Corporate One Federal Credit Union

September 16, 2002

Via email to

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

Dear Mr. Katz:

Corporate One FCU (Corporate One) appreciates the opportunity to comment on the Commission's proposed amendment changes to the custody rule under the Investment Advisers Act of 1940 (File No. S7-28-02). Corporate One, an NCUA-regulated, federally-chartered credit union and one of 34 corporate credit unions nationwide, is a leading wholesale financial services provider to more than 2,100 credit unions in 43 states and the District of Columbia. As a corporate credit union, Corporate One is a financial cooperative owned by credit unions. With more than $5 billion in assets under management, Corporate One offers settlement services including ATM/debit cards, check processing, and depository and electronic payment services to credit unions primarily throughout Ohio and Indiana, in addition to providing competitive, flexible investments to credit unions nationwide. Overall, corporate credit unions play an integral part in the financial success of credit unions nationally.

As the proposed SEC rule states, "qualified custodians" would include the types of financial institutions that customarily provide custodial services and are regulated and examined by their regulators with respect to those services. These would include banks, savings associations, registered broker-dealers, and registered futures commission merchants. The proposed rule continues by stating that many registered advisors would also be qualified custodians. You have requested comment as to whether there are other financial institutions that should be included as qualified custodians.

We feel that corporate credit unions should be added directly to the list of qualified custodians. All federally insured corporate credit unions, and the services they provide, are regulated and examined by the National Credit union Administration (NCUA). Specific rules governing a corporate credit union are listed under Part 704 of the NCUA Rules and Regulations. NCUA, in its most recent proposal to change Part 704, has proposed regulatory wording to permit corporate credit unions to offer custodial and safekeeping services among the permissible services. The proposed regulation is as follows:

§704.12 Permissible services

(a) Preapproved services. NCUA may at any time, based upon supervisory, legal, or safety and soundness reasons, limit or prohibit any pre-approved service. The specific activities listed within each pre-approved category are provided as illustrations of activities permissible under the particular category, not as an exclusive or exhaustive list. A corporate credit union may provide the following services to its members:

(8) Trustee or Custodial Services. Trustee services are services in which the corporate credit union is authorized to act under a written trust agreement to the extent permitted under Part 724 of this chapter. Custodial and safekeeping services are services a corporate credit union performs on behalf of its member to act as custodian or safekeeper of investments.

The comment period for the proposed NCUA Part 704 rule change concluded on August 30, 2002. It is our expectation that the final rule will be taken to the NCUA board by November and implemented sometime in early 2003.

In conclusion, we would encourage you to support the inclusion of a corporate credit union governed by Part 704 as a "qualified custodian", thus enabling federally insured corporate credit unions the needed regulatory framework to effectively implement this important additional authority to the powers of a corporate credit union.

Thank you for the opportunity to comment on this proposed change. If you have any questions regarding this letter, please call me.


Lee C. Butke
President & CEO
Corporate One FCU
8700 Orion Place
Columbus, OH 43240
ph# (614) 825-9300
fax# (614) 825-9202