The SEC finalized two rule amendments and a new rule (collectively, the "Dealer Rules") under the Securities Exchange Act of 1934 ("Exchange Act") that address bank exemptions from "dealer" registration under the Gramm-Leach-Bliley Act of 1999 (the "GLBA"). The Dealer Rules are effective September 30, 2003. The rules relating to the bank "broker" exemption have not yet been proposed.
De Minimis Exemption.
A bank is exempt from the definition of "broker" if it effects no more than 500 securities transactions in a given year, not including transactions that qualify for another statutory exemption (the "de minimis exemption"). Although the de minimis exemption is an exemption from the definition of "broker," Rule 3a5-1 under the Exchange Act provides that the exemption encompasses some "dealer" activities, including riskless principal transactions between two non-broker-dealer customers. The Dealer Rules amended Rule 3a5-1 to clarify the counting of transactions in which a bank acts
