WSR 15-03-053 PROPOSED RULES DEPARTMENT OF FINANCIAL INSTITUTIONS (Securities Division) [Filed January 14, 2015, 3:01 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 14-21-092.
Title of Rule and Other Identifying Information: The securities division is proposing to amend WAC 460-42A-081 to update the list of securities exchanges for which securities listed thereon qualify as "investment grade securities" and are thus exempt from registration under RCW 21.20.310(8).
Hearing Location(s): Department of Financial Institutions (DFI), 150 Israel Road S.W., Tumwater, WA 98501, on February 24, 2015, at 10:00 a.m.
Date of Intended Adoption: March 24, 2015.
Submit Written Comments to: Michelle Webster, Securities Division, P.O. Box 9033, Olympia, WA 98507-9033, e-mail michelle.webster@dfi.wa.gov, fax (360) 704-6491, by February 24, 2015.
Assistance for Persons with Disabilities: Contact Carolyn Hawkey, P.O. Box 9033, Olympia, WA 98507, by February 24, 2015, TTY (360) 664-8126 or (360) 902-8760.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: RCW 210.20.310(8) [21.20.310(8)] provides an exemption from securities registration for "any security which meets the criteria for investment grade securities that the director may adopt by rule." In furtherance of this statute, WAC 460-42A-081 provides an exemption for securities listed on specified national securities exchanges.
This rule was last amended in 1996 and since that time, a number of national securities exchanges specified in this rule have undergone name changes, have restructured, or no longer exist. The proposed rule seeks to identify the current exchange-listed securities recognized in Section 18 of the Securities Act of 1933 and federal Rule 146 adopted thereunder.
Reasons Supporting Proposal: The proposed amendments to WAC 460-42A-081 clarify the availability of the exemption from registration requirements for securities that are deemed "covered securities" under federal law and that the securities division is thus otherwise preempted from requiring registration thereof. As this rule was last amended in 1996, the proposed updates will better coordinate this rule with existing federal law enforced by the Securities and Exchange Commission.
Statutory Authority for Adoption: RCW 21.20.450, 21.20.310(8).
Statute Being Implemented: RCW 21.20.310(8).
Rule is necessary because of federal law, 15 U.S.C. §77r; 17 C.F.R. 230.146.
Name of Proponent: DFI, securities division, governmental.
Name of Agency Personnel Responsible for Drafting: Michelle Webster, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8736; Implementation: Scott Jarvis, Director, DFI, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760; and Enforcement: William Beatty, Director, Securities, 150 Israel Road S.W., Tumwater, WA 98501, (360) 902-8760.
No small business economic impact statement has been prepared under chapter 19.85 RCW. RCW 19.85.061 of the Regulatory Fairness Act provides that unless requested by a majority vote of the joint administrative rules [review] committee under RCW 19.85.030, an agency is not required to prepare a small business economic impact statement when adopting any rule solely for the purpose of conformity or compliance, or both, with federal statutes or regulations. The proposed updates merely seek to better coordinate the amended proposed rule with existing federal law by identifying the current securities listed on exchanges recognized in Section 18 of the Securities Act of 1933 and amended federal Rule 146 adopted thereunder.
A cost-benefit analysis is not required under RCW 34.05.328. DFI is not an agency identified in RCW 34.05.328.
January 14, 2015
Scott Jarvis
Director
AMENDATORY SECTION (Amending WSR 04-07-035, filed 3/9/04, effective 4/9/04)
WAC 460-42A-081 Exchange and national market system exemption.
(1) Any securities listed or designated, or approved for listing or designation upon notice of issuance, on (a) the New York Stock Exchange LLC, (b) the ((American Stock Exchange, (c) the NASDAQ/NMS interdealer quotation system pursuant to the Memorandum of Understanding between the North American Securities Administrators Association (NASAA) and the National Association of Securities Dealers (NASD) adopted April 28, 1990, (d) the Chicago Board Options Exchange pursuant to the Memorandum of Understanding between NASAA and the Chicago Board Options Exchange dated May 30, 1991, (e) Tier I on the Pacific Stock Exchange pursuant to the Memorandum of Understanding between NASAA and the Pacific Stock Exchange dated October 12, 1994, or (f) Tier I on the Philadelphia Stock Exchange pursuant to the Memorandum of Understanding between NASAA and the Philadelphia Stock Exchange dated October 12, 1994)) NYSE MKT LLC ("NYSE MKT"), (c) the National Market System of the NASDAQ Stock Market ("NASDAQ/NGM"), (d) Tier I of the NYSE Arca, Inc., (e) Tier I of the NASDAQ OMX PHLX LLC, (f) the Chicago Board Options Exchange, Incorporated, (g) options listed on the International Securities Exchange, LLC, (h) the NASDAQ Capital Market, (i) Tier I and Tier II of BATS Exchange, Inc., any other security of the same issuer which is of senior or substantially equal rank, any security called for by subscription rights or warrants so listed or approved, or any warrant or right to purchase or subscribe to any of the foregoing is exempt under RCW 21.20.310(8).
(2) ((For the purposes of nonissuer transactions only, any security listed or approved for listing upon notice of issuance on (a) the NASDAQ/NMS interdealer quotation system, (b) the New York Stock Exchange, (c) the American Stock Exchange, (d) the Chicago Stock Exchange, (e) the Chicago Board Options Exchange, (f) the Pacific Stock Exchange, (g) the Philadelphia Stock Exchange, or any other stock exchange registered with the federal securities and exchange commission and approved by the director; any other security of the same issuer which is of senior or substantially equal rank; any security called for by subscription rights or warrants so listed or approved; or any warrant or right to purchase or subscribe to any of the foregoing, is exempted under RCW 21.20.310(8).
(3)))(a) For the purposes of nonissuer transactions only, any security meeting the following requirements is exempted under RCW 21.20.310(8):
(i) The issuer of the security is a reporting issuer in a foreign country or jurisdiction designated in (b) of this subsection, or by rule or order of the director, and has been subject to continuous reporting requirements in such foreign country for not less than one hundred eighty days before the transaction; and
(ii) The security is listed on such foreign country's securities exchange which has been designated in (b) of this subsection, or by rule or order of the director, or is a security of the same issuer which is of senior or substantially equal rank to such listed security or is a warrant or right to purchase or subscribe to any of the foregoing.
(b) For purposes of (a) of this subsection, Canada together with its provinces and territories is a designated foreign jurisdiction and the Toronto Stock Exchange is a designated securities exchange.
(((4))) (3) The director may by order withdraw the exemptions provided by subsection (1)((,)) or (2)((, or (3))) of this section as to an exchange or interdealer quotation system or a particular security when necessary in the public interest for the protection of investors.
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