Sec. 218.772 Exemption from the definition
of ‘‘broker’’ for banks engaging in
securities lending transactions.
(a) A bank is exempt from the
definition of the term ‘‘broker’’ under
section 3(a)(4) of the Act (15 U.S.C.
78c(a)(4)), to the extent that, as an agent,
it engages in or effects securities lending
transactions, and any securities lending
services in connection with such
transactions, with or on behalf of a
person the bank reasonably believes to
be:
(1) A qualified investor as defined in
section 3(a)(54)(A) of the Act (15 U.S.C.
78c(a)(54)(A)); or
(2) Any employee benefit plan that
owns and invests on a discretionary
basis, not less than $ 25,000,000 in
investments.
(b) Securities lending transaction
means a transaction in which the owner
of a security lends the security
temporarily to another party pursuant to
a written securities lending agreement
under which the lender retains the
economic interests of an owner of such
securities, and has the right to terminate
the transaction and to recall the loaned
securities on terms agreed by the
parties.
(c) Securities lending services means:
(1) Selecting and negotiating with a
borrower and executing, or directing the
execution of the loan with the borrower;
(2) Receiving, delivering, or directing
the receipt or delivery of loaned
securities;
(3) Receiving, delivering, or directing
the receipt or delivery of collateral;
(4) Providing mark-to-market,
corporate action, recordkeeping or other
services incidental to the administration
of the securities lending transaction;
(5) Investing, or directing the
investment of, cash collateral; or
(6) Indemnifying the lender of
securities with respect to various
matters.
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