Statement on Signing the National Securities Markets Improvement Act of 1996

Today I am pleased to sign into law H.R. 3005, the "National Securities Markets Improvement Act of 1996." This legislation represents the most significant overhaul of the securities regulatory structure in decades. Without compromising investor protection, H.R. 3005 will enhance capital formation and the competitiveness of the American economy by eliminating regulatory overlap between the States and the Federal Government, significantly rationalizing and simplifying the way mutual funds and corporate securities are regulated, reducing Securities and Exchange Commission (SEC) registration fees, and stabilizing the SEC funding structure over a 10-year period.

This bill achieves the difficult task of improving the efficiency of the financial markets without compromising investor protections. Lower registration fees will reduce the cost of capital formation in the United States. Changes to margin requirements should lower funding costs for broker-dealers, benefiting investors without reducing the systemic protections of the margin requirements. This legislation will more efficiently divide responsibility for regulation between the Federal and State governments. The SEC will be charged with responsibility for activities in the national markets, such as regulation of securities listed on the national exchanges and mutual funds, as well as large investment advisors. States will have responsibility for smaller issues and investment advisors with smaller portfolios, while retaining their authority to take enforcement actions against fraudulent conduct in all situations.

The legislation gives the SEC new broad general exemptive authority under both the Securities Act and the Exchange Act, which should allow the Commission to deal more quickly and effectively with the facts and circumstances of individual situations. At the same time, it strengthens the SEC's hand in addressing fund names that use words such as "government," "guaranteed," or "insured," which can cause investors to conclude, incorrectly, that their investments are guaranteed by State or Federal authorities.

This legislation will save hundreds of millions of dollars for American businesses. Corporations will benefit from the reduction in SEC fees. Mutual funds, which are sold nationally, will be regulated nationally. Broker-dealers will benefit from no longer being subject to dozens of differing State net capital and books and records requirements. The SEC's funding will be more stable and predictable than it has been in recent years. These changes will all enhance our national capital markets, helping to create and nurture new businesses and new jobs, and enhancing the returns of both businesses and investors.

I am pleased to sign this bill into law. I thank all the participants—from the Congress, from Federal and State regulatory agencies, from the affected industries—for the hard work that culminated in enactment of this important piece of legislation.

WILLIAM J. CLINTON

The White House, October 11, 1996.