Circular
Proposed Regulations on Qualification Requirements for Bank Employees Who Sell Mutual Funds and Other Securities
January 29, 1997
Circular No. 10918

Comments due February 28

To All State Member Banks, and Branches and Agencies
of Foreign Banks, in the Second Federal Reserve District:

The following is from a statement issued by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (banking agencies), has requested comment on proposed regulations regarding qualification requirements for bank employees who sell mutual funds and certain other securities.

Comment is requested by February 28, 1997.

The principal provisions of the proposed regulations would require:

  • banks to sponsor their employees to take the appropriate professional qualification test to become bank securities representatives;
  • bank employees to pass the appropriate professional qualification test as a condition to selling covered products to retail customers;
  • bank employees to register with the banking agencies by providing personal history, employment, and disciplinary information that would eventually be made available to the public;
  • supervisors of bank securities representatives to pass the appropriate professional qualification test and register as a bank securities representative; and
  • bank securities representatives to participate in continuing education programs that incorporate the requirements applicable to the securities industry.

The proposed regulations would promote the safe and sound operation of bank retail securities sales programs and customer protection by establishing standardized qualification requirements for bank personnel engaged in the retail sale of certain securities.

A copy of Part II of the Federal Register of December 30, 1996, containing the text of the joint proposal is available as a (pdf) file. However, the companion notice of forms are available in hardcopy only. Comments thereon should be submitted by February 28, 1997 and may be sent to the Board, as specified in the notices, or to this Bank's Compliance Examinations Department.