WASHINGTON - Bank-employed brokers who sell mutual funds and other securities will soon be subject to the same licensing requirements as their Wall Street counterparts.
The new licensing requirements result from an agreement between banking and securities regulators, who recently worked out their differences over the touchy issue of how bank brokers should be trained.
Comptroller of the Currency Eugene A. Ludwig announced Tuesday that bank regulators have agreed with the National Association of Securities Dealers to open series 6 and 7 examinations to bank employees.
NASD is the industry self-regulatory group that examines and licenses securities brokers; series 6 and 7 are the main licensing exams for securities dealers. Under the agreement, NASD would administer entrance exams to bank brokers but would have no further disciplinary authority.
"We are hopeful that a testing program can be established within the next year," Mr. Ludwig told a Consumer Bankers Association gathering in Seattle. An OCC spokesperson said the new exams would likely require new banking regulations, which could be proposed by yearend by all the banking agencies.
The American Bankers Association praised the move.
"We are very. supportive," said Sarah A. Miller, the ABA's senior government relations counsel.
Ms. Miller estimated that no more than 3,000 bank brokers, mostly in smaller banks, would be affected by the new rule.
Large banks usually sell mutual funds and other investment products through their brokerage subsidiaries, which are registered with NASD and the Securities and Exchange Commission. But smaller banks without such subsidiaries do not now have to follow NASD or SEC standards.
The accord stops short of requiring bank brokers to register with the SEC, as securities brokers are required to do.
Securities firms have complained that bank sales representatives are not as well-trained as NASD-certified brokers.
Mr. Ludwig said, "It is crucial for bank employees to have training comparable to that enjoyed by securities industry sales staff."
As banks get more into selling nontraditional products, Mr. Ludwig said, "My personal view is that, if banks are to be successful, they must take advantage of their long-established reputation for honesty to position themselves in the marketplace as the financial service providers of high integrity, the providers that customers - be they depositors, borrowers, or investors - can trust."
The OCC spokesperson said that, with the agreement, "it is one standard for everybody who is going to be selling securities products."
