Subject: File No. S7-26-04
From: Agustin Abalo, President, Florida International Bankers Association, Inc.

September 1, 2004

Sent via email to:rule-comments@sec.gov

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

RE: File No. S7-26-04 (Proposed Regulation B)

Dear Mr. Katz:

The Florida International Bankers Association ("FIBA") appreciates the opportunity to provide the following comments concerning Regulation B implementing the securities activities push out requirements of the Gramm-Leach-Bliley Act of 1999 (the "Push Out Requirements"), as proposed by the Securities and Exchange Commission (the "SEC") in its release dated June 17, 2004.

In this regard, FIBA is cognizant of and grateful for the SECís careful consideration of banking industry concerns in the formulation of proposed Regulation B. FIBA particularly appreciates the SECís efforts in crafting the new exemption (the "Regulation S Push Out Exemption") set forth in Rule 771 of proposed Regulation B (proposed 17 C.F.R. ß 242.771) for certain securities transactions conducted by banks on behalf of non-U.S. persons or U.S. registered broker-dealers pursuant to the SECís Regulation S  (the "Regulation S Securities Registration Exemption").

FIBA is of the view that the Regulation S Push Out Exemption should avert substantial and unnecessary disruption to the predominantly "offshore" securities business conducted by the Florida international private banking community and the concomitant negative impact on the ability of international banking organizations to continue to offer securities services to non-resident customers from the United States. For this reason, FIBA is concerned that the proposed Regulation S Push Out Exemption be implemented in a fashion that enables banks to rely upon it in a practical way for both primary and secondary market transactions.

As you know, the proposed Regulation S Push Out Exemption is intended to permit a bank that is not registered as a broker-dealer to continue to conduct securities purchases and sales which qualify under the Regulation S Securities Registration Exemption on behalf of non-U.S. persons (or U.S. registered broker-dealers) in primary market transactions under Rule 903, and in secondary market transactions under Rule 904, subject to restrictions outlined in proposed Rule 771. Such transactions could be conducted as agent or riskless principal.

However, subparagraphs (a)(2) and (3) of proposed Rule 771 currently provide that secondary market transactions conducted in reliance upon the Regulation S Push Out Exemption may only involve securities that were initially sold "within the meaning of and in compliance with the requirements of [Rule 903 of the Regulation S Securities Registration Exemption....]" (emphasis added). Consequently, it appears that the Regulation S Push Out Exemption, as currently drafted, could not be used by banks in offering their clients securities of foreign or domestic issuers unless the banks are able to establish that the securities were initially sold in primary market transactions in compliance with Rule 903, regardless of how long the securities may have been trading in the secondary market.

A number of FIBA member institutions have expressed concern that the above-referenced provisions in Rule 771 requiring that resales of securities under the Regulation S Push Out Exemption involve only securities that were initially sold in compliance with Rule 903ís requirements may significantly diminish the utility of the exemption, because it will not always be possible for a bank seeking to rely upon the exemption to establish whether a particular security was initially sold in compliance with Rule 903. For example, if a bank executes a clientís order for a non-U.S. issuerís securities through a third-party broker-dealer, and different tranches of the issuerís securities were initially sold under various exemptions from the U.S. securities laws including Rule 903, it may well be impossible for the bank (or even the executing broker) to know whether the exact securities with which the clientís order is filled were initially sold in compliance with Rule 903.

In view of this practical impediment to the utilization of the Regulation S Push Out Exemption for secondary market transactions, FIBA respectfully requests that the SEC consider amending proposed Rule 771 to facilitate reliance by banks on the proposed Regulation S Push Out Exemption in connection with secondary market transactions. In this regard, FIBA is of the view that proposed Rule 771 could be amended to facilitate its use in the secondary market context through an amendment which would allow banks to rely on the proposed Regulation S Push Out Exemption for secondary market transactions conducted in compliance with the requirements of Rule 904 involving either (1) securities that were initially sold in compliance with Rule 903 of the Regulation S Securities Registration Exemption, or (2) securities issued by a foreign issuer if the transaction in such securities is not effected on a securities exchange in the United States or through NASDAQ.

FIBA is aware that the Institute of International Bankers has submitted a comment letter to the SEC proposing a similar approach to addressing this issue, and FIBA supports and endorses the views expressed in that letter.

Again, FIBA appreciates the opportunity to provide the SEC the comments set forth in this letter. Should you have questions regarding this matter, please do not hesitate to contact the undersigned.

Sincerely yours,

Agustin Abalo, President
Florida International Bankers Association, Inc.