Joint Notice of Final Rule on Government Securities Sales Practices
(Part 368 of the FDIC Rules and Regulations)
The FDIC, the Office of the Comptroller of the Currency and the Federal Reserve Board have
adopted regulations for government securities sales practices of banks that are registered (or
are required to register) as government securities brokers and dealers. The new regulations
take effect July 1, 1997. Attached is a copy of the joint notice of the final rule published in
the Federal Register.
The agencies considered comments received in response to their Joint Notice of Proposed
Rulemaking published in the Federal Register on April 25, 1996 (see FIL-30-96, dated May
17, 1996). The agencies have adopted rules substantially similar to those proposed in the Joint
Notice of Proposed Rulemaking and the rules of the National Association of Securities
The measures adopted by the agencies consist of a business conduct rule, a suitability rule and
an investment suitability interpretation:
The business conduct rule requires banks that are government securities brokers and
dealers to observe high standards of commercial honor and maintain just and equitable
principles of trade in the conduct of their business.
The suitability rule requires banks that are government securities brokers and dealers to
have reasonable grounds for believing an investment recommendation is suitable for a
customer based on customer securities holdings, financial situation and needs.
The investment suitability interpretation highlights factors that may be relevant in the
evaluation of a bank’s compliance with the suitability rule in transactions with
For more information, please contact Keith Ligon, Chief, Policy Unit, Securities, Capital
Markets and Trust Branch, Division of Supervision (DOS), at (202) 898-3618; Kenton P. Fox,
Senior Capital Markets Specialist, DOS, at (202) 898-7119; or Karen L. Main, Senior
Attorney, Legal Division, at (202) 898-8838.
Distribution: FDIC-Supervised Banks (Commercial and Savings)
Note: Paper copies of FDIC financial institution letters may be obtained through the
FDIC’s Public Information Center, 801 17th St., N.W., Room 100, Washington, D.C.
20434 ((703) 562-2200 or 800-276-6003).