For immediate release

The Federal Reserve Board today announced modifications to the prudential limits or firewalls that currently apply to bank holding companies engaged in securities underwriting and dealing activities through section 20 subsidiaries. The modifications are effective October 31, l997. The Board is eliminating those restrictions that have proven to be unduly burdensome or unnecessary in light of other laws or regulations, and consolidating the remaining restrictions in a series of eight operating standards. The new operating standards will cover the following areas: Capital requirement for bank holding company and section 20 subsidiary; Internal controls; Interlocks restriction; Customer disclosure; Credit for clearing purposes; Funding of securities purchases from a section 20 affiliate; Reporting requirement; and Application of sections 23A and 23B to foreign banks. The Board has concluded that the narrower set of restrictions will be fully consistent with safety and soundness and should improve operating efficiencies at section 20 subsidiaries and increase options for their customers. The Board's notice is attached.

Summary only | Summary and final conditions (124 KB PDF)

1997 Banking and consumer regulatory policy