June 1997 - Ask The Analyst - Bank Broker/Dealers

Q: Why are some firms allowed to have all their representatives operating from "non-branch" business locations, but any broker dealer doing occasional business in a bank must register that location as a branch?

A: With few exemptions, members must register as a branch any location identified by any means to the public or customers as a place where the member conducts an investment banking or securities business (see NASD Conduct Rule 3010(g)(2) and Article III, Section 8 of the NASD By-Laws). Thus, the requirement to register a location as a branch depends primarily upon whether the branch is identified to the public as a place where securities business occurs. For example, if an advertisement for securities includes the street address of a location, then that location must be registered, regardless of what amount of securities business occurs at the location. The business conducted at the location may also, in certain instances, trigger the requirement to register as stated in NASD Notice to Members 92-18, dated April 1992. The Notice details several location types that, by their nature, hold themselves out to the public as being places where a member conducts a securities business. In particular, the Notice indicates, "Any office location that operates…from public areas of buildings, such as bank branches, even when such locations are temporarily staffed...would still be required to register as a branch office."