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SEC Announces Timetable for Enactment of Final Rules Under Gramm-Leach-Bliley Act


Washington, D.C., Sept. 29, 2006 - Securities and Exchange Commission Chairman Christopher Cox announced today that, following this week's expected passage of the Financial Services Regulatory Relief Act of 2006 by both houses of Congress, he hopes to complete work by year end on proposed new rules to implement the bank broker provisions of the Gramm-Leach-Bliley Act.

Under the provisions of the Regulatory Relief Act, the SEC and the Federal Reserve have 180 days from the date the President signs the bill into law to jointly propose final rules. The rules will define the circumstances under which a bank can engage in securities activities without registering as a broker.

"I am very confident that we will meet the new legislative deadline," said Chairman Cox, "and it is our intention to do so by year end, well ahead of schedule. Over the past six months, the SEC, the Federal Reserve, the FDIC, and the Comptroller of the Currency have been working at the highest levels to put these needed clarifications in place. We are already well along in that process.

"With the expectation that proposed new rules will be issued by December 31, 2006, the Commission today extended the current exemption from the definition of "broker" until January 15, 2007," Chairman Cox added. "This will give the Commission and the banking regulators time to complete the rule-writing and propose new rules before the exemption expires."

If the new rules are proposed with a 90-day comment period beginning at year end, final rules could be expected in late spring or early summer 2007. "Because we recognize that banks will need time to implement systems to ensure compliance with the new bank broker provisions," Chairman Cox said, "we expect any final rules would have a delayed effective date."

The Gramm-Leach-Bliley Act repealed an exception from broker-dealer registration requirements in the Securities Exchange Act of 1934. After passage of Gramm-Leach-Bliley, banks' ability to engage in securities activities without registering as a broker or dealer depends on their coming within more narrowly tailored exceptions. Those exceptions were to have become effective on May 12, 2001, but the Commission adopted interim rules that postponed full compliance, and through a series of orders extended banks' exemption from the definition of "broker" to Sept. 30, 2006. It is this exemption that today's action further extends until Jan. 15, 2007.

In June 2004, the Commission proposed to replace its interim rules with new Regulation B. That effort was never completed. To resuscitate the effort, this year Chairman Cox has led a series of meetings with the leaders of the federal banking regulators aimed at resolving outstanding issues so that the bank broker provisions of the Gramm-Leach-Bliley Act can be fully implemented.

The text of today's order and notice are available on the Commission's website at http://www.sec.gov.

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  Additional materials: Exemptive Order; Release No. 34-54544



Modified: 09/29/2006