A bank trade group is urging the National Association of Securities Dealers to supply financial institutions with a direct say in how the organization serves and polices them.
The Bank Securities Association wants the NASD -- which sets professional standards for the securities industry -- to form a permanent committee through which bank brokerage executives could air concerns and work with NASD staff on proposals that affect financial institutions.
The group would operate along the same lines as the NASD's 31 other committees. These groups represent regional brokerages, international firms, and other specific interests. The committees, which usually have about 12 members, conduct meetings with NASD staff members.
"We have requested the NASD form a bank broker-dealer committee to address various issues the NASD is looking at" that involve banks, said James M. Shelton, executive director of the Bank Securities Association, Corte Madera, Calif.
The request, which the trade group made in a Dec. 7 letter to Joseph R. Hardiman, the NASD's chief executive, comes as the organization is sharply stepping up its attention to bank brokerage activities.
For example, the NASD, last month prohibited bank investment programs from using their financial institutions' logos on promotional materials.
On Wednesday, the NASD is scheduled to unveil a comprehensive package of proposals to regulate all aspects of bank investment sales activities.
Supporters of the Bank Securities Association's proposal will have to act fast. New committees are considered only once a year, and this year representatives of the NASD are meeting Dec. 21 to review the nominees.
Mr. Shelton estimates that about 200 banks have their own brokerage operations. Hundreds of other financial institutions operate with help from investment product marketing firms, which would also be represented on the committee.
Representatives of these various organizations are embracing the proposal.
"It's very important that banks have their own committee," said Paul Werlin, executive vice president of the financial institutions division of Robert Thomas Securities, St. Petersburg, Fla. "They have issues that are unique to them."
Bankers say these matters include complying with bank regulators' guidelines for investment product sales and supplying ongoing training for licensed and nonlicensed bank employees.
The committee would let bankers explain to the NASD that customer confusion issues are addressed internally on an ongoing basis, said Dan Phillips, vice president for mutual fund sales at First Commerce Corp., New Orleans.
The Bank Securities Association has asked other trade groups, including the American Bankers Association, to support its proposal.
Before offering any endorsement, the ABA, which represents banks and bank holding companies of all sizes, wants to consider whether the measure could have a negative impact on some banks.
"We would have to think through carefully all the ramifications of the proposal," said Edward L. Yingling, the ABa's head lobbyist.
Industry observers noted that if the ABA did decide to support a committee, the trade group would likely present its own proposal through its newly formed association for banks that offer investment products.