September 23,1997
William Kurdyla, Second Vice President
Gibraltar Securities Co.
25 Hanover Rd.
Florham Park, NJ 07932-1407
Dear Mr. Kurdyla:
You have asked whether your firm's securities safekeeping arrangements
meet the requirements of Section 703.60(c) of the National Credit
Union Administration Rules and Regulations, effective January
1, 1998. The answer is yes.
Your company, a broker-dealer, sells securities to federal credit
unions (FCUs) and safekeeps them with a third party, Correspondent
Services Corporation (CSC). Section 703.60(c) states that an
FCU "may not allow the selling broker-dealer to safekeep
purchased investments or repurchase collateral." Your firm's
custodial arrangement with CSC does not constitute "broker-dealer
safekeeping" within the meaning of the regulation. Section
703.60(c) prohibits an FCU from allowing a broker-dealer to serve,
itself, as a depository for securities the FCU has purchased from
the broker-dealer.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/LH:bhs
SSIC 4660
97-0803