(a) Subject to the requirements of paragraph (b) of this section, a financial institution shall be exempt from the provisions of sections 15C (a), (b), and (d) of the Act (15 U.S.C. 78o-5 (a), (b), (d)) and the regulations of this subchapter if its government securities dealer activities are limited to one or more of the following activities:

1. (1) Sales or purchases in a fiduciary capacity;
2. (2) The sale and subsequent repurchase and the purchase and subsequent resale of government securities pursuant to a repurchase or reverse repurchase agreement; and
3. (3) Such other activities as have been exempted by regulation under this subchapter.

(b)

1. (1) A financial institution that relies on the exemption contained in paragraph (a) of this section is required to comply with:

   1. (i) The regulations of part 450 of this chapter concerning custodial holdings of government securities for customers; and
   2. (ii) Section 403.5(d) of this chapter concerning certain repurchase transactions with customers.
2. (2) A branch or agency of a foreign bank that relies on the exemption contained in paragraph (a) of this section is in addition required to comply with § 403.5(e) of this chapter.