Removal of Transferred OTS Regulations Regarding Recordkeeping and Confirmation Requirements for Securities Transactions Effected by State Savings Associations and Other Amendments, 76721-76728 [2013-29786]

Download as PDF 76721 Rules and Regulations Federal Register Vol. 78, No. 244 Thursday, December 19, 2013 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 344 and 390 RIN 3064–AE06 Removal of Transferred OTS Regulations Regarding Recordkeeping and Confirmation Requirements for Securities Transactions Effected by State Savings Associations and Other Amendments Federal Deposit Insurance Corporation. ACTION: Final rule. AGENCY: The Federal Deposit Insurance Corporation (‘‘FDIC’’) is adopting a final rule (‘‘Final Rule’’) to rescind and remove a regulation entitled ‘‘Recordkeeping and Confirmation Requirements for Securities Transactions,’’ and to amend another regulation also entitled ‘‘Recordkeeping and Confirmation Requirements for Securities Transactions.’’ The rescinded regulation was one of several rules transferred to the FDIC following dissolution of the former Office of Thrift Supervision (‘‘OTS’’) in connection with the implementation of applicable provisions of Title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’). The Dodd-Frank Act provided that the former OTS rules that were transferred to the FDIC would be enforceable by or against the FDIC until they were modified, terminated, set aside, or superseded in accordance with applicable law by the FDIC, by any court of competent jurisdiction, or by operation of law. The FDIC received no comments on the Proposed Rule and consequently is adopting the Final Rule as proposed in the NPR without change. As a result, the recordkeeping and confirmation requirements for securities transactions effected on behalf of customers by all pmangrum on DSK3VPTVN1PROD with RULES SUMMARY: VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 FDIC-supervised institutions will be found at the existing regulation entitled ‘‘Recordkeeping and Confirmation Requirements for Securities Transactions.’’. DATES: The Final Rule is effective on January 21, 2014. FOR FURTHER INFORMATION CONTACT: Anthony J. DiMilo, Examination Specialist, Trust, Division of Risk Management Supervision, (202) 898– 7496; John M. Jackwood, Senior Policy Analyst, Division of Depositor and Consumer Protection, (202) 898–3991; Julia E. Paris, Counsel, Legal Division, (202) 898–3821; Grace Pyun, Senior Attorney, Legal Division, (202) 898– 3609. SUPPLEMENTARY INFORMATION: I. Background Beginning July 21, 2011, the transfer date established by section 311 of the Dodd-Frank Act, 12 U.S.C. 5411, the powers, duties and functions of the former OTS were divided among the FDIC as to State savings associations, the Office of the Comptroller of the Currency (‘‘OCC’’) as to Federal savings associations, and the Board of Governors of the Federal Reserve System as to savings and loan holding companies.1 Section 316(b) of the DoddFrank Act, 12 U.S.C. 5414(b), provides the manner of treatment for all orders, resolutions, determinations, regulations, and advisory materials that had been issued, made, prescribed, or allowed to become effective by the OTS. The section provides that if such regulatory issuances were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law. The Dodd-Frank Act directed the FDIC and OCC to consult with one another and to publish a list of continued OTS regulations to be enforced by each respective agency that would continue to remain in effect until the appropriate successor agency modified or removed the regulations in accordance with the applicable laws. 1 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 124 Stat. 1376 (2010). PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 The list was published by the FDIC and OCC as a Joint Notice in the Federal Register on July 6, 2011, and shortly thereafter, the FDIC published its transferred OTS regulations as new FDIC regulations in 12 CFR parts 390 and 391. When it republished the transferred OTS regulations as new FDIC regulations, the FDIC specifically noted that its staff would evaluate the transferred OTS rules and might later recommend incorporating the transferred OTS regulations into other FDIC rules, amending them, or rescinding them, as appropriate. Further, section 312(c) of the DoddFrank Act amended the definition of ‘‘appropriate Federal banking agency’’ contained in section 3(q) of the FDI Act, to add State savings associations to the list of entities for which the FDIC is designated the ‘‘appropriate Federal banking agency.’’ As a result, when the FDIC acts as the designated ‘‘appropriate Federal banking agency’’ (or under similar terminology) for State savings associations, as it does today, it has the authority to issue, modify, and rescind regulations involving such associations as well as for State nonmember banks and insured branches of foreign banks.2 II. Proposed Rule A. Removal of Part 390, Subpart K (Former OTS 12 CFR Part 551) On September 4, 2013, the FDIC published an NPR regarding the removal of part 390, subpart K (formerly OTS part 551), which governs recordkeeping and confirmation requirements for securities transactions effected for customers by State savings associations.3 The former OTS rule was transferred to the FDIC with only nominal changes. The NPR proposed removing part 390, subpart K from the CFR in an effort to streamline FDIC regulations for all FDIC-supervised institutions. As discussed in the Proposed Rule, the FDIC carefully reviewed the transferred rule, part 390, subpart K, and compared it with part 344, an FDIC regulation that existed before the transfer of part 390, subpart K and that continues to remain in effect today. Like the transferred rule, part 344 governs recordkeeping and confirmation requirements for securities transactions 2 12 3 78 E:\FR\FM\19DER1.SGM U.S.C. 5412(b)–(c). FR 54403, 54408 (Sept. 4, 2013). 19DER1 76722 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations pmangrum on DSK3VPTVN1PROD with RULES effected for customers by insured State nonmember banks and insured branches of foreign banks.4 Although the two rules were substantively the same, the FDIC noted some distinctions and minor technical differences between the transferred OTS rule and part 344.5 The primary distinction between part 390, subpart K and part 344 was the scope of the Small Transaction Exception. The Final Rule conforms the interpretations of that exception, as discussed below. B. Amendments to Part 344 The Proposed Rule noted that the key difference between part 344 and part 390, subpart K is the number of transactions permitted under each rule’s respective Small Transaction Exception. Specifically, the threshold for part 390, subpart K’s Small Transaction Exception is an average of 500 or fewer transactions for customers per year over the three prior calendar years, while the threshold under part 344 is fewer than an average of 200 transactions during the same time period. To reconcile the difference between the two thresholds, the FDIC’s Proposed Rule proposed amending 12 CFR 344.2(a)(1) to increase the threshold for the Small Transaction Exception applicable to all FDIC-supervised institutions effecting securities transactions for customers from an average of 200 transactions to 500 transactions per calendar year over the prior three calendar year period.6 As stated in the Proposed Rule, the FDIC believes that increasing the number of securities transactions to which the Small Transaction Exception would apply will not only ensure parity for all FDIC-supervised institutions, but recognizes that the securities activities of FDIC-supervised institutions have increased over the three decades since the FDIC established the original scope of the Small Transaction Exception.7 In addition, the Proposed Rule included a measure designed to clarify that part 344 applies to all insured depository institutions for which the FDIC has been designated the appropriate Federal banking agency. Specifically, the Proposed Rule proposed amending section 344.3 of part 344 to remove the definition of ‘‘bank’’ and add the defined term ‘‘FDIC-supervised institution’’ to the list of defined words.8 ‘‘FDIC-supervised institution’’ would mean ‘‘any insured depository institution for which the 4 Id. at 54406. 5 Id. 6 Id. 7 78 FDIC is the appropriate Federal banking agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q).’’ Under the Proposed Rule, the term ‘‘FDICsupervised institution’’ and its plural form would replace ‘‘bank,’’ ‘‘banks,’’ ‘‘state nonmember insured bank (except a District bank)’’ and ‘‘foreign bank having an insured branch’’ throughout part 344.9 III. Comments The FDIC issued the NPR with a 60day comment period, which closed on November 4, 2013. The FDIC received no comments on its Proposed Rule, and consequently the Final Rule is adopted as proposed without any changes. IV. Explanation of the Final Rule As discussed in the NPR, part 390, subpart K is substantively similar to part 344, and the designation of part 344 as a single authority of recordkeeping requirements for all FDIC-supervised institutions will serve to streamline the FDIC’s rules and eliminate unnecessary regulations. To that effect, the Final Rule removes and rescinds 12 CFR part 390, subpart K in its entirety. Consistent with the Proposed Rule, the Final Rule also amends section 344.2(a)(1) to increase the threshold from an average of fewer than 200 transactions to an average of fewer than 500 transactions for all FDIC-supervised institutions availing themselves of the Small Transaction Exception. In addition, in the Final Rule, the definition of the term ‘‘bank’’ has been deleted from section 344.3 of part 344 and has been replaced with the term ‘‘FDIC-supervised institution.’’ As discussed in the Proposed Rule, ‘‘FDICsupervised institution’’ is defined in section 344.3(h) as ‘‘any insured depository institution for which the FDIC is the appropriate Federal banking agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q).’’ In the Final Rule, the term ‘‘FDIC-supervised institution’’ and its plural form have replaced the terms ‘‘bank,’’ ‘‘banks,’’ ‘‘state nonmember bank (except a District bank)’’ and ‘‘foreign bank(s) having an insured branch’’ as used in sections 344.1 through 344.9. Section 344.10 of part 344 remains unchanged in the Final Rule. V. Administrative Law Matters A. Paperwork Reduction Act In accordance with the requirements of the Paperwork Reduction Act (‘‘PRA’’) of 1995 (44 U.S.C. 3501–3521), the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (‘‘OMB’’) control number. The information collections contained in part 344 are cleared by OMB under the FDIC’s ‘‘Recordkeeping and Confirmation Requirements for Securities Transactions’’ information collection (OMB No. 3064–0028). The FDIC’s burden estimates were updated in connection with the collection’s 2012 renewal to include State savings associations transferred from the OTS to the FDIC. The Final Rule rescinds and removes from FDIC regulations part 390, subpart K. Further, with regard to part 344, the Final Rule amends section 344.2(a)(1) to increase the threshold, from an average of 200 transactions to 500 transactions per calendar year over the prior three calendar year period, for the Small Transaction Exception to certain recordkeeping requirements applicable to all FDIC-supervised institutions. The effect of the increased threshold will be to increase the number of institutions that are exempt from more elaborate recordkeeping requirements in part 344 and from the need to have special written management policies and operational procedures relating to the execution of securities transactions for customers. However, the FDIC’s burden calculations are based on an estimated average response time across all supervised institutions. Therefore, the nominal increase in exempted institutions will have no significant impact on overall current burden estimates. As such, this provision of the Final Rule will not involve any new collections of information under the PRA. B. The Regulatory Flexibility Act The Regulatory Flexibility Act (‘‘RFA’’), 5 U.S.C. 601 et. seq., generally requires an agency to consider whether a final rule will have a significant economic impact on a substantial number of small entities (defined in regulations promulgated by the Small Business Administration to include banking organizations with total assets of less than or equal to $500 million).10 Pursuant to section 605(b) of the RFA, a final regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register together with the rule. For the reasons provided below, the FDIC certifies that FR 54406. 8 Id. VerDate Mar<15>2010 9 Id. 15:16 Dec 18, 2013 Jkt 232001 PO 00000 Frm 00002 10 5 Fmt 4700 Sfmt 4700 U.S.C. 601 et seq. E:\FR\FM\19DER1.SGM 19DER1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations the Final Rule will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. As discussed previously, part 390, subpart K was transferred from OTS’s part 551, which governed recordkeeping and confirmation requirements for Federal and State savings associations that effect securities transactions for customers. OTS’s part 551 had been in effect since 2002, and all State savings associations were required to comply with it. Because it is redundant of existing part 344 of the FDIC’s Rules, the Final Rule rescinds and removes part 390, subpart K. As a result, all FDIC-supervised institutions—including State savings associations—must comply with part 344 if they effect securities transactions for customers. Consequently, because all State savings associations have been required to comply with substantively similar recordkeeping and confirmation rules when they effected securities transactions for customers since 2002, today’s Final Rule will have no significant economic impact on any State savings association. Further, the Final Rule amends section 344.2(a)(1) to increase the threshold for all FDIC-supervised institutions relying on the Small Transaction Exception from an average of fewer than 200 to 500 transactions for customers per calendar year over the prior three calendar year period. As State savings associations currently comply with a 500-transaction small transaction threshold, the only impact of this portion of the Final Rule is to exempt more State nonmember banks and foreign banks having insured branches from complying with certain recordkeeping and written policy and procedure requirements, thus reducing regulatory burden for these insured depository institutions. There is no existing data that is helpful in determining how many State nonmember banks and foreign banks having insured branches that transact on average between 201 and 500 transactions for customers per calendar year over the prior three calendar year period will take advantage of the increased transaction threshold for the FDIC’s Small Transaction Exception in today’s Final Rule. Nevertheless, if the Final Rule reduces recordkeeping and written policy procedure requirements for any insured depository institutions, there still is no significant economic impact on a substantial number of small entities. VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 76723 C. Small Business Regulatory Enforcement Fairness Act 390 of title 12 of the Code of Federal Regulations as set forth below: The Office of Management and Budget has determined that the Final Rule is not a ‘‘major rule’’ within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996 (‘‘SBREFA’’), 5 U.S.C. 801 et seq. PART 344—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS D. Plain Language Section 722 of the Gramm-LeachBliley Act, 12 U.S.C. 4809, requires each Federal banking agency to use plain language in all of its proposed and final rules published after January 1, 2000. In the NPR, the FDIC invited comments on whether the Proposed Rule was clearly stated and effectively organized, and how the FDIC might make it easier to understand. Although the FDIC did not receive any comments, the FDIC sought to present the Final Rule in a simple and straightforward manner. E. The Economic Growth and Regulatory Paperwork Reduction Act Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (‘‘EGRPRA’’), the FDIC is required to review all of its regulations, at least once every 10 years, in order to identify any outdated or otherwise unnecessary regulations imposed on insured depository institutions.11 The FDIC’s EGRPRA review is ongoing and is expected to be completed by 2016. The NPR solicited comments on whether the proposed rescission of part 390, subpart K and amendments to part 344 would impose any outdated or unnecessary regulatory requirements on insured depository institutions. No comments on this issue were received. Upon review, the FDIC does not believe that part 344, as amended by the Final Rule, impose any outdated or unnecessary regulatory requirements on any insured depository institutions. List of Subjects 12 CFR Part 344 Banks, banking; Reporting and recordkeeping requirements; Savings associations. 12 CFR Part 390 Reporting and recordkeeping requirements. Authority and Issuance For the reasons stated in the preamble, the Board of Directors of the Federal Deposit Insurance Corporation revises part 344 of title 12 of the Code of Federal Regulations and amends part 11 Public PO 00000 Law 104–208 (Sept. 30, 1996). Frm 00003 Fmt 4700 Sfmt 4700 ■ 1. Revise part 344 to read as follows: PART 344—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS Sec. 344.1 Purpose and scope. 344.2 Exceptions. 344.3 Definitions. 344.4 Recordkeeping. 344.5 Content and time of notification. 344.6 Notification by agreement; alternative forms and times of notification. 344.7 Settlement of securities transactions. 344.8 Securities trading policies and procedures. 344.9 Personal securities trading reporting by officers and employees. 344.10 Waivers. Authority: 12 U.S.C. 1817, 1818, 1819, and 5412. § 344.1 Purpose and scope. (a) Purpose. The purpose of this part is to ensure that purchasers of securities in transactions effected by FDICsupervised institutions are provided adequate information regarding transactions. This part is also designed to ensure that FDIC-supervised institutions subject to this part maintain adequate records and controls with respect to the securities transactions they effect. (b) Scope; general. Any security transaction effected for a customer by an FDIC-supervised institution is subject to this part unless excepted by § 344.2. An FDIC-supervised institution effecting transactions in government securities is subject to the notification, recordkeeping, and policies and procedures requirements of this part. This part also applies to municipal securities transactions by an FDICsupervised institution that is not registered as a ‘‘municipal securities dealer’’ with the Securities and Exchange Commission. See 15 U.S.C. 78c(a)(30) and 78o–4. § 344.2 Exceptions. (a) An FDIC-supervised institution effecting securities transactions for customers is not subject to all or part of this part 344 to the extent that they qualify for one or more of the following exceptions: (1) Small number of transactions. The requirements of §§ 344.4(a)(2) through (4) and 344.8(a)(1) through (3) do not apply to an FDIC-supervised institution E:\FR\FM\19DER1.SGM 19DER1 76724 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations effecting an average of fewer than 500 securities transactions per year for customers over the prior three calendar year period. The calculation of this average does not include transactions in government securities. (2) Government securities. The recordkeeping requirements of § 344.4 do not apply to FDIC-supervised institutions effecting fewer than 500 government securities brokerage transactions per year. This exemption does not apply to government securities dealer transactions by FDIC-supervised institutions. (3) Municipal securities. This part does not apply to transactions in municipal securities effected by an FDIC-supervised institution registered with the Securities and Exchange Commission as a ‘‘municipal securities dealer’’ as defined in title 15 U.S.C. 78c(a)(30). See 15 U.S.C. 78o–4. (4) Foreign branches. Activities of foreign branches of FDIC-supervised institutions shall not be subject to the requirements of this part. (5) Transactions effected by registered broker/dealers. (i) This part does not apply to securities transactions effected for an FDIC-supervised institution’s customer by a registered broker/dealer if: (A) The broker/dealer is fully disclosed to the customer; and (B) The customer has a direct contractual agreement with the broker/ dealer. (ii) This exemption extends to arrangements with broker/dealers which involve FDIC-supervised institution employees when acting as employees of, and subject to the supervision of, the registered broker/dealer when soliciting, recommending, or effecting securities transactions. (b) Safe and sound operations. Notwithstanding this section, every FDIC-supervised institution effecting securities transactions for customers shall maintain, directly or indirectly, effective systems of records and controls regarding their customer securities transactions to ensure safe and sound operations. The records and systems maintained must clearly and accurately reflect the information required under this part and provide an adequate basis for an audit. pmangrum on DSK3VPTVN1PROD with RULES § 344.3 Definitions. (a) Asset-backed security means a security that is serviced primarily by the cash flows of a discrete pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period plus any rights or other assets designed to assure the servicing VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 or timely distribution of proceeds to the security holders. (b) Cash management sweep account means a prearranged, automatic transfer of funds above a certain dollar level from a deposit account to purchase a security or securities, or any prearranged, automatic redemption or sale of a security or securities when a deposit account drops below a certain level with the proceeds being transferred into a deposit account. (c) Collective investment fund means funds held by an FDIC-supervised institution as fiduciary and, consistent with local law, invested collectively: (1) In a common trust fund maintained by such FDIC-supervised institution exclusively for the collective investment and reinvestment of monies contributed thereto by the FDICsupervised institution in its capacity as trustee, executor, administrator, guardian, or custodian under the Uniform Gifts to Minors Act; or (2) In a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or similar trusts which are exempt from Federal income taxation under the Internal Revenue Code (26 U.S.C.). (d) Completion of the transaction means: (1) For purchase transactions, the time when the customer pays the FDICsupervised institution any part of the purchase price (or the time when the FDIC-supervised institution makes the book-entry for any part of the purchase price, if applicable), however, if the customer pays for the security prior to the time payment is requested or becomes due, then the transaction shall be completed when the FDIC-supervised institution transfers the security into the account of the customer; and (2) For sale transactions, the time when the FDIC-supervised institution transfers the security out of the account of the customer or, if the security is not in its custody, then the time when the security is delivered to it, however, if the customer delivers the security to the FDIC-supervised institution prior to the time delivery is requested or becomes due then the transaction shall be completed when the FDIC-supervised institution makes payment into the account of the customer. (e) Crossing of buy and sell orders means a security transaction in which the same FDIC-supervised institution acts as agent for both the buyer and the seller. (f) Customer means any person or account, including any agency, trust, estate, guardianship, or other fiduciary account for which an FDIC-supervised institution effects or participates in PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 effecting the purchase or sale of securities, but does not include a broker, dealer, insured depository institution acting as a broker or a dealer, issuer of the securities that are the subject of the transaction or a person or account having a direct, contractual agreement with a fully disclosed broker/dealer. (g) Debt security means any security, such as a bond, debenture, note, or any other similar instrument that evidences a liability of the issuer (including any security of this type that is convertible into stock or a similar security) and fractional or participation interests in one or more of any of the foregoing; provided, however, that securities issued by an investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80a— 1 et seq., shall not be included in this definition. (h) FDIC-supervised institution means any insured depository institution for which the Federal Deposit Insurance Corporation is the appropriate Federal banking agency pursuant to section 3(q) of the Federal Deposit Insurance Act, 12 U.S.C. 1813(q). (i) Government security means: (1) A security that is a direct obligation of, or obligation guaranteed as to principal and interest by, the United States; (2) A security that is issued or guaranteed by a corporation in which the United States has a direct or indirect interest and which is designated by the Secretary of the Treasury for exemption as necessary or appropriate in the public interest or for the protection of investors; (3) A security issued or guaranteed as to principal and interest by any corporation whose securities are designated, by statute specifically naming the corporation, to constitute exempt securities within the meaning of the laws administered by the Securities and Exchange Commission; or (4) Any put, call, straddle, option, or privilege on a security described in paragraph (i)(1), (2), or (3) of this section other than a put, call, straddle, option, or privilege that is traded on one or more national securities exchanges, or for which quotations are disseminated through an automated quotation system operated by a registered securities association. (j) Investment discretion means that, with respect to an account, an FDICsupervised institution directly or indirectly: (1) Is authorized to determine what securities or other property shall be purchased or sold by or for the account; or E:\FR\FM\19DER1.SGM 19DER1 pmangrum on DSK3VPTVN1PROD with RULES Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations (2) Makes decisions as to what securities or other property shall be purchased or sold by or for the account even though some other person may have responsibility for these investment decisions. (k) Municipal security means a security which is a direct obligation of, or an obligation guaranteed as to principal or interest by, a State or any political subdivision, or any agency or instrumentality of a State or any political subdivision, or any municipal corporate instrumentality of one or more States or any security which is an industrial development bond (as defined in 26 U.S.C. 103(c)(2)) the interest on which is excludable from gross income under 26 U.S.C. 103(a)(1) if, by reason of the application of paragraph (4) or (6) of 26 U.S.C. 103(c) (determined as if paragraphs (4)(A), (5) and (7) were not included in 26 U.S.C. 103(c), paragraph (1) of 26 U.S.C. 103(c) does not apply to such security. See 15. U.S.C. 78c(a)(29). (l) Periodic plan means any written authorization for an FDIC-supervised institution to act as agent to purchase or sell for a customer a specific security or securities, in a specific amount (calculated in security units or dollars) or to the extent of dividends and funds available, at specific time intervals, and setting forth the commission or charges to be paid by the customer or the manner of calculating them. Periodic plans include dividend reinvestment plans, automatic investment plans, and employee stock purchase plans. (m) Security means any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, and any put, call, straddle, option, or privilege on any security or group or index of securities (including any interest therein or based on the value thereof), or, in general, any instrument commonly known as a ‘‘security’’; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing. The term security does not include: (1) A deposit or share account in a federally or state insured depository institution; (2) A loan participation; (3) A letter of credit or other form of insured depository institution indebtedness incurred in the ordinary course of business; VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 (4) Currency; (5) Any note, draft, bill of exchange, or bankers acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited; (6) Units of a collective investment fund; (7) Interests in a variable amount (master) note of a borrower of prime credit; or (8) U.S. Savings Bonds. § 344.4 Recordkeeping. (a) General rule. An FDIC-supervised institution effecting securities transactions for customers shall maintain the following records for at least three years: (1) Chronological records. An itemized daily record of each purchase and sale of securities maintained in chronological order, and including: (i) Account or customer name for which each transaction was effected; (ii) Description of the securities; (iii) Unit and aggregate purchase or sale price; (iv) Trade date; and (v) Name or other designation of the broker/dealer or other person from whom the securities were purchased or to whom the securities were sold; (2) Account records. Account records for each customer, reflecting: (i) Purchases and sales of securities; (ii) Receipts and deliveries of securities; (iii) Receipts and disbursements of cash; and (iv) Other debits and credits pertaining to transactions in securities; (3) A separate memorandum (order ticket) of each order to purchase or sell securities (whether executed or canceled), which shall include: (i) The accounts for which the transaction was effected; (ii) Whether the transaction was a market order, limit order, or subject to special instructions; (iii) The time the order was received by the trader or other FDIC-supervised institution employee responsible for effecting the transaction; (iv) The time the order was placed with the broker/dealer, or if there was no broker/dealer, time the order was executed or canceled; (v) The price at which the order was executed; and (vi) The broker/dealer utilized; (4) Record of broker/dealers. A record of all broker/dealers selected by the FDIC-supervised institution to effect securities transactions and the amount of commissions paid or allocated to each broker during the calendar year; and PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 76725 (5) Notifications. A copy of the written notification required by §§ 344.5 and 344.6. (b) Manner of maintenance. Records may be maintained in whatever manner, form or format an FDIC-supervised institution deems appropriate, provided however, the records required by this section must clearly and accurately reflect the information required and provide an adequate basis for the audit of the information. Records may be maintained in hard copy, automated or electronic form provided the records are easily retrievable, readily available for inspection, and capable of being reproduced in a hard copy. An FDICsupervised institution may contract with third party service providers, including broker/dealers, to maintain records required under this part. § 344.5 Content and time of notification. Every FDIC-supervised institution effecting a securities transaction for a customer shall give or send, by mail, facsimile or other means of electronic transmission, to the customer at or before completion of the transaction one of the types of written notification identified below: (a) Broker/dealer’s confirmations. (1) A copy of the confirmation of a broker/ dealer relating to the securities transaction. An FDIC-supervised institution may either have the broker/ dealer send the confirmation directly to the FDIC-supervised institution’s customer or send a copy of the broker/ dealer’s confirmation to the customer upon receipt of the confirmation by the FDIC-supervised institution. If an FDICsupervised institution chooses to send a copy of the broker/dealer’s confirmation, it must be sent within one business day from the institution’s receipt of the broker/dealer’s confirmation; and (2) If the FDIC-supervised institution is to receive remuneration from the customer or any other source in connection with the transaction, a statement of the source and amount of any remuneration to be received if such would be required under paragraph (b)(6) of this section; or (b) Written notification. A written notification disclosing: (1) Name of the FDIC-supervised institution; (2) Name of the customer; (3) Whether the FDIC-supervised institution is acting as agent for such customer, as agent for both such customer and some other person, as principal for its own account, or in any other capacity; (4) The date and time of execution, or the fact that the time of execution will E:\FR\FM\19DER1.SGM 19DER1 pmangrum on DSK3VPTVN1PROD with RULES 76726 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations be furnished within a reasonable time upon written request of the customer, and the identity, price, and number of shares or units (or principal amount in the case of debt securities) of the security purchased or sold by the customer; (5) The amount of any remuneration received or to be received, directly or indirectly, by any broker/dealer from such customer in connection with the transaction; (6)(i) The amount of any remuneration received or to be received by the FDICsupervised institution from the customer, and the source and amount of any other remuneration received or to be received by the FDIC-supervised institution in connection with the transaction, unless: (A) Remuneration is determined pursuant to a prior written agreement between the FDIC-supervised institution and the customer; or (B) In the case of government securities and municipal securities, the FDIC-supervised institution received the remuneration in other than an agency transaction; or (C) In the case of open end investment company securities, the FDICsupervised institution has provided the customer with a current prospectus which discloses all current fees, loads and expenses at or before completion of the transaction; (ii) If the FDIC-supervised institution elects not to disclose the source and amount of remuneration it has received or will receive from a party other than the customer pursuant to paragraph (b)(6)(i)(A), (B), or (C) of this section, the written notification must disclose whether the FDIC-supervised institution has received or will receive remuneration from a party other than the customer, and that the FDICsupervised institution will furnish within a reasonable time the source and amount of this remuneration upon written request of the customer. This election is not available, however, if, with respect to a purchase, the FDICsupervised institution was participating in a distribution of that security; or, with respect to a sale, the FDICsupervised institution was participating in a tender offer for that security; (7) Name of the broker/dealer utilized; or where there is no broker/dealer, the name of the person from whom the security was purchased or to whom the security was sold, or a statement that the FDIC-supervised institution will furnish this information within a reasonable time upon written request; (8) In the case of a transaction in a debt security subject to redemption before maturity, a statement to the effect VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 that the debt security may be redeemed in whole or in part before maturity, that the redemption could affect the yield represented and that additional information is available upon request; (9) In the case of a transaction in a debt security effected exclusively on the basis of a dollar price: (i) The dollar price at which the transaction was effected; and (ii) The yield to maturity calculated from the dollar price, provided however, that this shall not apply to a transaction in a debt security that either has a maturity date that may be extended by the issuer thereof, with a variable interest payable thereon, or is an asset-backed security that represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment; (10) In the case of a transaction in a debt security effected on the basis of yield: (i) The yield at which the transaction was effected, including the percentage amount and its characterization (e.g., current yield, yield to maturity, or yield to call) and if effected at yield to call, the type of call, the call date and call price; (ii) The dollar price calculated from the yield at which the transaction was effected; and (iii) If effected on a basis other than yield to maturity and the yield to maturity is lower than the represented yield, the yield to maturity as well as the represented yield; provided however, that this paragraph (b)(10) shall not apply to a transaction in a debt security that either has a maturity date that may be extended by the issuer with a variable interest rate payable thereon, or is an asset-backed security that represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment; (11) In the case of a transaction in a debt security that is an asset-backed security, which represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment, a statement indicating that the actual yield of the asset-backed security may vary according to the rate at which the underlying receivables or other financial assets are prepaid and a statement of the fact that information concerning the factors that affect yield (including at a minimum estimated yield, weighted average life, and the prepayment assumptions underlying yield) will be furnished upon written request of the customer; and (12) In the case of a transaction in a debt security, other than a government PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 security, that the security is unrated by a nationally recognized statistical rating organization, if that is the case. § 344.6 Notification by agreement; alternative forms and times of notification. An FDIC-supervised institution may elect to use the following alternative notification procedures if the transaction is effected for: (a) Notification by agreement. Accounts (except periodic plans) where the FDIC-supervised institution does not exercise investment discretion and the FDIC-supervised institution and the customer agree in writing to a different arrangement as to the time and content of the written notification; provided however, that such agreement makes clear the customer’s right to receive the written notification pursuant to § 344.5(a) or (b) at no additional cost to the customer. (b) Trust accounts. Accounts (except collective investment funds) where the FDIC-supervised institution exercises investment discretion in other than in an agency capacity, in which instance it shall, upon request of the person having the power to terminate the account or, if there is no such person, upon the request of any person holding a vested beneficial interest in such account, give or send to such person the written notification within a reasonable time. The FDIC-supervised institution may charge such person a reasonable fee for providing this information. (c) Agency accounts. Accounts where the FDIC-supervised institution exercises investment discretion in an agency capacity, in which instance: (1) The FDIC-supervised institution shall give or send to each customer not less frequently than once every three months an itemized statement which shall specify the funds and securities in the custody or possession of the FDICsupervised institution at the end of such period and all debits, credits and transactions in the customer’s accounts during such period; and (2) If requested by the customer, the FDIC-supervised institution shall give or send to each customer within a reasonable time the written notification described in § 344.5. The FDICsupervised institution may charge a reasonable fee for providing the information described in § 344.5. (d) Cash management sweep accounts. An FDIC-supervised institution effecting a securities transaction for a cash management sweep account shall give or send its customer a written statement, in the same form as required under paragraph (f) of this section, for each month in which a purchase or sale of a security E:\FR\FM\19DER1.SGM 19DER1 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations takes place in the account and not less than once every three months if there are no securities transactions in the account. Notwithstanding the provisions of this paragraph (d), FDICsupervised institutions that retain custody of government securities that are the subject of a hold-in-custody repurchase agreement are subject to the requirements of 17 CFR 403.5(d). (e) Collective investment fund accounts. The FDIC-supervised institution shall at least annually give or send to the customer a copy of a financial report of the fund, or provide notice that a copy of such report is available and will be furnished upon request to each person to whom a regular periodic accounting would ordinarily be rendered with respect to each participating account. This report shall be based upon an audit made by independent public accountants or internal auditors responsible only to the board of directors of the FDICsupervised institution. (f) Periodic plan accounts. The FDICsupervised institution shall give or send to the customer not less than once every three months a written statement showing: (1) The funds and securities in the custody or possession of the FDICsupervised institution; (2) All service charges and commissions paid by the customer in connection with the transaction; and (3) All other debits and credits of the customer’s account involved in the transaction; provided that upon written request of the customer, the FDICsupervised institution shall give or send the information described in § 344.5, except that any such information relating to remuneration paid in connection with the transaction need not be provided to the customer when the remuneration is paid by a source other than the customer. The FDICsupervised institution may charge a reasonable fee for providing information described in § 344.5. pmangrum on DSK3VPTVN1PROD with RULES § 344.7 Settlement of securities transactions. (a) An FDIC-supervised institution shall not effect or enter into a contract for the purchase or sale of a security (other than an exempted security as defined in 15 U.S.C. 78c(a)(12), government security, municipal security, commercial paper, bankers’ acceptances, or commercial bills) that provides for payment of funds and delivery of securities later than the third business day after the date of the contract unless otherwise expressly agreed to by the parties at the time of the transaction. VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 (b) Paragraphs (a) and (c) of this section shall not apply to contracts: (1) For the purchase or sale of limited partnership interests that are not listed on an exchange or for which quotations are not disseminated through an automated quotation system of a registered securities association; or (2) For the purchase or sale of securities that the Securities and Exchange Commission (SEC) may from time to time, taking into account then existing market practices, exempt by order from the requirements of paragraph (a) of SEC Rule 15c6–1, 17 CFR 240.15c6–1(a), either unconditionally or on specified terms and conditions, if the SEC determines that an exemption is consistent with the public interest and the protection of investors. (c) Paragraph (a) of this section shall not apply to contracts for the sale for cash of securities that are priced after 4:30 p.m. Eastern time on the date the securities are priced and that are sold by an issuer to an underwriter pursuant to a firm commitment underwritten offering registered under the Securities Act of 1933, 15 U.S.C. 77a et seq., or sold to an initial purchaser by an FDICsupervised institution participating in the offering. An FDIC-supervised institution shall not effect or enter into a contract for the purchase or sale of the securities that provides for payment of funds and delivery of securities later than the fourth business day after the date of the contract unless otherwise expressly agreed to by the parties at the time of the transaction. (d) For the purposes of paragraphs (a) and (c) of this section, the parties to a contract shall be deemed to have expressly agreed to an alternate date for payment of funds and delivery of securities at the time of the transaction for a contract for the sale for cash of securities pursuant to a firm commitment offering if the managing underwriter and the issuer have agreed to the date for all securities sold pursuant to the offering and the parties to the contract have not expressly agreed to another date for payment of funds and delivery of securities at the time of the transaction. § 344.8 Securities trading policies and procedures. (a) Policies and procedures. Every FDIC-supervised institution effecting securities transactions for customers shall establish written policies and procedures providing: (1) Assignment of responsibility for supervision of all officers or employees who: PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 76727 (i) Transmit orders to or place orders with broker/dealers; or (ii) Execute transactions in securities for customers; (2) Assignment of responsibility for supervision and reporting, separate from those in paragraph (a)(1) of this section, with respect to all officers or employees who process orders for notification or settlement purposes, or perform other back office functions with respect to securities transactions effected for customers; (3) For the fair and equitable allocation of securities and prices to accounts when orders for the same security are received at approximately the same time and are placed for execution either individually or in combination; and (4) Where applicable, and where permissible under local law, for the crossing of buy and sell orders on a fair and equitable basis to the parties to the transaction. § 344.9 Personal securities trading reporting by officers and employees of FDIC-supervised institutions. (a) Officers and employees subject to reporting. FDIC-supervised institution officers and employees who: (1) Make investment recommendations or decisions for the accounts of customers; (2) Participate in the determination of such recommendations or decisions; or (3) In connection with their duties, obtain information concerning which securities are being purchased or sold or recommend such action, must report to the FDIC-supervised institution, within 30-calendar days after the end of the calendar quarter, all transactions in securities made by them or on their behalf, either at the FDIC-supervised institution or elsewhere in which they have a beneficial interest. The report shall identify the securities purchased or sold and indicate the dates of the transactions and whether the transactions were purchases or sales. (b) Exempt transactions. Excluded from this reporting requirement are: (1) Transactions for the benefit of the officer or employee over which the officer or employee has no direct or indirect influence or control; (2) Transactions in registered investment company shares; (3) Transactions in government securities; and (4) All transactions involving in the aggregate $10,000 or less during the calendar quarter. (c) Alternative report. Where an FDICsupervised institution acts as an investment adviser to an investment company registered under the E:\FR\FM\19DER1.SGM 19DER1 76728 Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / Rules and Regulations Investment Company Act of 1940, the FDIC-supervised institution’s officers and employees may fulfill their reporting requirement under paragraph (a) of this section by filing with the FDIC-supervised institution the ‘‘access persons’’ personal securities trading report required by SEC Rule 17j–1, 17 CFR 270.17j–1. § 344.10 Waivers. The Board of Directors of the FDIC, in its discretion, may waive for good cause all or any part of this part 344. PART 390—REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT SUPERVISION 2. The authority citation for part 390 is revised to read as follows: pmangrum on DSK3VPTVN1PROD with RULES ■ Authority: 12 U.S.C. 1819. Subpart A also issued under 12 U.S.C. 1820. Subpart B also issued under 12 U.S.C. 1818. Subpart C also issued under 5 U.S.C. 504; 554–557; 12 U.S.C. 1464; 1467; 1468; 1817; 1818; 1820; 1829; 3349, 4717; 15 U.S.C. 78l; 78o–5; 78u–2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; 42 U.S.C. 4012a. Subpart D also issued under 12 U.S.C. 1817; 1818; 1820; 15 U.S.C. 78l. Subpart E also issued under 12 U.S.C. 1813; 1831m; 15 U.S.C. 78. Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et seq. Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601–3619. Subpart H also issued under 12 U.S.C. 1464; 1831y. Subpart I also issued under 12 U.S.C. 1831x. Subpart J also issued under 12 U.S.C. 1831p–1. Subpart L also issued under 12 U.S.C. 1831p–1. Subpart M also issued under 12 U.S.C. 1818. Subpart N also issued under 12 U.S.C. 1821. Subpart O also issued under 12 U.S.C. 1828. Subpart P also issued under 12 U.S.C. 1470; 1831e; 1831n; 1831p–1; 3339. Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464. Subpart R also issued under 12 U.S.C. 1463; 1464; 1831m; 1831n; 1831p–1. Subpart S also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 1468a; 1817; 1820; 1828; 1831e; 1831o; 1831p–1; 1881–1884; 3207; 3339; 15 U.S.C. 78b; 78l; 78m; 78n; 78p; 78q; 78w; 31 U.S.C. 5318; 42 U.S.C. 4106. Subpart T also issued under 12 U.S.C. 1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 78n; 78w. Subpart U also issued under 12 U.S.C. 1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 78n; 78p; 78w; 78d–1; 7241; 7242; 7243; 7244; 7261; 7264; 7265. Subpart V also issued under 12 U.S.C. 3201–3208. VerDate Mar<15>2010 15:16 Dec 18, 2013 Jkt 232001 Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 U.S.C. 78c; 78l; 78m; 78n; 78p; 78w. Subpart X also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 1828; 3331 et seq. Subpart Y also issued under 12 U.S.C.1831o. Subpart Z also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 1828 (note). 3. Subpart K—[Removed and reserved] ■ Remove and reserve subpart K consisting of §§ 390.200 through 390.214. ■ Dated at Washington, DC, this 10th day of December, 2013. By order of the Board of Directors. Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary. [FR Doc. 2013–29786 Filed 12–18–13; 8:45 am] BILLING CODE 6714–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Parts 703 and 721 RIN 3133–AE17 Charitable Donation Accounts National Credit Union Administration (NCUA). ACTION: Final rule. AGENCY: The NCUA Board (Board) is issuing a final rule to amend its regulations to clarify that federal credit unions are authorized to create and fund a charitable donation account, a hybrid charitable and investment vehicle, as an activity incidental to the business for which the credit union is chartered, provided the account is primarily charitable in nature and meets other regulatory conditions to ensure safety and soundness. DATES: The effective date for this rule is December 19, 2013. FOR FURTHER INFORMATION CONTACT: Rick Mayfield, Senior Capital Markets Specialist, Office of Examination and Insurance, at 1775 Duke Street, Alexandria, VA 22314 or by telephone: (703) 518–6360; or Steven W. Widerman, Senior Staff Attorney, Office of General Counsel, at the above address or by telephone: (703) 518–6540. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background II. Summary of Comments on Proposed Rule III. Regulatory Procedures I. Background NCUA is amending parts 703 and 721 of its regulations to clarify that, under certain circumstances, federal credit PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 unions (FCUs) are authorized to fund a charitable donation account (CDA), which may hold investments that are otherwise impermissible, as a charitable contribution or donation under its incidental powers authority.1 This will help facilitate charitable activities for FCUs. To be considered an incidental powers activity, the rule requires a CDA to be primarily charitable in nature. Any investment feature benefitting the FCU must be incidental to the CDA’s primary charitable purpose. The CDA must also be structured to preserve safety and soundness and to limit the FCU’s exposure to the risks of otherwise impermissible investments. Summary of Proposed Rule On September 12, 2013, the Board issued a Notice of Proposed Rulemaking (NPRM) 2 allowing FCUs to invest in CDAs while creating safeguards to ensure the donations are used for their intended charitable purposes. The Board proposed several requirements for FCUs that invest in these accounts, including: • The primary purpose of a CDA must be to generate funds to donate to taxexempt charities chosen by FCUs. • The total investment in all such accounts, in the aggregate, must be limited to three percent of the FCU’s net worth for the duration of the accounts. • A minimum of 51 percent of the total return from such an account must be distributed to one or more qualified charities. • Distributions must be made to qualified charities no less frequently than every five years, or in the event the account terminates in less than five years. • Assets of these accounts must be held in segregated custodial accounts or special purpose entities specifically identified as a CDA. • If the FCU structures its CDA using a trust, the trustee must be an entity regulated by the Office of the Comptroller of the Currency (OCC), the U.S. Securities and Exchange Commission (SEC) or another federal regulatory agency. The regulated trustee or other person who is authorized to make investment decisions for a CDA (manager) must be a Registered Investment Adviser (RIA) with the SEC. • The terms and conditions controlling the account must be documented in a written agreement. • An FCU, upon termination of its CDA, may receive a distribution of the remaining assets in cash, or a distribution in kind of the remaining 1 12 2 78 E:\FR\FM\19DER1.SGM CFR 721.3(b). FR 57539 (Sept. 19, 2013). 19DER1

Agencies

FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 78, Number 244 (Thursday, December 19, 2013)]
[Rules and Regulations]
[Pages 76721-76728]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29786]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 78, No. 244 / Thursday, December 19, 2013 / 
Rules and Regulations

[[Page 76721]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Parts 344 and 390

RIN 3064-AE06


Removal of Transferred OTS Regulations Regarding Recordkeeping 
and Confirmation Requirements for Securities Transactions Effected by 
State Savings Associations and Other Amendments

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Deposit Insurance Corporation (``FDIC'') is 
adopting a final rule (``Final Rule'') to rescind and remove a 
regulation entitled ``Recordkeeping and Confirmation Requirements for 
Securities Transactions,'' and to amend another regulation also 
entitled ``Recordkeeping and Confirmation Requirements for Securities 
Transactions.'' The rescinded regulation was one of several rules 
transferred to the FDIC following dissolution of the former Office of 
Thrift Supervision (``OTS'') in connection with the implementation of 
applicable provisions of Title III of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (``Dodd-Frank Act''). The Dodd-Frank Act 
provided that the former OTS rules that were transferred to the FDIC 
would be enforceable by or against the FDIC until they were modified, 
terminated, set aside, or superseded in accordance with applicable law 
by the FDIC, by any court of competent jurisdiction, or by operation of 
law.
    The FDIC received no comments on the Proposed Rule and consequently 
is adopting the Final Rule as proposed in the NPR without change. As a 
result, the recordkeeping and confirmation requirements for securities 
transactions effected on behalf of customers by all FDIC-supervised 
institutions will be found at the existing regulation entitled 
``Recordkeeping and Confirmation Requirements for Securities 
Transactions.''.

DATES: The Final Rule is effective on January 21, 2014.

FOR FURTHER INFORMATION CONTACT: Anthony J. DiMilo, Examination 
Specialist, Trust, Division of Risk Management Supervision, (202) 898-
7496; John M. Jackwood, Senior Policy Analyst, Division of Depositor 
and Consumer Protection, (202) 898-3991; Julia E. Paris, Counsel, Legal 
Division, (202) 898-3821; Grace Pyun, Senior Attorney, Legal Division, 
(202) 898-3609.

SUPPLEMENTARY INFORMATION: 

I. Background

    Beginning July 21, 2011, the transfer date established by section 
311 of the Dodd-Frank Act, 12 U.S.C. 5411, the powers, duties and 
functions of the former OTS were divided among the FDIC as to State 
savings associations, the Office of the Comptroller of the Currency 
(``OCC'') as to Federal savings associations, and the Board of 
Governors of the Federal Reserve System as to savings and loan holding 
companies.\1\ Section 316(b) of the Dodd-Frank Act, 12 U.S.C. 5414(b), 
provides the manner of treatment for all orders, resolutions, 
determinations, regulations, and advisory materials that had been 
issued, made, prescribed, or allowed to become effective by the OTS. 
The section provides that if such regulatory issuances were in effect 
on the day before the transfer date, they continue in effect and are 
enforceable by or against the appropriate successor agency until they 
are modified, terminated, set aside, or superseded in accordance with 
applicable law by such successor agency, by any court of competent 
jurisdiction, or by operation of law.
---------------------------------------------------------------------------

    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010).
---------------------------------------------------------------------------

    The Dodd-Frank Act directed the FDIC and OCC to consult with one 
another and to publish a list of continued OTS regulations to be 
enforced by each respective agency that would continue to remain in 
effect until the appropriate successor agency modified or removed the 
regulations in accordance with the applicable laws. The list was 
published by the FDIC and OCC as a Joint Notice in the Federal Register 
on July 6, 2011, and shortly thereafter, the FDIC published its 
transferred OTS regulations as new FDIC regulations in 12 CFR parts 390 
and 391. When it republished the transferred OTS regulations as new 
FDIC regulations, the FDIC specifically noted that its staff would 
evaluate the transferred OTS rules and might later recommend 
incorporating the transferred OTS regulations into other FDIC rules, 
amending them, or rescinding them, as appropriate.
    Further, section 312(c) of the Dodd-Frank Act amended the 
definition of ``appropriate Federal banking agency'' contained in 
section 3(q) of the FDI Act, to add State savings associations to the 
list of entities for which the FDIC is designated the ``appropriate 
Federal banking agency.'' As a result, when the FDIC acts as the 
designated ``appropriate Federal banking agency'' (or under similar 
terminology) for State savings associations, as it does today, it has 
the authority to issue, modify, and rescind regulations involving such 
associations as well as for State nonmember banks and insured branches 
of foreign banks.\2\
---------------------------------------------------------------------------

    \2\ 12 U.S.C. 5412(b)-(c).
---------------------------------------------------------------------------

II. Proposed Rule

A. Removal of Part 390, Subpart K (Former OTS 12 CFR Part 551)

    On September 4, 2013, the FDIC published an NPR regarding the 
removal of part 390, subpart K (formerly OTS part 551), which governs 
recordkeeping and confirmation requirements for securities transactions 
effected for customers by State savings associations.\3\ The former OTS 
rule was transferred to the FDIC with only nominal changes. The NPR 
proposed removing part 390, subpart K from the CFR in an effort to 
streamline FDIC regulations for all FDIC-supervised institutions. As 
discussed in the Proposed Rule, the FDIC carefully reviewed the 
transferred rule, part 390, subpart K, and compared it with part 344, 
an FDIC regulation that existed before the transfer of part 390, 
subpart K and that continues to remain in effect today. Like the 
transferred rule, part 344 governs recordkeeping and confirmation 
requirements for securities transactions

[[Page 76722]]

effected for customers by insured State nonmember banks and insured 
branches of foreign banks.\4\ Although the two rules were substantively 
the same, the FDIC noted some distinctions and minor technical 
differences between the transferred OTS rule and part 344.\5\ The 
primary distinction between part 390, subpart K and part 344 was the 
scope of the Small Transaction Exception. The Final Rule conforms the 
interpretations of that exception, as discussed below.
---------------------------------------------------------------------------

    \3\ 78 FR 54403, 54408 (Sept. 4, 2013).
    \4\ Id. at 54406.
    \5\ Id.
---------------------------------------------------------------------------

B. Amendments to Part 344

    The Proposed Rule noted that the key difference between part 344 
and part 390, subpart K is the number of transactions permitted under 
each rule's respective Small Transaction Exception. Specifically, the 
threshold for part 390, subpart K's Small Transaction Exception is an 
average of 500 or fewer transactions for customers per year over the 
three prior calendar years, while the threshold under part 344 is fewer 
than an average of 200 transactions during the same time period.
    To reconcile the difference between the two thresholds, the FDIC's 
Proposed Rule proposed amending 12 CFR 344.2(a)(1) to increase the 
threshold for the Small Transaction Exception applicable to all FDIC-
supervised institutions effecting securities transactions for customers 
from an average of 200 transactions to 500 transactions per calendar 
year over the prior three calendar year period.\6\ As stated in the 
Proposed Rule, the FDIC believes that increasing the number of 
securities transactions to which the Small Transaction Exception would 
apply will not only ensure parity for all FDIC-supervised institutions, 
but recognizes that the securities activities of FDIC-supervised 
institutions have increased over the three decades since the FDIC 
established the original scope of the Small Transaction Exception.\7\
---------------------------------------------------------------------------

    \6\ Id.
    \7\ 78 FR 54406.
---------------------------------------------------------------------------

    In addition, the Proposed Rule included a measure designed to 
clarify that part 344 applies to all insured depository institutions 
for which the FDIC has been designated the appropriate Federal banking 
agency. Specifically, the Proposed Rule proposed amending section 344.3 
of part 344 to remove the definition of ``bank'' and add the defined 
term ``FDIC-supervised institution'' to the list of defined words.\8\ 
``FDIC-supervised institution'' would mean ``any insured depository 
institution for which the FDIC is the appropriate Federal banking 
agency pursuant to section 3(q) of the FDI Act, 12 U.S.C. 1813(q).'' 
Under the Proposed Rule, the term ``FDIC-supervised institution'' and 
its plural form would replace ``bank,'' ``banks,'' ``state nonmember 
insured bank (except a District bank)'' and ``foreign bank having an 
insured branch'' throughout part 344.\9\
---------------------------------------------------------------------------

    \8\ Id.
    \9\ Id.
---------------------------------------------------------------------------

III. Comments

    The FDIC issued the NPR with a 60-day comment period, which closed 
on November 4, 2013. The FDIC received no comments on its Proposed 
Rule, and consequently the Final Rule is adopted as proposed without 
any changes.

IV. Explanation of the Final Rule

    As discussed in the NPR, part 390, subpart K is substantively 
similar to part 344, and the designation of part 344 as a single 
authority of recordkeeping requirements for all FDIC-supervised 
institutions will serve to streamline the FDIC's rules and eliminate 
unnecessary regulations. To that effect, the Final Rule removes and 
rescinds 12 CFR part 390, subpart K in its entirety.
    Consistent with the Proposed Rule, the Final Rule also amends 
section 344.2(a)(1) to increase the threshold from an average of fewer 
than 200 transactions to an average of fewer than 500 transactions for 
all FDIC-supervised institutions availing themselves of the Small 
Transaction Exception.
    In addition, in the Final Rule, the definition of the term ``bank'' 
has been deleted from section 344.3 of part 344 and has been replaced 
with the term ``FDIC-supervised institution.'' As discussed in the 
Proposed Rule, ``FDIC-supervised institution'' is defined in section 
344.3(h) as ``any insured depository institution for which the FDIC is 
the appropriate Federal banking agency pursuant to section 3(q) of the 
FDI Act, 12 U.S.C. 1813(q).'' In the Final Rule, the term ``FDIC-
supervised institution'' and its plural form have replaced the terms 
``bank,'' ``banks,'' ``state nonmember bank (except a District bank)'' 
and ``foreign bank(s) having an insured branch'' as used in sections 
344.1 through 344.9. Section 344.10 of part 344 remains unchanged in 
the Final Rule.

V. Administrative Law Matters

A. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
(``PRA'') of 1995 (44 U.S.C. 3501-3521), the FDIC may not conduct or 
sponsor, and the respondent is not required to respond to, an 
information collection unless it displays a currently valid Office of 
Management and Budget (``OMB'') control number. The information 
collections contained in part 344 are cleared by OMB under the FDIC's 
``Recordkeeping and Confirmation Requirements for Securities 
Transactions'' information collection (OMB No. 3064-0028). The FDIC's 
burden estimates were updated in connection with the collection's 2012 
renewal to include State savings associations transferred from the OTS 
to the FDIC.
    The Final Rule rescinds and removes from FDIC regulations part 390, 
subpart K. Further, with regard to part 344, the Final Rule amends 
section 344.2(a)(1) to increase the threshold, from an average of 200 
transactions to 500 transactions per calendar year over the prior three 
calendar year period, for the Small Transaction Exception to certain 
recordkeeping requirements applicable to all FDIC-supervised 
institutions. The effect of the increased threshold will be to increase 
the number of institutions that are exempt from more elaborate 
recordkeeping requirements in part 344 and from the need to have 
special written management policies and operational procedures relating 
to the execution of securities transactions for customers. However, the 
FDIC's burden calculations are based on an estimated average response 
time across all supervised institutions. Therefore, the nominal 
increase in exempted institutions will have no significant impact on 
overall current burden estimates. As such, this provision of the Final 
Rule will not involve any new collections of information under the PRA.

B. The Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et. seq., 
generally requires an agency to consider whether a final rule will have 
a significant economic impact on a substantial number of small entities 
(defined in regulations promulgated by the Small Business 
Administration to include banking organizations with total assets of 
less than or equal to $500 million).\10\ Pursuant to section 605(b) of 
the RFA, a final regulatory flexibility analysis is not required if the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities, and publishes its 
certification and a short explanatory statement in the Federal Register 
together with the rule. For the reasons provided below, the FDIC 
certifies that

[[Page 76723]]

the Final Rule will not have a significant economic impact on a 
substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required.
---------------------------------------------------------------------------

    \10\ 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    As discussed previously, part 390, subpart K was transferred from 
OTS's part 551, which governed recordkeeping and confirmation 
requirements for Federal and State savings associations that effect 
securities transactions for customers. OTS's part 551 had been in 
effect since 2002, and all State savings associations were required to 
comply with it. Because it is redundant of existing part 344 of the 
FDIC's Rules, the Final Rule rescinds and removes part 390, subpart K. 
As a result, all FDIC-supervised institutions--including State savings 
associations--must comply with part 344 if they effect securities 
transactions for customers. Consequently, because all State savings 
associations have been required to comply with substantively similar 
recordkeeping and confirmation rules when they effected securities 
transactions for customers since 2002, today's Final Rule will have no 
significant economic impact on any State savings association.
    Further, the Final Rule amends section 344.2(a)(1) to increase the 
threshold for all FDIC-supervised institutions relying on the Small 
Transaction Exception from an average of fewer than 200 to 500 
transactions for customers per calendar year over the prior three 
calendar year period. As State savings associations currently comply 
with a 500-transaction small transaction threshold, the only impact of 
this portion of the Final Rule is to exempt more State nonmember banks 
and foreign banks having insured branches from complying with certain 
recordkeeping and written policy and procedure requirements, thus 
reducing regulatory burden for these insured depository institutions. 
There is no existing data that is helpful in determining how many State 
nonmember banks and foreign banks having insured branches that transact 
on average between 201 and 500 transactions for customers per calendar 
year over the prior three calendar year period will take advantage of 
the increased transaction threshold for the FDIC's Small Transaction 
Exception in today's Final Rule. Nevertheless, if the Final Rule 
reduces recordkeeping and written policy procedure requirements for any 
insured depository institutions, there still is no significant economic 
impact on a substantial number of small entities.

C. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget has determined that the Final 
Rule is not a ``major rule'' within the meaning of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (``SBREFA''), 5 U.S.C. 801 
et seq.

D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, 12 U.S.C. 4809, requires 
each Federal banking agency to use plain language in all of its 
proposed and final rules published after January 1, 2000. In the NPR, 
the FDIC invited comments on whether the Proposed Rule was clearly 
stated and effectively organized, and how the FDIC might make it easier 
to understand. Although the FDIC did not receive any comments, the FDIC 
sought to present the Final Rule in a simple and straightforward 
manner.

E. The Economic Growth and Regulatory Paperwork Reduction Act

    Under section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (``EGRPRA''), the FDIC is required to review all 
of its regulations, at least once every 10 years, in order to identify 
any outdated or otherwise unnecessary regulations imposed on insured 
depository institutions.\11\ The FDIC's EGRPRA review is ongoing and is 
expected to be completed by 2016. The NPR solicited comments on whether 
the proposed rescission of part 390, subpart K and amendments to part 
344 would impose any outdated or unnecessary regulatory requirements on 
insured depository institutions. No comments on this issue were 
received. Upon review, the FDIC does not believe that part 344, as 
amended by the Final Rule, impose any outdated or unnecessary 
regulatory requirements on any insured depository institutions.
---------------------------------------------------------------------------

    \11\ Public Law 104-208 (Sept. 30, 1996).
---------------------------------------------------------------------------

List of Subjects

12 CFR Part 344

    Banks, banking; Reporting and recordkeeping requirements; Savings 
associations.

12 CFR Part 390

    Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons stated in the preamble, the Board of Directors of 
the Federal Deposit Insurance Corporation revises part 344 of title 12 
of the Code of Federal Regulations and amends part 390 of title 12 of 
the Code of Federal Regulations as set forth below:

PART 344--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS

0
1. Revise part 344 to read as follows:

PART 344--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS

Sec.
344.1 Purpose and scope.
344.2 Exceptions.
344.3 Definitions.
344.4 Recordkeeping.
344.5 Content and time of notification.
344.6 Notification by agreement; alternative forms and times of 
notification.
344.7 Settlement of securities transactions.
344.8 Securities trading policies and procedures.
344.9 Personal securities trading reporting by officers and 
employees.
344.10 Waivers.


    Authority: 12 U.S.C. 1817, 1818, 1819, and 5412.


Sec.  344.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to ensure that purchasers 
of securities in transactions effected by FDIC-supervised institutions 
are provided adequate information regarding transactions. This part is 
also designed to ensure that FDIC-supervised institutions subject to 
this part maintain adequate records and controls with respect to the 
securities transactions they effect.
    (b) Scope; general. Any security transaction effected for a 
customer by an FDIC-supervised institution is subject to this part 
unless excepted by Sec.  344.2. An FDIC-supervised institution 
effecting transactions in government securities is subject to the 
notification, recordkeeping, and policies and procedures requirements 
of this part. This part also applies to municipal securities 
transactions by an FDIC-supervised institution that is not registered 
as a ``municipal securities dealer'' with the Securities and Exchange 
Commission. See 15 U.S.C. 78c(a)(30) and 78o-4.


Sec.  344.2  Exceptions.

    (a) An FDIC-supervised institution effecting securities 
transactions for customers is not subject to all or part of this part 
344 to the extent that they qualify for one or more of the following 
exceptions:
    (1) Small number of transactions. The requirements of Sec. Sec.  
344.4(a)(2) through (4) and 344.8(a)(1) through (3) do not apply to an 
FDIC-supervised institution

[[Page 76724]]

effecting an average of fewer than 500 securities transactions per year 
for customers over the prior three calendar year period. The 
calculation of this average does not include transactions in government 
securities.
    (2) Government securities. The recordkeeping requirements of Sec.  
344.4 do not apply to FDIC-supervised institutions effecting fewer than 
500 government securities brokerage transactions per year. This 
exemption does not apply to government securities dealer transactions 
by FDIC-supervised institutions.
    (3) Municipal securities. This part does not apply to transactions 
in municipal securities effected by an FDIC-supervised institution 
registered with the Securities and Exchange Commission as a ``municipal 
securities dealer'' as defined in title 15 U.S.C. 78c(a)(30). See 15 
U.S.C. 78o-4.
    (4) Foreign branches. Activities of foreign branches of FDIC-
supervised institutions shall not be subject to the requirements of 
this part.
    (5) Transactions effected by registered broker/dealers. (i) This 
part does not apply to securities transactions effected for an FDIC-
supervised institution's customer by a registered broker/dealer if:
    (A) The broker/dealer is fully disclosed to the customer; and
    (B) The customer has a direct contractual agreement with the 
broker/dealer.
    (ii) This exemption extends to arrangements with broker/dealers 
which involve FDIC-supervised institution employees when acting as 
employees of, and subject to the supervision of, the registered broker/
dealer when soliciting, recommending, or effecting securities 
transactions.
    (b) Safe and sound operations. Notwithstanding this section, every 
FDIC-supervised institution effecting securities transactions for 
customers shall maintain, directly or indirectly, effective systems of 
records and controls regarding their customer securities transactions 
to ensure safe and sound operations. The records and systems maintained 
must clearly and accurately reflect the information required under this 
part and provide an adequate basis for an audit.


Sec.  344.3  Definitions.

    (a) Asset-backed security means a security that is serviced 
primarily by the cash flows of a discrete pool of receivables or other 
financial assets, either fixed or revolving, that by their terms 
convert into cash within a finite time period plus any rights or other 
assets designed to assure the servicing or timely distribution of 
proceeds to the security holders.
    (b) Cash management sweep account means a prearranged, automatic 
transfer of funds above a certain dollar level from a deposit account 
to purchase a security or securities, or any prearranged, automatic 
redemption or sale of a security or securities when a deposit account 
drops below a certain level with the proceeds being transferred into a 
deposit account.
    (c) Collective investment fund means funds held by an FDIC-
supervised institution as fiduciary and, consistent with local law, 
invested collectively:
    (1) In a common trust fund maintained by such FDIC-supervised 
institution exclusively for the collective investment and reinvestment 
of monies contributed thereto by the FDIC-supervised institution in its 
capacity as trustee, executor, administrator, guardian, or custodian 
under the Uniform Gifts to Minors Act; or
    (2) In a fund consisting solely of assets of retirement, pension, 
profit sharing, stock bonus or similar trusts which are exempt from 
Federal income taxation under the Internal Revenue Code (26 U.S.C.).
    (d) Completion of the transaction means:
    (1) For purchase transactions, the time when the customer pays the 
FDIC-supervised institution any part of the purchase price (or the time 
when the FDIC-supervised institution makes the book-entry for any part 
of the purchase price, if applicable), however, if the customer pays 
for the security prior to the time payment is requested or becomes due, 
then the transaction shall be completed when the FDIC-supervised 
institution transfers the security into the account of the customer; 
and
    (2) For sale transactions, the time when the FDIC-supervised 
institution transfers the security out of the account of the customer 
or, if the security is not in its custody, then the time when the 
security is delivered to it, however, if the customer delivers the 
security to the FDIC-supervised institution prior to the time delivery 
is requested or becomes due then the transaction shall be completed 
when the FDIC-supervised institution makes payment into the account of 
the customer.
    (e) Crossing of buy and sell orders means a security transaction in 
which the same FDIC-supervised institution acts as agent for both the 
buyer and the seller.
    (f) Customer means any person or account, including any agency, 
trust, estate, guardianship, or other fiduciary account for which an 
FDIC-supervised institution effects or participates in effecting the 
purchase or sale of securities, but does not include a broker, dealer, 
insured depository institution acting as a broker or a dealer, issuer 
of the securities that are the subject of the transaction or a person 
or account having a direct, contractual agreement with a fully 
disclosed broker/dealer.
    (g) Debt security means any security, such as a bond, debenture, 
note, or any other similar instrument that evidences a liability of the 
issuer (including any security of this type that is convertible into 
stock or a similar security) and fractional or participation interests 
in one or more of any of the foregoing; provided, however, that 
securities issued by an investment company registered under the 
Investment Company Act of 1940, 15 U.S.C. 80a--1 et seq., shall not be 
included in this definition.
    (h) FDIC-supervised institution means any insured depository 
institution for which the Federal Deposit Insurance Corporation is the 
appropriate Federal banking agency pursuant to section 3(q) of the 
Federal Deposit Insurance Act, 12 U.S.C. 1813(q).
    (i) Government security means:
    (1) A security that is a direct obligation of, or obligation 
guaranteed as to principal and interest by, the United States;
    (2) A security that is issued or guaranteed by a corporation in 
which the United States has a direct or indirect interest and which is 
designated by the Secretary of the Treasury for exemption as necessary 
or appropriate in the public interest or for the protection of 
investors;
    (3) A security issued or guaranteed as to principal and interest by 
any corporation whose securities are designated, by statute 
specifically naming the corporation, to constitute exempt securities 
within the meaning of the laws administered by the Securities and 
Exchange Commission; or
    (4) Any put, call, straddle, option, or privilege on a security 
described in paragraph (i)(1), (2), or (3) of this section other than a 
put, call, straddle, option, or privilege that is traded on one or more 
national securities exchanges, or for which quotations are disseminated 
through an automated quotation system operated by a registered 
securities association.
    (j) Investment discretion means that, with respect to an account, 
an FDIC-supervised institution directly or indirectly:
    (1) Is authorized to determine what securities or other property 
shall be purchased or sold by or for the account; or

[[Page 76725]]

    (2) Makes decisions as to what securities or other property shall 
be purchased or sold by or for the account even though some other 
person may have responsibility for these investment decisions.
    (k) Municipal security means a security which is a direct 
obligation of, or an obligation guaranteed as to principal or interest 
by, a State or any political subdivision, or any agency or 
instrumentality of a State or any political subdivision, or any 
municipal corporate instrumentality of one or more States or any 
security which is an industrial development bond (as defined in 26 
U.S.C. 103(c)(2)) the interest on which is excludable from gross income 
under 26 U.S.C. 103(a)(1) if, by reason of the application of paragraph 
(4) or (6) of 26 U.S.C. 103(c) (determined as if paragraphs (4)(A), (5) 
and (7) were not included in 26 U.S.C. 103(c), paragraph (1) of 26 
U.S.C. 103(c) does not apply to such security. See 15. U.S.C. 
78c(a)(29).
    (l) Periodic plan means any written authorization for an FDIC-
supervised institution to act as agent to purchase or sell for a 
customer a specific security or securities, in a specific amount 
(calculated in security units or dollars) or to the extent of dividends 
and funds available, at specific time intervals, and setting forth the 
commission or charges to be paid by the customer or the manner of 
calculating them. Periodic plans include dividend reinvestment plans, 
automatic investment plans, and employee stock purchase plans.
    (m) Security means any note, stock, treasury stock, bond, 
debenture, certificate of interest or participation in any profit-
sharing agreement or in any oil, gas, or other mineral royalty or 
lease, any collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, voting-trust 
certificate, and any put, call, straddle, option, or privilege on any 
security or group or index of securities (including any interest 
therein or based on the value thereof), or, in general, any instrument 
commonly known as a ``security''; or any certificate of interest or 
participation in, temporary or interim certificate for, receipt for, or 
warrant or right to subscribe to or purchase, any of the foregoing. The 
term security does not include:
    (1) A deposit or share account in a federally or state insured 
depository institution;
    (2) A loan participation;
    (3) A letter of credit or other form of insured depository 
institution indebtedness incurred in the ordinary course of business;
    (4) Currency;
    (5) Any note, draft, bill of exchange, or bankers acceptance which 
has a maturity at the time of issuance of not exceeding nine months, 
exclusive of days of grace, or any renewal thereof the maturity of 
which is likewise limited;
    (6) Units of a collective investment fund;
    (7) Interests in a variable amount (master) note of a borrower of 
prime credit; or
    (8) U.S. Savings Bonds.


Sec.  344.4  Recordkeeping.

    (a) General rule. An FDIC-supervised institution effecting 
securities transactions for customers shall maintain the following 
records for at least three years:
    (1) Chronological records. An itemized daily record of each 
purchase and sale of securities maintained in chronological order, and 
including:
    (i) Account or customer name for which each transaction was 
effected;
    (ii) Description of the securities;
    (iii) Unit and aggregate purchase or sale price;
    (iv) Trade date; and
    (v) Name or other designation of the broker/dealer or other person 
from whom the securities were purchased or to whom the securities were 
sold;
    (2) Account records. Account records for each customer, reflecting:
    (i) Purchases and sales of securities;
    (ii) Receipts and deliveries of securities;
    (iii) Receipts and disbursements of cash; and
    (iv) Other debits and credits pertaining to transactions in 
securities;
    (3) A separate memorandum (order ticket) of each order to purchase 
or sell securities (whether executed or canceled), which shall include:
    (i) The accounts for which the transaction was effected;
    (ii) Whether the transaction was a market order, limit order, or 
subject to special instructions;
    (iii) The time the order was received by the trader or other FDIC-
supervised institution employee responsible for effecting the 
transaction;
    (iv) The time the order was placed with the broker/dealer, or if 
there was no broker/dealer, time the order was executed or canceled;
    (v) The price at which the order was executed; and
    (vi) The broker/dealer utilized;
    (4) Record of broker/dealers. A record of all broker/dealers 
selected by the FDIC-supervised institution to effect securities 
transactions and the amount of commissions paid or allocated to each 
broker during the calendar year; and
    (5) Notifications. A copy of the written notification required by 
Sec. Sec.  344.5 and 344.6.
    (b) Manner of maintenance. Records may be maintained in whatever 
manner, form or format an FDIC-supervised institution deems 
appropriate, provided however, the records required by this section 
must clearly and accurately reflect the information required and 
provide an adequate basis for the audit of the information. Records may 
be maintained in hard copy, automated or electronic form provided the 
records are easily retrievable, readily available for inspection, and 
capable of being reproduced in a hard copy. An FDIC-supervised 
institution may contract with third party service providers, including 
broker/dealers, to maintain records required under this part.


Sec.  344.5  Content and time of notification.

    Every FDIC-supervised institution effecting a securities 
transaction for a customer shall give or send, by mail, facsimile or 
other means of electronic transmission, to the customer at or before 
completion of the transaction one of the types of written notification 
identified below:
    (a) Broker/dealer's confirmations. (1) A copy of the confirmation 
of a broker/dealer relating to the securities transaction. An FDIC-
supervised institution may either have the broker/dealer send the 
confirmation directly to the FDIC-supervised institution's customer or 
send a copy of the broker/dealer's confirmation to the customer upon 
receipt of the confirmation by the FDIC-supervised institution. If an 
FDIC-supervised institution chooses to send a copy of the broker/
dealer's confirmation, it must be sent within one business day from the 
institution's receipt of the broker/dealer's confirmation; and
    (2) If the FDIC-supervised institution is to receive remuneration 
from the customer or any other source in connection with the 
transaction, a statement of the source and amount of any remuneration 
to be received if such would be required under paragraph (b)(6) of this 
section; or
    (b) Written notification. A written notification disclosing:
    (1) Name of the FDIC-supervised institution;
    (2) Name of the customer;
    (3) Whether the FDIC-supervised institution is acting as agent for 
such customer, as agent for both such customer and some other person, 
as principal for its own account, or in any other capacity;
    (4) The date and time of execution, or the fact that the time of 
execution will

[[Page 76726]]

be furnished within a reasonable time upon written request of the 
customer, and the identity, price, and number of shares or units (or 
principal amount in the case of debt securities) of the security 
purchased or sold by the customer;
    (5) The amount of any remuneration received or to be received, 
directly or indirectly, by any broker/dealer from such customer in 
connection with the transaction;
    (6)(i) The amount of any remuneration received or to be received by 
the FDIC-supervised institution from the customer, and the source and 
amount of any other remuneration received or to be received by the 
FDIC-supervised institution in connection with the transaction, unless:
    (A) Remuneration is determined pursuant to a prior written 
agreement between the FDIC-supervised institution and the customer; or
    (B) In the case of government securities and municipal securities, 
the FDIC-supervised institution received the remuneration in other than 
an agency transaction; or
    (C) In the case of open end investment company securities, the 
FDIC-supervised institution has provided the customer with a current 
prospectus which discloses all current fees, loads and expenses at or 
before completion of the transaction;
    (ii) If the FDIC-supervised institution elects not to disclose the 
source and amount of remuneration it has received or will receive from 
a party other than the customer pursuant to paragraph (b)(6)(i)(A), 
(B), or (C) of this section, the written notification must disclose 
whether the FDIC-supervised institution has received or will receive 
remuneration from a party other than the customer, and that the FDIC-
supervised institution will furnish within a reasonable time the source 
and amount of this remuneration upon written request of the customer. 
This election is not available, however, if, with respect to a 
purchase, the FDIC-supervised institution was participating in a 
distribution of that security; or, with respect to a sale, the FDIC-
supervised institution was participating in a tender offer for that 
security;
    (7) Name of the broker/dealer utilized; or where there is no 
broker/dealer, the name of the person from whom the security was 
purchased or to whom the security was sold, or a statement that the 
FDIC-supervised institution will furnish this information within a 
reasonable time upon written request;
    (8) In the case of a transaction in a debt security subject to 
redemption before maturity, a statement to the effect that the debt 
security may be redeemed in whole or in part before maturity, that the 
redemption could affect the yield represented and that additional 
information is available upon request;
    (9) In the case of a transaction in a debt security effected 
exclusively on the basis of a dollar price:
    (i) The dollar price at which the transaction was effected; and
    (ii) The yield to maturity calculated from the dollar price, 
provided however, that this shall not apply to a transaction in a debt 
security that either has a maturity date that may be extended by the 
issuer thereof, with a variable interest payable thereon, or is an 
asset-backed security that represents an interest in or is secured by a 
pool of receivables or other financial assets that are subject 
continuously to prepayment;
    (10) In the case of a transaction in a debt security effected on 
the basis of yield:
    (i) The yield at which the transaction was effected, including the 
percentage amount and its characterization (e.g., current yield, yield 
to maturity, or yield to call) and if effected at yield to call, the 
type of call, the call date and call price;
    (ii) The dollar price calculated from the yield at which the 
transaction was effected; and
    (iii) If effected on a basis other than yield to maturity and the 
yield to maturity is lower than the represented yield, the yield to 
maturity as well as the represented yield; provided however, that this 
paragraph (b)(10) shall not apply to a transaction in a debt security 
that either has a maturity date that may be extended by the issuer with 
a variable interest rate payable thereon, or is an asset-backed 
security that represents an interest in or is secured by a pool of 
receivables or other financial assets that are subject continuously to 
prepayment;
    (11) In the case of a transaction in a debt security that is an 
asset-backed security, which represents an interest in or is secured by 
a pool of receivables or other financial assets that are subject 
continuously to prepayment, a statement indicating that the actual 
yield of the asset-backed security may vary according to the rate at 
which the underlying receivables or other financial assets are prepaid 
and a statement of the fact that information concerning the factors 
that affect yield (including at a minimum estimated yield, weighted 
average life, and the prepayment assumptions underlying yield) will be 
furnished upon written request of the customer; and
    (12) In the case of a transaction in a debt security, other than a 
government security, that the security is unrated by a nationally 
recognized statistical rating organization, if that is the case.


Sec.  344.6  Notification by agreement; alternative forms and times of 
notification.

    An FDIC-supervised institution may elect to use the following 
alternative notification procedures if the transaction is effected for:
    (a) Notification by agreement. Accounts (except periodic plans) 
where the FDIC-supervised institution does not exercise investment 
discretion and the FDIC-supervised institution and the customer agree 
in writing to a different arrangement as to the time and content of the 
written notification; provided however, that such agreement makes clear 
the customer's right to receive the written notification pursuant to 
Sec.  344.5(a) or (b) at no additional cost to the customer.
    (b) Trust accounts. Accounts (except collective investment funds) 
where the FDIC-supervised institution exercises investment discretion 
in other than in an agency capacity, in which instance it shall, upon 
request of the person having the power to terminate the account or, if 
there is no such person, upon the request of any person holding a 
vested beneficial interest in such account, give or send to such person 
the written notification within a reasonable time. The FDIC-supervised 
institution may charge such person a reasonable fee for providing this 
information.
    (c) Agency accounts. Accounts where the FDIC-supervised institution 
exercises investment discretion in an agency capacity, in which 
instance:
    (1) The FDIC-supervised institution shall give or send to each 
customer not less frequently than once every three months an itemized 
statement which shall specify the funds and securities in the custody 
or possession of the FDIC-supervised institution at the end of such 
period and all debits, credits and transactions in the customer's 
accounts during such period; and
    (2) If requested by the customer, the FDIC-supervised institution 
shall give or send to each customer within a reasonable time the 
written notification described in Sec.  344.5. The FDIC-supervised 
institution may charge a reasonable fee for providing the information 
described in Sec.  344.5.
    (d) Cash management sweep accounts. An FDIC-supervised institution 
effecting a securities transaction for a cash management sweep account 
shall give or send its customer a written statement, in the same form 
as required under paragraph (f) of this section, for each month in 
which a purchase or sale of a security

[[Page 76727]]

takes place in the account and not less than once every three months if 
there are no securities transactions in the account. Notwithstanding 
the provisions of this paragraph (d), FDIC-supervised institutions that 
retain custody of government securities that are the subject of a hold-
in-custody repurchase agreement are subject to the requirements of 17 
CFR 403.5(d).
    (e) Collective investment fund accounts. The FDIC-supervised 
institution shall at least annually give or send to the customer a copy 
of a financial report of the fund, or provide notice that a copy of 
such report is available and will be furnished upon request to each 
person to whom a regular periodic accounting would ordinarily be 
rendered with respect to each participating account. This report shall 
be based upon an audit made by independent public accountants or 
internal auditors responsible only to the board of directors of the 
FDIC-supervised institution.
    (f) Periodic plan accounts. The FDIC-supervised institution shall 
give or send to the customer not less than once every three months a 
written statement showing:
    (1) The funds and securities in the custody or possession of the 
FDIC-supervised institution;
    (2) All service charges and commissions paid by the customer in 
connection with the transaction; and
    (3) All other debits and credits of the customer's account involved 
in the transaction; provided that upon written request of the customer, 
the FDIC-supervised institution shall give or send the information 
described in Sec.  344.5, except that any such information relating to 
remuneration paid in connection with the transaction need not be 
provided to the customer when the remuneration is paid by a source 
other than the customer. The FDIC-supervised institution may charge a 
reasonable fee for providing information described in Sec.  344.5.


Sec.  344.7  Settlement of securities transactions.

    (a) An FDIC-supervised institution shall not effect or enter into a 
contract for the purchase or sale of a security (other than an exempted 
security as defined in 15 U.S.C. 78c(a)(12), government security, 
municipal security, commercial paper, bankers' acceptances, or 
commercial bills) that provides for payment of funds and delivery of 
securities later than the third business day after the date of the 
contract unless otherwise expressly agreed to by the parties at the 
time of the transaction.
    (b) Paragraphs (a) and (c) of this section shall not apply to 
contracts:
    (1) For the purchase or sale of limited partnership interests that 
are not listed on an exchange or for which quotations are not 
disseminated through an automated quotation system of a registered 
securities association; or
    (2) For the purchase or sale of securities that the Securities and 
Exchange Commission (SEC) may from time to time, taking into account 
then existing market practices, exempt by order from the requirements 
of paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a), either 
unconditionally or on specified terms and conditions, if the SEC 
determines that an exemption is consistent with the public interest and 
the protection of investors.
    (c) Paragraph (a) of this section shall not apply to contracts for 
the sale for cash of securities that are priced after 4:30 p.m. Eastern 
time on the date the securities are priced and that are sold by an 
issuer to an underwriter pursuant to a firm commitment underwritten 
offering registered under the Securities Act of 1933, 15 U.S.C. 77a et 
seq., or sold to an initial purchaser by an FDIC-supervised institution 
participating in the offering. An FDIC-supervised institution shall not 
effect or enter into a contract for the purchase or sale of the 
securities that provides for payment of funds and delivery of 
securities later than the fourth business day after the date of the 
contract unless otherwise expressly agreed to by the parties at the 
time of the transaction.
    (d) For the purposes of paragraphs (a) and (c) of this section, the 
parties to a contract shall be deemed to have expressly agreed to an 
alternate date for payment of funds and delivery of securities at the 
time of the transaction for a contract for the sale for cash of 
securities pursuant to a firm commitment offering if the managing 
underwriter and the issuer have agreed to the date for all securities 
sold pursuant to the offering and the parties to the contract have not 
expressly agreed to another date for payment of funds and delivery of 
securities at the time of the transaction.


Sec.  344.8  Securities trading policies and procedures.

    (a) Policies and procedures. Every FDIC-supervised institution 
effecting securities transactions for customers shall establish written 
policies and procedures providing:
    (1) Assignment of responsibility for supervision of all officers or 
employees who:
    (i) Transmit orders to or place orders with broker/dealers; or
    (ii) Execute transactions in securities for customers;
    (2) Assignment of responsibility for supervision and reporting, 
separate from those in paragraph (a)(1) of this section, with respect 
to all officers or employees who process orders for notification or 
settlement purposes, or perform other back office functions with 
respect to securities transactions effected for customers;
    (3) For the fair and equitable allocation of securities and prices 
to accounts when orders for the same security are received at 
approximately the same time and are placed for execution either 
individually or in combination; and
    (4) Where applicable, and where permissible under local law, for 
the crossing of buy and sell orders on a fair and equitable basis to 
the parties to the transaction.


Sec.  344.9  Personal securities trading reporting by officers and 
employees of FDIC-supervised institutions.

    (a) Officers and employees subject to reporting. FDIC-supervised 
institution officers and employees who:
    (1) Make investment recommendations or decisions for the accounts 
of customers;
    (2) Participate in the determination of such recommendations or 
decisions; or
    (3) In connection with their duties, obtain information concerning 
which securities are being purchased or sold or recommend such action, 
must report to the FDIC-supervised institution, within 30-calendar days 
after the end of the calendar quarter, all transactions in securities 
made by them or on their behalf, either at the FDIC-supervised 
institution or elsewhere in which they have a beneficial interest. The 
report shall identify the securities purchased or sold and indicate the 
dates of the transactions and whether the transactions were purchases 
or sales.
    (b) Exempt transactions. Excluded from this reporting requirement 
are:
    (1) Transactions for the benefit of the officer or employee over 
which the officer or employee has no direct or indirect influence or 
control;
    (2) Transactions in registered investment company shares;
    (3) Transactions in government securities; and
    (4) All transactions involving in the aggregate $10,000 or less 
during the calendar quarter.
    (c) Alternative report. Where an FDIC-supervised institution acts 
as an investment adviser to an investment company registered under the

[[Page 76728]]

Investment Company Act of 1940, the FDIC-supervised institution's 
officers and employees may fulfill their reporting requirement under 
paragraph (a) of this section by filing with the FDIC-supervised 
institution the ``access persons'' personal securities trading report 
required by SEC Rule 17j-1, 17 CFR 270.17j-1.


Sec.  344.10  Waivers.

    The Board of Directors of the FDIC, in its discretion, may waive 
for good cause all or any part of this part 344.

PART 390--REGULATIONS TRANSFERRED FROM THE OFFICE OF THRIFT 
SUPERVISION

0
2. The authority citation for part 390 is revised to read as follows:

    Authority: 12 U.S.C. 1819.

    Subpart A also issued under 12 U.S.C. 1820.
    Subpart B also issued under 12 U.S.C. 1818.
    Subpart C also issued under 5 U.S.C. 504; 554-557; 12 U.S.C. 
1464; 1467; 1468; 1817; 1818; 1820; 1829; 3349, 4717; 15 U.S.C. 78l; 
78o-5; 78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; 42 U.S.C. 4012a.
    Subpart D also issued under 12 U.S.C. 1817; 1818; 1820; 15 
U.S.C. 78l.
    Subpart E also issued under 12 U.S.C. 1813; 1831m; 15 U.S.C. 78.
    Subpart F also issued under 5 U.S.C. 552; 559; 12 U.S.C. 2901 et 
seq.
    Subpart G also issued under 12 U.S.C. 2810 et seq., 2901 et 
seq.; 15 U.S.C. 1691; 42 U.S.C. 1981, 1982, 3601-3619.
    Subpart H also issued under 12 U.S.C. 1464; 1831y.
    Subpart I also issued under 12 U.S.C. 1831x.
    Subpart J also issued under 12 U.S.C. 1831p-1.
    Subpart L also issued under 12 U.S.C. 1831p-1.
    Subpart M also issued under 12 U.S.C. 1818.
    Subpart N also issued under 12 U.S.C. 1821.
    Subpart O also issued under 12 U.S.C. 1828.
    Subpart P also issued under 12 U.S.C. 1470; 1831e; 1831n; 1831p-
1; 3339.
    Subpart Q also issued under 12 U.S.C. 1462; 1462a; 1463; 1464.
    Subpart R also issued under 12 U.S.C. 1463; 1464; 1831m; 1831n; 
1831p-1.
    Subpart S also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1468a; 1817; 1820; 1828; 1831e; 1831o; 1831p-1; 1881-1884; 3207; 
3339; 15 U.S.C. 78b; 78l; 78m; 78n; 78p; 78q; 78w; 31 U.S.C. 5318; 
42 U.S.C. 4106.
    Subpart T also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78w.
    Subpart U also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w; 78d-1; 7241; 7242; 7243; 7244; 
7261; 7264; 7265.
    Subpart V also issued under 12 U.S.C. 3201-3208.
    Subpart W also issued under 12 U.S.C. 1462a; 1463; 1464; 15 
U.S.C. 78c; 78l; 78m; 78n; 78p; 78w.
    Subpart X also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1828; 3331 et seq.
    Subpart Y also issued under 12 U.S.C.1831o.
    Subpart Z also issued under 12 U.S.C. 1462; 1462a; 1463; 1464; 
1828 (note).

0
3. Subpart K--[Removed and reserved]
0
Remove and reserve subpart K consisting of Sec. Sec.  390.200 through 
390.214.

    Dated at Washington, DC, this 10th day of December, 2013.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2013-29786 Filed 12-18-13; 8:45 am]
BILLING CODE 6714-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.