Magazine article American Banker

SEC Agrees to Permit Security Pacific to Operate Options Trading System without Registering

Magazine article American Banker

SEC Agrees to Permit Security Pacific to Operate Options Trading System without Registering

Article excerpt

SEC Agrees to Permit Security Pacific to Operate Options Trading System Without Registering

Security Pacific National Bank's plan to start an interest rate options trading system in New York cleared one major regulatory hurdle here on Friday.

Staff of the Securities and Exchange Commission, which was reviewing the bank's latest plan for the trading system, informed the commissioners at an open meeting that they would issue a "no-action' letter to the bank.

This means that the SEC staff will allow the bank to operate the trading system without requiring it to register as an exchange or as a clearing agency-- a form of relief from numerous regulatory requirements that otherwise might prevent the trading system from operating.

Security Pacific last year obtained a no-action letter from the SEC for plans to start a trading facility, but the bank's original blueprint ran into opposition from federal banking regulators, Rep. John Dingell, D-Mich., and several options and futures exchanges. They expressed concerns that the plan could be too risky because Security Pacific said it would guarantee all trading-- something that might have resulted in use of the bank's own money in the case of a default.

As reported previously, Security Pacific has arranged for the General Electric Credit Corp. to serve as third-party guarantor. Because of the change in plans, the bank had to go back to the SEC for another no-action letter, which SEC market regulation director Richard G. Ketchum said Friday would be sent.

The staff's no-action letter was not available late Friday, but if it is similar to the one issued last year, the bank will be asked to provide the SEC with quarterly reports on the system's operation. …

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