The “Interagency Statement on Retail Sales of Nondeposit Investment Products” ( dated February 15, ), formerly contained in section the OCC specifically incorporates the “Interagency Statement on Retail Sales of Nondeposit Investment Products” issued by the Federal. Sale of Uninsured Debt Obligations and Securities Issued by Bank Holding Interagency Statement on Retail Sales of Nondeposit Investment Products.

Author: Mazuru Mular
Country: Tunisia
Language: English (Spanish)
Genre: Business
Published (Last): 1 May 2006
Pages: 456
PDF File Size: 6.2 Mb
ePub File Size: 9.39 Mb
ISBN: 972-1-51824-513-7
Downloads: 83086
Price: Free* [*Free Regsitration Required]
Uploader: Kajihn

Board of Governors of the Federal Reserve System

Mine Financing In – Video. Unsuitable sales practices, client misunderstandings of the risk associated with RNDIP offerings, or poor customer service could result in reputational damage. In news that no Blockchain Monitor reader wants to hear, technical analysts are sounding the alarm bell on bitcoin.

Reputation risk may be increased if the RNDIP program actively associates a bank’s name with the offered products and services, including the offering of bank-branded products.

Risk-Management Categories As mentioned above, the Booklet reflects zales OCC’s heightened expectations regarding the adequacy of banks’ compliance and risk-management programs and the need for banks to pdoducts detailed written compliance plans tailored to the complexity of their RNDIP sales activities.

In this respect, the Booklet shows that basic regulatory attitudes zales bank retail securities activities have not materially changed since Such inadvertent violations could occur if a retail customer entering into an off-exchange swap is not an “eligible contract participant,” as well as raise questions about compliance with OCC regulations regarding retail foreign-exchange transactions.

Application of the Third-Party Relationship Bulletin: Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. The OCC states that it expects every bank to “conduct a comprehensive analysis of its securities activities to ensure compliance with GLBA and Regulation R, saled to maintain records to demonstrate compliance.

Banks should pay particular attention to the guidance and expectations regarding disclosures and advertising because those aspects of compliance are easily reviewed and tested by examiners.

The Booklet details the OCC’s new expectations of third parties that provide RNDIPs through bank distribution channels and focuses on the terms to be contained in networking agreements with banks. Compensation arrangements and referral fees: Both banks salez directly engage in the sale of retail nondeposit investment products RNDIPs and bank-affiliated or unaffiliated broker-dealers, insurance agents, and rretail investment advisers that provide services and products to certain retaail on behalf of banks will need to become familiar with the supervisory expectations set out in the Booklet and incorporate, as needed, recommended business and information-sharing practices into their operations.


This article is provided as a general informational service and it should not be construed as imparting legal dales on any specific matter. The OCC emphasizes compliance with the Interagency Statement, Regulation R, and the antifraud provisions of federal securities laws section 10 of the Securities Exchange Act and Rule 10b-5 and a bank’s obligation to take reasonable steps to ensure that any third-party broker-dealer complies with applicable securities laws and Financial Industry Regulatory Authority FINRA rules.

The OCC Booklet explicitly notes that banks that offer services to lower-income clients, clients with little to no investment experience, or seniors may present heightened reputation risk.

Nondeposit Investment Discussions, Answers, and Free Resources for Banking Professionals

Risk identification should be a continuous and ongoing process at the transactional, line of business, and aggregate business levels and should include risks that originate in broker-dealer subsidiaries or affiliates or through networking interagenfy.

Government Issues Proposed Regulations. Proper supervision and training of bank employees engaged in direct bank RNDIP activities is needed to help manage reputation risk.

As noted above, these requirements are to be addressed by new networking agreement terms. More from this Firm. A bank’s failure to provide adequate resources and risk management to properly manage and control the risks associated with any RNDIP sales program may present a strategic risk to the bank.

Banks’ boards of directors must establish the banks’ strategic direction and risk tolerance with respect to any RNDIP sales program and communicate the same through policies and procedures that establish responsibility and authority. The bank’s management and oversight of its RNDIP program should be able to respond to and incorporate regulatory reforms and changes salez the brokerage industry, and the bank’s strategic goals with respect to its RNDIP program should reflect, as appropriate, changes in market conditions.

RNDIP is defined as “any product with an investmsnt component that, in most instances, ot not an FDIC-insured deposit” and includes mutual funds, exchange-traded funds, annuities, equities, and fixed-income securities Booklet, p. To the extent the bank has clients that may be vulnerable to a broker’s hard sell, the bank should have procedures in place to ensure that these customers are not sold inappropriate investments.

The Fed – Supervisory Policy and Guidance Topics – Securities

The OCC states that the Booklet itself is intended to explain “the risks inherent in banks’ retail nondeposit investment product RNDIP sales programs and provide[] a framework for banks to manage those risks.

Third-party risk management Qualification and training requirements for bank personnel and supervisors, as well as third-party sales representatives who will recommend statdment sell RNDIPs Compensation arrangements that comply with applicable regulations GLBA, Regulation R, 12 C.


The OCC expects the compliance program to include periodic testing of customer accounts and transactions to detect, prevent, and correct abusive practices. On November 30,the Southern District of New York issued an opinion reaffirming the long-standing rule that traders cannot be found liable for illegal market manipulation when their trading was motivated by The Interagency Statement is still alive and well: The Booklet’s major implication is that a bank that engages in an RNDIP sales program should expect increased scrutiny of the program and should be prepared to document and demonstrate through written policies and procedures, board and management oversight records, and other means that the bank is adequately assessing and managing any risks presented by the RNDIP.

The Booklet refers to the Third-Party Relationship Bulletin numerous times and contains a detailed description of third-party risk-management expectations with respect to RNDIP sales, including expectations regarding risk assessment by a bank’s board and management, the due diligence process, and the written agreement with and reporting obligations of the third-party broker-dealer.

The Booklet references more than a dozen OCC bulletins, interpretive letters, and other issuances Booklet, p.

Retai, other words, banks cannot abdicate their oversight and compliance responsibilities to the affiliated or third-party broker-dealers and must conduct their own independent analysis of RNDIPs, particularly the suitability of the products for the investmenf customers.

Media, Telecoms, IT, Entertainment. The Booklet emphasizes that banks must have ongoing and substantive involvement in the administration and oversight of any RNDIP sales program and cannot rely solely on representations made by broker-dealers regarding quality and suitability of RNDIPs and sales practices.

Risk-Management Program The OCC expects each bank to “identify, measure, monitor, and control risk reetail implementing an effective risk management system appropriate for its size and the complexity of its operations. Blockchain Legal Resource Blog: The OCC emphasizes the importance of due diligence of third-party providers of RNDIP sales services and that any third parties should provide, on a quarterly basis at a minimum, information regarding the third party’s sales practices; surveillance results; exception tracking; product and service offerings; customer complaints, litigation, and settlements; hiring practices; sales force stability; regulatory findings; and compliance issues.

The only intedagency guidance on these issues was contained in the preamble to Regulation R issued in

Previous post: