activities reflects information submitted by the Bank to the Commission. During the year ended June 30, 1971, the Bank made 19 loans totaling the equivalent of $230,510,000 from its Ordinary Capital resources, bringing the net total of loan commitments outstanding, after cancellations, to 212, aggregating $1,566,546,787. During the year, the Bank sold or agreed to sell $2,280,875 in participations in the aforesaid loans, all such participations being without the guarantee of the Bank. The loans from the Bank's Ordinary Capital resources were made in Argentina, Brazil, Colombia, Ecuador, Jamaica, Mexico, Peru, Uruguay and Venezuela. During the year the Bank also made 37 loans totaling the equivalent of $415,830,000 from its Fund for Special Operations, bringing the gross total of loan commitments outstanding to 292, aggregating $2,206,758,846. The Bank made no loans during the year from the Social Progress Trust Fund, which it administers under an agreement with the United States, leaving the gross total of loan commitments outstanding from that Fund at 116, aggregating $494,191,039. On June 30, 1971, the outstanding funded debt of the Ordinary Capital resources of the Bank was the equivalent of $948,641,000, reflecting a net increase in the past year of the equivalent of $174,079,000. During the year the funded debt was increased through public bond issues in Austria, France, Germany, Netherlands, Switzerland and the United States totaling the equivalent of $175,053,000 as well as private placements in Japan, Latin America, Norway, Sweden and the United Kingdom totaling the equivalent of $69,263,000. The revaluation of the Swiss franc and Austrian schilling in May 1971 resulted in an increase in the funded debt in the equivalent of $3,323,000. The funded debt was decreased through the retirement of $43,350,000 of short-term dollar bonds, SF 50,000,000 ($11,434,000) representing a shortterm loan in Switzerland and $18,776,000 through sinking fund purchases and scheduled debt retirement. The subscribed ordinary capital of the Bank on June 30, 1971 was the equivalent of $2,763,020,000 of which $2,374,540,000 represented callable capital. ASIAN DEVELOPMENT BANK The Asian Development Bank Act, adopted in March 1966, authorized United States participation in the Asian Development Bank and provides an exemption for certain securities which may accorded the International Bank for Reconstruction and Development and the Inter-American Development Bank, Acting pursuant to this authority the Commission has adopted Regulation AD which requires the Bank to file with the Commission substantially the same information, documents and reports as are required from these banks. The Bank has 36 members, including 22 countries in the region and 14 nonregional developed countries with subscriptions totaling $1,005 million. Of the $502.7 million of paid-up shares subscribed, $490.3 million had matured by June 30, 1971. As of June 30, 1971, Australia, Belgium, Canada, Denmark, Germany, Italy, Japan, the Netherlands, and the United Kingdom had contributed or pledged a total of $174,645,944 to the Bank's Special Funds. In addition to the $14.575 million set aside from Ordinary Capital in 1969 by the Board of Governors for Special Funds purposes, another $9.935 million were set aside in April 1971, making a total of $24.510 million set aside. In addition, the United States Congress is considering a proposal for a $100 million U.S. contribution to the Bank's Special Funds and there have been indications from other countries of additional contributions in 1971 and thereafter. In November 1970, the Bank sold in Japan 6 billion yen ($16,667 million) 7.4 percent bonds. In April 1971, the Bank sold $20 million U.S. bonds to regional central banks at 5.5 percent, sold in Switzerland 40 million francs ($9.147 million U.S.) 7 percent bonds, and sold $25 million notes in the United States at 612 percent and $25 million bonds in the United States at 734 percent. As of June 30, 1971, the Bank had made 45 loans from Ordinary Capital resources totaling $341.035 million, and had approved 21 loans totaling $71.208 million from its Special Funds resources. As of June 30, 1971, a number of technical assistance grants, totaling $7,422,546, had been made or pledged to the Bank, by Australia, Belgium, Canada, Ceylon, China, Denmark, Finland, Germany, India, Japan, Korea, Netherlands, New Zealand, Pakistan, Switzerland, United Kingdom and the United States, including $1 million for the Southeast Asia Regional Transport Survey. Norway has also indicated its intent to contribute. The Bank has provided technical assistance to 15 countries through 53 projects amounting to over $7 million, as well as contributing to important regional projects. TRUST INDENTURE ACT OF 1939 debt securities offered for public sale, except as specifically exempted, be issued under an indenture which meets the requirements of the Act and has been duly qualified with the Commission. The provisions of the Act are closely integrated with the requirements of the Securities Act. Registration pursuant to the Securities Act of securities to be issued under a trust indenture subject to the Trust Indenture Act is not permitted to become effective unless the indenture conforms to the requirements of the latter Act designed to safeguard the rights and interests of the purchasers. Moreover, specified information about the trustee and the indenture must be included in the registration statement. The Act was passed after studies by the Commission had revealed the frequency with which trust indentures failed to provide minimum protections for security holders and absolved so-called trustees from minimum obligations in the discharge of their trusts. It requires that the indenture trustee be free of conflicting interests which might interfere with the faithful exercise of its duties in behalf of the purchasers of the securities. It requires also that the trustee be a corporation with a minimum combined capital and surplus; imposes high standards of conduct and responsibility on the trustee; precludes preferential collection of certain claims owing to the trustee by the issuer in the event of default; provides for the issuer's supplying evidence to the trustee of compliance with indenture terms and conditions such as those relating to the release or substitution of mortgaged property, issuance of new securities or satisfaction of the indenture; and provides for reports and notices by the trustee to security holders. Other provisions of the Act prohibit impairment of the security holders' right to sue individually for principal and interest except under certain circumstances, and require the maintenance of a list of security holders which may be used by them to communicate with each other regarding their rights. Number of Indentures Filed Under the Trust Indenture Act of 1939 PART III REGULATION OF SECURITIES MARKETS In addition to the disclosure provisions discussed in Part II of this report, the Securities Exchange Act of 1934 gives the Commission significant responsibilities with respect to the securities markets and persons engaged in the securities business. Among other things, it requires securities exchanges to register with the Commission and provides for Commission supervision of the selfregulatory responsibilities conferred on registered exchanges. The Act also provides for the registration and regulation of brokers and dealers doing business in the over-the-counter markets, and grants to registered associations of brokers or dealers self-regulatory functions under the Commission's supervision. In addition, it contains provisions designed to prevent fraudulent, deceptive, and manipulative acts and practices on the exchanges and in the over-the-counter markets. This and the next part of the report deal with developments and actions taken in these areas during the 1971 fiscal year. Statistical information concerning the securities markets is presented in this part. Certain recent developments of particular significance are discussed in Part I. REGULATION OF EXCHANGES REGISTRATION AND EXEMPTION OF EXCHANGES The Securities Exchange Act requires an exchange to be registered with the Commission as a national securities exchange unless the Commission exempts it from registration because of the limited volume of transactions effected. As of June 30, 1971, the following 12 stock exchanges were registered: American Stock Exchange Cincinnati Stock Exchange Detroit Stock Exchange National Stock Exchange New York Stock Exchange Salt Lake Stock Exchange Spokane Stock Exchange 1 The Executive Committee of the Board of Trade of the City of Chicago adopted a resolution on March 29, 1971 to close the Board's securities market. |