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FEDERAL RESERVE BANK OF NEW YORK Circular No. 5 9 6 9 "I April 14,1967 [ J NOTICE OF PROPOSED RULE MAKING Regulation R— Relationships With Dealers in Securities Under Section 32 of the Banking Act of 1933 To All Member Banks in the Second Federal Reserve D istrict: The following statement was made public April 6 by the Board of Governors of the Federal Reserve System: The B oard o f Governors today announced a proposed amendment to its Regulation R, relating to inter locking personnel relationships between member banks and dealers in securities. The regulation exempts from the general prohibition o f section 32 o f the Banking A ct o f 1933 relationships between member banks and securities dealers that confine their investment banking activities to specified categories o f obligations. The proposed amendment would include general obligations o f any State or any political subdivision thereof among those already exempt from the prohibition. The effect o f the amendment would be to permit inter locking relationships between member banks and securities dealers that confine themselves to underwriting and dealing in securities which member banks may law fu lly underwrite. Comments on the proposed amendment should be submitted by M ay 1, 1967, and may be sent to the Board, or to any Federal Reserve Bank. Printed below is an excerpt from the Federal R egister of April 12, containing a copy of the notice of the proposed amendment. Any comments submitted to this Bank should be directed to our Bank Examinations Depart ment. Additional copies of this circular will be furnished upon request. A lfred H ayes, P resident. FEDERAL RESERVE SYSTEM [1 2 CFR Part 218 ] [ Reg. R ] PERMISSIBLE RELATIONSHIPS WITH DEALERS IN SECURITIES Proposed Exceptions The Board of Governors is considering amending § 218.2, which delineates permis sible personnel relationships between banks that are members of the Federal Reserve System and dealers in securities. That section exempts from the general prohibition of section 32 o f the Banking Act of 1933 (12 U.S.C. 78) interlocking relation ships between member banks and firms deal ing only in certain types o f obligations. The proposed amendment would add to such types o f obligations “ general obligations of any State or o f any political subdivision thereof. ’ * The effect o f the amendment would be to permit interlocking relationships between member banks and securities dealers that confine themselves to underwriting and dealing in securities which member banks themselves may lawfully underwrite. The amended § 218.2 would read as follows: § 218.2 Exceptions. Pursuant to the authority vested in it by section 32, the Board of Governors o f the Federal Reserve System hereby grants per mission for any officer, director, or employee of any member bank of the Federal Reserve System, unless otherwise prohibited, to be at the same time an officer, director, or employee o f any corporation or unincorpo rated association, a partner or employee of any partnership, or an individual, engaged in the issue, flotation, underwriting, public sale, or distribution, at wholesale or retail, or through syndicate participation, of any stocks, bonds, or other similar securities, if so engaged only as to the following secu rities: Bonds, notes, certificates o f indebted ness, and Treasury bills o f the United States; obligations fully guaranteed both as to prin cipal and interest by the United States; general obligations of Territories, depend encies, and insular possessions of the United States; obligations of Federal Intermediate Credit banks, Federal Land banks, Central Bank for Cooperatives, Federal Home Loan banks, the Federal National Mortgage Asso ciation, and the Tennessee Valley Authority; certificates o f interest of the Commodity Credit Corporation; general obligations of any State or o f any political subdivision thereof; and, subject to specifications con tained in paragraph Seventh of section 5136, Revised Statutes (12 U.S.C. 24), obligations o f the International Bank for Reconstruc tion and Development, and Inter-American Development Bank, the Asian Development Bank, local public agencies, public housing agencies, and obligations insured by the Federal Housing Administrator. This notice is published pursuant to sec tion 55 3 (b ), Title 5, United States Code, and section 1 (b ) o f the rules o f procedure of the Board of Governors of the Federal Reserve System (12 CFR 2 6 2 .1 (b )). To aid in consideration of the foregoing matter by the Board, interested persons are invited to submit relevant data, views, or arguments. Such material may be sent directly to the Board or to any Federal Reserve Bank. All such material should be submitted in writing to be received by the Board not later than May 1, 1967. Dated at Washington, D. C., this 6th day o f April 1967. By order o f the Board o f Governors. [seal] M e r r it t Sherman, Secretary. [F.R. Doc. 67-3963; Filed, Apr. 11, 1967; 8:45 a.m.]
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