Current through Register Vol. 49, No. 18, September 16, 2024
PURPOSE: This rule establishes the limits within
which banks may offer securities services for their customers with particular
emphasis on the rules which must be followed in the interest of safety and
soundness. Certain of these powers are granted to assure that state-chartered
banks will remain competitive with national banks. Other powers are derived
from express powers contained in the statutes.
(1) Definitions.
(A) Bank means a state-chartered bank and
trust company.
(B) Commissioner
means the commissioner of finance of Missouri, who is the director of the
Division of Finance under section
361.010,
RSMo.
(C) Discount brokerage
service means those activities through which a bank facilitates the execution
of securities transactions for its customers by arranging for the transmission
of customer orders to a broker.
(D)
Issuer means every person who issues or proposes to issue any security except
that, with respect to an issue of industrial revenue bonds, the term shall
include the person for whose benefit the bonds were issued.
(E) Securities services means the purchase
and sale of investment securities without recourse solely upon order and for
the account of customers, the underwriting of mutual funds, revenue bonds and
other debt securities issued by any public or private corporation, association
or partnership, offering investment advice to customers other than through a
properly organized trust department and discount brokerage services.
(F) Securities subsidiary means a
wholly-owned corporate subsidiary of a bank organized to engage in securities
activities pursuant to this rule.
(G) Underwriting means the direct or indirect
purchase of part or all of an issue of securities with a view to subsequent
resale of those securities.
(2) A bank may offer securities services in
accordance with the provisions of this rule only if-
(A) These securities services are offered by
and through a securities subsidiary of the bank;
(B) The bank meets Division of Finance
guidelines for capital adequacy; and
(C) The bank and any securities subsidiary
comply with all applicable laws and regulations administered by the
commissioner of finance, the Missouri commissioner of securities, the Federal
Securities Exchange Commission and the Federal Deposit Insurance Corporation
(FDIC).
(3) No bank may
establish or own a securities subsidiary unless-
(A) The bank has first obtained the approval
of the commissioner; and
(B) The
securities subsidiary is-
1. Operated as a
separate corporate entity with its own meetings, records and books;
2. Reasonably capitalized in view of the
needs of the corporation; and
3.
Operated through procedures and forms which clearly disclose that it is
separate from the bank and not insured by the FDIC.
(4) No subsidiary may underwrite
securities if the total amount of securities underwritten and held on behalf of
an issuer, when aggregated with credit extended by the bank to or for the
benefit of the issuer, would exceed the amount which the bank could lend to the
issue under section
362.170,
RSMo.
(5) Each securities
subsidiary shall adopt and submit to the commissioner its dealing and
underwriting standards setting forth the minimum standards which securities
under-written, purchased and sold by the subsidiary must meet.
(6) No bank which offers securities services
through a securities subsidiary may extend credit to any-
(A) Person for the purpose of enabling the
person to acquire any security which is either underwritten, distributed or
issued by the subsidiary or issued by any investment company advised by the
subsidiary; and
(B) Issuer whose
securities, at the time of the extension, are underwritten or distributed by
the securities subsidiary unless the bank's board of directors gives its prior
approval and states, in writing, its determination that the extension is not
made to facilitate the underwriting, distribution or sale of the securities or
unless the extension is made pursuant to a binding commitment entered into
prior to the underwriting, distribution or sale.
(7) Notwithstanding the provisions of this
rule, any bank may directly purchase and sell investment securities without
recourse, solely on order and for the account of customers, offer discount
brokerage services or underwrite or deal in obligations of the United States or
general obligations of any state or of any political subdivision.
*Original authority: 361.105, RSMo 1967; 362.105 RSMo,
1939, amended 1949, 1963, 1965, 1967, 1977, 1983, 1986, 1990, 1991, 1992; and
362.170, RSMo 1939, amended 1941, 1943, 1945, 1959, 1963, 1967, 1977, 1983,
1985, 1986, 1989.
