Document ID: SEC-2006-1678-0003
Agency: sec
Document Type: Rule
Title: Definitions of Terms and Exemptions Relating to the ``Broker Exceptions for Banks
Posted Date: 2008-04-17T04:00Z

[Federal Register: April 17, 2008 (Volume 73, Number 75)]
[Rules and Regulations]               
[Page 20779-20780]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ap08-1]                         

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Rules and Regulations
                                                Federal Register
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[[Page 20779]]

FEDERAL RESERVE SYSTEM

12 CFR Part 218

[Regulation R; Docket No. R-1274]

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 247

[Release No. 34-56501A; File No. S7-22-06]
RIN 3235-AJ74

 
Definitions of Terms and Exemptions Relating to the ``Broker'' 
Exceptions for Banks

AGENCIES: Board of Governors of the Federal Reserve System (``Board'') 
and Securities and Exchange Commission (``SEC'' or ``Commission'') 
(collectively, the Agencies).

ACTION: Final rule; technical amendments.

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SUMMARY: The Board and the Commission jointly are adopting technical 
amendments to Regulation R, which the Agencies jointly adopted in 
September 2007. Regulation R implements certain of the exceptions for 
banks from the definition of the term ``broker'' in section 3(a)(4) of 
the Securities Exchange Act of 1934 (``Exchange Act''), as amended by 
the Gramm-Leach-Bliley Act (``GLBA''). The technical amendments correct 
cross-references and other typographical errors in the regulation.

DATES: Effective Date: The technical amendments are effective April 17, 
2008.
    Compliance Date: As provided in 12 CFR 218.781 and 17 CFR 247.100 
of Regulation R, banks are exempt from complying with Regulation R and 
the ``broker'' exceptions in section 3(a)(4)(B) of the Exchange Act 
until the first day of their first fiscal year that commences after 
September 30, 2008.

FOR FURTHER INFORMATION CONTACT: Board: Andrea Tokheim, Counsel, (202) 
452-2300, or Brian Knestout, Attorney, (202) 452-2249, Legal Division, 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue, NW., Washington, DC 20551. Users of 
Telecommunication Device for Deaf (TDD) only, call (202) 263-4869.
    SEC: Linda Stamp Sundberg, Senior Special Counsel, at (202) 551-
5550, Office of the Chief Counsel, Division of Trading and Markets, 
Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549.

SUPPLEMENTARY INFORMATION: 

A. Overview of Technical Amendment

    In September 2007, the Board and the SEC jointly adopted a single 
set of final rules called Regulation R that implement certain of the 
exceptions for banks from the definition of the term ``broker'' in 
section 3(a)(4) of the Exchange Act, as amended by the GLBA.\1\ 
Regulation R defines terms used in these statutory exceptions and 
includes certain related exemptions. The Board and the SEC are jointly 
adopting these technical amendments to correct certain cross-references 
and typographical errors in the final rules.
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    \1\ See 72 FR 56514, Oct. 3, 2007, which added parts 12 CFR 218 
and 17 CFR 247 to the Code of Federal Regulations.
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    In particular, paragraph (b) of Rule 701 is revised to add a colon 
at the end of the paragraph.\2\ Paragraphs (a)(6) and (a)(7) of Rule 
721 are redesignated as paragraphs (a)(5) and (a)(6) because there was 
no numbered paragraph (a)(5). Paragraph (c)(2) of Rule 721 is revised 
to correctly cross-reference paragraph (h)(2), rather than paragraph 
(g)(2). Paragraph (e)(3) of Rule 723 is revised to correctly refer to 
``this paragraph (e)'', rather than ``this paragraph (d)''. For 
consistency, paragraphs (a)(1)(A) and (a)(1)(B) of Rule 741 are 
redesignated as paragraphs (a)(1)(i) and (a)(1)(ii). Finally, paragraph 
(b)(1)(i) of Rule 775 is revised to add a dash to the citation of 15 
U.S.C. 80a-5(a)(1).
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    \2\ The final rules adopted by the Board and the SEC within 
their respective titles of the Code of Federal Regulations (12 CFR 
part 218 for the Board and 17 CFR part 247 for the SEC) are 
identically numbered from Sec.  --.100 to Sec.  --.781. For ease of 
reference, the single set of final rules adopted by each Agency are 
referred to in this release as Rule --, excluding title and part 
designations. A similar format was used to refer to the single set 
of rules issued by the Agencies.
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B. Administrative Procedure Act

    The Agencies find, in accordance with sections 553(b) and (d) of 
the Administrative Procedure Act,\3\ that good cause exists to make 
these amendments effective upon publication in the Federal Register 
without providing prior notice and an opportunity for comment. 
Specifically, the Agencies find that notice and comment and a delayed 
effective date are unnecessary because the amendments make only 
technical changes to Regulation R and there is no substantive change on 
which the public could provide meaningful comment.\4\
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    \3\ 5 U.S.C. 553(b)(3)(A) and (d)(3).
    \4\ For similar reasons, the amendments do not require analysis 
under the Regulatory Flexibility Act or analysis of major rule 
status under the Small Business Regulatory Enforcement Fairness Act. 
See 5 U.S.C. 601(2) (for purposes of Regulatory Flexibility Act 
analyses, the term ``rule'' means any rule for which the agency 
publishes a general notice of proposed rulemaking); 5 U.S.C. 
804(3)(C) (for purposes of Congressional review of agency 
rulemaking, the term ``rule'' does not include any rule of agency 
organization, procedure, or practice that does not substantially 
affect the rights or obligations of non-agency parties).
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C. Paperwork Reduction Act

    Finally, the technical amendments do not contain any new or 
additional collections of information as defined by the Paperwork 
Reduction Act of 1995, as amended.\5\
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    \5\ 44 U.S.C. 3501.
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List of Subjects

12 CFR Part 218

    Banks, Brokers, Securities.

17 CFR Part 247

    Banks, Brokers, Securities.

Federal Reserve System

Authority and Issuance

0
For the reasons set forth in the preamble, the Board amends 12 CFR part 
218 as set forth below:

PART 218--REGULATION R--EXCEPTIONS FOR BANKS FROM THE DEFINITION OF 
BROKER IN THE SECURITIES EXCHANGE ACT OF 1934 (REGULATION R)

0
1. The Authority citation for part 218 continues to read as follows:

    Authority: 15 U.S.C. 78c(a)(4)(F).

[[Page 20780]]

Securities and Exchange Commission

Authority and Issuance

0
For the reasons set forth in the preamble, the Commission amends 17 CFR 
part 247 as set forth below:

PART 247--REGULATION R--EXEMPTIONS AND DEFINITIONS RELATED TO THE 
EXCEPTIONS FOR BANKS FROM THE DEFINITION OF BROKER

0
2. The authority citation for part 247 continues to read as follows:

    Authority: 15 U.S.C. 78c, 78o, 78q, 78w, and 78mm.

Common Rules

    The common rules adopted by the Board as Part 218 of Title 12, 
Chapter II of the Code of Federal Regulations and by the Commission as 
Part 247 of Title 17, Chapter II of the Code of Federal Regulations are 
amended as follows:

0
3. Paragraph (b) of common rule Sec.  --.701 is revised to read as 
follows:

Sec.  --.701  Exemption from the definition of ``broker'' for certain 
institutional referrals.

* * * * *
    (b) Required disclosures. The disclosures provided to the high net 
worth customer or institutional customer pursuant to paragraphs 
(a)(2)(i) or (a)(3)(i) of this section shall clearly and conspicuously 
disclose:
* * * * *

0
4. In common rule Sec.  --.721, paragraphs (a)(6) and (a)(7) are 
redesignated as paragraphs (a)(5) and (a)(6), respectively, and 
paragraph (c)(2) is revised to read as follows:

Sec.  --.721  Defined terms relating to the trust and fiduciary 
activities exception from the definition of ``broker.''

* * * * *
    (c) * * *
    (2) Advertisement. For purposes of this section, the term 
advertisement has the same meaning as in Sec.  --.760(h)(2).

0
5. Paragraph (e)(3) of common rule Sec.  --.723 is revised to read as 
follows:

Sec.  --.723  Exemptions for special accounts, transferred accounts, 
foreign branches and a de minimis number of accounts.

* * * * *
    (e) * * *
    (3) The bank did not rely on this paragraph (e) with respect to 
such account during the immediately preceding year.

Sec.  --.741  [Amended]

0
6. In common rule Sec.  --.741, paragraphs (a)(1)(A) and (a)(1)(B) are 
redesignated as paragraphs (a)(1)(i) and (a)(1)(ii), respectively.

0
7. In common rule Sec.  --.775, paragraph (b)(1)(i) is revised to read 
as follows:

Sec.  --.775  Exemption from the definition of ``broker'' for banks 
effecting certain excepted or exempted transactions in investment 
company securities.

* * * * *
    (b) * * *
    (1) * * *
    (i) Any security issued by an open-end company, as defined by 
section 5(a)(1) of the Investment Company Act (15 U.S.C. 80a-5(a)(1)), 
that is registered under that Act; and
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, acting through the Secretary of the Board under delegated 
authority, April 11, 2008.
Robert deV. Frierson,
Deputy Secretary of the Board.
    Dated: April 11, 2008.
Florence Harmon,
By the Securities and Exchange Commission, Deputy Secretary.
 [FR Doc. E8-8270 Filed 4-16-08; 8:45 am]

BILLING CODE 6210-01-P