Joint Press Release

FRB: Agencies adopt final rules to implement the bank "broker" provisions of the Gramm-Leach-Bliley Actskip

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Home > News & Events > 2007 Banking and Consumer Regulatory Policy

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Joint Press Release

Securities and Exchange Commission

Board of Governors of the Federal Reserve System

For immediate release September 24, 2007 Agencies Adopt Final Rules to Implement

the Bank Broker Provisions of the Gramm-Leach-Bliley Act

The Securities and Exchange Commission (SEC) and Board of Governors of the

Federal Reserve System (Board) on Monday announced the adoption of final joint

rules to implement the broker exceptions for banks under Section 3(a)(4) of

the Securities Exchange Act of 1934. These exceptions were adopted as part of

the Gramm-Leach-Bliley Act of 1999 (GLB Act). The SEC and the Board approved

the final rules at separate open meetings held on September 19, 2007, and

September 24, 2007, respectively.

The Board and SEC issued proposed rules for comment in December 2006. The final

rules are similar to the proposed rules in overall scope and approach. In

response to comments, the agencies also have modified the rules in several

important respects to make the rules more workable and less burdensome. These

changes are discussed in detail in the attached notice, which will be published

in the Federal Register shortly.

The rules define the scope of securities activities that banks may conduct

without registering with the SEC as a securities broker and implement the most

important broker exceptions for banks adopted by the GLB Act. Specifically,

the rules implement the statutory exceptions that allow a bank, subject to

certain conditions, to continue to conduct securities transactions for its

customers as part of the banks trust and fiduciary, custodial and deposit

sweep functions, and to refer customers to a securities broker-dealer pursuant

to a networking arrangement with the broker-dealer.

The rules are designed to accommodate the business practices of banks and to

protect investors. In developing these rules, the agencies consulted

extensively with the Office of the Comptroller of the Currency, the Federal

Deposit Insurance Corporation and the Office of Thrift Supervision. Banks do

not have to start complying with the rules until the first day of their fiscal

year commencing after September 30, 2008. The Federal Register notice is

attached.

Statement by Governor Randall S. Kroszner

Attachment (530 KB PDF)

Media Contacts:

SECKevin Callahan202-551-4120

Federal Reserve BoardDeborah Lagomarsino202-452-2955

2007 Banking and Consumer Regulatory Policy

Last update: September 24, 2007

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