[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: 12CFR250.246]

[Page 682-683]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 250--MISCELLANEOUS INTERPRETATIONS--Table of Contents
 
Sec. 250.246  Applicability of section 23A of the Federal Reserve Act to the purchase of a security by an insured depository institution from an affiliate.

    (a) The purchase of a security by an insured depository institution 
from an affiliate that is a broker-dealer registered with the Securities 
and Exchange Commission is exempt from section 23A of the Federal 
Reserve Act (12 U.S.C. 371c) under paragraph (d)(6) of that statute if:
    (1) The security has a ``ready market,'' as defined in 17 CFR 
240.15c3-1(c)(11)(i);
    (2) The security is eligible for a State member bank to purchase 
directly, subject to the same terms and conditions that govern the 
investment activities of a State member bank, and

[[Page 683]]

the institution records the transaction as a purchase of securities for 
purposes of the bank Call report, consistent with the requirements for a 
State member bank;
    (3) The security is not a low-quality asset;
    (4) The security is not purchased during an underwriting, or within 
30 days of an underwriting, if an affiliate is an underwriter of the 
security, unless the security is purchased as part of an issue of 
obligations of, or obligations fully guaranteed as to principal and 
interest by, the United States or its agencies;
    (5) The security's price is quoted routinely on an unaffiliated 
electronic service that provides indicative data from real-time 
financial networks, provided that:
    (i) The price paid by the insured depository institution is at or 
below the current market quotation for the security; and
    (ii) The size of the transaction executed by the insured depository 
institution does not cast material doubt on the appropriateness of 
relying on the current market quotation for the security; and
    (6) The security is not issued by an affiliate, unless the security 
is an obligation fully guaranteed by the United States or its agencies 
as to principal and interest.
    (b) The purchase of the security must comply with paragraph (a)(4) 
of section 23A, which requires that any covered transactions between an 
insured depository institution and an affiliate be on terms and 
conditions that are consistent with safe and sound banking practices.

[66 FR 24225, May 11, 2001]

    Effective Date Note: At 67 FR 76622, Dec. 12, 2002, Sec. 250.246 was 
removed, effective Apr. 1, 2003.