The Securities and Exchange Commission is delaying a plan to oversee brokerage services offered by banks because of objections from the Federal Reserve and other banking regulators.

The commission extended until March 31 a rule that exempts banks that offer brokerage services from SEC oversight.

The Fed, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have said SEC proposals to regulate how banks offer brokerage services would interfere with the companies offering more products. Banking regulators also say the SEC oversight would force the companies to examine individual customer accounts, which would be expensive.

"The proposal would severely limit our ability to continue serving our custodial clients" such as pension plans and investment advisers, said Sarah A. Miller, general counsel of the American Banking Association's securities association. "Many banks would be out of business."

The SEC has now twice delayed implementing provisions of the 1999 Gramm-Leach-Bliley Act, which calls for some banks that offer securities services to be overseen by the SEC.

The SEC proposal would let banks avoid SEC oversight if their trust departments aren't paid chiefly in commissions and if bank employees who refer customers to affiliated brokers get fees of less than $25. Banks with less than $500 million in assets would be able to make securities trades under the proposal if the revenue is less than $100 million. There are about 8,000 U.S. banks that meet the criteria.

Banks said in letters to the commission that the rule as drafted would be difficult and costly to implement.

"The proposed rules are inconsistent in many respects with Congressional intent and will create a burdensome and unwarranted regulatory regime," John H. Huffstutler, an associate general counsel for Bank of America Corp., based in Charlotte, wrote in a letter to the SEC.

Deutsche Bank AG and Mellon Financial Corp. also said the SEC's proposal would be too restrictive. Deutsche Bank called the proposal's bonus provisions "impractical and burdensome."

The House Financial Services Committee last month wrote to the SEC, criticizing the proposal and encouraging the commission to collaborate with banking regulators on a new plan. The committee asked the SEC and banking regulators to enter into a "joint rulemaking" on the issue.