Structured Product Sales at Bank Branches: Networking- Arrangement Rules -

Many broker-dealers engaged in the structured products industry are affiliates of large U.S. banks, which have a significant customer footprint. When yields are low on conventional banking products, such as fixed-rate certificates of deposit or savings accounts, broker-dealers and bank customer relations specialists alike are especially mindful that structured products may be useful investments for some bank customers.

If broker-dealer services are offered on a bank’s premises, or if bank employees refer bank customers to the broker-dealers, the participants must be aware of, and comply with, FINRA Rule 3160 and SEC Rule 7011 of Regulation R, which govern these arrangements. In this article, we summarize some of the key provisions of these rules.