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.

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The Booklet states that “[b]y referring its customers to a broker-dealer, the bank is tacitly endorsing the RNDIP sales made by those brokers to those customers.

Blockchain Legal Resource Blog: News About statemetn Firm. The Booklet also strongly encourages using mystery shopping and call-back programs to test sales programs and ensure that sales activities comply with applicable regulations, guidance, and a bank’s policies.

The Booklet acknowledges that FINRA Rule regarding suitability of recommended products does not expressly apply to sales or recommendations made directly by a bank.

Board of Governors of the Federal Reserve System

Risk-Management Program The OCC expects each bank to “identify, measure, monitor, and control risk by implementing an effective risk management system appropriate for its saes and the complexity of its operations. Government Issues Proposed Regulations.

investmetn The OCC identifies operational risk as arising from inadequate oversight of bank employees or third parties, sales practice misconduct, poor customer service, or adverse events that could affect business volume and efficient trade execution. Reputation risk arises from the way a bank or a third party interacts with customers.

As mentioned above, the Booklet reflects the OCC’s heightened expectations regarding the adequacy of banks’ compliance and risk-management programs and the need for banks to develop detailed written compliance plans tailored to the complexity of their RNDIP sales activities. 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 Booklet emphasizes the need for banks to retain qualified counsel to help assess and manage the risk by ensuring compliance with applicable regulations.

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

In addition, banks should adopt comprehensive compliance policies and procedures that address applicable regulations and guidance, including the Interagency Statement. The bank’s management and oversight of its RNDIP program should be able to respond to and incorporate regulatory reforms and changes in the brokerage industry, and the bank’s strategic goals with respect to its RNDIP program should reflect, as appropriate, changes in market conditions.

Saales Laws and Products. More from this Firm. More from this Author. More clarity regarding specific OCC expectations and methods for implementing the guidance in the Booklet will be revealed through upcoming examination cycles. To measure risk, banks are expected to use measurement systems and models appropriate for the nature and complexity of the RNDIP sales program and should periodically test the measurement systems.


Application of the Third-Party Relationship Bulletin: The Booklet references more than a dozen OCC bulletins, interpretive letters, and other issuances Booklet, p. Part of the risk-monitoring program should include a requirement that affiliated and inteagency third parties provide risk-monitoring reports that allow a bank to properly oversee the RNDIP sales program, including the quality and suitability of the RNDIPs sold by an affiliated or third-party broker-dealer.

Banks that are active sapes retail securities activities should interavency that their next examination will involve detailed questions and requests for information regarding their RNDIP sales programs. 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.

In news that no Blockchain Monitor reader wants to hear, technical analysts are sounding the alarm bell on bitcoin. The Booklet contains extensive discussion about permissible compensation arrangements and referral fees. In addition to the compliance obligations associated with these lending activities, the bank needs to monitor and manage its credit exposures.

A bank’s failure to provide adequate resources and risk proructs to properly manage and control the risks associated with any RNDIP sales program may present a strategic risk to the bank. It is intended to provide guidance for bank examiners on activities of national banks and federal savings associations collectively, banks involved in recommending and selling nondeposit investment products to retail customers.

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; interagench results; exception tracking; product and service offerings; customer complaints, litigation, and settlements; hiring practices; sales force stability; regulatory findings; and compliance issues. The OCC Booklet explicitly investmfnt that banks that offer services to lower-income clients, clients with little to no investment experience, or seniors may present heightened reputation risk.

Overall, the Booklet reflects the OCC’s increasing focus in recent years on the need for banks to implement strong risk-management processes and policies commensurate with their activities, as well as oversight of these activities by senior bank management interagsncy banks’ boards of directors. Although no one measurement system will be appropriate for all RNDIP sales programs, the OCC expects that the measurement process will assess risks of individual transactions, aggregate client portfolios, and interdependencies, correlations, and risks across business lines.


In turn, the Booklet may serve as a useful compliance guide for banks other than national banks. In accordance with the Interagency Statement, boards should adopt written statements that address the risks, policies, and procedures and risk-management associated with an RNDIP sales program. Third-party risk management Qualification and training requirements for bank personnel and supervisors, as well as third-party sales representatives who will recommend or sell RNDIPs Compensation arrangements that comply with applicable regulations GLBA, Regulation R, 12 C.

Real Estate and Construction. This article is provided as a general prodcuts service and it should not be construed as imparting legal advice on any specific matter.

RNDIP is defined as “any product with an investment component that, in most instances, is not an FDIC-insured deposit” and includes mutual funds, exchange-traded funds, annuities, equities, and fixed-income securities Booklet, p. Credit risk in an RNDIP may arise if the program provides retail clients with margin lending or securities lending services.

Media, Telecoms, IT, Entertainment. Unsuitable sales practices, client misunderstandings of the risk associated with RNDIP offerings, or poor customer service could result in reputational damage. There are several aspects of the Booklet that are particularly noteworthy or warrant special mention. The Booklet reflects the OCC’s emphasis on the importance of strong and effective risk-management processes, which continues a regulatory theme articulated by the OCC in recent years.

Interested in sapes next Webinar on this Topic? Banks are also expected to identify cross-business-line interdependencies or issues that could present increased risk. In addition, banks should require third parties to have sufficient business continuity planning in the event of interruption, as well as the operational capacity and customer service levels that can adequately service customer needs, particularly in times of market stress.

The Fed – Supervisory Policy and Guidance Topics – Securities

The OCC states that it expects every bank to “conduct a comprehensive analysis of its securities activities to ensure compliance with GLBA interagencg Regulation R, and to maintain records to demonstrate compliance.

As part of its operational risk management, banks should have internal management information systems that ensure timely transaction confirmations and customer statements and billing and should ensure that any modeling used in an RNDIP sales program is properly designed and managed. Worldwide Europe European Union U.