Swift Trade Securities USA Inc. (Order Affirming SIPC Determination)

Securities Investor Protection Act of 1970
Release No. 165 / May 26, 2004

In the Matter of
Securities Investor Protection Corporation
805 Fifteenth Street, N.W., Suite 800
Washington, D.C. 20005-2207

ORDER AFFIRMING DETERMINATION BY THE SECURITIES INVESTOR PROTECTION CORPORATION ("SIPC") THAT SWIFT TRADE SECURITIES USA INC. IS NOT A MEMBER OF SIPC

I. Introduction

Section 3(a)(2) of the Securities Investor Protection Act of 1970 ("SIPA") provides that, with certain exceptions, all broker-dealers registered pursuant to Section 15(b) of the Securities Exchange Act of 1934 are members of SIPC.1 Section 3(a)(2)(A)(i) of SIPA provides an exception to SIPC membership for broker-dealers whose principal business, in the determination of SIPC, taking into account business of affiliated entities, is conducted outside the United States and its territories and possessions.2 Section 3(a)(2)(B) of SIPA requires SIPC to file that determination with the Securities and Exhange Commission ("Commission"), and the Commission, within thirty days of SIPC's filing, or within such longer period as the Commission may designate of not more than ninety days after the date of SIPC's filing if it finds such longer period to be appropriate and publishes its reasons for so finding, must "consistent with the public interest and the purposes of [SIPA], affirm, reverse, or amend [SIPC's determination]."

II. Background and Discussion

On May 4, 2004, SIPC filed a request that the Commission affirm SIPC's determination that Swift Trade Securities USA Inc. ("Swift Trade USA") is a person whose business is conducted outside the United States, its territories and possessions, and that therefore it is not a member of SIPC pursuant to Section 3(a)(2)(A)(i) of SIPA.3

The Commission's broker-dealer records show that Swift Trade USA became registered with the Commission as a broker-dealer on May 7, 1999. In the information supplied to SIPC as part of its request for exclusion from SIPC membership, Swift Trade USA indicated that it is a Canadian entity, incorporated in the Province of Ontario, and licensed to do business in Canada. Swift Trade USA's principal business activity is trade execution for its wholly owned subsidiary Swift Trade Securities, Inc ("Swift Trade Canada") a Canadian broker-dealer also incorporated in the Province of Ontario, and licensed to do business in Canada. Swift Trade USA does not have any retail accounts. Swift Trade USA and Swift Trade Canada are located in Toronto, Canada and neither have any branch offices or sales personnel or agents in the United States or its territories and possessions. Neither firm has any customers located in the United States or its territories and possessions. Swift Trade USA's sole customer is Swift Canada whose customers are all located in Canada.

In addition, Penson Financial Services, Inc., a SIPC member located in Texas clears all of Swift Trade USA's securities transactions in the United States. No securities or funds are taken into Swift Trade USA's possession and the firm does not use customer assets in any way. The firm does not engage in underwriting or syndicated distribution of securities. Customer securities transactions for Swift Trade Canada are cleared through Penson Financial Services Canada Inc. ("Penson Canada") and all customer property is maintained on the books of Penson Canada.

The information provided to SIPC also indicates that Swift Trade USA had gross revenues for the fiscal year ending September 30, 2003 of $16,515,603.85 US, none of which came from transactions in the United States.

III. Conclusion

Because Swift Trade USA has indicated that it has one office, which is located in Canada, that it introduces all its securities transactions in the United States on a fully disclosed basis through a SIPC member located in the United States, has no customers located in the United States, employs no sales personnel or agents in the United States, has a single customer, a Canadian broker-dealer, whose customers are all located in Canada, does not take possession of securities or funds, does not engage in underwriting or syndicated distribution of securities, has no affiliates that engage in the securities business, and had gross revenues of $16,515,603.85 US in 2003, none of which came from transactions in the United States, the Commission, consistent with the public interest and the purposes of SIPA under Section 3(a)(2)(B) of SIPA, affirms SIPC's determination that Swift Trade USA is a person whose business is conducted outside the United States, its territories and possessions, and that therefore it is not a member of SIPC.

IT IS THEREFORE ORDERED, pursuant to Section 3(a)(2)(B) of SIPA,4 that SIPC's determination that Swift Trade USA is not a member of SIPC is affirmed.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.5

Margaret H. McFarland
Deputy Secretary

Endnotes

1 15 U.S.C. 78ccc(a)(2)(A).

2 15 U.S.C. 78ccc(a)(2)(A)(i).

3 See Letter from Stephen P. Harbeck, Secretary, SIPC, to Jonathan G. Katz, Secretary, Office of the Secretary, dated April 29, 2004.

4 15 U.S.C. 78ccc(a)(2)(B).

5 17 CFR 200.30-3(f)(1)(ii).