17 C.F.R. § 240.3b-9 Definition of “bank” for purposes of section 3(a) (4) and (5) of the Act.
Title 17 - Commodity and Securities Exchanges
(a) The term bank as used in the definition of broker and dealer in section 3(a) (4) and (5) of the Act does not include a bank that: (1) Publicly solicits brokerage business for which it receives transaction-related compensation, unless the bank enters into a contractual or other arrangement with a broker-dealer registered under the Act pursuant to which the broker-dealer will offer brokerage services on or off the premises of the bank, provided that: (i) Such broker-dealer is clearly identified as the person performing the brokerage services; (ii) Bank employees perform only clerical and ministerial functions in connection with brokerage transactions unless such employees are qualified as registered representatives pursuant to the requirements of the self-regulatory organizations; (iii) Bank employees do not receive, directly or indirectly, compensation for any brokerage activities unless such employees are qualified as registered representatives pursuant to the requirements of the self-regulatory organizations; and (iv) Such services are provided by the broker-dealer on a basis in which all customers are fully disclosed. (2) Directly or indirectly receives transaction-related compensation for providing brokerage services for trust, managing agency or other accounts to which the bank provides advice, provided, however, that this subsection shall not apply if the bank executes transactions through a registered broker-dealer and: (i) Each account independently chooses the broker-dealer through which execution is effected; (ii) The bank's personnel do not receive, directly or indirectly, transaction-related compensation or compensation based upon the number of accounts choosing to use the registered broker-dealer; and (iii) The brokerage services are provided by the broker-dealer on a basis in which all customers are fully disclosed; or (3) Deals in or underwrites securities. (b) This rule shall not apply to any bank that engages in one or more of the following activities only: (1) Effects transactions in exempted or municipal securities as defined in the Act or in commercial paper, bankers' acceptances or commercial bills; (2) Effects no more than 1,000 transactions each year in securities other than exempted or municipal securities as defined in the Act or in commercial paper, bankers' acceptances or commercial bills; (3) Effects transactions for the investment portfolio of affiliated companies; (4) Effects transactions as part of a program for the investment or reinvestment of bank deposit funds into any no-load open-end investment company registered pursuant to the Investment Company Act of 1940 that attempts to maintain a constant net asset value per share or has an investment policy calling for investment of at least 80% of its assets in debt securities maturing in thirteen months or less; (5) Effects transactions as part of any bonus, profit-sharing, pension, retirement, thrift, savings, incentive, stock purchase, stock ownership, stock appreciation, stock option, dividend reinvestment or similar plan for employees or shareholders of an issuer or its subsidiaries; (6) Effects transactions pursuant to sections 3(b), 4(2) and 4(6) of the Securities Act of 1933 and the rules and regulations thereunder; or (7) Is subject to section 15(e) of the Act. (c) The Commission, upon written request, or upon its own motion, may exempt a bank, either unconditionally or on specific terms and conditions, where the Commisison determines that the bank's activities are not within the intended meaning and purpose of this rule. (d) For purposes of this section, the term transaction-related compensation shall mean monetary profit to the bank in excess of cost recovery for providing brokerage execution services. [50 FR 28394, July 12, 1985]
Title 17: Commodity and Securities Exchanges
PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934
Subpart A—Rules and Regulations Under the Securities Exchange Act of 1934
Definitions
§ 240.3b-9 Definition of “bank” for purposes of section 3(a) (4) and (5) of the Act.
