FDIC Advisory Opinion

4000 - Advisory Opinions

Question regarding FDIC's criteria for determining when a "listing service" is a "deposit broker." FDIC--04--04 July 28, 2004 Christopher L. Hencke, Counsel

The FDIC's Criteria

The FDIC revised its criteria in 2002 through Advisory Opinion No. 02--04 (November 13, 2002). We made additional revisions in our letter to you dated April 21, 2004. In that letter, we recognized that, through advances in technology, an Internet-based "listing service" can transmit messages (including trade confirmations) between depositors and depository institutions so long as the Internet-based "listing service" is a passive mechanism for "posting" rates and transmitting messages. Consistent with our previous opinions, the letter noted that the fees charged by a "listing service" must be flat fees unrelated to the amount of deposits. The revised criteria in our April 21, 2004 letter are set forth in full below.

1. The person or entity providing the listing service is compensated solely by means of subscription fees (i.e., the fees paid by subscribers as payment for their opportunity to see the rates gathered by the listing service) and/or listing fees (i.e., the fees paid by depository institutions as payment for their opportunity to list or "post" their rates). The listing service does not require a depository institution to pay for other services offered by the listing service or its affiliates as a condition precedent to being listed. {{8-31-04 p.4984.92}}

2. The fees paid by depository institutions are flat fees: they are not calculated on the basis of the number of dollar amount of deposits accepted by the depository institution as a result of the listing or "posting" of the depository institution's rates.

3. In exchange for these fees, the listing service performs no services except (A) the gathering and transmission of information concerning the availability of deposits; and/or (B) the transmission of messages between depositors and depository institutions (including purchase orders and trade confirmations). In publishing or displaying information about depository institutions, the listing service must not attempt to steer funds toward particular institutions (except that the listing service may rank institutions according to interest rates and also may exclude institutions that do not pay the listing fee). Similarly, in any communications with depositors or potential depositors, the listing service must not attempt to steer funds toward particular institutions.

4. The listing service is not involved in placing deposits. Any funds to be invested in deposit accounts are remitted directly by the depositor to the insured depository institution and not, directly or indirectly, by or through the listing service.

National CD Rateline meets all four criteria to be considered a listing service, not a deposit broker. Please contact National CD Rateline for related documentation.