INTERAGENCY STATEMENT ON RETAIL SALES OF NONDEPOSIT INVESTMENT PRODUCTS PDF
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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To the extent the bank has clients that may be vulnerable to a broker’s hard sell, the bank should have procedures in place to ensure that these customers are not sold inappropriate investments. More from this Firm. Banks that are active in retail securities activities should expect that their next examination will involve detailed questions and requests for information regarding their RNDIP sales programs.
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In this respect, the Booklet shows that basic regulatory attitudes about bank retail securities activities have not materially changed since Risk-Management Program The OCC expects each bank to “identify, measure, monitor, and control risk by tsatement an effective risk management system appropriate for its size and the complexity of its operations. Insurance Laws and Products.
The OCC Booklet explicitly notes that banks that offer services to lower-income clients, clients with little to no investment experience, or seniors may present heightened reputation risk. Credit risk can also arise if a bank advances payments to client accounts even intraday or allows overdrafts in client accounts.
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. 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.
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.
The Fed – Supervisory Policy and Guidance Topics – Securities
Click here to register your Interest. The OCC expects the compliance program to include periodic testing of shatement accounts and transactions to detect, prevent, and correct abusive practices.
Nondeposig risk may be increased if the RNDIP program actively associates a bank’s name with the offered products and services, including the offering of bank-branded products. However, the Booklet identifies the rule as “an appropriate reference for a bank compliance program designed to ensure that the bank’s sales of RNDIPs are operated in a safe and sound rdtail.
More from this Author. Virtual currencies and interagenvy underlying blockchain technology has a profound potential to be a driver of economic growth. Reputation risk arises from the way a bank or a third party interacts with customers. The Booklet details the OCC’s new expectations of third parties that provide RNDIPs through bank distribution channels and focuses on the terms to be contained in networking agreements with banks.
Events from this Firm. The Booklet references more than a dozen OCC bulletins, interpretive letters, and other issuances Interagdncy, p. Application of the Third-Party Relationship Bulletin: Retail foreign exchange transactions also present counterparty credit risk where a bank acts as principal in a transaction.
The Booklet emphasizes the need for banks to retain qualified counsel to help assess and manage the risk by ensuring compliance with applicable regulations. As with other recent OCC guidance, active and meaningful oversight and participation of a bank’s board and senior management is expected and required.
Mine Financing In – Video. The compliance policies should address the following:. Such inadvertent violations could occur if a retail customer entering into an off-exchange swap is not an “eligible contract participant,” as well as raise questions about compliance with OCC regulations regarding retail foreign-exchange transactions.
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The OCC emphasizes compliance with the Interagency Statement, Regulation R, and the antifraud provisions of federal securities laws section 10 of the Securities Exchange Act and Rule 10b-5 and a bank’s obligation to take reasonable steps to ensure that any third-party broker-dealer complies with applicable securities laws and Financial Industry Regulatory Authority FINRA rules. Proper supervision and training of bank employees engaged in direct bank RNDIP activities is needed to help manage reputation risk.
The OCC states that it expects every xtatement to “conduct a comprehensive analysis of its securities activities to ensure nonfeposit with GLBA and Regulation R, and to maintain records to demonstrate compliance. Although it was adopted almost 21 years ago, the Booklet demonstrates the Interagency Statement’s durability and continued relevance for bank RNDIP activities.
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.
As noted above, these requirements are to be addressed by new networking agreement terms. 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.
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 and banks’ boards of directors.