The following activities are
financial in nature or incidental to a financial activity:
(a) Activities determined to
be closely related to banking.
(1) Any activity that the Board had determined
by regulation prior to November 12, 1999, to be so closely related
to banking as to be a proper incident thereto, subject to the terms
and conditions contained in this part, unless modified by the Board. These activities
are listed in section 225.28.
(2) Any activity that the Board had determined
by an order that was in effect on November 12, 1999, to be so closely
related to banking as to be a proper incident thereto, subject to
the terms and conditions contained in this part and those in the authorizing
orders. These activities are—
(i) providing administrative
and other services to mutual funds (Societe Generale, 84 Federal Reserve Bulletin 680 (1998));
(ii) owning shares of a securities exchange
(J.P. Morgan & Co, Inc., and UBS AG, 86 Federal Reserve
Bulletin 61 (2000));
(iii) acting as a certification authority
for digital signatures and authenticating the identity of persons
conducting financial and nonfinancial transactions (Bayerische
Hypo- und Vereinsbank AG, et al., 86 Federal Reserve Bulletin 56 (2000));
(iv)
providing employment histories to third parties for use in making
credit decisions and to depository institutions and their affiliates
for use in the ordinary course of business (Norwest Corporation, 81 Federal Reserve Bulletin 732 (1995));
(v) check-cashing and wire-transmission
services (Midland Bank, PLC, 76 Federal Reserve Bulletin 860 (1990) (check cashing); Norwest Corporation, 81 Federal
Reserve Bulletin 1130 (1995) (money transmission));
(vi) in connection with
offering banking services, providing notary-public services, selling
postage stamps and postage-paid envelopes, providing vehicle-registration
services, and selling public-transportation tickets and tokens (Popular, Inc., 84 Federal Reserve Bulletin 481 (1998));
and
(vii) real estate
title abstracting (The First National Company, 81 Federal
Reserve Bulletin 805 (1995)).
4-056.51
(b) Activities determined to be usual in
connection with the transaction of banking abroad. Any activity
that the Board had determined by regulation in effect on November
11, 1999, to be usual in connection with the transaction of banking
or other financial operations abroad (see section 211.5(d) of this
chapter), subject to the terms and conditions in part 211 and Board
interpretations in effect on that date regarding the scope and conduct
of the activity. In addition to the activities listed in paragraphs
(a) and (c) of this section, these activities are—
(1) providing management consulting services,
including to any person with respect to nonfinancial matters, so long
as the management consulting services are advisory and do not allow
the financial holding company to control the person to which the services
are provided;
(2) operating
a travel agency in connection with financial services offered by the
financial holding company or others; and
(3) organizing, sponsoring, and managing
a mutual fund, so long as—
(i) the fund does not exercise managerial
control over the entities in which the fund invests; and
(ii) the financial holding
company reduces its ownership in the fund, if any, to less than 25
percent of the equity of the fund within one year of sponsoring the
fund or such additional period as the Board permits.
4-056.52
(c) Activities permitted
under section 4(k)(4) of the BHC Act. Any activity defined to
be financial in nature under sections 4(k)(4)(A) through (E), (H)
and (I) of the BHC Act.
4-056.53
(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.
(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.
4-056.54
(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]
4-056.55
(e) Activities permitted under section 4(k)(5) of
the Bank Holding Company Act (12 USC 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 USC 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.
4-056.56
(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 USC 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.
