[Code of Federal Regulations]

[Title 12, Volume 1]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR12.4]



[Page 170-172]

 

                       TITLE 12--BANKS AND BANKING

 

   CHAPTER I--COMPTROLLER OF THE CURRENCY, DEPARTMENT OF THE TREASURY

 

PART 12_RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES 

TRANSACTIONS--Table of Contents

 

Sec. 12.4  Content and time of notification.



    Unless a national bank elects to provide notification by one of the 

means specified in Sec. 12.5, a national bank effecting a securities 

transaction for a customer shall give or send to the customer either of 

the following types of notifications at or before completion of the 

transaction or, if the bank uses a registered broker/dealer's 

confirmation, within one business day from the bank's receipt of the 

registered broker/dealer's confirmation:

    (a) Written notification. A written notification disclosing:

    (1) Name of the bank;

    (2) Name of the customer;

    (3) Capacity in which the bank acts (i.e., as agent for the 

customer, as agent for both the customer and some other person, as 

principal for its own account, or in any other capacity);

    (4) Date and time of execution, or a statement that the bank will 

furnish the time of execution 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;



[[Page 171]]



    (5) Amount of any remuneration that the customer has provided or is 

to provide any broker/dealer, directly or indirectly, in connection with 

the transaction;

    (6) (i) Amount of any remuneration that the bank has received or 

will receive from the customer, and the source and amount of any other 

remuneration that the bank has received or will receive in connection 

with the transaction; unless:

    (A) The bank and its customer have determined remuneration pursuant 

to a written agreement; or

    (B) In the case of government securities and municipal securities, 

the bank received the remuneration in other than an agency transaction.

    (ii) If the bank elects not to disclose the source and amount of 

remuneration it has or will receive from a party other than the customer 

pursuant to paragraph (a)(6)(i) of this section, the written 

notification must disclose whether the bank has received or will receive 

remuneration from a party other than the customer, and that the bank 

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 bank was 

participating in a distribution of that security; or, with respect to a 

sale, the bank was participating in a tender offer for that security;

    (7) Name of the registered broker/dealer utilized; or where there is 

no registered 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 bank will furnish this information within a reasonable time 

upon written request from the customer;

    (8) In the case of any 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, unless 

the transaction is for a debt security that either:

    (A) Has a maturity date that may be extended by the issuer thereof, 

with a variable interest payable thereon; or

    (B) Is an asset-backed security that represents an interest in or is 

secured by a pool of receivables or other financial assets that 

continuously are subject 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, unless the transaction is for 

a debt security that either:

    (A) Has a maturity date that may be extended by the issuer thereof, 

with a variable interest rate payable thereon; or

    (B) Is an asset-backed security that represents an interest in or is 

secured by a pool of receivables or other financial assets that 

continuously are subject 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 continuously are 

subject 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 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



[[Page 172]]



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; or

    (b) Copy of the registered broker/dealer's confirmation. A copy of 

the confirmation of a registered broker/dealer relating to the 

securities transaction and, if the customer or any other source will 

provide remuneration to the bank in connection with the transaction and 

a written agreement between the bank and the customer does not determine 

the remuneration, a statement of the source and amount of any 

remuneration that the customer or any other source is to provide the 

bank.