SALES PRACTICE RULEMAKING AUTHORITY.

SEC. 106. SALES PRACTICE RULEMAKING AUTHORITY. (a) Rules for Financial Institutions.— Section 15C(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–5(b)) is amended— (1) by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (4), (5), (6), and (7), respectively; and (2) by inserting after paragraph (2) the following new paragraph: “(3) (A) With respect to any financial institution that has filed notice as a government securities broker or government securities dealer or that is required to file notice under subsection (a)(1)(B), the appropriate regulatory agency for such government securities broker or government securities dealer may issue such rules and regulations with respect to transactions in government securities as may be necessary to prevent fraudulent and manipulative acts and practices and to promote just and equitable principles of trade. If the Secretary of the Treasury determines, and notifies the appropriate regulatory agency, that such rule or regulation, if implemented, would, or as applied does (i) adversely affect the liquidity or efficiency of the market for government securities; or (ii) impose any burden on competition not necessary or appropriate in further-107 STAT. 2350ance of the purposes of this section, the appropriate regulatory agency shall, prior to adopting the proposed rule or regulation, find that such rule or regulation is necessary and appropriate in furtherance of the purposes of this section notwithstanding the Secretary’s determination. “(B) The appropriate regulatory agency shall consult with and consider the views of the Secretary prior to approving or amending a rule or regulation under this paragraph, except where the appropriate regulatory agency determines that an emergency exists requiring expeditious and summary action and publishes its reasons therefor. If the Secretary comments in writing to the appropriate regulatory agency on a proposed rule or regulation that has been published for comment, the appropriate regulatory agency shall respond in writing to such written comment before approving the proposed rule or regulation. “(C) In promulgating rules under this section, the appropriate regulatory agency shall consider the sufficiency and appropriateness of then existing laws and rules applicable to government securities brokers, government securities dealers, and persons associated with government securities brokers and government securities dealers.”. (b) Rules by Registered Securities Associations.— (1) Removal of limitations on authority.— (A) Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) is amended— (i) by striking subsections (f)(1) and (f)(2); and (ii) by redesignating subsection (f)(3) as subsection (f). (B) Section 15A(g) of such Act is amended— (i) by striking “exempted securities” in paragraph (3)(D) and inserting “municipal securities”; (ii) by striking paragraph (4); and (iii) by redesignating paragraph (5) as paragraph (4). (2) Conforming amendment.— (A) Section 3(a)(12)(B)(ii) of such Act (15 U.S.C. 78c(a)(12)(B)(ii)) is amended by striking “15, 15A (other than subsection (g)(3)), and 17A” and inserting “15 and 17A”. (B) Section 15(b)(7) of such Act (15 U.S.C. 78o(b)(7)) is amended by inserting “or government securities broker or government securities dealer registered (or required to register) under section 15C(a)(1)(A)” after “No registered broker or dealer”. (c) Oversight of Registered Securities Associations.— Section 19 of the Securities Exchange Act of 1934 (15 U.S.C. 78s) is amended— (1) in subsection (b), by adding at the end the following new paragraphs: “(5) The Commission shall consult with and consider the views of the Secretary of the Treasury prior to approving a proposed rule filed by a registered securities association that primarily concerns conduct related to transactions in government securities, except where the Commission determines that an emergency exists requiring expeditious or summary action and publishes its reasons therefor. If the Secretary of the Treasury comments in writing to the Commission on a proposed rule that has been published for comment, the Commission shall respond in writing to such written comment before approving the proposed rule. If the Secretary of the Treasury determines, and notifies the Commission, 107 STAT. 2351that such rule, if implemented, would, or as applied does (i) adversely affect the liquidity or efficiency of the market for government securities; or (ii) impose any burden on competition not necessary or appropriate in furtherance of the purposes of this section, the Commission shall, prior to adopting the proposed rule, find that such rule is necessary and appropriate in furtherance of the purposes of this section notwithstanding the Secretary’s determination. “(6) In approving rules described in paragraph (5), the Commission shall consider the sufficiency and appropriateness of then existing laws and rules applicable to government securities brokers, government securities dealers, and persons associated with government securities brokers and government securities dealers.”; and (2) in subsection (c), by adding at the end the following new paragraph: “(5) With respect to rules described in subsection (b)(5), the Commission shall consult with and consider the views of the Secretary of the Treasury before abrogating, adding to, and deleting from such rules, except where the Commission determines that an emergency exists requiring expeditious or summary action and publishes its reasons therefor.”.