Rule will add business relationship of non-discretionary custodial services as ‘designated exception’ to brokered deposits reg

An additional business relationship – or “designated exception” – that meets the primary purpose exception to the deposit broker definition has been identified by the federal bank deposit insurance agency and applicable as of Dec. 29, according to filings by the agency made public Friday.

The Federal Deposit Insurance Corp. (FDIC), in a rule scheduled to be published Monday (Jan. 10) in the Federal Register, said the additional business relationship relates to specific, non-discretionary custodial services offered by third parties to depositors or depositors’ agents.

Entities that meet the criteria outlined in the rule will be permitted to rely upon the primary purpose exception without submitting a notice or application, the rule states. The criteria include that the agent or nominee’s primary purpose in placing deposits at insured depository institutions (IDIs) is to provide non-discretionary custodial services on behalf of the depositor or depositor’s agent. “Therefore, such entities will be deemed to meet the primary purpose exception,” the rule states.

The rule is scheduled to take effect upon publication in the Register (Monday).

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