[Code of Federal Regulations] [Title 12, Volume 3, Parts 220 to 299] [Revised as of January 1, 2001] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR225.86] [Page 112-114] TITLE 12--BANKS AND BANKING CHAPTER II--FEDERAL RESERVE SYSTEM PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL (REGULATION Y)--Table of Contents Subpart I--Financial Holding Companies Sec. 225.86 What activities are permissible for financial holding companies? The following activities are financial in nature or incidental to a financial activity: (a) Activities that were closely related to banking. (1) Any activity that the Board had determined by regulation prior to November 12, 1999, to be so closely related to banking as to be a proper incident thereto, subject to the terms and conditions contained in this part, unless modified by the Board. These activities are listed in Sec. 225.28. (2) Any activity that the Board had determined by an order that was in effect on November 12, 1999, to be so closely related to banking as to be a proper incident thereto, subject to the terms and conditions contained in this part and those in the authorizing orders. These activities are: [[Page 113]] (i) Providing administrative and other services to mutual funds (see, e.g., Societe Generale, 84 Federal Reserve Bulletin 680 (1998)); (ii) Owning shares of a securities exchange (J.P. Morgan & Co, Inc., and UBS AG, 86 Federal Reserve Bulletin 61 (2000)); (iii) Acting as a certification authority for digital signatures (Bayerische Hypo-und Vereinsbank AG, et.al., 86 Federal Reserve Bulletin 56 (2000)); (iv) Providing employment histories to third parties for use in making credit decisions and to depository institutions and their affiliates for use in the ordinary course of business (Norwest Corporation, 81 Federal Reserve Bulletin 732 (1995)); (v) Check cashing and wire transmission services (Midland Bank, PLC, 76 Federal Reserve Bulletin 860 (1990) (check cashing); Norwest Corporation, 81 Federal Reserve Bulletin 1130 (1995) (money transmission)); (vi) In connection with offering banking services, providing notary public services, selling postage stamps and postage-paid envelopes, providing vehicle registration services, and selling public transportation tickets and tokens (Popular, Inc., 84 Federal Reserve Bulletin 481 (1998)); and (vii) Real estate title abstracting (The First National Company, 81 Federal Reserve Bulletin 805 (1995)). (b) Activities that are usual in connection with the transaction of banking abroad. Any activity that the Board has determined by regulation in effect on November 11, 1999, to be usual in connection with the transaction of banking or other financial operations abroad (see Sec. 211.5(d) of this chapter), subject to the terms and conditions in part 211 and Board interpretations in effect on that date regarding the scope and conduct of the activity. In addition to the activities listed in paragraphs (a) and (c) of this section, these activities are: (1) Providing management consulting services, including to any person with respect to nonfinancial matters, so long as the management consulting services are advisory and do not allow the financial holding company to control the person to which the services are provided; (2) Operating a travel agency in connection with financial services offered by the financial holding company or others; and (3) Organizing, sponsoring, and managing a mutual fund, so long as: (i) The fund does not exercise managerial control over the entities in which the fund invests; and (ii) The financial holding company reduces its ownership in the fund, if any, to less than 25 percent of the equity of the fund within one year of sponsoring the fund or such additional period as the Board permits. (c) Activities permitted under section 4(k)(4) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)). Any activity defined to be financial in nature under sections 4(k)(4)(A) through (E), (H) and (I) of the Bank Holding Company Act (12 U.S.C. 1843(k)(4)(A) through (E) (H) and (I)). [Reg. Y, 65 FR 14438, Mar. 17, 2000] Effective Date Note: At 65 FR 80740, Dec. 22, 2000, Sec. 225.86 was amended by adding paragraph (d), effective Jan. 22, 2001. For the convenience of the user, the added text is set forth as follows: Sec. 225.86 What activities are permissible for financial holding companies? * * * * * (d) Activities determined to be financial in nature or incidental to financial activities by the Board--(1) Acting as a finder--Acting as a finder in bringing together one or more buyers and sellers of any product or service for transactions that the parties themselves negotiate and consummate. (i) What is the scope of finder activities? Acting as a finder includes providing any or all of the following services through any means-- (A) Identifying potential parties, making inquiries as to interest, introducing and referring potential parties to each other, and arranging contacts between and meetings of interested parties; (B) Conveying between interested parties expressions of interest, bids, offers, orders and confirmations relating to a transaction; and (C) Transmitting information concerning products and services to potential parties in connection with the activities described in paragraphs (d)(1)(i)(A) and (B) of this section. (ii) What are some examples of finder services? The following are examples of the services that may be provided by a finder when done [[Page 114]] in accordance with paragraphs (d)(1)(iii) and (iv) of this section. These examples are not exclusive. (A) Hosting an electronic marketplace on the financial holding company's Internet web site by providing hypertext or similar links to the web sites of third party buyers or sellers. (B) Hosting on the financial holding company's servers the Internet web site of-- (1) A buyer (or seller) that provides information concerning the buyer (or seller) and the products or services it seeks to buy (or sell) and allows sellers (or buyers) to submit expressions of interest, bids, offers, orders and confirmations relating to such products or services; or (2) A government or government agency that provides information concerning the services or benefits made available by the government or government agency, assists persons in completing applications to receive such services or benefits from the government or agency, and allows persons to transmit their applications for services or benefits to the government or agency. (C) Operating an Internet web site that allows multiple buyers and sellers to exchange information concerning the products and services that they are willing to purchase or sell, locate potential counterparties for transactions, aggregate orders for goods or services with those made by other parties, and enter into transactions between themselves. (D) Operating a telephone call center that provides permissible finder services. (iii) What limitations are applicable to a financial holding company acting as a finder? (A) A finder may act only as an intermediary between a buyer and a seller. (B) A finder may not bind any buyer or seller to the terms of a specific transaction or negotiate the terms of a specific transaction on behalf of a buyer or seller, except that a finder may-- (1) Arrange for buyers to receive preferred terms from sellers so long as the terms are not negotiated as part of any individual transaction, are provided generally to customers or broad categories of customers, and are made available by the seller (and not by the financial holding company); and (2) Establish rules of general applicability governing the use and operation of the finder service, including rules that-- (i) Govern the submission of bids and offers by buyers and sellers that use the finder service and the circumstances under which the finder service will match bids and offers submitted by buyers and sellers; and (ii) Govern the manner in which buyers and sellers may bind themselves to the terms of a specific transaction. (C) A finder may not-- (1) Take title to or acquire or hold an ownership interest in any product or service offered or sold through the finder service; (2) Provide distribution services for physical products or services offered or sold through the finder service; (3) Own or operate any real or personal property that is used for the purpose of manufacturing, storing, transporting, or assembling physical products offered or sold by third parties; or (4) Own or operate any real or personal property that serves as a physical location for the physical purchase, sale or distribution of products or services offered or sold by third parties. (D) A finder may not engage in any activity that would require the company to register or obtain a license as a real estate agent or broker under applicable law. (iv) What disclosures are required? A finder must distinguish the products and services offered by the financial holding company from those offered by a third party through the finder service. (2) [Reserved]