[Federal Register Volume 66, Number 72 (Friday, April 13, 2001)]
[Rules and Regulations]
[Pages 19081-19082]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9123]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 72 / Friday, April 13, 2001 / Rules 
and Regulations  

[[Page 19081]]



FEDERAL RESERVE SYSTEM

12 CFR Part 225

[Regulation Y; Docket Nos. R-1078 and R-1094]


Bank Holding Companies and Change in Bank Control: Technical 
Amendments

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule and interim rule; technical amendments.

-----------------------------------------------------------------------

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is adopting technical amendments to the financial holding company 
provisions of Regulation Y to restore provisions that were adopted in 
December 2000, and inadvertently deleted from the Code of Federal 
Regulations.

DATES: The amendments are effective April 13, 2001.

FOR FURTHER INFORMATION CONTACT: Kieran J. Fallon, Senior Counsel (202/
452-5270), or Adrianne G. Threatt, Senior Attorney (202/452-3554), 
Legal Division; Board of Governors of the Federal Reserve System, 20th 
Street and Constitution Avenue, NW., Washington, DC, 20551.

SUPPLEMENTARY INFORMATION: On December 19, 2000, the Board adopted a 
final rule permitting financial holding companies to act as a finder. 
(See 65 FR 80735, December 22, 2000, which added a new paragraph (d) to 
12 CFR 225.86.) On December 27, 2000, the Board also adopted, on an 
interim basis and jointly with the Secretary of the Treasury, a rule 
that implemented the financial activity provisions of section 4(k)(5) 
of the Bank Holding Company Act (12 U.S.C. 1843(k)(5)). (See 66 FR 257, 
January 3, 2001, which added a new paragraph (e) to 12 CFR 225.86.) Due 
to delays in the publication of these rules in the Federal Register and 
the effective dates of other rules adopted by the Board in late 2000 
and early 2001, paragraphs (d) and (e) of section 225.86 were 
inadvertently deleted in the final publication of the Code of Federal 
Regulations (CFR). Accordingly, the Board has adopted these technical 
amendments to ensure the prior actions taken by the Board are included 
in the CFR. These amendments restore in final form 12 CFR 225.86(d) as 
adopted by the Board on December 19, 2000, and restore in interim form 
12 CFR 225.86(e) as adopted by the Board on December 27, 2000. The 
Board will review comments received on the interim provisions of 
section 225.86(e) (Docket R-1094) in connection with its adoption of a 
final rule regarding the provisions of that paragraph.
    The Board previously has reviewed the amendments under the 
Paperwork Reduction Act (44 U.S.C. 3506; 5 CFR Appendix A.1) and the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.). See 65 FR 80735, 
December 22, 2000; 66 FR 257, January 3, 2001. In addition, the Board 
previously has solicited and considered public comments on section 
225.86(d) of the rule under the Administrative Procedures Act (5 U.S.C. 
553) (APA), and previously has determined under 5 U.S.C. 553(d)(3) of 
the APA that there is good cause to make the provisions of section 
225.86(e) of the rule effective immediately and prior to the review of 
public comments.

List of Subjects in 12 CFR Part 225

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

Authority and Issuance

    For the reasons set out in the preamble, the Board amends 12 CFR 
part 225 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), 2903, 3106, 3108, 3310, 3331-
3351, 3907, and 3909.


    2. Section 225.86 is amended by adding new paragraphs (d) and (e) 
to read as follows:


Sec. 225.86  What activities are permissible for any financial holding 
company?

* * * * *
    (d) Activities determined to be financial in nature or incidental 
to financial activities by the Board--(1) Acting as a finder--Acting as 
a finder in bringing together one or more buyers and sellers of any 
product or service for transactions that the parties themselves 
negotiate and consummate.
    (i) What is the scope of finder activities? Acting as a finder 
includes providing any or all of the following services through any 
means--
    (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)(A) and (B) of this section.
    (ii) What are some examples of finder services? The following are 
examples of the services that may be provided by a finder when done in 
accordance with paragraphs (d)(1)(iii) and (iv) of this section. These 
examples are not exclusive.
    (A) Hosting an electronic marketplace on the financial holding 
company's Internet web site by providing hypertext or similar 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--
    (1) A buyer (or seller) that provides information concerning the 
buyer (or seller) and the products or services it seeks to buy (or 
sell) and allows sellers (or buyers) to submit expressions of interest, 
bids, offers, orders and confirmations relating to such products or 
services; or
    (2) A government or government agency that provides information 
concerning the services or benefits made available by the government or 
government agency, assists persons in completing applications to 
receive such services or benefits from the government or agency, and 
allows persons to transmit their applications for services or benefits 
to the government or agency.

[[Page 19082]]

    (C) Operating an Internet web site that allows multiple buyers and 
sellers to exchange information concerning the products and services 
that they are willing to purchase or sell, locate potential 
counterparties for transactions, aggregate 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 permissible 
finder services.
    (iii) What limitations are applicable to a financial holding 
company acting as a finder?
    (A) A finder may act only as an intermediary between a buyer and a 
seller.
    (B) A finder may not bind any buyer or seller to the terms of a 
specific transaction or negotiate the terms of a specific transaction 
on behalf of a buyer or seller, except that a finder may--
    (1) 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 
financial holding company); and
    (2) Establish rules of general applicability governing the use and 
operation of the finder service, including rules that--
    (i) Govern the submission of bids and offers by buyers and sellers 
that use the finder service and the circumstances under which the 
finder service will match bids and offers submitted by buyers and 
sellers; and
    (ii) Govern the manner in which buyers and sellers may bind 
themselves to the terms of a specific transaction.
    (C) A finder may not--
    (1) Take title to or acquire or hold an ownership interest in any 
product or service offered or sold through the finder service;
    (2) Provide distribution services for physical products or services 
offered or sold through the finder service;
    (3) Own or operate any real or personal property that is used for 
the purpose of manufacturing, storing, transporting, or assembling 
physical products offered or sold by third parties; or
    (4) Own or operate any real or personal property that serves as a 
physical location for the physical purchase, sale or distribution of 
products or services offered or sold by third parties.
    (D) A finder may not 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.
    (iv) What disclosures are required? A finder must distinguish the 
products and services offered by the financial holding company from 
those offered by a third party through the finder service.
    (2) [Reserved]
    (e) Activities permitted under section 4(k)(5) of the Bank Holding 
Company Act (12 U.S.C. 1843(k)(5)).
    (1) The following types of activities are financial in nature or 
incidental to a financial activity when conducted pursuant to a 
determination by the Board under paragraph (e)(2) of this section:
    (i) Lending, exchanging, transferring, investing for others, or 
safeguarding financial assets other than money or securities;
    (ii) Providing any device or other instrumentality for transferring 
money or other financial assets; and
    (iii) Arranging, effecting, or facilitating financial transactions 
for the account of third parties.
    (2) Review of specific activities.
    (i) Is a specific request required? A financial holding company 
that wishes to engage on the basis of paragraph (e)(1) of this section 
in an activity that is not otherwise permissible for a financial 
holding company must obtain a determination from the Board that the 
activity is permitted under paragraph (e)(1).
    (ii) Consultation with the Secretary of the Treasury. After 
receiving a request under this section, the Board will provide the 
Secretary of the Treasury with a copy of the request and consult with 
the Secretary in accordance with section 4(k)(2)(A) of the Bank Holding 
Company Act (12 U.S.C. 1843(k)(2)(A)).
    (iii) Board action on requests. After consultation with the 
Secretary, the Board will promptly make a written determination 
regarding whether the specific activity described in the request is 
included in an activity category listed in paragraph (e)(1) of this 
section and is therefore either financial in nature or incidental to a 
financial activity.
    (3) What factors will the Board consider? In evaluating a request 
made under this section, the Board will take into account the factors 
listed in section 4(k)(3) of the BHC Act (12 U.S.C. 1843(k)(3)) that it 
must consider when determining whether an activity is financial in 
nature or incidental to a financial activity.
    (4) What information must the request contain? Any request by a 
financial holding company under this section must be in writing and 
must:
    (i) Identify and define the activity for which the determination is 
sought, specifically describing what the activity would involve and how 
the activity would be conducted; and
    (ii) Provide information supporting the requested determination, 
including information regarding how the proposed activity falls into 
one of the categories listed in paragraph (e)(1) of this section, and 
any other information required by the Board concerning the proposed 
activity.

    By order of the Board of Governors of the Federal Reserve 
System, April 9, 2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-9123 Filed 4-12-01; 8:45 am]
BILLING CODE 6210-01-P