n c l o s e d p a g e s is a n e x t r a c t from t h e FEDERAL REGISTER
c o n t a i n i n g t h e t e x t of t h e p r o p o s e d a m e n d m e n t s . C o m m en ts s h o u l d b e s u b m i t t e d in
w r i t i n g to t h e S e c r e t a r y , B o a r d of G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s t e m ,
W a s h i n g t o n , D . C . 20551, to b e r e c e i v e d n o t l a t e r th a n J u l y 30, 1976. All m a t e r i a l s
s u b m i t t e d s h o u l d in c l u d e t h e d o c k e t n u m b e r R -0 0 4 2 .
S in c e re ly y o u r s ,
T . W. P la n t
F i r s t V ice P r e s i d e n t
E n closure

26231
FEDERAL RESERVE SYSTEM
[1 2 CFR Parts 2 0 8 ,2 2 5 ]
[Docket No. R-0042; Begs. H and T]
MEMBERSHIP OF STATE BANKING INSTI­
TUTIONS IN THE FEDERAL RESERVE
SYSTEM; BANK HOLDING COMPANIES
Notice of Proposed Rulemaking

E x t r a c t F rom
FEDERAL REGISTER
VOL. 41, NO. 124
F r i d a y , J u n e 25, 1976
p p . 26231 - 26234

Pursuant to authority of Sections 17,
17A, 19 and 23 of the Securities Ex­
change Act of 1934 (15 U.S.C. 78q, q-1,
s and w) ("Act”) , th e Board of Gover­
nors proposes to am end Regulation H,
Membership of S tate Banking In stitu tidns in th e Federal Reserve System, (12
CFR 208) to require th a t, a S tate mem­
ber bank or any of its subsidiaries th a t
is a registered clearing agency pursuant
to Section 17A(b) of th e Act, shall file
notice w ith th e Board of all final disci­
plinary actions, denials of participation,
conditions, prohibitions or lim itations of
access to services, sum m ary suspensions
or conditions, prohibitions or lim itations
of participation imposed by it on any
participant, in conform ity w ith th e form
and content of such notices as prescribed
herein. T his am endm ent also prescribes
th e form and content of applications for
stays by th e Board of final disciplinary
sanctions and sum m ary actions of regis­
tered clearing agencies when th e Board
is th e appropriate regulatory agency for
th e applicant and th e form and content
of applications for review by the Board
of final disciplinary sanctions, denials of
participation, prohibitions or lim itations
of access to services imposed by regis­
tered clearing agencies.
In connection w ith th is amendment,
th e Board of Governors also proposes to
amend Regulation 7 , Bank Holding Com­
panies, (12 CFR 225) prescribing th e
form and content of applications for
stays by th e Board of final disciplinary
sanctions, and sum m ary actions of regis­
tered clearing agencies when the partici­
pant or applicant is a bank holding com­
pany or a subsidiary of a bank holding
company and th e form and content of
applications for review by th e Board of
final disciplinary sanctions, denials of
participation, prohibitions or lim itations
of access to services imposed by regis­
tered clearing agencies when the partici­
p ant or applicant is a bank holding com­
pany or subsidiary of a bank holding
company.
The Securities Acts Amendments of
1975 (th e “ 1975 Amendments”) provided
for direct oversight jurisdiction to cover
disciplinary sanctions an d denials of
participation imposed by any registered
clearing agency. Under the 1975 Amend­
m ents such clearing agencies m ust
prom ptly file notice of such action w ith
(a) th e appropriate regulatory agency
for th e registered clearing agency and

(b) if not the same, w ith th e appropriate
regulatory agency for a participant, ap­
plicant or person on whom is Imposed a
final disciplinary sanction, or w ith re­
spect to whom participation is denied, or
access to service is lim ited or prohibited.
Review of any action requiring th e filing
of such notice may be had either on the
motion of the appropriate regulatory
agency (the Board w ith respect to S tate
member banks, bank holding companies,
or subsidiaries of bank holding compan­
ies in bank clearing agencies, th e Comp­
troller of th e Currency w ith respect to
N ational banks In bank clearing agen­
cies; th e Federal Deposit Insurance Cor­
poration w ith respect to S tate nonmem­
ber insured banks in bank clearing agen­
cies; and the Securities and Exchange
Commission (the “Commission”) w ith
respect to all others) or on th e applica­
tion of any person aggrieved by such
action. However, appeals taken to th e
Board or th e other appropriate regula­
tory agencies do not autom atically stay
any action, although stays may be
granted by a particular agency where
appropriate.
Moreover, th e 1975 Amendments grant
specific authority, under certain circum ­
stances, to a registered clearing agency
to take sum m ary action against p artici­
pants where such persons have been sus­
pended or expelled from any self-regu­
latory organization, such as a registered
exchange or securities association. A reg­
istered clearing agency may also sum ­
marily suspend a participant where such
clearing agency determ ines th a t th e p ar­
ticip ant is in such financial o r opera­
tional difficulty so as to endanger Inves­
tors, creditors, or participants in the reg­
istered clearing agency or the registered
clearing agency itself.
Finally, th e 1975 Amendments Intro­
duced th e concept of a "statutory dis­
qualification.” A person is subject to a
statutory disqualification if such person:
1. Has been and is expelled or sus­
pended from m embership or participa­
tion in, or barred or suspended from
being associated w ith a member of, any
self-regulatory organization;
2. Is subject to a n order of th e Com­
mission denying, suspending or revoking
his registration as a broker, dealer or
m unicipal securities dealer or barring his
association w ith a broker, dealer or m u­
nicipal securities dealer;
3. By his conduct while associated w ith
a broker, dealer or m unicipal securities
dealer if such conduct has been found to
be th e cause of any effective suspension
or expulsion; or has associated w ith him
any person who is known, or in th e exer­
cise of reasonable care should be known,
to be a disqualified person,
4. H as violated or participated in vi­
olating any provisions of the Federal se-

26232
curlties acts or the rules of the Munici­ agency actions would be required to Notice of such final disciplinary action
pal Securities Rulemaking Board;
make application for such a stay pur­ shall be promptly filed with the Board
5. Has been convicted w ith in the past suant to these provisions.
in accordance with paragraph (g) (2) of
ten yean of any felony or misdemeanor
The proposed amendment also pro­ this section.
which involves certain crimes relating, vides the procedures lo r application for
(iii) Any registered clearing agency
generally, to securities transactions or review of all final disciplinary sanctions, fOr which the Board is the appropriate
business, perjury or the misappropria­ participation denials, and similar actions regulatory agency th at takes any final
by registered bank clearing agencies action with respect to any persgp con­
tion of funds or securities;
6. Is enjoined from any action, conduct against a participant, applicant, or per­ stituting a denial, prohibition, or limita­
or practice in connection with the securi­ son for which the Board is the appropri­ tion of participation or of access to serv­
ties Industry or the purchase or sale of ate regulatory organization. The Secre­ ices offered by it, and which is based on
tary of the Board or other designated an alleged failure of any person to :
any security; or
(A)
Comply with qualification stand­
7. Has willfully made application or officer acting for the Board would serve
submitted a report containing a false or a copy of the application for review on ards established by rules of the appro­
misleading statem ent with respect to any the registered bank clearing agency priate regulatory agency or such regis­
m aterial fact or omitted to state any which, within 10 days, must certify and tered clearing agency; or
. (B) Comply with any administrative
m aterial fact which is required to be file with the Board one copy of the rec­
stated to a self-regulatory organization. ord and three copies of an index of the requirements of such registered clearing
These statutory disqualifications per­ record. The Secretary or the Board’s de­ agency (Including failure to pay entry
mit, but do not automatically require, a signee would then serve on the parties or other dues or fees or to file prescribed
registered clearing agency to deny or copies of the index and any other papers forms or reports) not involving charges
condition participation, but the Act re­ subsequently filed. The applicant may of violations which may lead to a dis­
quires the registered clearing agency to file a brief within 20 days after receipt ciplinary sanction shall not be considered
take such action If the Commission so of the copy of the index and, within 20 a “final disciplinary action" for purposes
orders. A registered clearing agency pro­ days thereafter the registered bank of this paragraph; but notice thereof
posing to admit to participation a person clearing agency may file its brief. Oral shall be promptly filed with the Board
subject to a statutory disqualification argument may be requested by the ap­ in accordance with paragraph (g) (3)
m ust give notice to the Commission 30 plicant or the registered bank clearing of this section, provided, however, that
agency which request may be granted no disposition of a m atter shall be con­
days prior to such action.
The notice provisions of this amend­ or denied at the discretion of the Board. sidered “final” pursuant to this para­
graph which results merely from a notice
m ent provide for the content of notices
relating to four general types of adjudi­ PART 208— MEMBERSHIP O f STATE of such failure to the person affected, if
catory actions taken by a registered
BANKING INSTITUTIONS IN THE FED­ such person has not sought an adjudica­
tion of the m atter, including a hearing,
clearing agency for which the Board Is
ERAL RESERVE SYSTEM
or otherwise exhausted his adm inistra­
the appropriate regulatory agency as
1. Pursuant to the amendment, new tive remedies within such registered
follows;
1. Notice of Pinal Disciplinary Action. paragraphs (g), (h) and (i) would be clearing agency with respect to such a
m atter.
2. Notice of Final Denial, Prohibition, added to § 208.8 as set forth below:
Termination or Limitation Based on § 2 0 8 .8 B a n k in g practice*.
(iv) Any registered clearing agency for
Qualification or Administrative Buies.
•
•
*
•
•
which the Beard is the appropriate regu­
S. Notice of Final Action Based on a (g)
State member banks as registeredlatory agency th at takes any final action
Statutory Disqualification.
clearing agencies. (1) Requirement of with respect to any person which:
4. Notice of Summary Suspension of notice—(i) Any S tate member bank or
(A) Denies or conditions participation
Participation or Summary Limitation or any of its subsidiaries th at is a regis­ in or prohibits or limits access to services
Prohibition of Access to Services.
tered clearing agency pursuant to Sec­ offered by such registered clearing
Section 17A(b) (4) of the Act requires tion 17A(b) of the Securities Exchange agency; and
th at disciplinary sanctions, denials of Act of 1934 (the “Act”), shall file with
(B) Is based upon a statutory disquali­
participation and similar adjudicatory the Board and (if other than the Board) fication of a type defined in subpara­
findings Include supportng statements of the appropriate regulatory agency for a graph (A), (B) or (C) of Section 3(a)
the registered clearing agency. The pro­ participant, applicant or person affected, 39 of the Act or consisting of a prior
posed notice' provisions were designed to notice of all final disciplinary actions, conviction, as described in subparagraph
obtain a report from the registered bank denials, conditions, prohibitions or
(E) of said Section 3(a)
clearing agency containing its state­ limitations respecting participation or not be considered a “final 39 shall
discipli­
ments. The notice provisions have also access to services and summary sus­ nary action” for purposes of this para­
been structured to satisfy, a t the same pensions, conditions, prohibitions, limi­ graph; but notice thereof shall be
time, the requirement of Section 19(d) tations, Imposed by such registered promptly filed with the Board In accord­
of the Act th at such actions be promptly clearing agency on any of its partici­ ance with paragraph (g) (4) of this sec­
reported to the Board. Moreover, the pants, applicants or persons, such notice tion, provided, however, th at no disposi­
notice provisions ensure th a t such re­ to be in conformity with the form and
tion of a m atter shall be considered
ports and notices supply sufficient in­ content prescribed herein.
“final” pursuant to this paragraph where
formation regarding the background,
(ii)
For the purposes of this para­such person has not sought an adjudi­
factual basis and issues Involved in the
proceeding to enable the Board or the graph “final disciplinary action” shall cation of the matter, Including a hearing,
appropriate regulatory agency not mean the Imposition of any final dis­ or otherwise exhausted his adm inistra­
merely to determine whether the case ciplinary sanction pursuant to Section tive remedies within such registered
should be called up for review on its own 17A(b) (3) (O) of the Act or other action clearing agency with respect to such a
motion but also to ascertain generally of a registered clearing agency which, matter.
(v) Any registered clearing agency for
whether registered bank clearing agen­ after notice and opportunity for hearing,
cies are adequately carrying out their results in any final disposition of charges which the Board is the appropriate regu­
of:
latory agency th at summarily suspends a
responsibilities under the Act.
(A) One or more violations of the participant, or summarily limits or pro­
The stay provisions of the proposed
amendment would apply in the case of a rules of such registered clearing hibits any person with respect to access
to or services offered by the organization
registered bank clearing agency only agency;
(B) Acts or practices constituting a pursuant to the provisions of Section
where the disciplinary or denial action is
taken against a participant or applicant statutory disqualification of a type de­ 17A(b) (5) (C) of the Act, shall within 24
for which the Board Is the appropriate fined In subparagraph (D) or (E) (ex­ hours of the effectiveness of such sum­
regulatory agency. Such persons desir­ cept prior convictions) of Section 3(a) mary suspension, limitation or prohibi­
tion notify the Board and the appro­
ing to stay registered bank clearing 39 of the Act.

26233
priate regulatory agency fo r the partici­ in support of the resolution of th e p rin ­
p an t (If other th a n th e Board) of such cipal Issues raised in the proceeding;
action. Such notice of summary suspen­
(iv) The date upon which such action
sion, lim itation or prohibition filed with has or will become effective; and
(v) Such other m atters as the regis­
the Board shall be in accordance w ith
tered clearing agency deems relevant.
paragraph (g) (5) of this section.
(4) Content of notice of final action
(2) Content of notice of final dis­
ciplinary action. Any notice of a final based upon prior adjudicated statutory
disciplinary action filed with th e Board disqualification. Any notice of a final
pursuant to this am endm ent shall consist action based upon a prior adjudicated
of the following, as appropriate:
statutory disqualification filed w ith the
Board pursuant to this am endm ent shall
(i)
The nam e of th e respondent con­
cerned together w ith his or her last consist of th e following, as appropriate:
known place of residence or business as
(I) The nam e of the person concerned,
reflected on the records of the registered together w ith his or her last known place
clearing agency and th e nam e of the of residence or business, as reflected on
person, committee, o r other organiza­ th e records of the organization;
tional u n it th a t brought th e charges in ­
(II) A statem ent setting fo rth th e
volved:
principal issues raised, th e answer of any
(11)
A statem ent describing th e in ­ person concerned, and a statem ent of
vestigative or other origin of the action; th e registered clearing agency in support
(ill) As charged In th e proceeding, the of the resolution of th e principal issues
specific provisions of th e rules of the raised In the proceeding;
(ili) Any description furnished by or
registered clearing agency and the
answ er of th e respondent to th e charges; on behalf of th e person concerned of the
(lv) A statem ent setting fo rth find­ activities engaged in by th e person since
ings of fact w ith respect to any act or the adjudication upon which th e dis­
practice th a t such respondent was qualification Is based;
(iv) Any descriptioh furnished by or
charged w ith having engaged In or
om itted; the conclusion of the registered on behalf of the person concerned of the
clearing agency as to w hether such re­ prospective business or employment in
spondent violated any provision as which th e person plans to engage and
charged; and a statem ent of the reg­ th e m anner and extent of supervision to
istered clearing agency In support of its be exercised over and by such person;
(v) A copy of th e order or decision of
resolution of the principal issues raised
th e court, th e appropriate regulatory
in the proceedings;
(v) A statem ent describing any sanc­ agency or th e self-regulatory organiza­
tion Imposed, the reasons therefor, and tion which adjudicated th e m atter giving
th e date upon which such sanction has rise to such statutory disqualification;
(vi) The nature of the action taken
or will become effective, together w ith a
finding, if appropriate, as to w hether and the date upon which such action is
such respondent was a cause of any to be made effective; and
(vii) Such other m atters as the reg­
sanction imposed upon any other person;
(vi) A statem ent concerning w hether istered clearing agency deems relevant.
(5) Content of notice of summary sus­
any stay of any sanction imposed should
be granted, pending final determ ination pension of participation or summary lim­
on review thereof by th e Board or the itation or prohibition of access to serv­
appropriate regulatory agency, if any ices. Any notice of sum m ary suspension
person aggrieved thereby applies for of participation or sum m ary lim itation
or prohibition of access of services filed
such review; and
(vli) Such o ther m atters as the regis­ with the Board pursuant to this am end­
tered clearing agency m ay deem relevant. m ent shall contain a t least th e following
(3) Content of notice of final denial, Inform ation:
(i) The nam e of the person concerned
prohibition, termination of limitation
based on qualification or administrative together with his or h er last known place
rules. Any notice of a final denial, pro­ of residence or business as reflected on
hibition, term ination or lim itation based th e records of th e registered clearing
on qualification or adm inistrative rules agency;
(ii) The date upon which such sum ­
filed w ith the Board pursuant to this
am endm ent shall consist of th e follow­ m ary action has or will become effective;
(ili) If such summary action is based
ing, as appropriate:
(i)
The nam e of each person con­ upon th e provision of Section 17A(b) (5)
cerned together w ith his or her last (C) (1) of th e Act, a copy of th e relevant
known place of residence or business as order or decision of th e self-regulatory
reflected on th e records of th e registered organization;
clearing agency;
(lv) If such sum m ary action is based
(11)
The specific provisions of the rulesupon the provisions of Section 17A(b)
of th e registered clearing agency, upon (5) (C) (11) or (111) of th e Act, a state ­
which th e action of th e registered clear­ m ent describing as appropriate:
ing agency was based; and th e answer of
<A) The default of any delivery of
th e person concerned;
funds or securities to any clearing facil­
(ill) A statem ent setting fo rth findings ity based upon which such registered
of fact and conclusions as to each alleged clearing agency determ ined th a t such
failure of th e person to comply w ith suspension was necessary for, or the
Qualification standards, or comply w ith participant could not be perm itted to
adm inistrative obligations, and a sta te­ continue to do business w ith, safely to
m ent of th e registered clearing agency such registered clearing agency, in -

vestors, creditors, or participants in the
registered clearing agency;
(B) T he financial or operating diffi­
culty of th e participant based upon
which such registered clearing agency
determ ined th a t th e p articipant could
n o t be perm itted to continue to do busi­
ness w ith safety to investors,.creditors or
other participants in th e registered
clearing agency; or
(C) T he failure to m eet qualification
requirem ents or other prerequisites for
access and the basis upon which such
organization determ ined th a t th e person
concerned could n o t be perm itted to
continue to have access w ith safety to
investors, creditors, th e registered
clearing agency or participants of the
registered clearing agency.
(v) T he nature and effective date of
th e suspension, lim itation or prohibition;
and
(vi) Such other m atters as the o r­
ganization deems relevant.
(h) Applications for stays of disci­
plinary sanctions or summary suspen­
sions by a registered clearing agency. If
a registered clearing agency for which
th e Securities and Exchange Commission
is not th e appropriate regulatory agency,
imposes any final disciplinary sanction
pursuan t to Section 17A(b) (3) (G) of the
Act, or sum m arily suspends or lim its or
prohibits access pursuant to Section
17A(b) (5) (C) of the Act, any person ag­
grieved thereby for which the Board is
th e appropriate regulatory agency may
file with th e Board, by telegram or
otherwise, a request for a stay of imposi­
tion of such action. Such request shall be
in w riting and shall include a statem ent
as to why such stay should be granted.
(i) Applications for review of final dis­
ciplinary sanctions, denials of participa­
tion or prohibitions or limitations of ac­
cess to services imposed by registered
clearing agencies. (1) Scope—Proceed­
ings on an application to the Board un­
der Section 19(d) (2) of th e Act by a
p articipant th a t is subject to th e Board’s
jurisdiction for review of any final disci­
plinary sanction, denial) or conditioning
of participation, or prohibition or lim ita­
tion with respect to access to registered
clearing agency services Imposed by a
registered clearing agency for which the
Securities and Exchange Commission ts
n o t th e appropriate regulatory agency
shall be governed by this paragraph.
(2)
Procedure. (1) An application for
review pursuant to Section 19(d) (2) ol
th e Act shall be filed with th e Board
w ithin 30 days a fte r notice thereof is
filed pursuant to Section 19(d) (1) of the
Act and received by th e aggrieved person
applying fo r review, or w ithin such longer
period as th e Board may determine. The
Secretary of th e Board shall serve
a copy of th e application on th e regis­
tered clearing agency, which
w ith­
in ten days a fte r receipt of th e applica­
tion, certify and file w ith th e Board one
copy of the record upon which th e action
complained of was taken, together w ith
th ree copies of an Index to such record.
T he Secretary shall serve upon th e par-

%

%
L

28234
ties copies of such Index and any papers
subsequently filed.
(il> W ithin 20 days a /te r receipt of a
copy of th e Index, th e applicant shall file
a brief or other statem ent In support of
his application which shall state th e
specific grounds on which th e applica­
tion is based, th e p articu lar findings of
th e organization to which objection is
taken, and th e relief sought. Any applica­
tion n o t perfected by such tim ely brief
or statem ent may be dismissed as aban­
doned.
(ill) w ith in 20 days a fte r receipt of
th e applicant's brief or statem ent th e or­
ganization m ay file an answ er thereto,
and w ithin 10 days of receipt of any such
answ er th e applicant may file a reply.
Any such papers not filed w ithin th e tim e
provided by paragraphs (1). (1) (2), (11),
o r (ill) of this section will not be received
except upon special permission of the
Board.
(iv) On Its own motion, th e Board may
direct th a t th e record under review be
supplem ented w ith such additional evi­
dence as it may deem relevant. Never­
theless, th e registered clearing agency
and persons who may be aggrieved by
such agency’s action shall be Obliged to
adduce all evidence th a t they deem rele­
vant In the proceedings before the regis­
tered clearing agency, and no such per­
son shall be entitled to adduce additional
evidence unless it is shown to th e satis­
faction of th e Board th a t such additional
evidence is m aterial and th a t there were
reasonable grounds for failure to adduce
such evidence In such proceedings. Any
request for leave to adduce additional
evidence shall be filed prom ptly so as
not to delay th e disposition of th e
proceeding.
(v) O ral argum ent before th e Board
may be requested by th e applicant or the
registered clearing agency as follows:
(A) by th e applicant w ith his brief or
statem ent or w ithin 10 days after receipt
of th e registered clearing agency’s an ­
swer, or (B) by th e registered clearing
agency w ith its answer. T he Board, In Its
discretion, may g ran t or deny any request
fo r oral argum ent and, w here it deems it
appropriate to do so, th e Board will con­
sider an application on th e basis of th e
papers filed by th e parties, w ithout oral
argum ent.
(vi) The B oard’s Rules of Practice for
Form al H earings shall apply to review
proceedings under this rule to th e extent
th a t they are n o t Inconsistent w ith th is
rule. A ttention is directed particularly to
1 263.21 of th e Rules of Practice rela t­
ing to form al requirem ents as to papers
filed.

(iii) W ithin 20 days a fte r receipt ef
th e applicant's briaf or statem ent th e
organization may file an answer thereto,
§ 225.5 A dm inistration.
and w ithin 10 days of receipt of any such
•
•
•
•
•
answer th e applicant may file ,a reply.
(d) Applications for stays of discipli­ Any such papers n o t filed w ithin th e
nary sanctions or summary suspensions tim e provided by paragraphs (e) (2) (i),
by a registered clearing agency. I f a (11), or (iii) of this section will n o t be
registered clearing agency for which th e reeclved except upon special permission
Securities and Exchange Commission is of th e Board.
(iv) On its own motion, th e Board may
not th e appropriate regulatory agency,
imposes any final disciplinary sanction direct th a t th e reoord under review be
pursuant to Section 17A(b) (3) (G) of the supplemented w ith such additional evi­
Act, or sum m arily suspends or lim its or dence as it m ay deem relevant. Never­
prohibits access pursuant to Section 17A theless, th e registered clearing agency
(b )(5 )(C ) of th e Act, any person ag­ and persons who may be aggrieved by
grieved thereby for which th e Board ts such agency’s action shall be obliged to
tiie appropriate regulatory agency may adduce all evidence th a t they deem rele­
file w ith th e Board, by telegram or other­ vant in the proceedings before the reg­
wise, a request for a stay of imposition istered clearing agency, and no such per­
of such action. Such request shall be In son shall be entitled to adduce additional
w riting and shall Include a statem ent as evidence unless It is shown to th e satis­
to why such stay should be granted.
faction of the Board th a t such additional
(e) Applications for review of final evidence is m aterial and th a t there were
disciplinary sanctions, denials of partici­ reasonable grounds for failure to adduce
pation or prohibitions or limitations of such evidence In such proceedings. Any
access to services imposed by registered request for leave to adduce additional
clearing agencies. (1) Scope.—Proceed­ evidence shall be filed prom ptly so as no t
ings on an application to th e Board un­ to delay th e disposition of th e proceeding.
der Section 10(d) (2) of th e Act by a
(v) O ral argum ent before th e Board
participant th a t is subject to th e Board’s may be requested by the applicant or th e
jurisdiction fo r review of any final dis­ registered clearing agency as follows: (A)
ciplinary sanction, denial, or condition­ by the applicant w ith his brief or sta te ­
ing of participation, o r prohibition or m ent or w ithin 10 days afte r receipt of
lim itation w ith respect to access to th e registered clearing agency’s answer,
registered clearing agency services im­ or (B) by th e registered clearing agency
posed by a registered clearing agency for w ith its answer. The Board, In its discre­
which the Securities and Exchange Com­ tion, m ay gran t or deny any request for
mission is n ot th e appropriate regula­ oral argum ent and, where it deems it ap­
tory agency shall be governed by this propriate to do so, the Board will consider
paragraph.
a n application on th e basis of th e papers
(2)
Procedure. (1) An application forfiled by the parties, w ithout oral argu­
review pursuant to Section 19(d) (2) of ment.
(vi) The Board’s Rules of Practice for
th e Act shall be filed w ith th e Board
w ithin 30 days after notice thereof is filed Form al Hearings shall apply to review
pursuant to Section 19(d) (1) of the Act proceedings under this rule to the ex­
and received by the aggrieved person ap­ te n t th a t they are not Inconsistent w ith
plying for review, or w ithin such longer this rule. A ttention is directed particu­
period as th e Board may determ ine. The larly to S 263.21 of the Rules of Practice
Secretary of th e Board shall serve a copy relating to form al requirem ents as to
of th e application on th e registered papers filed.
To aid in consideration of this m atter
clearing agency, which shall, w ithin ten
days afte r receipt of th e application, by th e Board, Interested persons are In­
certify and file w ith the Board one copy vited to subm it relevant d ata, views, or
of the record upon which the action com­ argum ents concerning th e proposed
plained of was taken, together w ith three amendments. Any such m aterial should
copies of an index to such record. T he be subm itted in w riting to th e Secre­
Secretary shall serve upon th e parties tary, Board of Governors of th e Federal
copies of such Index and any papers sub­ Reserve System, tW ashington, D.C. 20551,
to be received no later th a n July 30,1976.
sequently filed.
All m aterial subm itted should Include th e
(ii)
W ithin 20 days after receipt of adocket num ber R-0042. Such m aterial
copy of th e index, th e applicant shall file will be made available for inspection and
a brief a t other statem ent in support of copying upon request, except as provided
his application which shall state th e in section 261.6(a) of th e Board’s Rules
specific grounds on which the application Regarding Availability of Inform ation
(12 CFR 261.6(a)).
is based, th e particular findings of the
order of
PART 225— BANK HOLDING COMPANIES organization to which objection is taken, JuBy 21,1976. th e Board of Governors,
ne
and th e relief sought. Any application
2.
In connection w ith this amendment,
[ s e a l]
G r i f f i t h L . C a rw o o d ,
th e Board of Governors also proposes to not perfected by such tim ely brief o r
Assistant Secretary of the Board.
am end Regulation Y, Bank Holding statem ent m ay be dismissed as aban­
(FR Doc.7ft-1850a Filed ff-S4-76;8:48 am]
Companies, (12 CFR 225) by adding new doned.
paragraphs (d) and (e) to 8 225.5 to
read as follows:


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102