Institute Comment Letter on Proposed NASD Rules Governing Broker/Dealer Conduct on the Premises of Financial Institutions Washington, DC, May 12, 1997 - The Institute recently submitted a comment letter to the Securities and Exchange Commission regarding proposed amendments to NASD Regulation, Inc.'s Conduct Rules concerning the regulation of broker/dealer activities of NASD members operating on the premises of financial institutions. The Institute's comment letter is generally supportive of the proposed rule change. The letter notes that, unlike an earlier version of the rule proposal, both the referral fee and the confidential financial information provisions have been reproduced as separate proposals. The letter also notes that, compared to the earlier version, the proposing release clarifies the proposed rule's applicability with respect to: - physical setting requirements;
- broker/dealer services provided on bank premises where retail deposits are taken;
- broker/dealer services provided in one-person branches, in walkup windows, kiosks, or desks in public places such as supermarkets;
- Interagency Statement disclosure requirements for confirmation statements and account statements regarding bank-sold funds; and
- references in member sales materials to relationships between members and banks, and descriptions of relationships between members or products (such as mutual funds) and banks.
The letter requests clarification that the meaning of the phrase "broker/dealer services" excludes mutual fund distributors and underwriters, and that the meaning of the phrase "on the premises" excludes situations where there would be little, if any, risk of customer confusion, such as where a broker/dealer, who is on the bank's premises, fields incoming calls from customers who are not on the bank's premises. Finally, the Institute's letter requests that any reference to insurance other than FDIC insurance be deleted, and requests clarification that NASD members may use discretion in satisfying the disclosure and customer acknowledgment requirements, and be allowed flexibility in determining the placement of such disclosures, such as, for example, on an application to open an account.
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