[Code of Federal Regulations]
[Title 17, Volume 3]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR240.3b-9]

[Page 42-43]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
       CHAPTER II--SECURITIES AND EXCHANGE COMMISSION (CONTINUED)
 
PART 240_GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934
--Table of Contents
 
  Subpart A_Rules and Regulations Under the Securities Exchange Act of 
                                  1934
 
Sec.  240.3b-9  Definition of ``bank'' for purposes of section 3(a) (4) 
and (5) of the Act.

    (a) The term bank as used in the definition of broker and dealer in 
section 3(a) (4) and (5) of the Act does not include a bank that:
    (1) Publicly solicits brokerage business for which it receives 
transaction-related compensation, unless the bank

[[Page 43]]

enters into a contractual or other arrangement with a broker-dealer 
registered under the Act pursuant to which the broker-dealer will offer 
brokerage services on or off the premises of the bank, provided that:
    (i) Such broker-dealer is clearly identified as the person 
performing the brokerage services;
    (ii) Bank employees perform only clerical and ministerial functions 
in connection with brokerage transactions unless such employees are 
qualified as registered representatives pursuant to the requirements of 
the self-regulatory organizations;
    (iii) Bank employees do not receive, directly or indirectly, 
compensation for any brokerage activities unless such employees are 
qualified as registered representatives pursuant to the requirements of 
the self-regulatory organizations; and
    (iv) Such services are provided by the broker-dealer on a basis in 
which all customers are fully disclosed.
    (2) Directly or indirectly receives transaction-related compensation 
for providing brokerage services for trust, managing agency or other 
accounts to which the bank provides advice, provided, however, that this 
subsection shall not apply if the bank executes transactions through a 
registered broker-dealer and:
    (i) Each account independently chooses the broker-dealer through 
which execution is effected;
    (ii) The bank's personnel do not receive, directly or indirectly, 
transaction-related compensation or compensation based upon the number 
of accounts choosing to use the registered broker-dealer; and
    (iii) The brokerage services are provided by the broker-dealer on a 
basis in which all customers are fully disclosed; or
    (3) Deals in or underwrites securities.
    (b) This rule shall not apply to any bank that engages in one or 
more of the following activities only:
    (1) Effects transactions in exempted or municipal securities as 
defined in the Act or in commercial paper, bankers' acceptances or 
commercial bills;
    (2) Effects no more than 1,000 transactions each year in securities 
other than exempted or municipal securities as defined in the Act or in 
commercial paper, bankers' acceptances or commercial bills;
    (3) Effects transactions for the investment portfolio of affiliated 
companies;
    (4) Effects transactions as part of a program for the investment or 
reinvestment of bank deposit funds into any no-load open-end investment 
company registered pursuant to the Investment Company Act of 1940 that 
attempts to maintain a constant net asset value per share or has an 
investment policy calling for investment of at least 80% of its assets 
in debt securities maturing in thirteen months or less;
    (5) Effects transactions as part of any bonus, profit-sharing, 
pension, retirement, thrift, savings, incentive, stock purchase, stock 
ownership, stock appreciation, stock option, dividend reinvestment or 
similar plan for employees or shareholders of an issuer or its 
subsidiaries;
    (6) Effects transactions pursuant to sections 3(b), 4(2) and 4(6) of 
the Securities Act of 1933 and the rules and regulations thereunder; or
    (7) Is subject to section 15(e) of the Act.
    (c) The Commission, upon written request, or upon its own motion, 
may exempt a bank, either unconditionally or on specific terms and 
conditions, where the Commisison determines that the bank's activities 
are not within the intended meaning and purpose of this rule.
    (d) For purposes of this section, the term transaction-related 
compensation shall mean monetary profit to the bank in excess of cost 
recovery for providing brokerage execution services.

[50 FR 28394, July 12, 1985]