HR1764-119

What This Bill Does

The Aligning SEC Regulations for the World Bank's International Development Association Act adds a securities-law exemption to the International Development Association Act. Securities issued by IDA, including guarantees whether limited or not, and securities guaranteed by IDA as to both principal and interest are deemed exempted securities under Securities Act section 3(a)(2) and Securities Exchange Act section 3(a)(12), aligning IDA with other multilateral development banks that already receive similar treatment. IDA still must file annual and other reports with the SEC as the Commission determines appropriate given IDA's special character and operations and necessary for the public interest or investor protection. The SEC, consulting the National Advisory Council on International Monetary and Financial Problems, may suspend the exemption for any or all IDA securities during a suspension period and must include information in annual reports to Congress about the exemption's operations and effects. The amendment takes effect 30 days after enactment, but it does not take effect if Treasury reports before that date to House Financial Services and Senate Banking that IDA is providing financial assistance to a country whose government the Secretary of State has determined repeatedly supports international terrorism under specified export, foreign-assistance, or arms-control laws.

Who Benefits and How

The International Development Association, World Bank Group financing staff, institutional investors in development-bank securities, broker-dealers distributing IDA securities, emerging-market development borrowers, House Financial Services Committee members, Senate Banking Committee members, and U.S. Treasury international-finance officials benefit from a clearer securities-law exemption, lower registration friction, continuing SEC reporting, suspension authority, and a terrorism-state-sponsor safeguard.

Who Bears the Burden and How

The Securities and Exchange Commission, SEC disclosure staff, National Advisory Council on International Monetary and Financial Problems members, Treasury international-finance staff, State Department terrorism-designation officials, International Development Association reporting staff, broker-dealer compliance teams, and countries designated as state sponsors of terrorism must manage annual reports, possible suspension decisions, investor-protection oversight, Treasury pre-effective-date review, and the risk that IDA assistance to a state sponsor of terrorism prevents the exemption from taking effect.

Key Provisions

• Deems IDA-issued and IDA-guaranteed securities exempted securities under the Securities Act and Exchange Act.
• Requires IDA to file annual and other reports with the SEC as the Commission determines appropriate.
• Authorizes SEC, consulting the National Advisory Council, to suspend the exemption for IDA securities.
• Requires SEC annual congressional reporting on the exemption's operations and effects.
• Delays effectiveness for 30 days and blocks effectiveness if Treasury reports IDA assistance to a state sponsor of terrorism.