NCUA Clarifies Third-Party Brokerage Arrangements
The NCUA said while it has offered guidance on best practices involving third-party brokerage arrangements, the suggestions do not carry the force or weight of formal regulation.
In a Feb. 11 letter, NCUA General Counsel Robert Fenner responded to NACUSO regarding the regulator's 10-FCU-03 letter to federal credit unions on the sales of nondeposit investments. NACUSO had expressed concerns that the NCUA's guidance requires credit unions to perform duties outside the scope of their expertise and to interpose themselves in broker-dealer compliance issues. Fenner reiterated that guidance and said it does not impose regulatory requirements on FCUs.
NACUSO said Fenner's letter is important because it clarified that the NCUA is not requiring credit unions to approve specific investments, just the types of investments. However, the association has encouraged the regulator to continue to provide more clarity on not wanting credit unions to take over the compliance function from broker-dealers.
"[There] are concerns that some credit unions may interpret the letter in a manner where they assume some securities law compliance functions," wrote NACUSO President/CEO Jack Antonini.