The FDIC has issued guidance applicable to all FDIC-supervised banks and thrifts on recordkeeping and confirmation requirements for securities transactions. The February 4 guidance, FDIC FIL-7-2014, reminds banks that recent amendments to 12 C.F.R. Part 344 apply the same recordkeeping and confirmation requirements to state savings associations and to state nonmember banks. 12 C.F.R. Part 390, Subpart K (formerly 12 C.F.R. Part 551 of the rules and regulations of the OTS), which governed recordkeeping and confirmation requirements for securities transactions effected by state savings associations, has been rescinded. The primary difference between Part 344 and Part 390, Subpart K was the number of transactions permitted under each rule’s respective small transactions exception, which exempts qualifying institutions from certain recordkeeping requirements and requirements to establish certain written policies and procedures relating to securities transactions effected for customers. Specifically, the threshold for Part 390, Subpart K’s small transactions exception was an average of 500 or fewer transactions for customers per year over the prior three calendar years, while the threshold under Part 344 was fewer than an average of 200 transactions during the same period. The FDIC amended Part 344 to increase the threshold for the small transactions exception applicable to all FDIC-supervised institutions from an average of 200 transactions to 500 transactions per calendar year over the prior three calendar year period. The amendments to Part 344 became effective on January 21, 2014.
Nutter Notes: Under the small transactions exception under Part 344, an FDIC-supervised institution that effects an average of 500 securities transactions for customers per year over the prior three year period is exempt from the requirement to keep account records for each customer reflecting purchases and sales of securities, receipts and deliveries of securities, receipts and disbursements of cash and other debits and credits pertaining to transactions in securities. The small transactions exception also exempts qualifying institutions from the requirements to maintain a separate memorandum (order ticket) of each order to purchase or sell securities (whether executed or canceled), and a record of all broker/dealers selected by the institution to effect securities transactions and the amount of commissions paid or allocated to each broker/dealer during the calendar year. Institutions that qualify for the small transactions exception under Part 344 are also exempt from the requirements to establish written policies and procedures providing for (1) assignment of responsibility for supervision of all officers or employees who transmit orders to or place orders with broker/dealers or execute securities transactions for customers, (2) assignment of responsibility for supervision of and reporting for all officers or employees who process orders for notification or settlement purposes, or perform other back office functions with respect to securities transactions effected for customers, and (3) the fair and equitable allocation of securities and prices to accounts when orders for the same security are received at approximately the same time and are placed for execution either individually or in combination.