159
ing fees, or both, but the bank
does not otherwise receive broker-
age commissions, or other similar
remuneration based on effecting
transactions
in
securities,
that
exceed the cost incurred by the
bank in connection with execut-
ing securities transactions under
this subclause (I).
‘‘(II) DIVIDEND
REINVESTMENT
PLANS.—The
bank
effects
trans-
actions, as part of its transfer agency
activities, in the securities of an issuer
as part of that issuer’s dividend rein-
vestment plan, if—
‘‘(aa) the bank does not so-
licit transactions or provide in-
vestment advice with respect to
the purchase or sale of securities
in connection with the plan;
‘‘(bb) the bank does not net
shareholders’ buy and sell orders,
other than for programs for odd-
lot holders or plans registered
with the Commission; and
160
‘‘(cc) the bank’s compensa-
tion for such plan or program
consists of administration fees, or
flat or capped per order process-
ing fees, or both, but the bank
does not otherwise receive broker-
age commissions, or other similar
remuneration based on effecting
transactions
in
securities,
that
exceed the cost incurred by the
bank in connection with execut-
ing securities transactions under
this subclause (II).
‘‘(III) ISSUER PLANS.—The bank
effects transactions, as part of its
transfer agency activities, in the secu-
rities of an issuer as part of a plan or
program for the purchase or sale of
that issuer’s shares, if—
‘‘(aa) the bank does not so-
licit transactions or provide in-
vestment advice with respect to
the purchase or sale of securities
in connection with the plan or
program;
161
‘‘(bb) the bank does not net
shareholders’ buy and sell orders,
other than for programs for odd-
lot holders or plans registered
with the Commission; and
‘‘(cc) the bank’s compensa-
tion for such plan or program
consists of administration fees, or
flat or capped per order process-
ing fees, or both, but the bank
does not otherwise receive broker-
age commissions, or other similar
remuneration based on effecting
transactions
in
securities,
that
exceed the cost incurred by the
bank in connection with execut-
ing securities transactions under
this subclause (III).
‘‘(IV)
PERMISSIBLE
DELIVERY
OF
MATERIALS.—The
exception
to
being considered a broker for a bank
engaged in activities described in sub-
clauses (I), (II), and (III) will not be
affected by a bank’s delivery of writ-
ten or electronic plan materials to em-
162
ployees of the issuer, shareholders of
the issuer, or members of affinity
groups of the issuer, so long as such
materials are—
‘‘(aa) comparable in scope or
nature to that permitted by the
Commission as of the date of the
enactment of the Financial Serv-
ices Act of 1998; or
‘‘(bb) otherwise permitted by
the Commission.
‘‘(v) SWEEP
ACCOUNTS.—The bank
effects transactions as part of a program
for the investment or reinvestment of bank
deposit funds into any no-load, open-end
management
investment
company
reg-
istered under the Investment Company Act
of 1940 that holds itself out as a money
market fund.
‘‘(vi)
AFFILIATE
TRANSACTIONS.—
The bank effects transactions for the ac-
count of any affiliate of the bank (as de-
fined in section 2 of the Bank Holding
Company Act of 1956) other than—
163
‘‘(I) a registered broker or deal-
er; or
‘‘(II) an affiliate that is engaged
in merchant banking, as described in
section 6(c)(3)(H) of the Bank Hold-
ing company Act of 1956.
‘‘(vii) PRIVATE
SECURITIES
OFFER-
INGS.—The bank—
‘‘(I) effects sales as part of a pri-
mary offering of securities not involv-
ing a public offering, pursuant to sec-
tion 3(b), 4(2), or 4(6) of the Securi-
ties Act of 1933 or the rules and reg-
ulations issued thereunder;
‘‘(II) at any time after one year
after the date of enactment of the Fi-
nancial Services Act of 1998, is not
affiliated with a broker or dealer that
has been registered for more than one
year; and
‘‘(III) effects transactions exclu-
sively with qualified investors.
‘‘(viii) SAFEKEEPING
AND
CUSTODY
ACTIVITIES.—
164
‘‘(I) IN GENERAL.—The bank, as
part of customary banking activities—
‘‘(aa)
provides
safekeeping
or custody services with respect
to securities, including the exer-
cise of warrants and other rights
on behalf of customers;
‘‘(bb) facilitates the transfer
of funds or securities, as a custo-
dian or a clearing agency, in con-
nection with the clearance and
settlement
of
its
customers’
transactions in securities;
‘‘(cc) effects securities lend-
ing
or
borrowing
transactions
with or on behalf of customers as
part of services provided to cus-
tomers pursuant to division (aa)
or (bb) or invests cash collateral
pledged in connection with such
transactions; or
‘‘(dd)
holds
securities
pledged by a customer to another
person or securities subject to
purchase or resale agreements in-