Government Securities Market Protection Act

Summary

Government Securities Market Protection Act - Amends the Federal Reserve Act to direct the Board of Governors of the Federal Reserve System, in order to protect the integrity of the Government securities market, to prescribe regulations which: (1) establish capital adequacy standards for certain Government securities dealers; (2) require each such dealer to maintain an internal system of controls to assure compliance with such standards; (3) require the maintenance of segregated accounts on the records of the dealer and any clearing agent involved in any Government securities transaction; (4) require the dealer to deliver the Government securities involved in a securities loan or a repurchase agreement to the customer or to an independent custodian or other third party custodian designated by the customer, with specified exceptions; and (5) require dealers to certify that they will comply with such requirements. Requires the Board to maintain and publish a list of all such dealers in compliance with such requirements. Prohibits any dealer not listed from acting as a dealer or conducting any Government securities transaction with any primary dealer or depository institution. Requires each dealer to comply with reporting and recordkeeping requirements prescribed by the Board. Directs the Board to notify each member of the Federal Financial Institutions Examination Council whenever it determines that a dealer's activities may adversely affect any depository institution regulated by a Council member. Directs the Council to develop standardized practices for examining depository institutions which engage in Government securities transactions. Authorizes the Board to: (1) bring a court action to enjoin any act or practice in violation of this Act; and (2) suspend a dealer who has engaged or is about to engage in such an act or practice from the list of dealers in compliance with this Act after giving the dealer notice and the opportunity for a hearing. Establishes a civil penalty of up to $100,000 and a criminal penalty of up to $500,000 and five years' imprisonment for violations of this Act. Requires the Board to establish a Government Securities Advisory Council to advise the Board on methods to maintain and improve the integrity of the Government securities market and to protect against abusive practices in such market. Directs the Board to conduct a study to consider: (1) establishing limited business relations between Federal Reserve banks and nonprimary dealers that agree to provide regular reports to the Board; (2) giving primary dealers access to the clearing system; (3) permitting smaller Government securities dealers to borrow odd-lot securities on a fully collateralized basis; and (4) expanding the brokers' market for Government securities, including access to the broker screens. Requires the Board to report to specified congressional committees on the conclusions of such study, actions taken to implement this Act, and recommendations for legislative or administrative actions.

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1 official file

• Introduced in House

  summary · EN · 15 May 1985

  Open at official source

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