[Code of Federal Regulations]
[Title 12, Volume 3]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR250.244]

[Page 682]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 250--MISCELLANEOUS INTERPRETATIONS--Table of Contents
 
Sec. 250.244  Exemption from section 23A of the Federal Reserve Act for certain

 loans and extensions of credit by an insured depository institution to a 
          nonaffiliate to enable the nonaffiliate to purchase securities 
          through a registered broker-dealer affiliate of the 
          institution that is acting exclusively as riskless principal 
          in the securities transaction.

    (a) A loan or extension of credit by an insured depository 
institution (``depository institution'') to any person other than an 
affiliate of such depository institution is exempted from section 23A of 
the Federal Reserve Act (12 U.S.C. 371c) if--
    (1) The loan or extension of credit is on terms that are consistent 
with safe and sound banking practices; and
    (2) The proceeds of the loan or extension of credit are used to 
purchase a security through an affiliate of the depository institution 
that is a broker-dealer registered with the Securities and Exchange 
Commission, where
    (i) The affiliate is acting exclusively as a riskless principal in 
the securities transaction; and
    (ii) The security is not issued or underwritten by, or sold out of 
the inventory of, any affiliate of the depository institution.
    (b) This grant of exemption is applicable to a loan or extension of 
credit covered by paragraph (a) of this section even if a portion of the 
proceeds of the loan or extension of credit is used by the borrower to 
pay a riskless principal mark-up to the affiliate, provided that the 
mark-up is substantially the same as, or lower than, those prevailing at 
the same time for comparable transactions with or involving other 
nonaffiliated companies, in accordance with section 23B of the Federal 
Reserve Act (12 U.S.C. 371c-1).

[66 FR 24229, May 11, 2001]

    Effective Date Note: At 67 FR 76622, Dec. 12, 2002, Sec. 250.244 was 
removed, effective Apr. 1, 2003.