The Securities and Exchange Commission (SEC) and Board of Governors of the Federal Reserve System (Board) have proposed joint rules to implement the “broker” exceptions for banks.
The proposed rules would help define the scope of securities activities that banks may conduct without registering with the SEC as a securities broker and would implement the most important “broker” exceptions for banks adopted by the GLB Act. Specifically, the proposed rules would implement the statutory exceptions that allow a bank, subject to certain conditions, to continue to conduct securities transactions for its customers as part of the bank’s trust and fiduciary, custodial and deposit “sweep” functions, and to refer customers to a securities broker-dealer pursuant to a networking arrangement with the broker-dealer.
The proposed rules are designed to accommodate the business practices of banks and to protect investors. In developing these proposed joint rules, the agencies consulted extensively with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision.