Regulatory Moratorium to Facilitate
the Year 2000 Conversion
SECURITIES AND EXCHANGE COMMISSION
Policy Statement on Regulatory Moratorium to Facilitate the Year 2000 Conversion1
AGENCY: Securities and Exchange Commission
ACTION: Policy Statement
SUMMARY: The Securities and Exchange Commission ("SEC" or "Commission") is announcing a moratorium on the implementation of new Commission rules that require major reprogramming of computer systems by SEC-regulated entities between June 1, 1999 and March 31, 2000. The moratorium is intended to facilitate and encourage securities industry participants to allocate significant time and resources to addressing the potential problems caused by the Year 2000 computer technology conversion.
FOR FURTHER INFORMATION CONTACT: Primary Contacts Sheila Slevin at (202 942-0796), or Sarrita Cypress at (202 942-0735), Division of Market Regulation. Secondary Contacts for Specific Program Areas Mauri Osheroff at (202 942-2840), Division of Corporation Finance, or Robert E. Plaze (202 942-0716), Division of Investment Management.
The "Year 2000 problem" is generally understood to be a problem caused by computerized systems that are programmed to use a two-digit rather than four-digit number to represent the year. The "19" that precedes dates in this century was assumed. Consequently, systems programmed in this fashion may mistake the Year 2000 for 1900, or some other incorrect date. To mitigate potential problems caused by the Year 2000 computer conversion, the SEC has worked closely with the securities industry to encourage participants to remediate systems that are not Year 2000 compliant and test systems that are critical to the operation of the nations capital markets as the millennium approaches.
II. Year 2000 Regulatory Moratorium
Because the Commission views the Year 2000 problem as an extremely serious issue, it has determined to declare a moratorium on the implementation of new Commission rules requiring major reprogramming. Under this moratorium, no new Commission rules requiring major reprogramming will be made effective between June 1, 1999 and March 31, 2000.
Although the Commission will continue to consider necessary revisions to its rules, it will refrain from putting into effect changes to its rules having a major impact on computer systems during this critical transition period. Of course, the Commission reserves the right to implement new rules, where such rulemaking is necessary to protect the public interest in response to emergency conditions or special circumstances that may arise during the moratorium.2
The regulatory moratorium is limited to Commission rulemaking and shall not apply to rule changes by self-regulatory organizations, such as the National Association of Securities Dealers, Inc. and the New York Stock Exchange, or independent standard setting organizations like the Financial Accounting Standards Board.3
This policy statement is intended only to set forth the Commissions intention and expectation regarding its rulemaking activities during the period indicated above.4 It also shall not be construed as creating any right or benefit, substantive or procedural, enforceable at law or in equity, by any person against the Commission. This policy statement shall not be construed to create any right to judicial review involving the compliance or noncompliance of the Commission with the statement.
III. Regulatory Requirements
This general policy statement is not an agency rule requiring notice of proposed rulemaking, opportunities for public participation, and prior publication under the provisions of the Administrative Procedure Act ("APA").5 Similarly, the provisions of the Regulatory Flexibility Act,6 which apply only when notice and comment are required by the APA or another statute, are not applicable.
The Commission believes the foregoing statement of policy provides a sound basis for the Commissions action and makes a significant contribution to meeting the needs of investors and the capital markets.
By the Commission.
Jonathan G. Katz
August 27, 1998
-- Release Nos. 33-7568; 34-40377; 35-26912; IA-1749; and IC-23416
-- This moratorium will not apply to rules designed to implement changes to the EDGAR system.
-- Rules and standards established by private entities such as the Securities Investor Protection Corporation and the American Institute of Certified Public Accountants similarly are not subject to the moratorium.
-- Accordingly, the moratorium shall not affect any remedies the Commission may seek in an enforcement proceeding against a regulated entity.
-- 5 U.S.C. § 553.
-- 5 U.S.C. §§ 601-602.