1. (a) Securities activities permitted. Pursuant to Finance Code, §34.103(c), and subject to the provisions of 12 Code of Federal Regulations (CFR), §337.4, a state bank may establish or acquire a subsidiary that engages in securities activities; provided, however, that said subsidiary shall comply with all rules and regulations of the Securities and Exchange Commission and the State Securities Board applicable to registered brokers-dealers and investment advisors. The term "securities activities" means issuing, underwriting, selling, or distributing, or acting as agent or advisor in the issuing, underwriting, selling, or distributing of stocks, bonds, debentures, notes, or other securities.
2. (b) Investment ceiling. Pursuant to Finance Code, §34.103(c), a state bank may invest not more than 10% of its capital and certified surplus in a subsidiary engaged in securities activities that the bank is prohibited from conducting directly.
3. (c) Capitalization. Any subsidiary engaged in securities activities pursuant to this regulation must comply with any applicable state and federal capital requirements including, but not limited to, those imposed by the Securities and Exchange Commission, the State Securities Board, or the National Association of Securities Dealers.

4. (d) Limitations.

   1. (1) Unless otherwise permitted by Finance Code, Title 3, Subtitle A, a subsidiary of a state bank must dispose of any equity securities acquired for its own account within 90 days after the day of purchase.
   2. (2) A state bank may not purchase, in its discretion as fiduciary or managing agent, any security underwritten, distributed, or issued by the bank's securities subsidiary or any security issued by an investment company advised by the subsidiary.
5. (e) Notice. A state bank must file with the banking commissioner copies of all notices required to be filed with the Federal Deposit Insurance Corporation under the provisions of 12 CFR, §337.4, or any successor regulation.

Source Note:The provisions of this §3.3 adopted to be effective August 19, 1985, 10 TexReg 2542; amended to be effective May 17, 1996, 21 TexReg 3929.