[Federal Register Volume 83, Number 78 (Monday, April 23, 2018)]
[Rules and Regulations]
[Pages 17619-17621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-08388]
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DEPARTMENT OF THE TREASURY
31 CFR Part 148
RIN 1505-AC57
Qualified Financial Contracts Recordkeeping Related to Orderly
Liquidation Authority
AGENCY: Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Secretary of the Treasury (the ``Secretary''), as
Chairperson of the Financial Stability Oversight Council, in
consultation with the Federal Deposit Insurance Corporation (the
``FDIC''), is adopting a final rule that extends the compliance dates
of the regulation implementing the qualified financial contract
(``QFC'') recordkeeping requirements of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the ``Dodd-Frank Act'' or the
``Act'').
DATES: The final rule is effective May 23, 2018.
FOR FURTHER INFORMATION CONTACT: Brian Smith, Director, Office of
Capital Markets, (202) 622-0157; Peter Nickoloff, Financial Economist,
Office of Capital Markets, (202) 622-1692; Steven D. Laughton,
Assistant General Counsel (Banking & Finance), (202) 622-8413; or
Stephen T. Milligan, Attorney-Advisor, (202) 622-4051.
SUPPLEMENTARY INFORMATION: On October 31, 2016, the Secretary published
a final regulation pursuant to section 210(c)(8)(H) of the Dodd-Frank
[[Page 17620]]
Act requiring certain financial companies to maintain records with
respect to their QFC positions, counterparties, legal documentation,
and collateral that would assist the FDIC as receiver in exercising its
rights and fulfilling its obligations under Title II of the Act.\1\ On
December 28, 2017, the Secretary published a notice of proposed
rulemaking that would extend the compliance dates of the regulation.\2\
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\1\ 81 FR 75624 (Oct. 31, 2016).
\2\ 82 FR 61505 (Dec. 28, 2017).
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The regulation currently provides for staggered compliance dates
for the bulk of the recordkeeping requirements as follows. The
regulation generally provides that records entities with $1 trillion or
more in total consolidated assets have 540 days (approximately 18
months) after the effective date to comply with the regulation; that
records entities with total assets equal to or greater than $500
billion (but less than $1 trillion) have two years from the effective
date to comply with the regulation; that records entities with total
assets equal to or greater than $250 billion (but less than $500
billion) have three years from the effective date to comply with the
regulation; and that all other records entities have four years from
the effective date to comply with the regulation.\3\ Given that the
effective date is December 30, 2016, the first of these compliance
dates is currently June 23, 2018.
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\3\ 31 CFR 148.1(d)(1)(i).
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Separately, the regulation provides that a records entity may
request an exemption from one or more of the regulation's requirements
and that the Secretary may grant conditional or unconditional
exemptions from the regulation's requirements after receiving a
recommendation from the FDIC, prepared in consultation with the
relevant primary financial regulatory agencies (as defined in the
regulation).\4\ Since the regulation became effective, the Secretary,
the FDIC, and the primary financial regulatory agencies have received
requests for exemptions from the requirements of the regulation for
certain types of records entities within a corporate group and certain
types of QFCs. These exemption requests are currently subject to review
by the Secretary, the FDIC, and the primary financial regulatory
agencies.
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\4\ 31 CFR 148.3(c)(4).
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In light of the pending exemption requests and the Administration's
general policy of alleviating unnecessary regulatory burdens,\5\ the
Secretary, in consultation with the FDIC, proposed a six-month
extension of the compliance dates in the regulation. The Secretary
specifically requested comment on whether the compliance dates should
be extended and, if so, whether six months is the proper length for the
extension and whether an extension should be given only with respect to
records entities in the first compliance tier, i.e., those records
entities that currently have a June 23, 2018 compliance date.
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\5\ See Executive Order No. 13771, Reducing Regulation and
Controlling Regulatory Costs, section 1, 82 FR 9339 (Feb. 3, 2017);
Executive Order No. 13777, Enforcing the Regulatory Reform Agenda,
section 1, 82 FR 12285 (Mar. 1, 2017).
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The Secretary received one substantive comment regarding the
proposed rule.\6\ The Clearing House Association L.L.C. and the
Securities Industry and Financial Markets Association, which represent
certain institutions that are records entities under the rule, wrote
together to express their strong support for a proposed extension.\7\
These commenters recommended a nine month extension for all records
entities noting that such an extension would afford records entities
enough time to reflect the Secretary's determinations as to the pending
exemption requests in their efforts to comply with the regulation.
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\6\ The Secretary received a total of four comments; however,
three of the comments were not germane to the proposed rule.
\7\ Letter of January 29, 2018.
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In support of their request for extension of the compliance dates,
the commenters cited the resources being expended to develop systems to
collect information in the specific formats required by the rule and
the changes that will have to be made to the plans for those compliance
efforts once determinations as to the exemption requests are made. The
commenters also cited concurrent efforts by records entities to come
into compliance with other regulatory requirements regarding QFCs
recently adopted by other federal financial regulators.
Although the Secretary recognizes the importance of the QFC
recordkeeping requirements, the Secretary continues to believe that it
would impose an unnecessary burden on records entities to require their
compliance with the regulation before the scope of their recordkeeping
responsibilities is determined. An extension of the compliance dates is
appropriate pending the Secretary's decisions whether to grant, in
whole or in part, conditional or unconditional exemptions based on the
exemption requests received to date, and to allow adequate time for
records entities to prepare for compliance once the exemption requests
are resolved.
Specifically, the Secretary has determined to amend the regulations
to extend the compliance date by approximately nine months for records
entities in the first compliance tier. Based on the substantive comment
received in response to the proposed rule, the Secretary believes that
this extension will allow sufficient time for such records entities to
comply with the rule after determinations have been made with respect
to the exemption requests. The Secretary has determined to extend the
compliance dates for all other records entities by six months, as was
proposed. Based on the substantive comment received in response to the
proposed rule, the Secretary believes this additional time will permit
records entities in each compliance tier to adjust their plans and
budgets for compliance once the determinations as to the exemption
requests are made while maintaining the staggered approach that was
adopted by the Secretary with respect to the original compliance dates.
That staggered approach was adopted not only on the understanding that
larger entities will generally have greater capacity to apply to the
task of coming into initial compliance with the rules but also because
of the anticipated need to provide guidance to records entities as they
work to come into compliance with the rules.\8\ Maintaining the
staggered compliance schedule will permit staff of the Department of
the Treasury and the FDIC to allocate their resources to more
efficiently provide any needed guidance to records entities in each
compliance tier.
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\8\ See 81 FR at 75634.
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Administrative Law Matters
1. Regulatory Flexibility Act
This final rule will not impose any additional burden on any
records entities; rather, it would reduce the existing regulatory
burden by extending the periods in which records entities have to
comply with the regulation's requirements. For this reason and as
discussed further in the release of the 2016 final regulation, the
Secretary certifies, pursuant to 5 U.S.C. 605(b), that this final rule
will not have a significant economic impact on a substantial number of
small entities under the Small Business Administration's most recently
revised standards for small entities, which went into effect on October
1, 2017.
2. Executive Order 12866
This final rule is not a significant regulatory action as defined
in section 3.f of Executive Order 12866.
[[Page 17621]]
3. Executive Order 13771
While the cost savings of the rule cannot be estimated at this
time, this final rule is considered a deregulatory action under
Executive Order 13771.\9\
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\9\ 82 FR 9339 (Feb. 3, 2017).
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List of Subjects in 31 CFR Part 148
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set forth in the preamble, the Department of the
Treasury amends part 148 to 31 CFR as follows:
PART 148--QUALIFIED FINANCIAL CONTRACTS RECORDKEEPING RELATED TO
THE FDIC ORDERLY LIQUIDATION AUTHORITY
0
1. The authority citation for part 148 continues to read as follows:
Authority: 31 U.S.C. 321(b) and 12 U.S.C. 5390(c)(8)(H).
0
2. Amend Sec. 148.1 by revising paragraphs (d)(1)(i) introductory
text, (d)(1)(i)(A) introductory text, (d)(1)(i)(B) introductory text,
(d)(1)(i)(C) introductory text, and (d)(1)(i)(D) to read as follows:
Sec. 148.1 Scope, purpose, effective date, and compliance dates.
* * * * *
(d) * * *
(1) * * *
(i) A records entity subject to this part on the effective date
must comply with Sec. 148.3(a)(2) on the date that is 90 days after
the effective date and with all other applicable requirements of this
part on:
(A) March 31, 2019 for a records entity that:
* * * * *
(B) June 30, 2019 for any records entity that is not subject to the
compliance date set forth in paragraph (d)(1)(i)(A) of this section
and:
* * * * *
(C) June 30, 2020 for any records entity that is not subject to the
compliance dates set forth in paragraph (d)(1)(i)(A) or (B) of this
section and:
* * * * *
(D) June 30, 2021 for any records entity that is not subject to the
compliance dates set forth in paragraph (d)(1)(i)(A), (B), or (C) of
this section.
* * * * *
Dated: April 13, 2018.
Clay Berry,
Deputy Assistant Secretary for Financial Markets.
[FR Doc. 2018-08388 Filed 4-20-18; 8:45 am]
BILLING CODE 4810-25-P