SEC Enacts Rules For Bank Broker-Dealers

Eight years after passage of the Gramm-Leach-Bliley Financial Services Modernization Act, the U.S. Securities and Exchange Commission and the Federal Reserve Board have adopted rules for implementing the act’s bank provisions.

The act changed the definition of “broker” in the Securities Exchange Act of 1934 so that banks would no longer be excluded completely from broker-dealer registration requirements.

The SEC’s proposed Regulation R would allow these bank broker exceptions while accommodating the traditional business practices of banks, officials say.

One newly adopted provision would allow banks to receive “nominal” incentives for referring bank customers to broker-dealers.