Exemptions for Banks Under Section 3(a)(5) of the Securities Exchange Act of 1934 and Related Rules
The Securities and Exchange Commission (``Commission'') is adopting 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 adopting a conditional exemption that will 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 amending and redesignating an existing exemption from the definition of ``dealer'' for banks' securities lending activities as a conduit lender. In addition, the Commission is conforming a rule that grants a limited exemption from U.S. broker-dealer registration for foreign broker-dealers to the amended definitions of ``broker'' and ``dealer'' under the Exchange Act. Finally, the Commission is withdrawing three rules under the Exchange Act: A rule defining the term ``bank'' for purposes of the Exchange Act's definitions of ``broker'' and ``dealer,'' due to judicial invalidation; a time-limited exemption for banks' securities activities, due to the passage of time; and an exemption from the definitions of ``broker'' and ``dealer'' for savings associations and savings banks, as the exemption no longer necessary in light of subsequent legislation.
Definitions of Terms and Exemptions Relating to the “Broker” Exceptions for Banks
The Board and the Commission jointly are adopting a single set of final rules that 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 rules define terms used in these statutory exceptions and include certain related exemptions. In developing these rules, the Agencies have consulted with, and sought the concurrence of, the Office of the Comptroller of the Currency (``OCC''), the Federal Deposit Insurance Corporation (``FDIC'') and the Office of Thrift Supervision (``OTS''), and have taken into consideration all comments received on the proposed rules issued in December 2006. The rules are intended, among other things, to facilitate banks' compliance with the Exchange Act and the GLBA.