[Federal Register Volume 65, Number 150 (Thursday, August 3, 2000)]
[Proposed Rules]
[Pages 47696-47701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-19647]


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FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket No. R-1078]


Bank Holding Companies and Change in Bank Control

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Proposed rule with request for public comments.

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SUMMARY: The Board of Governors of the Federal Reserve System, after 
consultation with the Secretary of the Treasury, proposes to determine 
by rule that acting as a finder is an activity that is financial in 
nature or incidental to a financial activity and therefore permissible 
for financial holding companies. The proposed rule would authorize 
financial holding companies to act as a ``finder,'' which is an 
activity defined as bringing together buyers and sellers of products or 
services for transactions that the buyers and sellers themselves 
negotiate and consummate. The proposal would amend Subpart I of 
Regulation Y to add finder activities to the list of activities 
permissible for financial holding companies. The proposed rule provides 
examples of services that financial holding companies may perform as a 
finder, and examples of actions that are outside the scope of 
permissible finder activities. In addition, the proposed rule would 
require financial holding companies that act as a finder to distinguish 
the products and services offered by third parties through the 
company's finder service from any products or services offered by the 
financial holding company or its subsidiaries.
    The Board solicits comments on all aspects of the proposed rule and 
will amend the rule as appropriate in response to comments received.

DATES: Comments must be received by September 5, 2000.

ADDRESSES: Comments should refer to docket number R-1078 and should be 
mailed to Ms. Jennifer J. Johnson, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, NW., 
Washington, DC 20551 or mailed electronically to 
[email protected]. Comments addressed to Ms. Johnson 
also may be delivered to the Board's mailroom between 8:45 a.m. and 
5:15 p.m. and, outside those hours, to the Board's security control 
room. Both the mailroom and the security control room are accessible 
from the Eccles Building courtyard entrance, located on 20th Street 
between Constitution Avenue and

[[Page 47697]]

C Street, NW. Members of the public may inspect comments in room MP-500 
of the Martin Building between 9 a.m. and 5 p.m. on weekdays.

FOR FURTHER INFORMATION CONTACT: Scott G. Alvarez, Associate General 
Counsel (202/452-3583), Kieran J. Fallon, Senior Counsel (202/452-
5270), or Adrianne G. Threatt, Attorney (202/452-3554), Legal Division; 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue, NW., Washington, DC 20551. For users of 
Telecommunications Device for the Deaf (``TDD'') only, contact Janice 
Simms at 202/872-4984.

SUPPLEMENTARY INFORMATION:

Background

    The Gramm-Leach-Bliley Act (Pub. L. No. 106-102, 113 Stat. 1338 
(1999)) (``GLB Act'') amended the Bank Holding Company Act (``BHC 
Act'') (12 U.S.C. 1841 et seq.) to allow a bank holding company or 
foreign bank that qualifies as a financial holding company to engage in 
a broad range of activities that are defined by the GLB Act to be 
financial in nature or incidental to a financial activity. The GLB Act 
also permits financial holding companies to engage in other activities 
that the Board determines, by regulation or order and in consultation 
with the Secretary of the Treasury (``Secretary''), to be financial in 
nature or incidental to a financial activity.
    In considering whether an activity is financial in nature or 
incidental to a financial activity, the GLB Act requires the Board to 
consider: (1) The purposes of the GLB Act and BHC Act; (2) the changes 
or reasonably expected changes in the marketplace in which financial 
holding companies compete; (3) the changes or reasonably expected 
changes in technology for delivering financial services; and (4) 
whether the proposed activity is necessary or appropriate to allow a 
financial holding company to compete effectively with companies seeking 
to provide financial services in the United States, efficiently deliver 
financial information and services through technological means, and 
offer customers any available or emerging technological means for using 
financial services or for the document imaging of data. The Board also 
may consider other factors and information that it considers relevant 
to its determination.
    After considering the factors listed above and other relevant 
information, the Board, after consultation with the Secretary of the 
Treasury, proposes to determine by rule that acting as a finder is an 
activity that is incidental to a financial activity. The proposed rule 
would amend Sec. 225.86 of the Board's Regulation Y to add a new 
activity, which, as explained below is denominated ``acting as a 
finder,'' to the list of activities permissible for financial holding 
companies.\1\ Bank holding companies and foreign banks that qualify as 
financial holding companies would be permitted to engage in finder 
activities by using the post-commencement notice procedure described in 
Sec. 225.87 of Regulation Y. Bank holding companies and foreign banks 
that do not qualify as financial holding companies may engage only in 
those nonbanking activities that were permissible for bank holding 
companies prior to the enactment of the GLB Act and, thus, could not 
act as a finder under the proposed rule.
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    \1\ Subpart I of the Board's Regulation Y includes the criteria 
that a bank holding company or foreign bank must meet to become a 
financial holding company, a list of the activities permissible for 
financial holding companies, and the procedures for persons to 
request a determination that an activity is financial in nature or 
incidental or complementary to a financial activity. See 65 FR 3785 
(Jan. 25, 2000); 65 FR 14433 (March 17, 2000); 65 FR 15053 (March 
21, 2000).
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    The Board has consulted with the Secretary of the Treasury 
concerning the proposed rule, and the Secretary supports the Board's 
determination to seek public comment on the proposed rule. Under the 
GLB Act, the Board may not determine that an activity is financial in 
nature or incidental to a financial activity if the Secretary notifies 
the Board in writing that the Secretary believes the activity is not 
financial in nature, incidental to a financial activity, or otherwise 
permissible under section 4 of the BHC Act. The Secretary must notify 
the Board of the Secretary's determination within 30 days of receiving 
notice from the Board of a request, proposal or application for a 
determination that an activity is financial in nature or incidental to 
a financial activity, or within such longer period as the Board may 
allow under the circumstances.

Proposed Rule

Definition of a Finder

    The Board proposes to allow financial holding companies to act as 
an intermediary in bringing together buyers and sellers for 
transactions that the buyers and sellers themselves negotiate and 
consummate. This activity is referred to as ``acting as a finder.'' 
Although the exact services provided by a finder in a particular 
transaction may vary, a finder essentially performs two functions. 
First, a finder locates and matches third parties that are interested 
in engaging in a business transaction between themselves. For example, 
a finder may locate buyers for a company's products or services, or 
locate sellers of a particular product or service for a consumer. 
Similarly, a finder may assist a company locate third parties 
interested in engaging in other types of business arrangements, such as 
a merger, acquisition, or joint venture. Once a finder locates a 
potential buyer, seller, or business partner, the finder may arrange a 
meeting between the parties or refer one party to the other so that 
they may negotiate and complete the transaction.
    Second, a finder serves as a conduit of transaction-related 
information between third parties that are interested in conducting a 
business transaction. For example, a finder may provide potential 
buyers with information concerning a seller's products and services, or 
convey information about a potential buyer's preferences to a seller. 
In addition, a finder may receive bids, offers, expressions of 
interests or purchase orders from one party and convey them to the 
other party.
    Although a finder may introduce a buyer and seller and act as a 
conduit for the exchange of transaction-related information between the 
parties, it is the parties themselves--and not the finder--that are 
responsible for negotiating, executing and consummating the 
transaction. A finder lacks the authority to negotiate on behalf of 
either party concerning the transaction or to bind a party to the terms 
of the transaction. Accordingly, the role of a finder is more limited 
than that of an agent or broker.\2\ In addition, because a finder acts 
as an intermediary and not as a principal, a company acting as a finder 
also does not have an ownership interest in the products or services 
being offered and sold by third parties through the company's finder 
services.
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    \2\ An agent generally has the power to enter into or alter 
business or legal relationships on behalf of another person (the 
principal). 3 Am. Jur. 2d Agency Sec. 2 (1986). A broker is defined 
generally as an agent that carries on negotiations on behalf of its 
principal with the purpose of bringing the parties together on the 
terms established by the principal. 12 Am. Jur. 2d Brokers Sec. 1 
(1997). A finder, on the other hand, finds, interests, introduces 
and brings parties together for a transaction that they themselves 
negotiate, enter into, and consummate.
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Role of Financial Holding Companies as Finders

    The activity of acting as a finder has taken on increased 
significance as technological developments in communications, 
computing, and the Internet have spurred innovations in the way buyers 
and sellers of products and services, including financial products

[[Page 47698]]

and services, come together. These technological developments have 
encouraged the development of intermediaries who are able 
electronically to find and connect buyers and sellers in transactions 
that are negotiated and consummated by the buyers and sellers 
themselves.
    While technological developments have made the intermediary 
function more common and important, the demands of buyers and sellers 
simultaneously have encouraged the combination of previously uncombined 
products and services as a means of attracting buyers through the added 
convenience of one-stop shopping tailored to the needs of specific 
consumers. Thus, finders increasingly are attempting to attract buyers 
by combining access to sellers of commercial or consumer products as 
well as providers of financial products, such as investment products 
and advice, loans, and various payment services.
    Banking organizations, including banks and bank holding companies, 
have long facilitated the connection of buyers and sellers of 
nonfinancial products and services to a limited degree through the 
placement of commercial advertisements in customer mailings and through 
referrals that arise in connection with the banking organization's role 
as financial advisor or intermediary. More recently, the developments 
in electronic commerce over the Internet have allowed banking 
organizations to establish electronic sites that offer financial 
products and services in a manner comparable to the manner in which 
nonfinancial firms offer products and services. The electronic sites 
often include connections to and advertisements by sellers of 
nonfinancial products and services that may be of interest to consumers 
of financial products and services. The expertise gained in conducting 
these activities is operationally identical to the expertise needed to 
act more broadly as a finder.
    The Office of the Comptroller of the Currency (``OCC'') also has 
determined that acting as a finder is part of or incidental to the 
business of banking and therefore a permissible activity for national 
banks.\3\ The OCC has permitted national banks to act as a finder for 
nonfinancial products and services within parameters that closely 
parallel the limitations discussed below. Many state-chartered banks 
also are permitted to act as finders.\4\
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    \3\ See 12 CFR 7.1002; OCC Interpretive Ltr. No. 875 (Oct. 31, 
1999); OCC Interpretive Ltr. No. 856 (March 5, 1999).
    \4\ See Tex. Admin. Code Sec. 11.83(d) (``A state bank, pursuant 
to request, may act as a finder in bringing together a buyer and 
seller, where the bank's activity is limited to the introduction and 
it takes no further part in the negotiations.''). Several states 
also have ``wild card'' statutes that allow their state-chartered 
banks to engage in any activity that is permissible for national 
banks, which would include acting as a finder. See, e.g., 202 Ill. 
Comp. Stat. 5/5(11).
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Financial Holding Companies Permitted To Act as a Finder

    The Board's proposed rule would authorize financial holding 
companies to act as a finder, which is defined as acting as an 
intermediary in bringing together one or more buyers and sellers of 
financial or nonfinancial products or services for transactions that 
the parties themselves negotiate and consummate. Under the proposed 
rule, a financial holding company acting as a finder could provide any 
or all of the following services'
    (1) Identifying third parties that may be interested in engaging in 
a transaction between themselves;
    (2) Making inquiries of third parties as to their interest in 
engaging in a transaction with another party;
    (3) Introducing and referring potential parties to each other;
    (4) Arranging contacts and meetings between interested parties;
    (5) Conveying expressions of interests, bids, offers, orders, and 
confirmations relating to a transaction between third parties; and
    (6) Transmitting information concerning products and services to 
potential parties in connection with the activities described in 
paragraphs (1) through (5) above, such as transmitting to a buyer 
information concerning the products and services offered by a seller or 
transmitting to a seller the product preferences of a buyer.
    The rule includes specific examples of services that a financial 
holding company could provide as a finder and the technological means 
through which such services could be provided. These examples are 
intended to illustrate some activities that constitute acting as a 
finder and do not attempt to define fully the ways in which a financial 
holding company may act as finder. These examples are included in the 
rule in order to remove ambiguity about the permissibility of certain 
activities specifically mentioned by various financial holding 
companies in their requests regarding finder activities. Accordingly, 
the rule illustrates that a financial holding company acting as a 
finder may--
     Host an ``Internet marketplace'' that consists of 
hypertext links to the web sites of third party buyers and sellers;
     Host on the company's computer servers an Internet web 
site that allows various buyers and sellers to post information about 
the products and services they are willing to purchase and sell, locate 
potential counterparties for transactions, aggregate their orders for 
goods and services with those of other parties, and negotiate and enter 
into transactions between themselves;
     Host on its computer servers the Internet web site of a 
merchant that provides information about the merchant and its products 
and services and allows customers to place orders with the merchant; 
and
     Operate a telephone call center that provides consumers 
with information about the services or benefits provided by a 
government or government agency and clerical assistance in completing 
applications to receive those services or benefits.

The Board invites comment on whether the rule should include additional 
examples of how a financial holding company could act as a finder.

    The authority to act as finder does not restrict the manner in 
which a financial holding company may conduct activities that otherwise 
are permissible for a financial holding company to conduct. For 
example, financial holding companies have broad authority to act as a 
broker and advisor in the sale of securities. These activities, 
permissible under other provisions of Regulation Y, may be conducted 
without regard to the restrictions that apply to the financial holding 
company when it acts as a finder with regard to nonfinancial products 
or services.
    Moreover, a financial holding company may conduct activities that 
otherwise are permissible for a financial holding company in 
conjunction with acting as a finder for other products and services so 
long as these other permissible activities are conducted within any 
limits applicable to those activities and the company's finder 
activities are conducted within the limitations applicable to finder 
activities under this proposed rule. For example, a financial holding 
company acting as a finder for a merchant under the proposed rule also 
could make, acquire, broker or service loans or other extensions of 
credit to the merchant or the merchant's customers; provide the 
merchant with check verification, check guaranty, collection agency and 
credit bureau services; provide financial or investment advice to the 
merchant or the merchant's customers; act as a

[[Page 47699]]

certification authority for digital signatures and thereby authenticate 
the identity of persons conducting business with the merchant over 
electronic networks; and process and transmit financial, economic, and 
banking data on behalf of the merchant, such as by processing the 
merchant's accounts receivables and debit and credit card transactions, 
providing the merchant with bill payment and billing services, and 
processing order, distribution, accounting, settlement, collection and 
payment information for the merchant's transactions.\5\ Furthermore, 
under the proposal a financial holding company may market and provide 
its own financial products and services in conjunction with acting as a 
finder for buyers and sellers of nonfinancial products and services.
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    \5\ See 12 CFR 225.28(b)(1) (extending credit and servicing 
extensions of credit); (b)(2)(iii), (iv) and (v) (credit bureau, 
check guaranty, check verification, collection agency and credit 
bureau services); (b)(6) (financial and investment advice); 12 CFR 
225.86(a)(2) (certification authority for digital signatures) and 
(b)(1) (management consulting services); and 12 CFR 225.28(b)(14), 
Banc One Corporation, Inc., 83 Federal Reserve Bulletin 602 (1997); 
Royal Bank of Canada, 83 Federal Reserve Bulletin 135 (1997); 
Compagnie Financiere de Paribas, 82 Federal Reserve Bulletin 348 
(1996) (financial data processing and data transmission services).
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    The Board expects that financial holding companies likely would 
engage in finder activities through electronic means, such as over the 
Internet or other electronic networks. The proposed rule, however, 
would allow a financial holding company to act as a finder through any 
technological means available.

Parameters Defining Finder Authority

    As noted above, a finder's role is limited to acting as an 
intermediary in bringing third parties together for a transaction that 
the parties themselves negotiate and consummate. Paragraph (d)(1)(iii) 
of the proposed rule incorporates this restriction and includes several 
specific parameters designed to ensure that, when acting as a finder, a 
financial holding company does not exceed the limited role of a finder 
or otherwise become involved in any nonfinancial activity or 
transaction.
    In particular, paragraph (d)(1)(iii) provides that a financial 
holding company acting as a finder may not bind any buyer or seller to 
a specific transaction or the terms of a specific transaction, or 
negotiate on behalf of a buyer or seller concerning a specific 
transaction. As noted above, these activities are outside the limited 
scope of a finder's role.
    These restrictions, however, would not prohibit a financial holding 
company from conveying bids, offers, and orders between buyers and 
sellers, so long as the bids, offers and orders were negotiated and 
accepted by the buyers and sellers and not by the financial holding 
company. The proposed rule also would not prohibit a financial holding 
company from arranging for a seller to offer its goods or services on 
preferred terms to buyers generally or broad categories of buyers, if 
the financial holding company did not negotiate the terms of the 
arrangement as part of any individual transaction and the preferred 
terms were made available by the seller (and not the financial holding 
company). One of the permissible functions of a finder is to make 
inquiries as to the interest of a seller in entering into transactions 
with buyers, which includes determining the terms the seller is willing 
to offer buyers. Where the finder arranges for a seller to offer 
preferred terms to broad categories of buyers, and such negotiations 
are conducted outside the context of any individual transaction, the 
finder would not become involved in the negotiations between the buyer 
and seller concerning a specific transaction.
    Under the proposed rule, a financial holding company may not take 
title to, acquire, or hold an interest in any product or service. A 
finder may act only as an intermediary between a buyer and seller in 
the sale of products and services, and may not have an ownership or 
principal interest in the products or services being offered or sold. 
Similarly, a financial holding company may not, under the auspices of 
acting as a finder, own or operate any real property that is used for 
the purpose of manufacturing, storing, or assembling products offered 
or sold through the company's finder services or provide distribution 
services for physical products or services offered or sold through the 
company's finder services. The Board requests comment on whether the 
rule should specify other activities that are outside the scope of 
finder activities.
    Finally, paragraph (d)(1)(iii) clarifies that the proposed rule 
does not authorize a financial holding company to engage in any 
activity that would require the company to register or obtain a license 
as a real estate agent or broker under applicable law. The Board has 
made no determination to date regarding whether real estate agency, 
brokerage, investment or development activities are financial 
activities permissible for financial holding companies, and nothing in 
the proposed rule is intended to authorize a financial holding company 
to engage in these activities by, for example, owning or operating real 
property that serves as a shopping mall, a retail store, a 
manufacturing plant, or a product distribution center. The Board 
expects to monitor the finder activities of financial holding companies 
to ensure that companies engaged in finder activities comply with the 
restrictions contained in the rule and do not become impermissibly 
involved real estate activities or commercial transactions entered into 
by third parties through the company's finder services.
    The limitations in paragraph (d)(1)(iii) are restrictions on the 
activities that a financial holding company may conduct as a finder 
under the proposed rule. They do not apply to or restrict the authority 
of financial holding companies to engage in other activities that are 
permissible for financial holding companies under section 4 of the BHC 
Act and the Board's Regulation Y, even if the financial holding company 
engages in such activities in conjunction with its finder activities. 
For example, since insurance agency and insurance underwriting 
activities are permissible for financial holding companies, a financial 
holding company acting as a finder for an insurance company could also 
accept and negotiate insurance contracts on behalf of the insurance 
company and have a principal interest in the insurance products being 
sold, if the financial holding company had appropriately notified the 
Board of the company's intent to engage in insurance agency and 
underwriting activities under section 4(k)(4)(B) of the BHC Act.

Disclosure of Role

    To reduce the likelihood that customers using a financial holding 
company's finder services may be confused about the company's role in 
the underlying transactions, paragraph (d)(1)(iv) of the proposed rule 
provides that a financial holding company acting as a finder must 
distinguish the products and services it offers from those offered by a 
third party through the financial holding company's finder service.

Request for Comments

    The Board invites comment on all aspects of the proposed rule. In 
particular, the Board invites comments on whether the examples included 
in paragraph (d)(1)(ii) of the proposed rule are useful and whether 
additional examples of permissible finder activities should be included 
in the rule. The Board also requests comments on whether the 
restrictions contained in paragraph (d)(1)(iii) of the proposed rule

[[Page 47700]]

should be modified, expanded, or restricted in any way.
    Section 722 of the GLB Act requires the Board to use ``plain 
language'' in all proposed and final rules published after January 1, 
2000. In light of this requirement, the Board has sought to present the 
proposed rule in a simple and straightforward manner and has included 
in the rule examples of activities that would be permissible under the 
proposed rule. The Board invites comments on whether there are 
additional steps the Board could take to make the proposed rule easier 
to understand.

Regulatory Flexibility Act

    In accordance with section 3(a) of the Regulatory Flexibility Act 
(5 U.S.C. 603(a)), the Board must publish an initial regulatory 
flexibility analysis with this proposed rulemaking. The proposed rule 
would determine that acting as a finder, as defined in the proposed 
rule, is an activity that is incidental to a financial activity and, 
consequently, permissible for financial holding companies. A 
description of the reasons why action by the Board is being considered 
and a statement of the objectives of, and legal basis for, the proposed 
rule are contained in the supplementary material provided above.
    The proposed rule would allow bank holding companies and foreign 
banks that qualify as financial holding companies to engage in a new 
activity--acting as a finder. The proposed rule would apply to all 
financial holding companies, regardless of their size. The proposed 
rule should enhance the ability of financial holding companies, 
including small financial holding companies, to compete with other 
providers of financial services in the United States and to respond to 
technological and other changes in the marketplace in which financial 
holding companies compete. The Board specifically seeks comment on the 
likely burden the proposed rule would have on financial holding 
companies.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3506; 5 CFR 1320 Appendix A.1), the Board has reviewed the proposed 
rule under the authority delegated to the Board by the Office of 
Management and Budget. No collections of information pursuant to the 
Paperwork Reduction Act are contained in the proposed rule.

List of Subjects in 12 CFR Part 225

    Administrative practice and procedures, Banks, Banking, Federal 
Reserve System, Holding companies, Reporting and recordkeeping 
requirements, Securities.

Authority and Issuance

    For the reasons set forth in the preamble, Title 12, Chapter II, of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 225--BANK HOLDING COMPANIES AND CHANGE IN BANK CONTROL 
(REGULATION Y)

    1. The authority citation for part 225 continues to read as 
follows:

    Authority: 12 U.S.C. 1817(j)(13), 1818, 1828(o), 1831i, 1831p-1, 
1843(c)(8), 1843(k), 1844(b), 1972(l), 3106, 3108, 3310, 3331-3351, 
3907, and 3909.

    2. Section 225.86 is amended by adding a new paragraph (d) to read 
as follows:


Sec. 225.86  What activities are permissible for financial holding 
companies?

* * * * *
    (d) Activities determined to be financial in nature or incidental 
to financial activities by the Board--(1) Acting as a finder--(i) What 
is a finder? A financial holding company may act as a finder in 
bringing together one or more buyers and sellers of products or 
services for transactions that the parties themselves negotiate and 
consummate. Acting as a finder includes providing any or all of the 
following services--
    (A) Identifying potential parties, making inquiries as to interest, 
introducing and referring potential parties to each other, and 
arranging contacts between and meetings of interested parties;
    (B) Conveying between interested parties expressions of interest, 
bids, offers, orders and confirmations relating to a transaction; and
    (C) Transmitting information concerning products and services to 
potential parties in connection with the activities described in 
paragraphs (d)(1)(i)(B) and (C) of this section.
    (ii) What are examples of finder services? The following are 
examples of services that a financial holding company may provide as a 
finder when done in accordance with paragraph (d)(1)(iii) of this 
section--
    (A) Hosting an Internet marketplace on the financial holding 
company's Internet web site by providing hypertext links to the web 
sites of third party buyers or sellers;
    (B) Hosting on the financial holding company's servers the Internet 
web site of a seller that provides information concerning the seller 
and its products or services and allows buyers to submit orders for 
such products or services;
    (C) Operating an Internet web site that allows multiple buyers and 
sellers to post information concerning the products or services that 
they are willing to purchase or sell, locate potential counterparties 
for transactions, aggregate their orders for goods or services with 
those made by other parties, and enter into transactions between 
themselves;
    (D) Operating a telephone call center that provides consumers with 
information concerning the services or benefits provided by a 
government or government agency and clerical assistance in completing 
applications to receive services or benefits from the government or 
agency.
    (iii) What limitations are applicable to a financial holding 
company acting as a finder? In acting as a finder, a financial holding 
company may act only as an intermediary between a buyer and a seller 
and may not--
    (A) Bind any buyer or seller to a specific transaction or the terms 
of a specific transaction;
    (B) Negotiate on behalf of a buyer or seller concerning a specific 
transaction, except that a financial holding company may arrange for 
buyers to receive preferred terms from sellers so long as the terms are 
not negotiated as part of any individual transaction, are provided 
generally to customers or broad categories of customers, and are made 
available by the seller (and not by the company);
    (C) Engage in any activity that would require the financial holding 
company to register or obtain a license as a real estate agent or 
broker under applicable law;
    (D) Take title to or acquire or hold an ownership interest in any 
product or service offered or sold through the financial holding 
company's finder services or provide distribution services for physical 
products or services offered or sold through the company's finder 
services; or
    (E) Own or operate any real property that--
    (1) Is used for the purpose of manufacturing, storing or assembling 
products offered or sold by third parties; or
    (2) Serves as a physical location for the physical purchase, sale 
or distribution of products or services offered or sold by third 
parties.
    (iv) What disclosures are required? A financial holding company 
acting as a finder must distinguish the products and services offered 
by the financial holding company from those offered by a third party 
through the company's finder service.
    (2) [Reserved]


[[Page 47701]]


    By order of the Board of Governors of the Federal Reserve 
System, July 31, 2000.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 00-19647 Filed 8-2-00; 8:45 am]
BILLING CODE 6210-01-P