Financial Institutions - Credit Unions - Discount Securities Brokerage Service by State-Chartered Credit Unions

Published: 1997-12-02

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R337. Financial Institutions, Credit Unions.

R337-7. Discount Securities Brokerage Service by State-Chartered Credit Unions.

R337-7-1. Authority, Scope, and Purpose.

(1) This rule is issued pursuant to Subsection 7-1-301(3).

(2) This rule governs the type of securities brokerage service state chartered credit unions may offer.

(3) The purpose of this rule is to allow securities activities limited to "discount brokerage" services by state chartered credit unions, similar to the discount brokerage services allowed state chartered banks and industrial loan corporations.

R337-7-2. Definitions.

(1) "Discount brokerage" means the practice of executing securities transactions solely at the direction of a credit union member but not providing that member with any investment advice.

R337-7-3. Discount Brokerage Services.

A credit union may enter into a contractual arrangement with unrelated discount brokers where the broker executes securities transactions for credit union members and the credit union shares the commissions generated by the transaction. This service is restricted as outlined below:

(1) The credit union clearly acts solely at the member's direction;

(2) The transactions are for the account of the member and not the account of the credit union;

(3) The transactions are without recourse;

(4) The credit union makes no warranty as to the performance or quality of any security;

(5) The credit union does not advise members to make any particular investment;

(6) The credit union's promotional material clearly explains the credit union's limited role in the service; and

(7) The credit union's promotional material clearly explains that the transactions are not federally insured.

KEY: credit unions

Date of Enactment or Last Substantive Amendment: December 2, 1997

Notice of Continuation: September 28, 2017

Authorizing, and Implemented or Interpreted Law: 7-1-301(3)