What Is Regulation R?

Regulation R was implemented in 2007 as a provision of the Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act focuses on regulations for broker-dealers and brokerage transactions.

Regulation R provides exceptions for banks to offer certain brokerage services once defined in the 澳洲幸运5官方开奖结果体彩网:Securities Exchange Act of 1934.

Understanding Regulation R

Regulation R provides banks a broader latitude for their operational activities under bank status, allowing them to provide certain brokerage transactions without registration as a 澳洲幸运5官方开奖结果体彩网:broker-dealer.

In 1999, Section 3 of the Securities Exchange Act of 1934 was modified to include provisions instituted from the Gramm-Leach-Bliley Act (GLBA). This Act was known for modernizing and expanding the governance of the financial markets. Much of the focus from GLBA expanded the offerings a single financial service firm could provide.

GLBA allowed financial companies to partner for mergers involving the expansion of services for customers. Before 1999, financial service companies were primarily restricted to focusing their products around a single service offering.

Exceptions for Banks

In 2007, the Federal Reserve and the 澳洲幸运5官方开奖结果体彩网:Securities and Exchange Commission issued final details on Regulation R. Banks can receive an exemption from 澳洲幸运5官方开奖结果体彩网:broker-dealer regis🦋tration when secur🔥ities transactions are part of the bank's trust and fiduciary, custodial, and deposit sweep functions.

Exemptions can also relate to foreign securities transactions, and non-custodial securities lending transactions conducted in an agency capacity. Generally, however, banks must partner with a third party to offer brokerage services. Thus, activities of banks that fall outside of specified exemptions must be referred to their partnering registered broker-dealer for the transaction.

In some cases, banks may choose to acquire a broker-dealer as a 澳洲幸运5官方开奖结果体彩网:subsidiary to comply with market rules and regulations. Merrill Lynch’s merger with Bank of America provides one example. Merrill Lynch was acquired by Bank of America in 2009. Merrill Lynch offers a wide range of ♕brokerage services andไ serves as the primary broker-dealer partner for Bank of America.

Bank of America refers clients to Merrill Lynch for financial advice, full-service 澳洲幸运5官方开奖结果体彩网:brokerage transactions, and discount brokerage transactions through the Merrill Edge platform. This partnership supports c💙ompliance with Sectio𝐆n 3 of the Securities Exchange Act of 1934 and Regulation R.