WASHINGTON — The Securities and Exchange Commission said it is motivated by the recent passage of the Financial Services Regulatory Relief Act of 2006 and plans to wrap up its proposed new rules to implement the bank broker provisions of the Gramm-Leach-Bliley Act by Dec. 31.
After passage of Gramm-Leach-Bliley, banks' abilities to engage in securities activities without registering as a broker or dealer depend on their coming within more "narrowly tailored exceptions." Those exceptions were to have become effective on May 12, 2001, but SEC adopted interim rules that postponed full compliance and through a series of orders, extended banks' exemption from the definition of "broker" to Sept. 30, 2006. It is this recent exemption that further extends until Jan. 15, 2007. The deadline does not apply to credit unions.
SEC Chairman Christopher Cox said with the expectation that proposed new rules will be issued by Dec. 31, 2006, the agency has extended the current exemption from the definition of "broker" until Jan. 15, 2007. The extension will give SEC and the banking regulators time to complete the rule-writing and propose new rules before the exemption expires, the agency said.
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Under the provisions of the Regulatory Relief Act, SEC and the Federal Reserve have 180 days from the date President Bush signs the bill into law to jointly propose final rules.
"I am very confident that we will meet the new legislative deadline," Cox said, adding, "and it is our intention to do so by year end, well ahead of schedule. Over the past six months, the SEC, the Federal Reserve, the FDIC, and the Comptroller of the Currency have been working at the highest levels to put these needed clarifications in place. We are already well along in that process."
If the new broker rules are proposed with a 90-day comment period beginning at year end, final rules could be expected in late spring or early summer 2007.
"Because we recognize that banks will need time to implement systems to ensure compliance with the new bank broker provisions," Cox said. "We expect any final rules would have a delayed effective date."
In June 2004, the commission proposed to replace its interim rules with new Regulation B. That effort was never completed. To resuscitate the effort, this year Cox has led a series of meetings with the leaders of the federal banking regulators aimed at resolving outstanding issues so that the bank broker provisions of the Gramm-Leach-Bliley Act can be fully implemented.
Regulation B extended exemptions to credit unions that include engaging in third-party networking, sweep accounts and trust and fiduciary services without having to register with the SEC. –[email protected]
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