---
kind: "section"
citation: "17 C.F.R. § 247.775"
title: "17"
number: "247.775"
heading: "Exemption from the definition of “broker” for banks effecting certain excepted or exempted transactions in investment company securities."
url: "https://uscodex.org/cfr/17/247.775"
---

# §247.775. Exemption from the definition of “broker” for banks effecting certain excepted or exempted transactions in investment company securities.

- (a) A bank that meets the conditions for an exception or exemption from the definition of the term “broker” except for the condition in section 3(a)(4)(C)(i) of the Act ([15 U.S.C. 78c(a)(4)(C)(i)](/usc/15/78c.md?p=a-4-C-i)), is exempt from such condition to the extent that it effects a transaction in a covered security, if:
  - (1) Any such security is neither traded on a national securities exchange nor through the facilities of a national securities association or an interdealer quotation system;
  - (2) The security is distributed by a registered broker or dealer, or the sales charge is no more than the amount permissible for a security sold by a registered broker or dealer pursuant to any applicable rules adopted pursuant to section 22(b)(1) of the Investment Company Act of 1940 ([15 U.S.C. 80a-22(b)(1)](/usc/15/80a-22.md?p=b-1)) by a securities association registered under section 15A of the Act ([15 U.S.C. 78o-3](/usc/15/78o-3.md)); and
  - (3) **Any such transaction is effected—**
    - (i) Through the National Securities Clearing Corporation; or
    - (ii) Directly with a transfer agent or with an insurance company or separate account that is excluded from the definition of transfer agent in [Section 3(a)(25)](/cfr/17/3.md?p=a-25) of the Act.
- (b) **Definitions.** For purposes of this section:
  - (1) **Covered security—** means:
    - (i) Any security issued by an open-end company, as defined by section 5(a)(1) of the Investment Company Act ([15 U.S.C. 80a-5(a)(1)](/usc/15/80a-5.md?p=a-1)), that is registered under that Act; and
    - (ii) Any variable insurance contract funded by a separate account, as defined by section 2(a)(37) of the Investment Company Act ([15 U.S.C. 80a-2(a)(37)](/usc/15/80a-2.md?p=a-37)), that is registered under that Act.
  - (2) **Interdealer quotation system—** has the same meaning as in [17 CFR 240.15c2-11](/cfr/17/240.15c2-11.md).
  - (3) **Insurance company—** has the same meaning as in [15 U.S.C. 77b(a)(13)](/usc/15/77b.md?p=a-13).

## Notes

### Amendments

[72 FR 56554, Oct. 3, 2007, as amended at 73 FR 20780, Apr. 17, 2008]

### Authority

Authority: 15 U.S.C. 78c, 78 o , 78q, 78w, and 78mm.

### Source

Source: 72 FR 56554, Oct. 3, 2007, unless otherwise noted.

### Amendments

[72 FR 56554, Oct. 3, 2007, as amended at 73 FR 20780, Apr. 17, 2008]