SEC Further Extends Time For Banks To Comply With Gramm-Leach-Bliley Act Broker-Dealer Registration Requirements And Extends Comment Period

The Securities and Exchange Commission announced today that it issued an order further extending until May 12, 2002 the compliance dates for banks with respect to the broker-dealer registration requirements contained in the Gramm-Leach-Bliley Act. The Commission also indicated that it anticipates amending the interim final rules it issued on May 11, 2001, concerning these requirements, and the Commission issued a notice extending the comment period on the rules until September 4, 2001. The Commission does not expect banks to develop compliance systems until the Commission amends its rules. Banks have indicated that they may need as much as a year to develop compliance systems to adapt to the Gramm-Leach-Bliley Act and the rules. The Commission expects to extend the compliance date further so that banks will have sufficient time to respond to changes to the rules.

The Gramm-Leach-Bliley Act repealed a full exception that had allowed banks to engage in securities activities without registering as a broker or dealer and replaced the full exception with new functional exceptions. The new functional exceptions became effective May 12, 2001. On May 11, 2001, the Commission issued interim final rules defining terms in the statutory exceptions and granting banks additional exemptions from broker-dealer registration. The Commission gave banks until October 1, 2001, and with respect to their non-compliant compensation arrangements, until January 1, 2002 to bring their activities into compliance. These time periods have now been extended until May 12, 2002.

The Commission granted the latest extension to provide the Commission with time to explore with banks possible means of reducing compliance costs. The extension also will allow the Commission time to amend its rules while providing banks additional time to seek compliance advice regarding issues under the Gramm-Leach-Bliley Act and to explore forming relationships with broker-dealers if necessary. Three weeks ago, the Director of the Division of Market Regulation informed the American Bankers Association Securities Association that requests for extensions of time for banks to come into compliance could be appropriate and would be carefully considered. This extension of time addresses these requests.

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