Regulation R includes the following provisions:
- Third-Party Brokerage (Networking) Arrangements - Rule 700 defines the terms under which a bank employee may receive a nominal, non-contingent, one-time cash fee of a fixed-dollar amount for referring a customer to a broker- dealer. Rule 701 contains an exemption and related definitions that permit a bank employee to receive a higher, contingent fee for referring an institutional or high net-worth customer to a broker-dealer.
- Trust and Fiduciary Activities - Where a bank effects more than 500 securities transactions per year, the rules require trust operations to meet a "chiefly compensated" test unless related exemptions apply. Rules 721 through 723 define the terms "chiefly compensated" and "relationship compensation," and provide specific exemptions for banks effecting securities transactions in a trustee or fiduciary capacity, e.g., for short-term and transferred accounts.
- Sweep Activities - Rules 740 and 741 define terms and provide an exemption for banks sweeping funds into certain money market funds.
- Safekeeping and Custody Activities - Rule 760 provides exemptions for banks that accept orders to effect securities transactions from or for custody accounts. This rule comes into play when banks act in a custodial capacity for employee benefit plan accounts, for individual retirement accounts, and for accommodation trades for other custodial accounts.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Trust Officer
Chief Compliance Officer
Compliance Examination Procedures and
Supervisory Guidance for Retail Investment Sales
Definitions of Terms and Exemptions Relating To The "Broker" Exceptions For Banks
Victoria M. Pawelski, Compliance Policy Analyst, at
VPawelski@FDIC.gov or 202-898-3571, or Anthony
J. DiMilo, Trust Examination Specialist, at
ADiMilo@FDIC.gov or 202-898-7496.
FIL-92-2007 - PDF (PDF Help)
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Paper copies of FDIC financial institution letters
may be obtained via the FDIC's Public Information
Center (1-877-275-3342 or 703-562-2200).