PART 344—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS Authority: 12 U.S.C. 1817, 1818, 1819, and 5412. Source: 78 FR 76723, Dec. 19, 2013, unless otherwise noted. § 344.1 Purpose and scope. (a) Purpose. (b) Scope; general. § 344.2 Exceptions. (a) An FDIC-supervised institution effecting securities transactions for customers is not subject to all or part of this part 344 to the extent that they qualify for one or more of the following exceptions: (1) Small number of transactions. (2) Government securities. (3) Municipal securities. See (4) Foreign branches. (5) Transactions effected by registered broker/dealers. (A) The broker/dealer is fully disclosed to the customer; and (B) The customer has a direct contractual agreement with the broker/dealer. (ii) This exemption extends to arrangements with broker/dealers which involve FDIC-supervised institution employees when acting as employees of, and subject to the supervision of, the registered broker/dealer when soliciting, recommending, or effecting securities transactions. (b) Safe and sound operations. § 344.3 Definitions. (a) Asset-backed security (b) Cash management sweep account (c) Collective investment fund (1) In a common trust fund maintained by such FDIC-supervised institution exclusively for the collective investment and reinvestment of monies contributed thereto by the FDIC-supervised institution in its capacity as trustee, executor, administrator, guardian, or custodian under the Uniform Gifts to Minors Act; or (2) In a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus or similar trusts which are exempt from Federal income taxation under the Internal Revenue Code (26 U.S.C.). (d) Completion of the transaction (1) For purchase transactions, the time when the customer pays the FDIC-supervised institution any part of the purchase price (or the time when the FDIC-supervised institution makes the book-entry for any part of the purchase price, if applicable), however, if the customer pays for the security prior to the time payment is requested or becomes due, then the transaction shall be completed when the FDIC-supervised institution transfers the security into the account of the customer; and (2) For sale transactions, the time when the FDIC-supervised institution transfers the security out of the account of the customer or, if the security is not in its custody, then the time when the security is delivered to it, however, if the customer delivers the security to the FDIC-supervised institution prior to the time delivery is requested or becomes due then the transaction shall be completed when the FDIC-supervised institution makes payment into the account of the customer. (e) Crossing of buy and sell orders (f) Customer (g) Debt security (h) FDIC-supervised institution (i) Government security (1) A security that is a direct obligation of, or obligation guaranteed as to principal and interest by, the United States; (2) A security that is issued or guaranteed by a corporation in which the United States has a direct or indirect interest and which is designated by the Secretary of the Treasury for exemption as necessary or appropriate in the public interest or for the protection of investors; (3) A security issued or guaranteed as to principal and interest by any corporation whose securities are designated, by statute specifically naming the corporation, to constitute exempt securities within the meaning of the laws administered by the Securities and Exchange Commission; or (4) Any put, call, straddle, option, or privilege on a security described in paragraph (i)(1), (2), or (3) of this section other than a put, call, straddle, option, or privilege that is traded on one or more national securities exchanges, or for which quotations are disseminated through an automated quotation system operated by a registered securities association. (j) Investment discretion (1) Is authorized to determine what securities or other property shall be purchased or sold by or for the account; or (2) Makes decisions as to what securities or other property shall be purchased or sold by or for the account even though some other person may have responsibility for these investment decisions. (k) Municipal security See (l) Periodic plan (m) Security (1) A deposit or share account in a federally or state insured depository institution; (2) A loan participation; (3) A letter of credit or other form of insured depository institution indebtedness incurred in the ordinary course of business; (4) Currency; (5) Any note, draft, bill of exchange, or bankers acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited; (6) Units of a collective investment fund; (7) Interests in a variable amount (master) note of a borrower of prime credit; or (8) U.S. Savings Bonds. § 344.4 Recordkeeping. (a) General rule. (1) Chronological records. (i) Account or customer name for which each transaction was effected; (ii) Description of the securities; (iii) Unit and aggregate purchase or sale price; (iv) Trade date; and (v) Name or other designation of the broker/dealer or other person from whom the securities were purchased or to whom the securities were sold; (2) Account records. (i) Purchases and sales of securities; (ii) Receipts and deliveries of securities; (iii) Receipts and disbursements of cash; and (iv) Other debits and credits pertaining to transactions in securities; (3) A separate memorandum (order ticket) (i) The accounts for which the transaction was effected; (ii) Whether the transaction was a market order, limit order, or subject to special instructions; (iii) The time the order was received by the trader or other FDIC-supervised institution employee responsible for effecting the transaction; (iv) The time the order was placed with the broker/dealer, or if there was no broker/dealer, time the order was executed or canceled; (v) The price at which the order was executed; and (vi) The broker/dealer utilized; (4) Record of broker/dealers. (5) Notifications. (b) Manner of maintenance. § 344.5 Content and time of notification. Every FDIC-supervised institution effecting a securities transaction for a customer shall give or send, by mail, facsimile or other means of electronic transmission, to the customer at or before completion of the transaction one of the types of written notification identified below: (a) Broker/dealer's confirmations. (2) If the FDIC-supervised institution is to receive remuneration from the customer or any other source in connection with the transaction, a statement of the source and amount of any remuneration to be received if such would be required under paragraph (b)(6) of this section; or (b) Written notification. (1) Name of the FDIC-supervised institution; (2) Name of the customer; (3) Whether the FDIC-supervised institution is acting as agent for such customer, as agent for both such customer and some other person, as principal for its own account, or in any other capacity; (4) The date and time of execution, or the fact that the time of execution will be furnished within a reasonable time upon written request of the customer, and the identity, price, and number of shares or units (or principal amount in the case of debt securities) of the security purchased or sold by the customer; (5) The amount of any remuneration received or to be received, directly or indirectly, by any broker/dealer from such customer in connection with the transaction; (6)(i) The amount of any remuneration received or to be received by the FDIC-supervised institution from the customer, and the source and amount of any other remuneration received or to be received by the FDIC-supervised institution in connection with the transaction, unless: (A) Remuneration is determined pursuant to a prior written agreement between the FDIC-supervised institution and the customer; or (B) In the case of government securities and municipal securities, the FDIC-supervised institution received the remuneration in other than an agency transaction; or (C) In the case of open end investment company securities, the FDIC-supervised institution has provided the customer with a current prospectus which discloses all current fees, loads and expenses at or before completion of the transaction; (ii) If the FDIC-supervised institution elects not to disclose the source and amount of remuneration it has received or will receive from a party other than the customer pursuant to paragraph (b)(6)(i)(A), (B), or (C) of this section, the written notification must disclose whether the FDIC-supervised institution has received or will receive remuneration from a party other than the customer, and that the FDIC-supervised institution will furnish within a reasonable time the source and amount of this remuneration upon written request of the customer. This election is not available, however, if, with respect to a purchase, the FDIC-supervised institution was participating in a distribution of that security; or, with respect to a sale, the FDIC-supervised institution was participating in a tender offer for that security; (7) Name of the broker/dealer utilized; or where there is no broker/dealer, the name of the person from whom the security was purchased or to whom the security was sold, or a statement that the FDIC-supervised institution will furnish this information within a reasonable time upon written request; (8) In the case of a transaction in a debt security subject to redemption before maturity, a statement to the effect that the debt security may be redeemed in whole or in part before maturity, that the redemption could affect the yield represented and that additional information is available upon request; (9) In the case of a transaction in a debt security effected exclusively on the basis of a dollar price: (i) The dollar price at which the transaction was effected; and (ii) The yield to maturity calculated from the dollar price, provided however, that this shall not apply to a transaction in a debt security that either has a maturity date that may be extended by the issuer thereof, with a variable interest payable thereon, or is an asset-backed security that represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment; (10) In the case of a transaction in a debt security effected on the basis of yield: (i) The yield at which the transaction was effected, including the percentage amount and its characterization (e.g., current yield, yield to maturity, or yield to call) and if effected at yield to call, the type of call, the call date and call price; (ii) The dollar price calculated from the yield at which the transaction was effected; and (iii) If effected on a basis other than yield to maturity and the yield to maturity is lower than the represented yield, the yield to maturity as well as the represented yield; provided however, that this paragraph (b)(10) shall not apply to a transaction in a debt security that either has a maturity date that may be extended by the issuer with a variable interest rate payable thereon, or is an asset-backed security that represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment; (11) In the case of a transaction in a debt security that is an asset-backed security, which represents an interest in or is secured by a pool of receivables or other financial assets that are subject continuously to prepayment, a statement indicating that the actual yield of the asset-backed security may vary according to the rate at which the underlying receivables or other financial assets are prepaid and a statement of the fact that information concerning the factors that affect yield (including at a minimum estimated yield, weighted average life, and the prepayment assumptions underlying yield) will be furnished upon written request of the customer; and (12) In the case of a transaction in a debt security, other than a government security, that the security is unrated by a nationally recognized statistical rating organization, if that is the case. § 344.6 Notification by agreement; alternative forms and times of notification. An FDIC-supervised institution may elect to use the following alternative notification procedures if the transaction is effected for: (a) Notification by agreement. (b) Trust accounts. (c) Agency accounts. (1) The FDIC-supervised institution shall give or send to each customer not less frequently than once every three months an itemized statement which shall specify the funds and securities in the custody or possession of the FDIC-supervised institution at the end of such period and all debits, credits and transactions in the customer's accounts during such period; and (2) If requested by the customer, the FDIC-supervised institution shall give or send to each customer within a reasonable time the written notification described in § 344.5. The FDIC-supervised institution may charge a reasonable fee for providing the information described in § 344.5. (d) Cash management sweep accounts. (e) Collective investment fund accounts. (f) Periodic plan accounts. (1) The funds and securities in the custody or possession of the FDIC-supervised institution; (2) All service charges and commissions paid by the customer in connection with the transaction; and (3) All other debits and credits of the customer's account involved in the transaction; provided that upon written request of the customer, the FDIC-supervised institution shall give or send the information described in § 344.5, except that any such information relating to remuneration paid in connection with the transaction need not be provided to the customer when the remuneration is paid by a source other than the customer. The FDIC-supervised institution may charge a reasonable fee for providing information described in § 344.5. § 344.7 Settlement of securities transactions. (a) All contracts effected or entered into by an FDIC-supervised institution that provide for the purchase or sale of a security (other than an exempted security as defined in 15 U.S.C. 78c(a)(12), government security, municipal security, commercial paper, bankers' acceptances, or commercial bills) shall provide for completion of the transaction within the number of business days in the standard settlement cycle followed by registered broker dealers in the United States, unless otherwise agreed to by the parties at the time of the transaction. The number of business days in the standard settlement cycle shall be determined by reference to paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a). (b) Paragraphs (a) and (c) of this section shall not apply to contracts: (1) For the purchase or sale of limited partnership interests that are not listed on an exchange or for which quotations are not disseminated through an automated quotation system of a registered securities association; or (2) For the purchase or sale of securities that the Securities and Exchange Commission (SEC) may from time to time, taking into account then existing market practices, exempt by order from the requirements of paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a), either unconditionally or on specified terms and conditions, if the SEC determines that an exemption is consistent with the public interest and the protection of investors. (c) Paragraph (a) of this section shall not apply to contracts for the sale for cash of securities that are priced after 4:30 p.m. Eastern time on the date the securities are priced and that are sold by an issuer to an underwriter pursuant to a firm commitment underwritten offering registered under the Securities Act of 1933, 15 U.S.C. 77a et seq., or sold to an initial purchaser by an FDIC-supervised institution participating in the offering. An FDIC-supervised institution shall not effect or enter into a contract for the purchase or sale of the securities that provides for payment of funds and delivery of securities later than the fourth business day after the date of the contract unless otherwise expressly agreed to by the parties at the time of the transaction. (d) For the purposes of paragraphs (a) and (c) of this section, the parties to a contract shall be deemed to have expressly agreed to an alternate date for payment of funds and delivery of securities at the time of the transaction for a contract for the sale for cash of securities pursuant to a firm commitment offering if the managing underwriter and the issuer have agreed to the date for all securities sold pursuant to the offering and the parties to the contract have not expressly agreed to another date for payment of funds and delivery of securities at the time of the transaction. [78 FR 76723, Dec. 19, 2013, as amended at 83 FR 26349, June 7, 2018] § 344.8 Securities trading policies and procedures. (a) Policies and procedures. (1) Assignment of responsibility for supervision of all officers or employees who: (i) Transmit orders to or place orders with broker/dealers; or (ii) Execute transactions in securities for customers; (2) Assignment of responsibility for supervision and reporting, separate from those in paragraph (a)(1) of this section, with respect to all officers or employees who process orders for notification or settlement purposes, or perform other back office functions with respect to securities transactions effected for customers; (3) For the fair and equitable allocation of securities and prices to accounts when orders for the same security are received at approximately the same time and are placed for execution either individually or in combination; and (4) Where applicable, and where permissible under local law, for the crossing of buy and sell orders on a fair and equitable basis to the parties to the transaction. § 344.9 Personal securities trading reporting by officers and employees of FDIC-supervised institutions. (a) Officers and employees subject to reporting. (1) Make investment recommendations or decisions for the accounts of customers; (2) Participate in the determination of such recommendations or decisions; or (3) In connection with their duties, obtain information concerning which securities are being purchased or sold or recommend such action, must report to the FDIC-supervised institution, within 30-calendar days after the end of the calendar quarter, all transactions in securities made by them or on their behalf, either at the FDIC-supervised institution or elsewhere in which they have a beneficial interest. The report shall identify the securities purchased or sold and indicate the dates of the transactions and whether the transactions were purchases or sales. (b) Exempt transactions. (1) Transactions for the benefit of the officer or employee over which the officer or employee has no direct or indirect influence or control; (2) Transactions in registered investment company shares; (3) Transactions in government securities; and (4) All transactions involving in the aggregate $10,000 or less during the calendar quarter. (c) Alternative report. § 344.10 Waivers. The Board of Directors of the FDIC, in its discretion, may waive for good cause all or any part of this part 344.