WASHINGTON - The National Association of Securities Dealers' board of governors approved a set of revised rules for bank brokerages that promises to quell many bankers' fears.

These changes are "a prime example of how self-regulation works," said John E. Pinto, NASD executive vice president for regulation, at a news conference announcing the decision.

Under the revised rules, banks would be allowed to share confidential financial information about their customers with in-branch broker-dealers. This is expected to be a shot in the arm for banks' cross-marketing efforts. The bank would be responsible for obtaining a customer's prior written consent to release the data, and the broker-dealer would be required to keep the release information on file.

"I think that's a definite improvement," said David J. Reid, secretary treasurer and compliance officer, Old Kent Brokerage Services, Grand Rapids, Mich.

The new proposal also will allow banks and broker-dealers to issue joint account statements for customers. "That's what banks have been trying to offer customers," said Mr. Reid.

Last November, an NASD notice of proposed rules restricting bank- brokerage activities inspired confusion and ire among many in the industry. NASD, the self-regulating trade organization for securities dealers, was flooded with 284 comment letters.

In response, the organization's Board of Governors established a bank broker-dealer committee to work with NASD staff to change the rules while preserving protection for individual investors.

Few inside the banking industry disagreed with the intent of the original rules - to minimize investor confusion when choosing between insured bank deposit products and uninsured securities sold in a bank branch.

But some executives said they held banks to a higher regulatory standard than nonbank competitors. And Mr. Reid, while supportive of the revisions, still has his concerns.

He questioned whether prior written consent from bank customers before accessing data is in investors' best interest. Mr. Reid said the risk from foregone investment returns often merits even unsolicited customer contact. Besides, he added, existing regulations already allow customers to remove their names from cold-call lists.

The NASD's requirement that the accounts distinguish clearly between insured deposits and uninsured investment products presents "no problem" in Mr. Reid's opinion.

The new proposal also allows banks to conduct broker-dealer operations in the same area where retail deposits are taken, if "physical constraints" prevent a separate area and adequate signage can be used to distinguish the bank and securities operations.

Still, not every bank-brokerage gripe was solved. Broker-dealers still will be prohibited from directly paying finder or referral fees to bank employees.

Mr. Pinto said the rules will be filed with Securities and Exchange Commission in October. After a public comment period and possible revision, the rules may take effect early next year.

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