15 U.S.C. § 78q–2: Automated quotation systems…

Summary

Requires the Securities and Exchange Commission to make reliable penny stock prices and last-sale data widely available and to work to create one or more automated quotation systems for all penny stocks. Those systems must be run by a registered securities association or a national exchange under rules set by the Commission and the operators. The systems must collect and share quotes and trade information, give bid and ask prices that are firm for minimum share or dollar amounts set by the Commission and the operators, and report transaction volume and last sales when volume reaches levels the Commission sets. The Commission may exempt any penny stock or group of penny stocks from these rules if it decides that is in the public interest and protects investors. In each of the first five annual reports filed more than 12 months after October 15, 1990, the Commission must describe the system’s status, progress, key milestones, schedule, and the work done by exchanges and associations.

Title 15, §78q–2

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(a)Findings

The Congress finds that—

(1)the market for penny stocks suffers from a lack of reliable and accurate quotation and last sale information available to investors and regulators;

(2)it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to improve significantly the information available to brokers, dealers, investors, and regulators with respect to quotations for and transactions in penny stocks; and

(3)a fully implemented automated quotation system for penny stocks would meet the information needs of investors and market participants and would add visibility and regulatory and surveillance data to that market.

(b)Mandate to facilitate establishment of automated quotation systems

(1)In general

The Commission shall facilitate the widespread dissemination of reliable and accurate last sale and quotation information with respect to penny stocks in accordance with the findings set forth in subsection (a), with a view toward establishing, at the earliest feasible time, one or more automated quotation systems that will collect and disseminate information regarding all penny stocks.

(2)Characteristics of systems

Each such automated quotation system shall—

(A)be operated by a registered securities association or a national securities exchange in accordance with such rules as the Commission and these entities shall prescribe;

(B)collect and disseminate quotation and transaction information;

(C)except as provided in subsection (c), provide bid and ask quotations of participating brokers or dealers, or comparably accurate and reliable pricing information, which shall constitute firm bids or offers for at least such minimum numbers of shares or minimum dollar amounts as the Commission and the registered securities association or national securities exchange shall require; and

(D)provide for the reporting of the volume of penny stock transactions, including last sale reporting, when the volume reaches appropriate levels that the Commission shall specify by rule or order.

(c)Exemptive authority

The Commission may, by rule or order, grant such exemptions, in whole or in part, conditionally or unconditionally, to any penny stock or class of penny stocks from the requirements of subsection (b) as the Commission determines to be consistent with the public interest, the protection of investors, and the maintenance of fair and orderly markets.

(d)Commission reporting requirements

The Commission shall, in each of the first 5 annual reports (under section 78w(b)(1) of this title) submitted more than 12 months after October 15, 1990, include a description of the status of the penny stock automated quotation system or systems required by subsection (b). Such description shall include—

(1)a review of the development, implementation, and progress of the project, including achievement of significant milestones and current project schedule; and

(2)a review of the activities of registered securities associations and national securities exchanges in the development of the system.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 78w(b)(1) of this title, referred to in subsec. (d), was omitted from the Code. For further details related to reports referred to in subsec. (d), see Codification note set out under section 78w of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective Oct. 15, 1990, with provisions relating to civil penalties and accounting and disgorgement, see section 1(c)(1), (2) of Pub. L. 101–429, set out in an

Effective Date

of 1990 Amendment note under section 77g of this title.

§78q–2 Automated Quotation Systems for Penny Stocks

Summary

Title 15, §78q–2

Notes & Related Subsidiaries

Editorial Notes

References in Text

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata