Chipping Away at Barriers to Global Financial Services: SEC Staff Addresses Issues for Foreign Broker-Dealers under Rule 15a-6

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Noting the increasingly global nature of financial markets, the U.S. Securities and Exchange Commission (“SEC”) adopted Rule 15a-6 nearly twenty four years ago to facilitate limited access by foreign broker-dealers to customers in the United States. During the years since the rule’s adoption, globalization of world financial markets has accelerated, but the SEC has only gradually relaxed the restrictions set forth in Rule 15a-6. The staff of the SEC’s Division of Trading and Markets (the “Staff”) continued this process of incremental change through a series of frequently asked questions (“FAQs”) issued on March 21, 2013.

Background -

Under Section 15 of the Securities Exchange Act of 1934 (the “Exchange Act”), any person engaged in the business of effecting securities transactions is required to register with the SEC as a broker-dealer. This requirement applies to foreign broker-dealers conducting business with U.S. customers, even if all of the transactions are in foreign securities and are effected outside the United States. In 1989, the SEC adopted Rule 15a-6 in order to provide foreign broker-dealers with limited access to U.S. customers without having to register with the SEC. That rule, as interpreted by no-action letters issued in 1996 and 1997, permits foreign broker-dealers to...

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