Notice By Financial Institutions of Government Securities Broker or Government Securities Dealer Activities

Form G-FIN

FR G-FIN
Page 1

Instructions for completing
Notice by Financial Institutions of Government Securities Broker
or Government Securities Dealer Activities
GENERAL INFORMATION AND INSTRUCTIONS
A. Terms and Abbreviations
1. “Act” refers to the Securities Exchange Act of 1934, as
amended by the Government Securities Act of 1986.
2. “ARA” refers to the financial institution’s appropriate regulatory agency, as defined in section 3(a)(34)(G) of the Act. See
general instruction (E) below for a listing of appropriate regulatory agencies.
3. “Government securities” are defined in section 3(a)(42) of the
Act. In general, this term refers to direct obligations of or
obligations guaranteed as to principal or interest by the United
States; securities issued or guaranteed as to principal or interest
by corporations designated by statute or by the Secretary of the
Treasury to constitute exempt securities; and puts, calls, straddles
or options on such securities. Although not all inclusive, the
following are the more common types of government securities
covered by the term: U.S. Treasury bills, bonds, notes; discount
notes, bonds, certain collateralized mortgage obligations, pass
throughs, master notes, and other obligations of the Government National Mortgage Association (GNMA), Federal National
Mortgage Association (FNMA), Federal Home Loan Mortgage
Corporation (FHLMC), Student Loan Marketing Association
(SLMA), Federal Home Loan Banks and Farm Credit Banks;
securitized Small Business Association (SBA) loans; and FNMA
stock.
4. “Government securities broker” is defined in section 3(a)(43)
of the Act. In general, this term refers to a financial institution that
is regularly engaged in the business of effecting transactions in
government securities for the account of others.
5. “Government securities dealer” is defined in section 3(a)(44) of
the Act. In general, this term refers to a financial institution
engaged in the business of buying and selling government
securities for its own account but does not include a financial
institution insofar as it buys or sells securities for its own account
but not as a part of its regular business or in a fiduciary capacity.
6. “Financial institution” is defined in Section 3(a)(46) of the Act. In
general, the term refers to any national or state chartered bank
or trust company which is supervised and examined by a state
or federal bank supervisory agency, a foreign bank, and any
other institution whose deposits were formerly insured by the
Federal Savings and Loan Insurance Corporation.
7. “Associated person” is defined by Treasury regulation
(17 C.F.R. 400.3(c)) to mean a person directly engaged in any
of the following activities in either a supervisory or nonsupervisory capacity: underwriting, trading or sales of government
securities; financial advisory or consultant services for issuers in
connection with the issuance of government securities; other

communications with public investors, or research or investment advice other than general economic information or advice,
with respect to government securities in connection with the
activities described above. The term is further defined in Section
400.3(c) to cover persons engaged in the following activities in
a supervisory capacity: processing and clearance activities with
respect to government securities and maintenance of records
involving any of the activities described in this paragraph.
This definition does not include directors and senior officers of
the financial institution who may from time to time set broad
policy guidelines affecting the financial institution as a whole, but
are not directly involved in the conduct of the financial institution’s
government securities business on a day-to-day basis. It also
does not cover persons whose functions are solely clerical or
ministerial, persons who are acting in a fiduciary capacity, or
persons who act solely as order takers without giving investment
advice or receiving transaction-based compensation.
B. Who Must File?
Under Section 15C(a)(1)(B) of the Act, any financial institution
that is a government securities broker or government securities
dealer within the foregoing definitions must file with its ARA a
written notice, on the form prescribed herein, except as described
below.
A financial institution that buys and sells securities solely for
investment for its own account or for accounts for which it acts as
a fiduciary will not generally be classified as a dealer, even though
such purchases and sales are made with some frequency. Virtually
every financial institution purchases government securities for
investment; and purchases and sales may occur to accommodate
changes in the financial institution’s financial position or to reflect
investment decisions. The legislative history of the Act indicates
that the Congress did not intend to require financial institutions
engaged in such investment-type activity to register as dealers.
The Department of the Treasury has exempted financial institutions that engage solely in the following activities:
(1) Acting as issuing agent, payment agent or forwarding
agent for U.S. Savings Bonds (17 C.F.R. 401.1);
(2) submission of tenders for the account of customers
for purchase on original issue of U.S. Treasury securities (17
C.F.R. 401.2);
(3) the sale and subsequent repurchase and the purchase and
subsequent resale of government securities pursuant to a
repurchase or reverse repurchase agreement (17 C.F.R.
401.4); or
(4) sales or purchases in a fiduciary capacity (17 C.F.R. 401.4).
In general, government securities activities that may bring a
financial institution within the definition of government securities
dealer include the following: (1) underwriting or participating in a
selling group for the sale of government securities; (2) advertising
or otherwise holding itself out to other dealers or investors as a

FR G-FIN
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dealer in government securities; or (3) quoting a market for government securities, and in connection with such quotations, standing
ready to purchase or sell government securities.
The Department of the Treasury also has exempted (17 C.F.R.
401.3) any financial institution from the definition of government
securities broker unless it (1) holds itself out as a government
securities broker or interdealer broker; or (2) actively solicits
individual purchases or sales of government securities on an
agency basis. In addition, a financial institution will be exempt
if it (a) effects less than 500 brokerage transactions per year or
(b) except for U.S. Savings Bonds and submissions of tenders
for U.S. Treasury securities (as described above), effects all
brokerage transactions through a government securities broker
or dealer who is clearly identified as the entity providing the
brokerage services, and who meets the other conditions of the
exemption.
A branch or agency of a foreign bank that engages in government securities transactions solely with non-U.S. citizens
that are resident outside the United States is also exempt
(17 C.F.R. 401.6).

C. When to file
A financial institution that was acting as a government securities
broker or government securities dealer on July 25, 1987, was
required to file a notice with its ARA on or before that date. Any
financial institution that proposes to act as a government securities
broker or government securities dealer after that date shall file the
notice before it commences operations.

D. Amendments
In the event any of the information previously submitted on this
notice becomes incomplete, inaccurate or no longer applicable, the
notice must be amended. This amendment must be filed
within 30 calendar days of the notice becoming inaccurate
(17 C.F.R. 400.5(b)).
Items 1, 2, 3, 4, and 8 of the notice shall be completed for each
amendment. Otherwise, only those items which are being
amended need to be completed.

E. How and where to file: Number of copies
Each financial institution must file two copies of the notice and
each amendment with its ARA, one of which will be sent by the ARA
to the SEC. Retain one exact copy for your records. A financial
institution may determine the name and address of its ARA from the
following:
1. A national bank, a bank operating in the District of Columbia
that is examined by the Comptroller of the Currency, or a federal
branch or federal agency of a foreign bank, files with the:
Office of the Comptroller of the Currency
Administrator of National Banks
Compliance Programs
Washington, DC 20219

2. A state member bank of the Federal Reserve System, a
foreign bank, an uninsured state branch or a state agency of a
foreign bank, a commercial lending company owned or controlled by a foreign bank, or an Edge corporation files with the:
Board of Governors of the Federal Reserve System
Division of Banking Supervision & Regulation
Specialized Activities Section
Washington, DC 20551
3. A bank insured by the Federal Deposit Insurance Corporation
(other than a bank which is a member of the Federal Reserve
System or a federal savings bank) or an insured branch of a
foreign bank files with the:
Federal Deposit Insurance Corporation
Division of Bank Supervision
Securities Analysis Unit
Washington, DC 20429
4. A federal savings and loan association, federal savings bank, or
an institution formerly insured by the Federal Savings and Loan
Insurance Corporation, files with the:
Office of Thrift Supervision
Office of the Chief Counsel
Business Transactions Division
1700 G Street, NW
Washington, DC 20552
5. A state chartered bank or a state chartered trust company
that is not a member of the Federal Reserve System and
whose deposits are not insured by the Federal Deposit Insurance Corporation, or any other financial institution not
described in the preceding paragraphs, files with the:
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
F. Privacy Act Notice
Collection of the information to be supplied on this form is authorized by section 15C(a)(1)(B) of the Securities Exchange Act of
1934, 15 U.S.C. 78o-5(a)(1)(B). Disclosure is mandatory for all
financial institutions that act as government securities brokers or
government securities dealers that are not exempted from filing
under Treasury Department regulations (see 17 C.F.R. Part 401).
The principal purpose of this notice is to identify to the appropriate
regulatory agencies those financial institutions that act as government securities brokers or government securities dealers and are
subject to regulation under the Act. Information supplied on this
form will be included routinely in the public files of the appropriate
regulatory agencies and will be available for inspection by any
interested person. In addition, the Securities and Exchange
Commission will maintain copies of all G-FIN notices in the public
files, and will make them available for public inspection by any
interested person. Financial institutions that do not provide the
information solicited on this form may not lawfully act as government securities brokers or government securities dealers unless
exempted from the notice requirement by Treasury Department
regulation (17 C.F.R. Part 401).