Exemptions for Banks Under Section 3(a)(5) of the Securities Exchange Act of 1934 and Related Rules
The Securities and Exchange Commission is publishing for comment proposed rules and rule amendments regarding exemptions from the definitions of ``broker'' and ``dealer'' under the Securities Exchange Act of 1934 (``Exchange Act'') for banks'' securities activities. In particular, the Commission is re-proposing a conditional exemption originally proposed in 2004 that would allow banks to effect riskless principal transactions with non-U.S. persons pursuant to Regulation S under the Securities Act of 1933 (``Securities Act''). The Commission also is proposing to amend and redesignate an existing exemption from the definition of ``dealer'' for banks' securities lending activities as a conduit lender. In addition, the Commission is proposing to amend a rule that grants a limited exemption from U.S. broker-dealer registration for foreign broker-dealers, conforming the rule to amended definitions of ``broker'' and ``dealer'' under the Exchange Act. Finally, the Commission is requesting comment on its intention to withdraw a rule defining the term ``bank'' for purposes of Sections 3(a)(4) and 3(a)(5) of the Exchange Act, because of judicial invalidation, a time-limited exemption for banks' securities activities, because of the passage of time, and an exemption from the definition of ``broker'' and ``dealer'' for savings associations and savings banks, an exemption no longer necessary because of the passage of the Regulatory Relief Act.
Definitions of Terms and Exemptions Relating to the “Broker” Exceptions for Banks
The Board and the Commission jointly are issuing, and requesting comment on, proposed rules that would implement certain of the exceptions for banks from the definition of the term ``broker'' under Section 3(a)(4) of the Securities Exchange Act of 1934 (``Exchange Act''), as amended by the Gramm-Leach-Bliley Act (``GLBA''). The proposed rules would define terms used in these statutory exceptions and include certain related exemptions. In developing this proposal, the Agencies have consulted with the Office of the Comptroller of the Currency (``OCC''), the Federal Deposit Insurance Corporation (``FDIC'') and the Office of Thrift Supervision (``OTS''). The proposal is intended, among other things, to facilitate banks' compliance with the GLBA.