User talk:Bankersworld

General of Equity Derivative Transactions
General of Equity derivative transactions. State Member Banks cannot do equity derivative transactions.

Third party and how they are related to Equity Derivative Transactions
Third party and equity derivative transactions. Issue arises in case third party enter equity derivative transactions into bank lawfully and expose the bank. State member bank may acquire equity securities. It means Section 9 of the Federal Reserve Act (12 U.S.C. §335) only involves stocks that apply to national banks under 12 U.S.C. § 24 (Seventh).

National Banks and Equity Derivative Transactions
National banks and equity derivative transactions. National banks are prohibitted to acquire equity securities under section 24. Permitted cases are to hedge bank's exposure. Bank may be exposed due to legal customer-driven equity derivative transactions.

Board's Prior Approval to the State Mamber Bank
Board's prior approval to the state member bank. Section 9 of the Federal Reserve Act is not applied; instead, to hedge risks due to equity derivative transactions by legal third party Board sends prior approval.

Approval by the Board
Approval by the Board. A state member bank is now allowed to hedge the bank's exposure by acquiring an equity security. (No speculative or investment purposes are involved.)

Equity Hedging Activities
Equity hedging activities. Less than 5 percent of the stock is allowed to be acquired by a state member bank. Federal law, 12 U.S.C § 24(Seventh), 335, states no underwriting or dealing of any equity security is allowed. Equity security is not good for the purchase to the public; therefore, no market can be formed to quote "bid" or "ask".

Director of Board's Division of Banking Supervision and Regulation
Director of Board's Division of Banking Supervision and Regulation.

For a state member bank's hedging purposes, this division provides prior approval.

In a request, a state member banks should describe: 1. Scope of the bank's equity hedging, 2. Bank's internal policies and procedures to handle equity derivative activies, 3. Bank's methods to control and limit the activities and their compliance with the activities.

Board will examine: 1. Bank organization's financial and managerial resources, 2. Organization's risk-management policies, 3. Relevant policies, procedures, systems, and other factors.

Conditions follows with the approval: 1. Director determines are in accordance with law and its statement, 2. Also no risks are added to the bank or the deposit insurance funds.