[Federal Register: March 5, 1997 (Volume 62, Number 43)]
[Rules and Regulations]               
[Page 9915-9923]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05mr97-2]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 344
RIN 3064-AB74
 
Recordkeeping and Confirmation Requirements for Securities 
Transactions
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
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SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending 
its regulations governing the procedures for recordkeeping and 
confirmation requirements with respect to effecting securities 
transactions for customers of an insured state nonmember bank or a 
foreign bank having an insured branch (Bank). The final rule updates, 
clarifies and streamlines the FDIC regulations and reduces unnecessary 
regulatory costs and other burdens. The final rule also reorganizes and 
clarifies the regulation in areas where it previously was confusing. In 
addition, the FDIC has incorporated significant interpretive positions 
and updated various provisions to address market developments and 
regulatory changes by other regulators that affect requirements for 
recordkeeping and confirmation of securities transactions by Banks.
DATES: Effective date. The final rule is effective April 1, 1997. Early 
compliance. These revisions may be followed immediately by the affected 
party.
FOR FURTHER INFORMATION CONTACT: Miguel D. Browne, Manager--Risk Policy 
Development, (202) 898-6789; Keith A. Ligon, Chief, Policy Unit, (202) 
898-3618; and John F. Harvey, Review Examiner (Trust), Securities, 
Capital Markets and Trust Branch, Division of Supervision (202) 898-
6762; and Patrick J. McCarty, Counsel, Regulations and Legislation 
Section, Legal Division, (202) 898-8708.
SUPPLEMENTARY INFORMATION:
Background
    In 1979, the FDIC adopted part 344 to require Banks under its 
jurisdiction to establish uniform procedures and recordkeeping and 
confirmation requirements with respect to effecting securities 
transactions for customers. The requirements reflected, in part, the 
recommendations of the Securities and Exchange Commission's (SEC) Final 
Report of the Securities and Exchange Commission on Bank Securities 
Activities (June 30, 1977). Part 344's recordkeeping and confirmation 
requirements were patterned after the SEC's rules applicable to broker/
dealers and were intended to serve similar purposes for Banks involved 
in effecting customers' securities transactions. See 44 FR 43261 (July 
24, 1979). The Board of Governors of the Federal Reserve System (FRB) 
and the Office of the Comptroller of the Currency (OCC) also adopted 
regulations substantially identical to part 344 in 1979.1
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    \1\ 1 See 12 CFR 208.8(k), 44 FR 43258 (July 24, 1979) (FRB 
regulation); 12 CFR part 12, 44 FR 43254 (July 24, 1979)(OCC 
regulation).
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    The FDIC and the other federal banking agencies are required by 
section 303 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (CDRI) to review and streamline their 
regulations to improve efficiency, reduce unnecessary costs and 
eliminate unwarranted constraints on credit availability. 12 U.S.C. 
4803(a). Section 303(a) also requires the federal banking agencies to 
work jointly to make uniform all regulations and guidelines 
implementing common statutory or supervisory policies.
    On December 22, 1995, the OCC published a notice of proposed 
rulemaking (60 FR 66517) to revise 12 CFR part 12, the OCC's 
Recordkeeping and Confirmation Requirements for Securities Transactions 
regulation. The purpose of the proposal was to modernize part 12, 
address various market developments and regulatory changes, and reduce 
regulatory burden, where possible. The OCC published its final rule on 
December 2, 1996. See 61 FR 63958. The FRB published a substantially 
similar yet somewhat differently worded proposed rule on December 26, 
1995. See 60 FR 66759.
    The FDIC published an advance notice of proposed rulemaking on May 
24, 1996, soliciting comment on issues similar to those raised in the 
OCC's and FRB's proposed rules, as well as issues which the OCC and FRB 
proposals did not address. See 61 FR 26135. On December 24, 1996, the 
FDIC published a notice of proposed rulemaking (61 FR 67729) to amend 
part 344 to address various market developments and regulatory changes, 
and reduce regulatory burden, where possible. Consistent with Section 
303 of CDRI, the FDIC reviewed the OCC rule and the FRB proposal in 
connection with the preparation of its notice of proposed rulemaking. 
The FDIC has endeavored to create a rule that is uniform with the other 
agencies. As part of that effort, the staff of the FDIC has been in 
contact with the staffs of the FRB and the OCC in connection with the 
drafting of the final rule. The FDIC's final rule is closer in 
structure, definitions, language and form to the FRB's proposal than 
the OCC's final rule, however, all of the agencies' rules are 
substantively very similar.
Comments Received and Changes Made
    The FDIC received six comments on the proposal. One comment came 
from a bank, one from a bank holding company and four comments came 
from trade associations representing banks, investment companies and 
accountants. In general, the commenters strongly supported the proposal 
as promoting uniformity among the Federal bank regulatory agencies, 
reducing regulatory burdens as well as addressing recent developments 
in the securities market. Most commenters specifically supported the 
provision of the proposal that excluded from the scope of part 344 
customer transactions conducted directly with a broker/dealer where the 
customer has a written account agreement with the broker-dealer and the 
broker-dealer is fully disclosed to the customer. This change would 
exclude from part 344's coverage commonly utilized contractual 
relationships between banks and broker/dealers whereby the broker/
dealers conducts securities transactions on bank premises, known as 
networking arrangements.
    In addition, certain of the commenters requested specific changes 
to the proposal. The FDIC has considered each of the comments carefully 
and has made a number of changes in response to the comments received. 
Overall, the final rule adopts most of the changes to part 344 as 
proposed by the FDIC although certain changes have been made in an 
attempt to increase uniformity with regard to recordkeeping and 
confirmation requirements among the federal banking regulatory 
agencies. The section-by-section discussion of this preamble describes 
the final regulation
[[Page 9916]]
and identifies and discusses the comments received and changes made to 
certain sections of the proposal.
Section-by-Section Discussion
Purpose and Scope. (Section 344.1)
    The purpose of part 344 is twofold: to ensure that purchasers of 
securities from Banks are provided with certain necessary information 
about the transaction; and to ensure that Banks engaging in such 
transactions maintain adequate records and controls with respect to 
such transactions. In general, part 344 applies to securities 
transactions effected by Banks on behalf of customers unless the 
transaction is specifically exempted in Sec. 344.2, such as, to a 
limited extent, transactions in government securities and transactions 
in municipal securities conducted by Banks that are not registered as 
municipal securities dealers with the SEC.
Exceptions. (Section 344.2)
    The final rule provides five exceptions from the requirements of 
certain provisions of part 344. The specific exceptions, which are 
unchanged from the proposal, are: (1) Banks conducting a small number 
of securities transactions; (2) certain government securities 
transactions; (3) certain municipal securities transactions; (4) 
securities transactions conducted by a foreign branch of a bank; and 
(5) certain securities transactions with a broker/dealer. The first 
four exceptions already exist in part 344. The proposal added the 
exemption covering certain securities transactions with a broker/
dealer. In order for the exception to apply, the broker/dealer must be 
fully disclosed to the customer and the customer must have a direct 
contractual agreement with the broker/dealer, that is, a signed account 
agreement. This exception makes clear that under the circumstances 
described dual employee arrangements are not subject to part 344. This 
exemption is similar to that found in the OCC's rule. See 12 CFR 
Sec. 12.1(c)(2)(v). The rule also clarifies that even though certain 
transactions are excepted from compliance with all, or certain 
sections, of part 344, the FDIC expects a Bank conducting securities 
transactions for its customers to maintain effective systems of records 
and controls to ensure safe and sound operations.
    In connection with the broker/dealer networking exception, the FDIC 
requested comment on whether part 344 should apply to banks which 
impose surcharges or additional fees on customers in addition to the 
transaction volume compensation they normally receive under a 
networking agreements. The only comment received on this issue 
indicated support for requiring banks to disclose to customers that 
such surcharges or additional fees were being imposed. It is the FDIC's 
understanding that these type of surcharges and additional fees are not 
common, however, the FDIC expects banks to disclose the imposition of 
these surcharges or fees to customers and will monitor this area to 
determine if further supervisory action is necessary.
    The FDIC received comment on the small number of securities 
transactions exceptions. This exception applies to banks effecting an 
average of fewer than 200 securities transactions per year for 
customers over the prior three calendar year period and excepts the 
bank from certain record maintenance requirements as well as the need 
to establish most required written policies and procedures. One 
commenter proposed that this limited transactions exemption be expanded 
to allow a Bank to effect 500 rather than 200 transactions in 
securities that are neither municipal securities or government 
securities. In light of the FDIC's desire for uniformity of its 
recordkeeping and disclosure requirements with those of the other 
Federal banking regulators and the lack of a compelling basis by the 
commenter to make the suggested change, the FDIC has determined to 
maintain the exemption for limited transactions at an average of 200 of 
such transactions per year.
Definitions. (Section 344.3)
    Section 344.3 sets forth the definitions of 13 terms used in the 
rule. The FDIC's advance notice of proposed rule making described six 
new definitions--``asset-backed security'', ``completion of the 
transaction'', ``crossing of buy and sell orders'', ``debt security'', 
``government security'' and ``municipal security.'' The proposal added 
two additional new definitions: ``bank'' and ``cash management sweep 
account''. The proposed definitions are the similar to those proposed 
by the FRB. The OCC's final rule also uses the same terms, but the 
structure and language used are somewhat different. The final rule 
adopts the definitions as set forth in the proposal with the following 
minor modifications in response to comments received
    As proposed, the term ``cash management sweep account'' would cover 
any prearranged, automatic transfer of funds above a certain dollar 
level from a deposit account to purchase a security or securities or 
any prearranged, automatic redemption or sale of a security or 
securities when a deposit account drops below a certain dollar level 
with the proceeds being transferred into a deposit account. The term 
would only cover transactions involving the purchase or sale of 
securities. The FDIC received two comments on its proposed definition 
of a ``cash management sweep account'' found at Sec. 344.3(c). One 
commenter expressed appreciation for the clarity provided by having a 
separately defined term; the other raised concern that while the FDIC 
proposes to treat cash management sweep accounts in a manner identical 
to the OCC, an additional definition may cause uncertainty. The OCC 
defined a cash management sweep account within its definition of 
``periodic plan''. For the reasons stated in the proposed rulemaking 
2, the FDIC believes that there are benefits to separately 
defining the term ``cash management sweep account''. Furthermore, we do 
not foresee confusion resulting from the distinction used in the OCC's 
regulation. With respect to cash management sweep accounts, both the 
OCC's and the FDIC's rules will require monthly statements to be 
furnished to a customer for each month in which a security is purchased 
or sold, but not less than quarterly.
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    \2\ Sweep accounts are different in kind from typical periodic 
plans such as dividend reinvestment plans (DRIPs) and automatic 
investment plans. Sweep accounts do not normally invest in 
securities at the regular intervals (i.e. monthly or quarterly) as 
do DRIPs and automatic investment plans. Second, sweep accounts are 
a significant product/service in their own right which account for 
several billions of dollars worth of transactions on a daily basis 
and probably exceed the dollar volume in traditional periodic plans. 
Due to these differences, the FDIC believes it is not appropriate to 
include sweep accounts in the definition of periodic plans.
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    The FDIC has amended the definition of the term ``security'' at 
Sec. 344.3(m) so that it conforms to the definition used by the other 
federal banking regulatory agencies. The new definition more closely 
tracks the definition of ``security'' in the Securities Exchange Act of 
1934. See 17 U.S.C. 78a et seq. No substantive change in the definition 
or meaning of the term ``security'' is intended from the definition of 
the term as published in the FDIC's proposal and the term as used in 
the existing regulation. The FDIC is conforming where possible the 
terms of part 344 with the rules of the other federal banking 
regulatory agencies so that any regulatory burden resulting from the 
use of different terminology can be minimized.
[[Page 9917]]
Recordkeeping. (Section 344.4)
    Section 344.4 sets forth the requirements for maintenance of 
records of securities transactions by Banks or a third party service 
provider for the Bank. The rule specifically permits the use of 
electronic or automated records as long as the records are easily 
retrievable and readily available for inspection and the Bank has the 
capability to reproduce the records in hard copy form. The FDIC 
received no comments on this section, and therefore it is being adopted 
as proposed.
Content and Timing of Customer Notification. (Section 344.5)
    Section 344.5 of the regulation identifies the information that a 
Bank must provide to a customer at or before the completion of a 
securities transaction. When a broker/dealer is utilized in a 
transaction, Banks have the option of either having a broker/dealer 
that executes a transaction for the Bank send a confirmation directly 
to the Bank's customer or choosing to forward a copy of the broker/
dealer confirmation to the Bank customer when it is received. Banks 
opting to have confirmations sent directly to their customers by the 
broker/dealer are ultimately responsible for the timely delivery of 
confirmations as well as accurate disclosure of all information 
required therein. The FDIC received several comments concerning this 
section of the proposal. One commenter supported the provision allowing 
notices to be furnished to customers via facsimile or other electronic 
means. The FDIC notes its intent that references--in Sec. 344.5 as well 
as Sec. 344.6--to the ``give'' or ``send'' notices includes notice 
provided via facsimile or other electronic transmission.
    Several commenters had concerns with the partial exemption to the 
customer notification requirement of the source and amount of 
remuneration received by a Bank from a third party. The source and 
amount of remuneration that the Bank receives, other than from its 
customer, must be disclosed to the extent required under paragraph 
(b)(6) of Sec. 344.5. Paragraph 344.5(b)(6) describes three 
circumstances in which a Bank need only disclose to a customer that the 
Bank has received remuneration from a third party and that the Bank 
will provide such information upon the written request of the customer. 
If a transaction falls within one of the three enumerated exceptions in 
Sec. 344.5(b)(6)(i), a simple disclosure that the Bank received 
remuneration from a third party and that the source and amount of such 
remuneration received by the Bank from a third party is available upon 
written request of the customer will satisfy the disclosure 
requirements of Sec. 344.5(a)(2). One commenter indicated that the rule 
could be read so that Sec. 344.5(a)(2) would vitiate the exemption 
under Sec. 344.5(b)(6)(ii). The FDIC does not agree. As discussed, 
Sec. 344.5 (a)(2) is clear that notice need be provided only to the 
extent that such notice would be required under Sec. 344.5(b)(6), 
including any notice based on the request of a customer as permitted in 
paragraph (b)(6)(ii).
    Another commenter suggested that the Sec. 344.5(b)(6)(ii) partial 
exemption to the customer notification requirement regarding 
remuneration to the Bank by a source other than the customer be 
extended to permit a Bank not to disclose this information to the 
customer at all. The commenter expressed the belief that the specific 
source of such remuneration would not be of interest to the majority of 
customers. After consideration, the FDIC has determined not to change 
the rule from its proposed form. The final rule will reduce regulatory 
burden because a Bank is required to provide amount and source of 
remuneration information only upon specific written request by the 
customer. It is also noted that the final rule is consistent with 
similar rules of the other federal banking regulatory agencies. 
Moreover, because the Bank will only need to provide such information 
to customers who affirmatively request it, the burden on the Bank 
should be minimal, particularly if--as the commenter suggests--third 
party remuneration to the Bank is not of interest to a majority of 
customers.
    In addition, we note that the ``source and amount of remuneration'' 
issue which led to the FDIC issuing a partial waiver of part 344 in 
1995 3 has been resolved in the final rule. Previously, a literal 
reading of part 344 could have required a Bank to disclose the 
remuneration it obtained from a broker/dealer that dealt directly with 
the customer even if the Bank's remuneration was solely based on the 
broker/dealer's volume of transactions with Bank customers. Due to the 
impossibility of providing such disclosure to customers at the time of 
the transaction, the FDIC had granted a partial waiver of the 
requirements of part 344. Id. The FDIC now exempts for the scope of 
part 344 those securities transactions where the customer has a direct 
contractual agreement with a fully disclosed broker/dealer. See 12 CFR 
Sec. 344.2(a)(5). This exemption will remove from part 344's scope 
most, if not all, networking arrangements between registered broker/
dealers and financial institutions. Banks will not be obligated to 
disclose the source and amount of remuneration since the customer is 
actually a customer of the broker/dealer, not the Bank, and will 
receive a confirmation from the broker/dealer as required by SEC 
regulations.
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    \3\ See ``Waiver of Burdensome Disclosures for Certain 
Securities Transactions for Bank Customers'', FDIC Financial 
Institutions Letter 29-95 (April 7, 1995).
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Notification by Agreement; Alternative Forms and Times of Notification. 
(Section 344.6)
    In addition to the standard notification requirements in 
Sec. 344.5, the final regulation, in Sec. 344.6, generally authorizes a 
Bank, in cases in which it does not exercise investment discretion, to 
enter into a written agreement with its customer for an alternative 
arrangement as to the time and content of written notification. Section 
344.6 also sets forth alternative forms and times of notification for 
certain specific types of accounts. These are: (1) accounts in which 
the bank exercises investment discretion in other than an agency 
capacity; (2) accounts in which the bank exercises investment 
discretion in an agency capacity; (3) cash management sweep accounts; 
(4) transactions for a collective investment fund account; and (5) 
transactions for a periodic plan account. The FDIC has added language 
to the final regulation amending the requirements for certain cash 
management sweep accounts set forth in Sec. 344.6(d) in order to ensure 
that banks are aware that if they retain custody of securities that are 
the subject of a hold-in-custody repurchase agreement, they are subject 
to certain Treasury Department regulations governing confirmation 
requirements with respect to government securities transactions.
    The FDIC received one comment regarding the financial disclosure 
required for collective investment fund accounts in Sec. 344.6(e) 
suggesting that such disclosure be required to be made only by 
independent auditors in accordance with generally accepted auditing 
standards. The final rule allows either independent public accountants 
or internal auditors responsible only to the board of directors of the 
bank to prepare the financial information. The FDIC notes that 
Sec. 344.6(e) is identical to language used in the OCC's rule and the 
FRB's proposal. Moreover, the potential benefits resulting from the 
mandated use of external auditors does not outweigh the costs 
associated with
[[Page 9918]]
imposing such a regulatory burden upon the industry. Banks should be 
allowed the flexibility to effect the required disclosure through the 
use of external auditors as suggested by the commenter, or internal 
auditors that are responsible to only the board of directors. The final 
regulation adopts the language of the proposal.
Settlement of Securities Transactions. (Section 344.7)
    The proposal provided for a settlement period of T+3 and requires 
Banks to send broker/dealer confirmations within one business day of 
receipt. These requirements are being adopted in the final rule without 
change. The requirements are identical to those of the SEC and the 
other federal banking regulatory agencies and were generally supported 
by the commenters. One commenter suggested cross-referencing the rules 
of the Securities and Exchange Commission governing the settlement 
period for securities transactions into part 344 so that regulatory 
amendments by the SEC would automatically amend the FDIC's regulations. 
The FDIC has determined not to incorporate citations to the SEC's 
settlement regulations. Rather, the FDIC will review any regulatory 
amendments by the SEC on a case-by-case basis to determine whether such 
changes would be appropriate for Banks. The FDIC received no other 
comments on this section, and therefore it is being adopted as 
proposed.
Securities Trading Policies and Procedures. (Section 344.8)
    Section 344.8 of the final regulation requires Banks to establish 
written policies and procedures assigning supervisory responsibility 
for personnel engaged in different aspects of the trading process. 
Specifically, this section addresses orders and execution of trades, 
the equitable allocation of securities and prices for accounts and the 
crossing of buy and sell orders. In addition, Sec. 344.8(a)(2) requires 
the separation of order and execution functions from the traditional 
back office clearing functions in order to ensure that Banks maintain 
adequate internal controls for securities trading. The FDIC received no 
comments on this section, and therefore it is being adopted as 
proposed.
Personal Securities Trading Reported by Bank Officers and Employees. 
(Section 344.9)
    The proposal relocated to Sec. 344.9 without substantive change the 
personal trading reporting requirements for certain officers and 
employees. The notice of proposed rulemaking also included a new 
requirement that certain directors report their transactions in 
securities. As proposed, Sec. 344.9(a) would have required Bank 
directors, under certain limited and specified circumstances, to report 
a limited number of transactions in securities. The OCC's rule and the 
FRB's proposal do not specifically address the issue of director 
reporting requirements in this area.
    As proposed, the reporting requirements of Sec. 344.9 would have 
applied equally to directors, officers, or employees who have access to 
information in such a fashion so as to enable the person to gain an 
improper advantage or abuse the information obtained. The reporting 
requirement would not extend to individuals who routinely obtain such 
information but are never in a position to abuse it.
    The two comments received on the provision indicated uncertainty as 
to the scope and application of this provision of the proposed rule. 
One commenter indicated the rule could be interpreted more broadly than 
anticipated, and another comment indicated a reading more narrow than 
intended. Given the different interpretations of the proposed changes, 
it is clear that additional clarification is required if the FDIC were 
to retain the requirement. Upon review, the FDIC believes that 
additional revision to the proposed regulatory language would be 
necessary to accomplish the FDIC's intent. The FDIC recognizes that 
implementing the proposed amendatory language could result in reports 
being submitted by individual directors who are not intended to be 
subject to the reporting requirements. Other directors may innocently 
fail to report who are intended to be subject to the rule. Accordingly, 
in order to not unnecessarily increase the burden of regulatory 
reporting requirements, and in a continuing effort to maintain 
uniformity in the reporting requirements imposed by the federal banking 
regulators, the final rule does not contain specific reporting 
requirements for directors. The FDIC will, in consultation with the 
other federal banking regulators, study the issue of employee, officer, 
and director disclosures further and address the issue in a future 
rulemaking as appropriate. Any changes to the reporting requirements to 
be imposed upon bank directors, if proposed in the future, will be 
implemented following appropriate notice and comment.
Waivers. (Section 344.10)
    This section maintains the current provision that enables the FDIC 
to waive any provision of part 344 for good cause. No comments were 
received on this provision and it is being adopted as proposed.
Effective Date
    This regulation will become effective on April 1, 1997 in 
accordance with the requirements of the Paper Work Reduction and 
Regulatory Improvement Act (PWRRIA). Section 302(b) requires that the 
effectiveness of new rules be delayed until the beginning of the 
following calendar quarter in order to give depository institutions 
adequate time to adjust to new requirements, such as in this instance, 
the T+3 settlement requirement. Nevertheless, as permitted by Section 
302 of the PWRRIA, 12 U.S.C. 4802, banks may comply with the final rule 
before the effective date. In particular, the FDIC would not object to 
a Bank immediately taking advantage of Sec. 344.2(a)(5) of the final 
rule that exempts transactions in which a bank receives remuneration 
from a registered broker dealer so long as the broker/dealer is fully 
disclosed to the bank customer and the bank customer has a direct 
contractual agreement with the broker/dealer may be utilized.
Regulatory Flexibility Act
    Under section 605(b) of the Regulatory Flexibility Act (RFA) (5 
U.S.C. 605(b)), the final regulatory flexibility analysis otherwise 
required under section 604 of the RFA (5 U.S.C. 604) is not required if 
the head of the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities 
and the agency publishes such certification in the Federal Register 
along with its general notice of proposed rulemaking or at the time of 
publication of the final rule.
    The Board of Directors has concluded after reviewing the final 
regulation that it will not have a significant economic impact on a 
substantial number of small institutions. The Board of Directors 
therefore hereby certifies pursuant to section 605 of the RFA that the 
regulation will not have a significant economic impact on a substantial 
number of small entities within the meaning of the RFA. The FDIC 
anticipates that the final rule will result in a net benefit to all 
banks regardless of size due to the clarification provided by the rule. 
Small banks, in particular should be benefited by these changes. Most 
banks with total assets of under
[[Page 9919]]
$100 million are not engaged in securities activities in a manner 
covered by this regulation. Rather, a small bank typically will use 
either a registered broker/dealer who has rented space on the bank's 
premises in what is commonly referred to as a ``networking 
arrangement'' or an ``introducing broker'' who will refer a customer to 
a dealer that can effect the desired transaction, both of which 
situations are outside the scope of part 344 as adopted.
Small Business Regulatory Enforcement Fairness Act
    The Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) (Public Law 104-121) provides generally for agencies to report 
rules to Congress and for Congress to review rules. The reporting 
requirement is triggered when agencies issue a final rule as defined by 
the Administrative Procedure Act (APA) at 5 U.S.C. 551. Because the 
FDIC is issuing a final rule as defined by the APA, the FDIC will file 
the reports required by SBREFA.
    The Office of Management and Budget (OMB) has determined that this 
final revision to part 344 does not constitute a ``major rule'' as 
defined by SBREFA.
Paperwork Reduction Act
    The collection of information contained in this final rule has been 
reviewed and approved by the OMB under control number 3064-0028 
pursuant to section 3504(h) of the Paperwork Reduction Act of 1980 (44 
U.S.C. 3501 et seq.). Comments on the collections of information should 
be directed to the OMB, Paperwork Reduction Project (3064-0028) 
Washington, D.C. 20503 Attention: Desk officer for the Federal Deposit 
Insurance Corporation, with copies of such comments to be sent to 
Steven F. Hanft, Office of the Executive Secretary, room F-400, Federal 
Deposit Insurance Corporation, 550 17th Street, NW, Washington, D.C. 
20429.
    The collection of information requirements in this final rule are 
found in 12 CFR 344.2(b), 344.4(a), 344.5 (a) and (b), 344.8, and 
344.9. The collections consist of recordkeeping requirements, 
Secs. 344.2(b) and 344.4(a); the provision of written confirmations, 
Secs. 344.5 (a) and (b) and 344.6; the establishment of written 
policies and procedures for placing orders and executing trades as well 
as back office functions, Sec. 344.8; the reporting of personal 
securities trading by certain bank officers and employees, Sec. 344.9. 
The likely respondents/recordkeepers are state nonmember insured banks.
    Estimated average annual burden hours per respondent/recordkeeper: 
19.43 hours.
    Estimated number of respondents and/or recordkeepers: 5,663 state 
nonmember insured banks.
    Estimated total annual reporting and recordkeeping burden: 109,818 
hours.
    Start-up costs to respondents: None.
    Records under this part are to be maintained for at least three 
years.
List of Subjects in 12 CFR Part 344
    Banks, banking, Reporting and recordkeeping requirements, 
Securities.
    For the reasons set forth above, the FDIC hereby revises 12 CFR 
part 344 to read as follows.
PART 344--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS
Sec.
344.1  Purpose and scope.
344.2  Exceptions.
344.3  Definitions.
344.4  Recordkeeping.
344.5  Content and time of notification.
344.6  Notification by agreement; alternative forms and times of 
notification.
344.7  Settlement of securities transactions.
344.8  Securities trading policies and procedures.
344.9  Personal securities trading reporting by bank officers and 
employees.
344.10  Waivers.
    Authority: 12 U.S.C. 1817, 1818 and 1819.
Sec. 344.1  Purpose and scope.
    (a) Purpose. The purpose of this part is to ensure that purchasers 
of securities in transactions effected by a state nonmember insured 
bank (except a District bank) or a foreign bank having an insured 
branch are provided adequate information regarding transactions. This 
part is also designed to ensure that banks subject to this part 
maintain adequate records and controls with respect to the securities 
transactions they effect.
    (b) Scope; general. Any security transaction effected for a 
customer by a bank is subject to this part unless excepted by 
Sec. 344.2. A bank effecting transactions in government securities is 
subject to the notification, recordkeeping, and policies and procedures 
requirements of this part. This part also applies to municipal 
securities transactions by a bank that is not registered as a 
``municipal securities dealer'' with the Securities and Exchange 
Commission. See 15 U.S.C. 78c(a)(30) and 78o-4.
Sec. 344.2  Exceptions.
    (a) A bank effecting securities transactions for customers is not 
subject to all or part of this part 344 to the extent that they qualify 
for one or more of the following exceptions:
    (1) Small number of transactions. The requirements of 
Secs. 344.4(a) (2) through (4) and 344.8(a) (1) through (3) do not 
apply to a bank effecting an average of fewer than 200 securities 
transactions per year for customers over the prior three calendar year 
period. The calculation of this average does not include transactions 
in government securities.
    (2) Government securities. The recordkeeping requirements of 
Sec. 344.4 do not apply to banks effecting fewer than 500 government 
securities brokerage transactions per year. This exemption does not 
apply to government securities dealer transactions by banks.
    (3) Municipal securities. This part does not apply to transactions 
in municipal securities effected by a bank registered with the 
Securities and Exchange Commission as a ``municipal securities dealer'' 
as defined in title 15 U.S.C. 78c(a)(30). See 15 U.S.C. 78o-4.
    (4) Foreign branches. Activities of foreign branches of a bank 
shall not be subject to the requirements of this part.
    (5) Transactions effected by registered broker/dealers. (i) This 
part does not apply to securities transactions effected for a bank 
customer by a registered broker/dealer if:
    (A) The broker/dealer is fully disclosed to the bank customer; and
    (B) The bank customer has a direct contractual agreement with the 
broker/dealer.
    (ii) This exemption extends to bank arrangements with broker/
dealers which involve bank employees when acting as employees of, and 
subject to the supervision of, the registered broker/dealer when 
soliciting, recommending, or effecting securities transactions.
    (b) Safe and sound operations. Notwithstanding this section, every 
bank effecting securities transactions for customers shall maintain, 
directly or indirectly, effective systems of records and controls 
regarding their customer securities transactions to ensure safe and 
sound operations. The records and systems maintained must clearly and 
accurately reflect the information required under this part and provide 
an adequate basis for an audit.
Sec. 344.3  Definitions.
    (a) Asset-backed security means a security that is serviced 
primarily by the cash flows of a discrete pool of receivables or other 
financial assets, either fixed or revolving, that by their terms 
convert into cash within a finite time period plus any rights or other 
assets designed to assure the servicing
[[Page 9920]]
or timely distribution of proceeds to the security holders.
    (b) Bank means a state nonmember insured bank (except a District 
bank) or a foreign bank having an insured branch.
    (c) Cash management sweep account means a prearranged, automatic 
transfer of funds above a certain dollar level from a deposit account 
to purchase a security or securities, or any prearranged, automatic 
redemption or sale of a security or securities when a deposit account 
drops below a certain level with the proceeds being transferred into a 
deposit account.
    (d) Collective investment fund means funds held by a bank as 
fiduciary and, consistent with local law, invested collectively:
    (1) In a common trust fund maintained by such bank exclusively for 
the collective investment and reinvestment of monies contributed 
thereto by the bank in its capacity as trustee, executor, 
administrator, guardian, or custodian under the Uniform Gifts to Minors 
Act; or
    (2) In a fund consisting solely of assets of retirement, pension, 
profit sharing, stock bonus or similar trusts which are exempt from 
Federal income taxation under the Internal Revenue Code (26 U.S.C.).
    (e) Completion of the transaction means:
    (1) For purchase transactions, the time when the customer pays the 
bank any part of the purchase price (or the time when the bank makes 
the book-entry for any part of the purchase price, if applicable), 
however, if the customer pays for the security prior to the time 
payment is requested or becomes due, then the transaction shall be 
completed when the bank transfers the security into the account of the 
customer; and
    (2) For sale transactions, the time when the bank transfers the 
security out of the account of the customer or, if the security is not 
in the bank's custody, then the time when the security is delivered to 
the bank, however, if the customer delivers the security to the bank 
prior to the time delivery is requested or becomes due then the 
transaction shall be completed when the bank makes payment into the 
account of the customer.
    (f) Crossing of buy and sell orders means a security transaction in 
which the same bank acts as agent for both the buyer and the seller.
    (g) Customer means any person or account, including any agency, 
trust, estate, guardianship, or other fiduciary account for which a 
bank effects or participates in effecting the purchase or sale of 
securities, but does not include a broker, dealer, bank acting as a 
broker or a dealer, issuer of the securities that are the subject of 
the transaction or a person or account having a direct, contractual 
agreement with a fully disclosed broker/dealer.
    (h) Debt security means any security, such as a bond, debenture, 
note, or any other similar instrument that evidences a liability of the 
issuer (including any security of this type that is convertible into 
stock or a similar security) and fractional or participation interests 
in one or more of any of the foregoing; provided, however, that 
securities issued by an investment company registered under the 
Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., shall not be 
included in this definition.
    (i) Government security means:
    (1) A security that is a direct obligation of, or obligation 
guaranteed as to principal and interest by, the United States;
    (2) A security that is issued or guaranteed by a corporation in 
which the United States has a direct or indirect interest and which is 
designated by the Secretary of the Treasury for exemption as necessary 
or appropriate in the public interest or for the protection of 
investors;
    (3) A security issued or guaranteed as to principal and interest by 
any corporation whose securities are designated, by statute 
specifically naming the corporation, to constitute exempt securities 
within the meaning of the laws administered by the Securities and 
Exchange Commission; or
    (4) Any put, call, straddle, option, or privilege on a security 
described in paragraph (i) (1), (2), or (3) of this section other than 
a put, call, straddle, option, or privilege that is traded on one or 
more national securities exchanges, or for which quotations are 
disseminated through an automated quotation system operated by a 
registered securities association.
    (j) Investment discretion means that, with respect to an account, a 
bank directly or indirectly:
    (1) Is authorized to determine what securities or other property 
shall be purchased or sold by or for the account; or
    (2) Makes decisions as to what securities or other property shall 
be purchased or sold by or for the account even though some other 
person may have responsibility for these investment decisions.
    (k) Municipal security means a security which is a direct 
obligation of, or an obligation guaranteed as to principal or interest 
by, a State or any political subdivision, or any agency or 
instrumentality of a State or any political subdivision, or any 
municipal corporate instrumentality of one or more States or any 
security which is an industrial development bond (as defined in 26 
U.S.C. 103(c)(2)) the interest on which is excludable from gross income 
under 26 U.S.C. 103(a)(1) if, by reason of the application of paragraph 
(4) or (6) of 26 U.S.C. 103(c) (determined as if paragraphs (4)(A), (5) 
and (7) were not included in 26 U.S.C. 103(c), paragraph (1) of 26 
U.S.C. 103(c) does not apply to such security.
    (l) Periodic plan means any written authorization for a bank to act 
as agent to purchase or sell for a customer a specific security or 
securities, in a specific amount (calculated in security units or 
dollars) or to the extent of dividends and funds available, at specific 
time intervals, and setting forth the commission or charges to be paid 
by the customer or the manner of calculating them. Periodic plans 
include dividend reinvestment plans, automatic investment plans, and 
employee stock purchase plans.
    (m) Security means any note, stock, treasury stock, bond, 
debenture, certificate of interest or participation in any profit-
sharing agreement or in any oil, gas, or other mineral royalty or 
lease, any collateral-trust certificate, preorganization certificate or 
subscription, transferable share, investment contract, voting-trust 
certificate, and any put, call, straddle, option, or privilege on any 
security or group or index of securities (including any interest 
therein or based on the value thereof), or, in general, any instrument 
commonly known as a ``security''; or any certificate of interest or 
participation in, temporary or interim certificate for, receipt for, or 
warrant or right to subscribe to or purchase, any of the foregoing. The 
term security does not include:
    (1) A deposit or share account in a federally or state insured 
depository institution;
    (2) A loan participation;
    (3) A letter of credit or other form of bank indebtedness incurred 
in the ordinary course of business;
    (4) Currency;
    (5) Any note, draft, bill of exchange, or bankers acceptance which 
has a maturity at the time of issuance of not exceeding nine months, 
exclusive of days of grace, or any renewal thereof the maturity of 
which is likewise limited;
    (6) Units of a collective investment fund;
    (7) Interests in a variable amount (master) note of a borrower of 
prime credit; or
    (8) U.S. Savings Bonds.
[[Page 9921]]
Sec. 344.4  Recordkeeping.
    (a) General rule. A bank effecting securities transactions for 
customers shall maintain the following records for at least three 
years:
    (1) Chronological records. An itemized daily record of each 
purchase and sale of securities maintained in chronological order, and 
including:
    (i) Account or customer name for which each transaction was 
effected;
    (ii) Description of the securities;
    (iii) Unit and aggregate purchase or sale price;
    (iv) Trade date; and
    (v) Name or other designation of the broker/dealer or other person 
from whom the securities were purchased or to whom the securities were 
sold;
    (2) Account records. Account records for each customer, reflecting:
    (i) Purchases and sales of securities;
    (ii) Receipts and deliveries of securities;
    (iii) Receipts and disbursements of cash; and
    (iv) Other debits and credits pertaining to transactions in 
securities;
    (3) A separate memorandum (order ticket) of each order to purchase 
or sell securities (whether executed or canceled), which shall include:
    (i) The accounts for which the transaction was effected;
    (ii) Whether the transaction was a market order, limit order, or 
subject to special instructions;
    (iii) The time the order was received by the trader or other bank 
employee responsible for effecting the transaction;
    (iv) The time the order was placed with the broker/dealer, or if 
there was no broker/dealer, time the order was executed or canceled;
    (v) The price at which the order was executed; and
    (vi) The broker/dealer utilized;
    (4) Record of broker/dealers. A record of all broker/dealers 
selected by the bank to effect securities transactions and the amount 
of commissions paid or allocated to each broker during the calendar 
year; and
    (5) Notifications. A copy of the written notification required by 
Secs. 344.5 and 344.6.
    (b) Manner of maintenance. Records may be maintained in whatever 
manner, form or format a bank deems appropriate, provided however, the 
records required by this section must clearly and accurately reflect 
the information required and provide an adequate basis for the audit of 
the information. Records may be maintained in hard copy, automated or 
electronic form provided the records are easily retrievable, readily 
available for inspection, and capable of being reproduced in a hard 
copy. A bank may contract with third party service providers, including 
broker/dealers, to maintain records required under this part.
Sec. 344.5  Content and time of notification.
    Every bank effecting a securities transaction for a customer shall 
give or send, by mail, facsimile or other means of electronic 
transmission, to the customer at or before completion of the 
transaction one of the types of written notification identified below:
    (a) Broker/dealer's confirmations. (1) A copy of the confirmation 
of a broker/dealer relating to the securities transaction. A bank may 
either have the broker/dealer send the confirmation directly to the 
bank's customer or send a copy of the broker/dealer's confirmation to 
the customer upon receipt of the confirmation by the bank. If a bank 
chooses to send a copy of the broker/dealer's confirmation, it must be 
sent within one business day from the bank's receipt of the broker/
dealer's confirmation; and
    (2) If the bank is to receive remuneration from the customer or any 
other source in connection with the transaction, a statement of the 
source and amount of any remuneration to be received if such would be 
required under paragraph (b)(6) of this section; or
    (b) Written notification. A written notification disclosing:
    (1) Name of the bank;
    (2) Name of the customer;
    (3) Whether the bank is acting as agent for such customer, as agent 
for both such customer and some other person, as principal for its own 
account, or in any other capacity;
    (4) The date and time of execution, or the fact that the time of 
execution will be furnished within a reasonable time upon written 
request of the customer, and the identity, price, and number of shares 
or units (or principal amount in the case of debt securities) of the 
security purchased or sold by the customer;
    (5) The amount of any remuneration received or to be received, 
directly or indirectly, by any broker/dealer from such customer in 
connection with the transaction;
    (6)(i) The amount of any remuneration received or to be received by 
the bank from the customer, and the source and amount of any other 
remuneration received or to be received by the bank in connection with 
the transaction, unless:
    (A) Remuneration is determined pursuant to a prior written 
agreement between the bank and the customer; or
    (B) In the case of government securities and municipal securities, 
the bank received the remuneration in other than an agency transaction; 
or
    (C) In the case of open end investment company securities, the bank 
has provided the customer with a current prospectus which discloses all 
current fees, loads and expenses at or before completion of the 
transaction;
    (ii) If the bank elects not to disclose the source and amount of 
remuneration it has or will receive from a party other than the 
customer pursuant to paragraph (b)(6)(i) (A), (B), or (C) of this 
section, the written notification must disclose whether the bank has 
received or will receive remuneration from a party other than the 
customer, and that the bank will furnish within a reasonable time the 
source and amount of this remuneration upon written request of the 
customer. This election is not available, however, if, with respect to 
a purchase, the bank was participating in a distribution of that 
security; or, with respect to a sale, the bank was participating in a 
tender offer for that security;
    (7) Name of the broker/dealer utilized; or where there is no 
broker/dealer, the name of the person from whom the security was 
purchased or to whom the security was sold, or a statement that the 
bank will furnish this information within a reasonable time upon 
written request;
    (8) In the case of a transaction in a debt security subject to 
redemption before maturity, a statement to the effect that the debt 
security may be redeemed in whole or in part before maturity, that the 
redemption could affect the yield represented and that additional 
information is available upon request;
    (9) In the case of a transaction in a debt security effected 
exclusively on the basis of a dollar price:
    (i) The dollar price at which the transaction was effected; and
    (ii) The yield to maturity calculated from the dollar price, 
provided however, that this shall not apply to a transaction in a debt 
security that either has a maturity date that may be extended by the 
issuer thereof, with a variable interest payable thereon, or is an 
asset-backed security that represents an interest in or is secured by a 
pool of receivables or other financial assets that are subject 
continuously to prepayment;
    (10) In the case of a transaction in a debt security effected on 
the basis of yield:
    (i) The yield at which the transaction was effected, including the 
percentage amount and its characterization (e.g., current yield, yield 
to maturity, or yield to call) and if effected at yield to call,
[[Page 9922]]
the type of call, the call date and call price;
    (ii) The dollar price calculated from the yield at which the 
transaction was effected; and
    (iii) If effected on a basis other than yield to maturity and the 
yield to maturity is lower than the represented yield, the yield to 
maturity as well as the represented yield; provided however, that this 
paragraph (b)(10) shall not apply to a transaction in a debt security 
that either has a maturity date that may be extended by the issuer with 
a variable interest rate payable thereon, or is an asset-backed 
security that represents an interest in or is secured by a pool of 
receivables or other financial assets that are subject continuously to 
prepayment;
    (11) In the case of a transaction in a debt security that is an 
asset-backed security, which represents an interest in or is secured by 
a pool of receivables or other financial assets that are subject 
continuously to prepayment, a statement indicating that the actual 
yield of the asset-backed security may vary according to the rate at 
which the underlying receivables or other financial assets are prepaid 
and a statement of the fact that information concerning the factors 
that affect yield (including at a minimum estimated yield, weighted 
average life, and the prepayment assumptions underlying yield) will be 
furnished upon written request of the customer; and
    (12) In the case of a transaction in a debt security, other than a 
government security, that the security is unrated by a nationally 
recognized statistical rating organization, if that is the case.
Sec. 344.6  Notification by agreement; alternative forms and times of 
notification.
    A bank may elect to use the following alternative notification 
procedures if the transaction is effected for:
    (a) Notification by agreement. Accounts (except periodic plans) 
where the bank does not exercise investment discretion and the bank and 
the customer agree in writing to a different arrangement as to the time 
and content of the written notification; provided however, that such 
agreement makes clear the customer's right to receive the written 
notification pursuant to Sec. 344.5 (a) or (b) at no additional cost to 
the customer.
    (b) Trust accounts. Accounts (except collective investment funds) 
where the bank exercises investment discretion in other than in an 
agency capacity, in which instance the bank shall, upon request of the 
person having the power to terminate the account or, if there is no 
such person, upon the request of any person holding a vested beneficial 
interest in such account, give or send to such person the written 
notification within a reasonable time. The bank may charge such person 
a reasonable fee for providing this information.
    (c) Agency accounts. Accounts where the bank exercises investment 
discretion in an agency capacity, in which instance:
    (1) The bank shall give or send to each customer not less 
frequently than once every three months an itemized statement which 
shall specify the funds and securities in the custody or possession of 
the bank at the end of such period and all debits, credits and 
transactions in the customer's accounts during such period; and
    (2) If requested by the customer, the bank shall give or send to 
each customer within a reasonable time the written notification 
described in Sec. 344.5. The bank may charge a reasonable fee for 
providing the information described in Sec. 344.5.
    (d) Cash management sweep accounts. A bank effecting a securities 
transaction for a cash management sweep account shall give or send its 
customer a written statement, in the same form as required under 
paragraph (f) of this section, for each month in which a purchase or 
sale of a security takes place in the account and not less than once 
every three months if there are no securities transactions in the 
account. Notwithstanding the provisions of this paragraph (d), banks 
that retain custody of government securities that are the subject of a 
hold-in-custody repurchase agreement are subject to the requirements of 
17 CFR 403.5(d).
    (e) Collective investment fund accounts. The bank shall at least 
annually give or send to the customer a copy of a financial report of 
the fund, or provide notice that a copy of such report is available and 
will be furnished upon request to each person to whom a regular 
periodic accounting would ordinarily be rendered with respect to each 
participating account. This report shall be based upon an audit made by 
independent public accountants or internal auditors responsible only to 
the board of directors of the bank.
    (f) Periodic plan accounts. The bank shall give or send to the 
customer not less than once every three months a written statement 
showing:
    (1) The funds and securities in the custody or possession of the 
bank;
    (2) All service charges and commissions paid by the customer in 
connection with the transaction; and
    (3) All other debits and credits of the customer's account involved 
in the transaction; provided that upon written request of the customer, 
the bank shall give or send the information described in Sec. 344.5, 
except that any such information relating to remuneration paid in 
connection with the transaction need not be provided to the customer 
when the remuneration is paid by a source other than the customer. The 
bank may charge a reasonable fee for providing information described in 
Sec. 344.5.
Sec. 344.7  Settlement of securities transactions.
    (a) A bank shall not effect or enter into a contract for the 
purchase or sale of a security (other than an exempted security as 
defined in 15 U.S.C. 78c(a)(12), government security, municipal 
security, commercial paper, bankers' acceptances, or commercial bills) 
that provides for payment of funds and delivery of securities later 
than the third business day after the date of the contract unless 
otherwise expressly agreed to by the parties at the time of the 
transaction.
    (b) Paragraphs (a) and (c) of this section shall not apply to 
contracts:
    (1) For the purchase or sale of limited partnership interests that 
are not listed on an exchange or for which quotations are not 
disseminated through an automated quotation system of a registered 
securities association; or
    (2) For the purchase or sale of securities that the Securities and 
Exchange Commission (SEC) may from time to time, taking into account 
then existing market practices, exempt by order from the requirements 
of paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a), either 
unconditionally or on specified terms and conditions, if the SEC 
determines that an exemption is consistent with the public interest and 
the protection of investors.
    (c) Paragraph (a) of this section shall not apply to contracts for 
the sale for cash of securities that are priced after 4:30 p.m. Eastern 
time on the date the securities are priced and that are sold by an 
issuer to an underwriter pursuant to a firm commitment underwritten 
offering registered under the Securities Act of 1933, 15 U.S.C. 77a et 
seq., or sold to an initial purchaser by a bank participating in the 
offering. A bank shall not effect or enter into a contract for the 
purchase or sale of the securities that provides for payment of funds 
and delivery of securities later than the fourth business day after the 
date of the contract unless otherwise expressly agreed to by the 
parties at the time of the transaction.
[[Page 9923]]
    (d) For purposes of paragraphs (a) and (c) of this section, the 
parties to a contract shall be deemed to have expressly agreed to an 
alternate date for payment of funds and delivery of securities at the 
time of the transaction for a contract for the sale for cash of 
securities pursuant to a firm commitment offering if the managing 
underwriter and the issuer have agreed to the date for all securities 
sold pursuant to the offering and the parties to the contract have not 
expressly agreed to another date for payment of funds and delivery of 
securities at the time of the transaction.
Sec. 344.8  Securities trading policies and procedures.
    (a) Policies and procedures. Every bank effecting securities 
transactions for customers shall establish written policies and 
procedures providing:
    (1) Assignment of responsibility for supervision of all officers or 
employees who:
    (i) Transmit orders to or place orders with broker/dealers; or
    (ii) Execute transactions in securities for customers;
    (2) Assignment of responsibility for supervision and reporting, 
separate from those in paragraph (a)(1) of this section, with respect 
to all officers or employees who process orders for notification or 
settlement purposes, or perform other back office functions with 
respect to securities transactions effected for customers;
    (3) For the fair and equitable allocation of securities and prices 
to accounts when orders for the same security are received at 
approximately the same time and are placed for execution either 
individually or in combination; and
    (4) Where applicable, and where permissible under local law, for 
the crossing of buy and sell orders on a fair and equitable basis to 
the parties to the transaction.
Sec. 344.9  Personal securities trading reporting by bank officers and 
employees.
    (a) Officers and employees subject to reporting. Bank officers and 
employees who:
    (1) Make investment recommendations or decisions for the accounts 
of customers;
    (2) Participate in the determination of such recommendations or 
decisions; or
    (3) In connection with their duties, obtain information concerning 
which securities are being purchased or sold or recommend such action, 
must report to the bank, within ten business days after the end of the 
calendar quarter, all transactions in securities made by them or on 
their behalf, either at the bank or elsewhere in which they have a 
beneficial interest. The report shall identify the securities purchased 
or sold and indicate the dates of the transactions and whether the 
transactions were purchases or sales.
    (b) Exempt transactions. Excluded from this reporting requirement 
are:
    (1) Transactions for the benefit of the officer or employee over 
which the officer or employee has no direct or indirect influence or 
control;
    (2) Transactions in registered investment company shares;
    (3) Transactions in government securities; and
    (4) All transactions involving in the aggregate $10,000 or less 
during the calendar quarter.
    (c) Alternative report. Where a bank acts as an investment adviser 
to an investment company registered under the Investment Company Act of 
1940, the bank's officers and employees may fulfill their reporting 
requirement under paragraph (a) of this section by filing with the bank 
the ``access persons'' personal securities trading report required by 
(SEC) Rule 17j-1, 17 CFR 270.17j-1.
Sec. 344.10  Waivers.
    The Board of Directors of the FDIC, in its discretion, may waive 
for good cause all or any part of this part 344.
    By Order of the Board of Directors.
    Dated at Washington, D.C., this 25th day of February, 1997.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 97-5425 Filed 3-4-97; 8:45 am]
BILLING CODE 6714-01-P

Last Updated 04/25/1997 regs@fdic.gov