Q: When does a listing service qualify as a deposit broker?
A: If the listing service places deposits or facilitates the placement of deposits (in addition to compiling and publishing information on interest rates and other features of deposit accounts), the listing service is a deposit broker, and the deposits would be brokered. In determining whether a particular listing service is facilitating the placement of deposits, the FDIC applies the criteria set forth in FDIC Advisory Opinion No. 04-04 (July 28, 2004).
The FDIC does not treat the listing service as a deposit broker if the company satisfies each of the following requirements:
(A) 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.
(B) The fees paid by depository institutions are flat fees, not calculated on the basis of the number or dollar amount of deposits accepted by the depository institution as a result of the listing or posting of the depository institution’s rates.
(C) In exchange for these fees, the listing service performs no services except: (1) the gathering and transmission of information concerning the availability of deposits; and/or (2) 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.
(D) The listing service is not involved in the physical placement of 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.