The following is a brief summary of the key provisions of interest to the securities industry. The Act prohibits non-financial companies from owning commercial banks.
Merchant banking is included in the definition of a financial activity.
The Act includes a grandfather provision for commercial activities which permits a securities firm that becomes a FHC to continue to engage in commercial activities in an amount not to exceed 15 percent of its consolidated annual gross revenues, excluding bank subsidiaries. The grandfather provision will expire ten years after date of enactment, unless extended by the Board for an additional five years. The Act requires all financial institutions, regardless of whether they form an FHC, to disclose to customers their policies and practices for protecting the privacy of non-public personal information. The Act permits financial institutions to share personal customer information with affiliates within the holding company. Regulators have six months after the date of enactment to adopt final rules implementing the privacy provisions.