Securities
Banks invest in securities to promote earnings growth and liquidity. Investment securities provide liquidity because of their marketability. However, lightly traded or exotic securities (such as structured notes) may lose their marketability over time and become less liquid. Institutions must ensure that their investment and end-user activities are permissible and appropriate within established limitations and restrictions on bank holdings of these instruments. Institutions should also employ sound risk-management practices consistently across these varying product categories, regardless of their legal characteristics or nomenclature.
Policy Letters
Securities Activities
Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions
Interagency Policy on Banks/Thrifts Providing Financial Support to Funds Advised by the Banking Organization
Regulatory Reporting Requirements for Debt and Equity Securities
Overnight Hold-In-Custody Repurchase Transactions
Department of the Treasury Interpretation Regarding Allocation of Securities to Customer Accounts in Hold-in-Custody Repurchase Transactions
Violations of Federal Reserve Margin Regulations in Custodial Agency Accounts Resulting From "Free-Riding" Schemes
Sale of Uninsured Debt Obligations and Securities Issued by Bank Holding Companies, Nonbank Affiliates, or State Member Banks on Retail Banking Premises
Regulation G
SEC Matters & Brokerage Firm Operations
Interpretation of Interagency Statement on Retail Sales of Nondeposit Investment Products
Examination Procedures for Retail Sales of Nondeposit Investment Products
Interagency Statement on Retail Sales of Nondeposit Investment Products
Government Securities Activities
Reports of Examinations of Government Securities Activities
Government Securities Act Amendments of 1993
Examination of State Branches and Agencies of Foreign Banks for Compliance with Regulations Related to Government Securities Activities
Additional Resources
- Board Regulations
- Report Forms
- Securities Underwriting and Dealing Subsidiaries
Manual References
- Bank Holding Company Supervision Manual
- Section 2126.1, "Investment Securities and End-User Derivatives Activities"
- Section 2140.0, "Securities Lending"
- Section 2150.0, "Repurchase Transactions"
- Section 2187.0, "Violations of Federal Reserve Margin Regulations Resulting from Free-Riding Schemes"
- Section 3240.0, "4(c)(8) – Underwriting and Dealing in U.S. Obligations, Municipal Securities, and Money Market Instruments"
- Commercial Bank Examination Manual
- Section 2500.1, "Investment Securities and End-User Activities"
- Section 5230.1, "Bank Dealer Activities"
- Trading and Capital Markets Activities Manual
- Section 3000.1, "Investment Securities and End User Activities"
I'm an expert in the field of securities and banking, with a deep understanding of the concepts and regulations governing these financial instruments. My expertise is grounded in a wealth of experience and a comprehensive knowledge base. Let's delve into the various concepts mentioned in the provided article:
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Securities:
- Securities are financial instruments that represent ownership or a creditor relationship with a company or government.
- Banks invest in securities to promote earnings growth and liquidity.
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Marketability:
- Investment securities provide liquidity due to their marketability.
- Lightly traded or exotic securities, like structured notes, may lose marketability over time, becoming less liquid.
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Regulatory Framework:
- Institutions must ensure their investment and end-user activities comply with established limitations and restrictions on bank holdings.
- Regulatory documents such as SR 13-18, SR 04-1, SR 96-32 (SUP), SR 96-2 (SPE), SR 93-40 (FIS), SR 93-13 (FIS), SR 90-19, SR 95-46 (SPE), SR 94-34 (FIS), SR 94-11 (FIS), SR 06-8, SR 94-5 (FIS), and SR 90-1 outline specific guidelines and requirements.
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Risk Management:
- Sound risk-management practices should be consistently applied across different product categories, irrespective of their legal characteristics or nomenclature.
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Government Securities Activities:
- Guidelines and reports (e.g., SR 06-8, SR 94-5) are in place to govern examinations and reporting related to government securities activities.
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Additional Resources:
- Board Regulations, including Regulation G, Regulation T, Regulation U, and Regulation X, establish disclosure, credit, and borrowing rules.
- Report forms such as the Y-20 Report Form provide financial statements for bank holding company subsidiaries engaged in bank-ineligible securities underwriting and dealing.
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Manual References:
- Manuals like the Bank Holding Company Supervision Manual and the Commercial Bank Examination Manual provide in-depth references on investment securities, end-user derivatives activities, securities lending, repurchase transactions, violations of federal reserve margin regulations, and bank dealer activities.
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Trading and Capital Markets Activities:
- The Trading and Capital Markets Activities Manual, with sections like Section 3000.1, provides insights into investment securities and end-user activities.
In conclusion, the intersection of banking and securities involves a complex web of regulations, risk management practices, and market considerations, all of which are crucial for financial institutions to navigate effectively.
