(a) A bank is exempt from the
definition of the term broker under section 3(a)(4) of the
act (15 USC 78c(a)(4)) to the extent that it effects transactions
on behalf of a customer in securities issued by a money market fund,
provided that—
(1) the bank either—
(i) provides
the customer, directly or indirectly, any other product or service,
the provision of which would not, in and of itself, require the bank
to register as a broker or dealer under section 15(a) of the act (15 USC 78o(a));
or
(ii) effects the
transactions on behalf of another bank as part of a program for the
investment or reinvestment of deposit funds of, or collected by, the
other bank; and
(2) (i) the class
or series of securities is no-load; or
(ii) if the class or series of securities
is not no-load—
(A) the bank or, if applicable, the other
bank described in paragraph (a)(1)(B) of this section provides the
customer, not later than at the time the customer authorizes the securities
transactions, a prospectus for the securities; and
(B) the bank and, if applicable, the other
bank described in paragraph (a)(1)(B) of this section do not characterize
or refer to the class or series of securities as no-load.
(b) Definitions. For purposes of this section:
(1) Money market fund has the same
meaning as in section 218.740(b).
(2) No-load has the same meaning
as in section 218.740(c).
