[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Proposed Rules]
[Pages 95496-95528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30734]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 /
Proposed Rules
[[Page 95496]]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 371
RIN 3064-AE54
Recordkeeping Requirements for Qualified Financial Contracts
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice of proposed rulemaking.
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SUMMARY: The FDIC proposes to amend its regulations regarding
Recordkeeping Requirements for Qualified Financial Contracts (``Part
371''), which require insured depository institutions (``IDIs'') in a
troubled condition to keep records relating to qualified financial
contracts (``QFCs'') to which they are party. The proposed rule would
expand the scope of QFC records required to be maintained by an IDI
that is subject to the FDIC's recordkeeping requirements and that has
total consolidated assets equal to or greater than $50 billion or is a
member of a corporate group where one or more affiliates is subject to
the QFC recordkeeping requirements set forth in the regulations adopted
by the Department of the Treasury (a ``full scope entity''); for all
other IDIs subject to the FDIC's QFC recordkeeping requirements, add
and delete a limited number of data requirements and make certain
formatting changes with respect to the QFC recordkeeping requirements;
require full scope entities to keep QFC records of certain of their
subsidiaries; and include certain other changes, including changes that
would provide additional time for certain IDIs in a troubled condition
to comply with the regulations.
DATES: Comments must be received on or before February 27, 2017.
ADDRESSES: You may submit comments by any of the following methods:
FDIC Web site: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the agency
Web site.
Email: [email protected]. Include RIN 3064-AE54 on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW.,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7 a.m. and 5 p.m.
Public Inspection: All comments received, including any
personal information provided, will be posted generally without change
to https://www.fdic.gov/regulations/laws/federal/.
FOR FURTHER INFORMATION CONTACT: Legal Division: Phillip E. Sloan,
Counsel, (703) 562-6137; Joanne W. Rose, Counsel, (917) 320-2854.
Division of Resolutions and Receiverships: Marc Steckel, Deputy
Director, (571) 858-8824; George C. Alexander, Assistant Director,
(571) 858-8182.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
II. Background
III. The Proposed Rule
A. Summary
B. Section-By-Section Analysis
1. Scope, Purpose, and Compliance Dates
2. Definitions
3. Maintenance of Records
4. Content of Records
5. Transition for Existing Records Entities
6. Enforcement Actions
7. Appendix A
8. Appendix B
IV. Expected Effects
A. Limited Scope Entities
B. Full Scope Entities
C. All Covered Entities
V. Alternatives Considered
VI. Request for Comments
A. Scope of Coverage
B. Requirements
C. Implementation
D. Benefits and Costs
VII. Regulatory Process
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. The Treasury and General Government Appropriations Act of
1999
D. Plain Language
I. Policy Objectives
The proposed rule would enhance and update recordkeeping
requirements as to QFCs of IDIs in troubled condition in order to
facilitate the orderly resolution of IDIs with QFC portfolios. The
proposed rule would revise the format of records required to be
maintained in order to provide more ready access to expanded QFC
portfolio data. Additionally, the proposed rule would require that more
comprehensive information be maintained to facilitate the FDIC's
understanding of complex QFC portfolios in receivership. The proposed
changes to both the formatting and the quantity of information would
enable the FDIC, as receiver, to make better informed and efficient
decisions as to whether to transfer some or all of a failed IDI's QFCs
during the one-business-day stay period for the transfer of QFCs. This
would help the FDIC achieve a least costly resolution.
Part 371 was adopted in 2008 pursuant to 12 U.S.C. 1821(e)(8)(H)
(the ``FDIA Recordkeeping Provision'') to enable the FDIC to have
prompt access to detailed information about the QFC portfolios of IDIs
for which the FDIC is appointed receiver.\1\ In the eight years since
Part 371 was adopted, the FDIC has obtained QFC information pursuant to
Part 371 from many IDIs in troubled condition, ranging in size from
large, complex institutions to small community banks. While the
information obtained has proved useful to the FDIC as receiver, the
necessity for more comprehensive information from institutions with
complex QFC portfolios in formats that reflect recent developments in
digital technology was evident.
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\1\ 12 CFR part 371.
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In July 2010, Congress enacted the Dodd-Frank Wall Street Reform
and Consumer Protection Act \2\ (``Dodd-Frank Act''), section
210(c)(8)(H) (``Section 210(c)(8)(H)'') of which requires the adoption
of regulations that require financial companies to maintain QFC records
that are determined to be necessary or appropriate to assist the FDIC
as receiver for a covered financial company in being able to exercise
its rights and fulfill its obligations under section 210(c)(8), (9), or
(10) of the Dodd-Frank Act. These sections of the Dodd-Frank Act are in
most respects identical to 12 U.S.C. 1821(e) (8)-(10) of the FDIA and
cover, among other subjects, the stay applicable to QFCs and the FDIC's
rights to transfer QFCs during the one-business-day stay period.
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\2\ 12 U.S.C. 5301 et seq.
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On October 31, 2016, in implementation of Section 210(c)(8)(H), the
Department of the Treasury published regulations (Part 148) that
require large U.S. financial holding
[[Page 95497]]
companies and their U.S. subsidiaries (other than IDIs, certain IDI
subsidiaries and insurance companies) to maintain QFC recordkeeping
systems.\3\ The scope of records required to be maintained by companies
subject to Part 148 is more comprehensive than that required under Part
371 for IDIs in troubled condition. Part 148 was prepared in
consultation with the FDIC. Its recordkeeping requirements reflect the
insights obtained by the FDIC in administering Part 371. Part 148, as
adopted, reflects comments received on the Part 148 notice of proposed
rulemaking, and the input from those comments are, where appropriate,
considered in this proposed rule. Part 148 requires companies that are
subject to that rule to maintain comprehensive QFC records in formats
that will enable the FDIC to expeditiously analyze the information in
the event it is appointed as receiver for a covered financial company
pursuant to Title II of the Dodd-Frank Act. The comprehensive data
fields reflect the data that the FDIC has identified as important for
it to make its determinations as to whether to transfer QFCs of a
failed institution.
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\3\ 31 CFR part 148.
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The proposed rule would harmonize the recordkeeping requirements
under Part 371 for large IDIs and IDIs that are affiliates of financial
companies subject to Part 148 with the recordkeeping requirements of
Part 148. The harmonization would support the policy objective of
enabling the FDIC to make judicious QFC transfer decisions and would
enable the FDIC, as receiver of an IDI that is a member of a corporate
group subject to Part 371, to rapidly obtain a complete picture of the
QFC positions of the entire group by combining the records maintained
under the two regulations. Such harmonization would also have the
indirect benefit of reducing costs to IDIs that become subject to Part
371 and that are members of a corporate group subject to Part 148 by
enabling such IDIs to utilize the information technology infrastructure
established by their corporate group for purposes of complying with
Part 148.
II. Background
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
\4\ includes the FDIA Recordkeeping Provision that authorizes the FDIC,
in consultation with the appropriate Federal banking agencies, to
prescribe regulations requiring more detailed recordkeeping by an IDI
with respect to QFCs if such IDI is in a troubled condition. Pursuant
to this provision, in 2008 the FDIC adopted Part 371, which requires
that IDIs in a troubled condition maintain information relating to QFCs
to which they are party in a format set forth in two Appendices to the
regulation. As the FDIC noted in the adopting release for Part 371, the
FDIC as receiver has very little time--the period between the day on
which the FDIC is appointed receiver and 5:00 p.m. Eastern time on the
following business day--to determine whether to transfer QFCs to which
a failed IDI is party.\5\ The release stated that ``[g]iven the FDIA
Act's short time frame for such decision by the FDIC, in the case of a
QFC portfolio of any significant size or complexity, it may be
difficult to obtain and process the large amount of information
necessary for an informed decision by the FDIC as receiver unless the
information is readily available to the FDIC in a format that permits
the FDIC to quickly and efficiently carry out an appropriate financial
and legal analysis.'' \6\ It was the FDIC's expectation, when it
adopted Part 371, that the regulations would provide the FDIC with QFC
information in a format that would assist the FDIC in making these
determinations.
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\4\ Public Law 109-8, 119 Stat. 23.
\5\ 73 FR 78162, 78163 (December 22, 2008).
\6\ Id.
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In the eight years since it was adopted, Part 371 has proved very
useful to the FDIC in connection with QFCs of IDIs for which it was
appointed receiver. While these institutions, in general, had limited
QFC portfolios, several large IDIs with significant QFC portfolios also
became in a troubled condition and were required to comply with the
recordkeeping requirements of Part 371. The process of working with
these IDIs to achieve compliance with Part 371, in addition to being
very useful in resolution planning for these institutions, was
instructive for the FDIC and caused the FDIC to identify areas where
additional data in a more accessible format would provide the FDIC, as
receiver, with important benefits in making determinations as to
whether to transfer the institution's QFCs in a manner that would help
preserve the value of the receivership and minimize losses to the
Deposit Insurance Fund. The FDIC also gained experience with respect to
the length of time that sometimes is necessary to complete QFC
recordkeeping requirements, and identified areas where the requirements
could be made clearer.
As previously noted, Part 148 requires more extensive record
keeping than that required by Part 371 as currently in effect
(``Current Part 371''). The additional data include, among other data
points, information on underlying QFCs where the QFC in question is a
guarantee, additional information as to whether a QFC is guaranteed,
information as to positions for which a QFC serves as a hedge, certain
information as to the netting sets to which the QFCs pertain,
information as to cross-default provisions in QFCs, information as to
location of collateral, whether the collateral is segregated by the
entity holding the collateral, whether the collateral is subject to re-
hypothecation, and information as to the value of QFC positions in the
currency applicable to the QFCs. This additional information could
greatly assist the FDIC as receiver in making decisions as to the
treatment of the receivership's QFCs under the Dodd-Frank Act within
the same, short one-business-day stay period that applies where the
FDIC is appointed as receiver \7\ for an IDI under the Federal Deposit
Insurance Act (``FDIA'').\8\
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\7\ Most of the restrictions applicable to the treatment of QFCs
by an FDIC receiver also apply to the FDIC in its conservatorship
capacity. See 12 U.S.C. 1821(e)(8), (9), (10), and (11). While the
treatment of QFCs by an FDIC conservator is not identical to the
treatment of QFCs in a receivership, see 12 U.S.C. 1821(e)(8)(E) and
(10)(B)(i)-(ii), for purposes of this preamble reference to the FDIC
in its receivership capacity includes reference to its role as
conservator under this statutory authority.
\8\ 12 U.S.C. 1811 et seq.
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III. The Proposed Rule
A. Summary
The proposed rule would amend and restate Part 371 in its entirety.
The proposed rule would require full scope entities to maintain the
full complement of data required by Part 148.\9\ Full scope entities
include IDIs with total consolidated assets of $50 billion or more as
well as IDIs (``Part 148 affiliates'') that are affiliates of one or
more companies required to maintain records pursuant to Part 148. The
additional data with respect to credit support and collateral, among
other items, would provide the FDIC as receiver with important
information as to the risks associated with the QFC portfolio and thus
assist the FDIC in addressing more complex QFC portfolios. This is
appropriate for larger institutions that are more likely to have
significant and more complex QFC portfolios. It also is appropriate for
Part 148 affiliates, regardless of size. Consistency of recordkeeping
throughout the entire corporate group
[[Page 95498]]
will provide additional functionality and useful information to the
FDIC as receiver of an IDI in that group. Moreover, the additional
burden of this scope of recordkeeping on smaller IDIs that are Part 148
affiliates should be mitigated, as the information technology
infrastructure required to comply with Part 371 as proposed to be
revised would be the same information technology infrastructure that
the corporate group would need to construct in order to comply with
Part 148.
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\9\ One data row, relating to the status of non-reporting
subsidiaries under the provisions of Part 148, has been omitted from
the proposed tables for full scope entities.
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The FDIC decided that the $50 billion total consolidated asset
threshold for full scope entities was appropriate for several reasons.
Institutions with this higher threshold are more likely to have larger
and more complex QFC portfolios. Also, this is the threshold used in 12
CFR part 360 to identify institutions that are required to file
resolution plans \10\ and, accordingly, was the subject of comments
that were considered in the formulation of Part 360 as adopted. The
considerations that merit additional resolution planning for these
institutions also apply to the QFC recordkeeping requirements of this
Part. This threshold also corresponds to the threshold that was
established for determining which bank holding companies would be
subject to enhanced supervision and prudential standards under Title I
of the Dodd-Frank Act \11\ and was also adopted by the Financial
Stability Oversight Council as an initial threshold for identifying
nonbank financial companies that merit further evaluation as to whether
they should be designated under section 113 of the Dodd-Frank Act.\12\
Part 148 also uses a $50 billion threshold.\13\ All of the previously
described uses of the $50 billion threshold reflect a consensus that it
is a reasonable cut-off to identify institutions for heightened
attention and, in the case of QFC records, for requirements that would
provide quick access to more comprehensive data in the event of
failure.
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\10\ 12 CFR 360.10.
\11\ 12 U.S.C. 5365(a).
\12\ See Financial Stability Oversight Council Guidance for
Nonbank Financial Company Determinations, 12 CFR part 1310, app. A.,
III.a.
\13\ $50 billion is also one of the thresholds used in the OCC
guidelines establishing standards for recovery planning by certain
large IDIs. See 12 CFR part 30. In its preamble to its 2014
guidelines establishing heightened standards for certain large IDIs,
the OCC stated that ``the $50 billion asset criteria is a well
understood threshold that the OCC and other Federal banking
regulatory agencies have used to demarcate larger, more complex
banking organizations from smaller, less complex banking
organizations.'' 79 FR 54518, 54521-22 (September 11, 2014) (citing
12 CFR 46.1 (stress testing); 12 CFR 252.30 (enhanced prudential
standards for bank holding companies with total consolidated assets
of $50 billion or more)).
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The proposed rule makes only limited additions to the data required
Current Part 371 for IDIs other than full scope entities (``limited
scope entities'') because the data from the tables with the limited
additions set forth in the proposed rule will provide sufficient
information for the FDIC as receiver to take necessary actions with
respect to QFC portfolios of all but the largest IDIs and IDIs that are
part of a large group, with extensive QFC portfolios, that are subject
to Part 148. It is unlikely that most limited scope entities will have
QFC positions of a magnitude and complexity that would justify the
added burden of being subject to the full scope of data requirements
imposed by Part 148. In assessing what additions to information should
be required for limited scope entities, FDIC staff was informed by its
experience in administering Part 371.
Only certain portions of Current Part 371would be substantively
changed by the proposed rule. The changes include the following: (i)
The recordkeeping requirements for full scope IDIs would be expanded;
(ii) full scope IDIs would be required to keep records on the QFC
activity of certain of their subsidiaries; (iii) the required format
for QFC records for limited scope IDIs would be revised and a limited
number of additional data fields would be added for these IDIs; (iv)
the length of time that certain IDIs have to comply with the rule would
be increased; (v) changes to the process for obtaining extensions and
to the permitted duration of extensions for certain types of IDIs; (vi)
clarifications relating to records access requirements; and (vii)
certain other changes relating to transition and other matters.
B. Section-By-Section Analysis
1. Scope, Purpose, and Compliance Dates
Section 371.1 sets forth the scope and purpose of the proposed
rule, as well as required compliance dates. The expressed purpose of
Part 371--to establish recordkeeping requirements with respect to QFCs
for IDIs in a troubled condition--would not change from Current Part
371.
Under Current Part 371, an IDI is required to comply with Part 371
after receiving written notice from the IDI's appropriate Federal
banking agency or the FDIC that it is in troubled condition under Part
371. Section 371.1(a) of the proposed rule would provide that Part 371
applies to an IDI that is a ``records entity.'' A records entity is an
IDI that has received notice from its appropriate Federal banking
agency or the FDIC that it is in a troubled condition and has also
received written notification from the FDIC that it is subject to the
recordkeeping requirements of Part 371. The proposed rule would include
a requirement that an IDI receive notification from the FDIC that it is
subject to Part 371 in order ensure an orderly administration of Part
371 by the FDIC.
Section 371.1(c)(1) of the proposed rule would require that, within
three business days of receiving notice that it is a records entity, an
IDI must provide the FDIC with the contact information of the person
who is responsible for the QFC recordkeeping under Part 371 and a
directory of the electronic files that will be used by the IDI to
maintain the information required to be kept under Part 371. These
requirements are substantially similar to those set forth in Current
Part 371, although the proposed rule would clarify that the contact
person must be the person responsible for the recordkeeping system,
rather than simply a knowledgeable person. The electronic file
directory consists of the file path or paths of the electronic files
located on the IDI's systems.
The proposed rule would set forth a different compliance date
schedule than that set forth in Current Part 371. Under Current Part
371, an IDI is required to comply with Part 371 within 60 days of being
notified that it is in troubled condition under Part 371, unless it
obtains an extension of this deadline. It has been the FDIC's
experience that some IDIs with significant QFC portfolios that were
subject to Part 371 needed up to 270 days to establish systems that
enabled them to maintain QFC records in accordance with Part 371.
Because extensions under Current Part 371 are limited to 30 days,
several extensions were necessary.
Under section 371.1(c)(2)(i) of the proposed rule, all IDIs except
for an IDI that is an accelerated records entity (as defined in the
next paragraph) would have 270 days to comply with Part 371. In
addition, Sec. 371.1(d)(1) of the proposed rule would authorize the
FDIC to provide extensions of up to 120 days to records entities other
than accelerated records entities. This proposed change would reduce or
eliminate the need for repeated extensions for IDIs that are not
accelerated records entities and thus would reduce the burden on such
IDIs.
Accelerated records entities are IDIs with a composite rating of 4
or 5 or that are determined to be experiencing a significant
deterioration of capital or significant funding difficulties or
liquidity stress. In view of the increased risk of near-term failure of
IDIs that are
[[Page 95499]]
accelerated records entities, accelerated records entities would remain
subject to a 60-day compliance period and extensions for such entities
would be limited to 30 days. The 270-day compliance period with
extensions of up to 120 days is proposed for other records entities
because those entities do not pose the same near-term failure risk as
accelerated records entities. The proposed rule, under Sec.
371.1(c)(2)(iii), would specify that if a records entity that was not
initially an accelerated records entity becomes an accelerated records
entity, the entity would be required to comply with this rule within
the shorter of 60 days from the date it became an accelerated records
entity or 270 days from the date it became a records entity.
Section 371.1(d)(3) of the proposed rule would retain the
requirement of Current Part 371 that written extension requests be
submitted not less than 15 days prior to the deadline for compliance,
accompanied by a statement of the reasons why the deadline cannot be
met. In order to reflect the FDIC's past practice in considering
extension requests under Part 371, the proposed rule would also
expressly require that all extension requests include a project plan
for achieving compliance (including timeline) and a progress report.
2. Definitions
Section 371.2 contains definitions used in Part 371. The proposed
rule would add new definitions that reflect the proposed changes to the
text and tables of Part 371.
Newly defined terms include ``records entity,'' which is added for
clarity and conciseness to denote an IDI that is subject to Part 371.
As previously discussed, the definition would provide that in order to
be a records entity, and thus subject to Part 371, an IDI must receive
notice from its appropriate Federal banking agency or the FDIC that it
is in a troubled condition and must also receive notice from the FDIC
that it is subject to the recordkeeping requirements of Part 371. The
definition of records entity would include an IDI already subject to
the recordkeeping requirements of Part 371 as of the effective date of
the final rule.
Current Part 371 defines ``troubled condition'' to mean any IDI
that (1) has a composite rating, as determined by its appropriate
Federal banking agency in its most recent report of examination, of 3
(only for IDIs with total consolidated assets of $10 billion dollars or
greater), 4, or 5 under the Uniform Financial Institution Rating
System, or in the case of an insured branch of a foreign bank, an
equivalent rating; (2) is subject to a proceeding initiated by the FDIC
for termination or suspension of deposit insurance; (3) is subject to a
cease-and-desist order or written agreement issued by the appropriate
Federal banking agency, as defined in 12 U.S.C. 1813(q), that requires
action to improve the financial condition of the IDI or is subject to a
proceeding initiated by the appropriate Federal banking agency which
contemplates the issuance of an order that requires action to improve
the financial condition of the IDI, unless otherwise informed in
writing by the appropriate Federal banking agency; (4) is informed in
writing by the IDI's appropriate Federal banking agency that it is in
troubled condition for purposes of 12 U.S.C. 1831i on the basis of the
IDI's most recent report of condition or report of examination, or
other information available to the IDI's appropriate Federal banking
agency; or (5) is determined by the appropriate Federal banking agency
or the FDIC in consultation with the appropriate Federal banking agency
to be experiencing a significant deterioration of capital or
significant funding difficulties or liquidity stress, notwithstanding
the composite rating of the IDI by its appropriate Federal banking
agency in its most recent report of examination.
While the proposed rule would make no change to the definition of
troubled condition, the FDIC notes that the third prong of the
definition, which addresses IDIs subject to a cease-and-desist order or
written agreement issued by the appropriate Federal banking agency that
requires action to improve the financial condition of the IDI \14\ is
intended to be broadly interpreted to include consent orders, or
stipulations entered into by, or imposed upon, the IDI pursuant to 12
U.S.C. 1818(b) of the FDIA. Whether any such consent order or
stipulation, or any cease-and-desist order or written agreement,
requires ``action to improve the financial condition'' of the IDI will
depend on the facts and circumstances surrounding the particular order
or agreement, but it is not limited to an order or agreement that
specifically mentions adequacy of capital. It may also include, where
appropriate, factors relating to asset quality, management, earnings,
liquidity, and sensitivity to market risk, as each factor is defined in
the FDIC's notice of adoption of policy statement regarding the Uniform
Financial Institutions Rating System.\15\ For instance, in the case of
management, an order or agreement that requires improvements in risk
management practices and internal policies and controls addressing the
operations and risks of significant activities may fall within the
scope of orders or agreements that require action to improve the
financial condition of the IDI within the meaning of the proposed
rule.\16\ On the other hand, a cease-and-desist order or consent order
relating to improvements with respect to Bank Secrecy Act reporting
requirements may not fall within the meaning of an order to improve the
financial condition of the IDI.
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\14\ 12 CFR 371.2(f)(3) (2016).
\15\ See 62 FR 752 (Jan. 6, 1997).
\16\ Id. at 755.
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As discussed previously, the proposed rule would define an
``accelerated records entity'' as a records entity with a composite
rating of 4 or 5 under the Uniform Financial Institution Rating System
(or in the case of an insured branch of a foreign bank, an equivalent
rating system), or that is determined to be experiencing a significant
deterioration of capital or significant funding difficulties or
liquidity stress, notwithstanding the composite rating of the
institution by its appropriate Federal banking agency in its most
recent report of examination.
The proposed rule would require different recordkeeping
requirements for ``full scope entities'' and ``limited scope
entities,'' and adds definitions of those terms for clarity and
conciseness. The rule would define a full scope entity as a records
entity that has total consolidated assets equal to or greater than $50
billion or that is a Part 148 affiliate. ``Part 148 affiliate'' is
defined as a records entity that is a member of a corporate group one
or more other members of which are required to maintain QFC records
pursuant to Part 148. A limited scope entity would be defined as a
records entity that is not a full scope entity. As discussed
previously, the proposed rule would require full scope entities to keep
more detailed QFC records than limited scope entities.
The proposed rule would require that full scope entities include,
among other items, records for their reportable subsidiaries. A
reportable subsidiary would be defined to include a subsidiary of an
IDI that is not a functionally regulated subsidiary as defined in 12
U.S.C. 1844(c)(5), a security-based swap dealer as defined in 15 U.S.C.
78c(a)(71), or a major security-based swap participant as defined in 15
U.S.C. 78c(a)(67). Since QFC data for reportable subsidiaries is not
required to be maintained under Part 148, requiring this information in
Part 371 would provide the FDIC as receiver with more
[[Page 95500]]
complete recordkeeping for the largest entities, which are likely to
have more subsidiaries and, as discussed previously, are likely to have
larger and more complex QFC portfolios.
The proposed rule would also add a definition for ``business day''
that is consistent with the definition of this term used in 12 U.S.C.
1821(e)(10)(D) and a definition for ``control'' (used in the definition
of the term ``affiliate''), which is defined consistently with the
definition of this term in the FDI Act.\17\ In addition, the proposed
rule would define ``total consolidated assets,'' used in the definition
of troubled condition and in the definition of full scope entity, as
total consolidated assets as reported on a records entity's most recent
audited consolidated statement of financial condition filed with its
appropriate Federal banking agency.
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\17\ 12 U.S.C. 1813(w)(5), which uses the definition set forth
in 12 U.S.C. 1841(a)(2).
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Minor drafting changes to the definition of ``qualified financial
contract'' are included in the proposed rule. These changes are for
clarity only and are not intended to make substantive changes in the
meaning of this term.
The proposed rule would also add certain terms in order to clarify
portions of Part 371, including terms used in the proposed new data
tables. These terms include ``parent entity,'' ``corporate group,''
``counterparty,'' ``amendment effective date,'' ``legal entity
identifier'' (LEI), and ``subsidiary.''
3. Maintenance of Records
Section 371.3 of the proposed rule would set forth the requirements
for maintaining QFC records. As under Current Part 371, paragraph (a)
of the proposed rule would require that QFC records be maintained in
electronic form in the format set forth in the Appendices to Part 371,
unless the records entity qualifies for the exemption from electronic
recordkeeping for institutions with fewer than 20 QFC positions, and
that all such records in electronic form be updated on a daily basis.
In recognition of the value to the FDIC of consistency of recordkeeping
through an entire corporate group, the proposed rule would add a new
requirement, in Sec. 371.3(a)(4), that records maintained by a Part
148 affiliate are compiled consistently with records compiled by its
affiliates pursuant to Part 148. This would require that an IDI subject
to Part 371 use the same data inputs (for example, counterparty
identifier) as the inputs used for reporting pursuant to Part 148. The
proposed rule would clarify that these updates be based on the previous
end-of-day values. The proposed rule would require that the records
entity be capable of providing the preceding day's end-of-day values to
the FDIC no later than 7:00 a.m. (Eastern Time) each day. The 7:00 a.m.
deadline is proposed in light of the limited stay period for transfer
of QFCs by the FDIC as receiver, which ends at 5:00 p.m. (Eastern Time)
on the business day following the date of the appointment of the
receiver.\18\ This deadline represents a clarification of the
requirement contained in Current Part 371 that IDIs subject to Part 371
maintain the capacity to produce records at the close of processing on
a daily basis.\19\ The next-day 7:00 a.m. deadline would be applicable,
whether or not the day on which access would be required (the next day)
is a business day, to allow the FDIC to have the maximum time to make
necessary decisions and take necessary actions with respect to the QFC
portfolio, even where the IDI is closed on a Friday. Even though, in
the case of a Friday closing, the next day is not a business day, the
next day deadline should impose no additional burden on an IDI since
the proposed rule would require that the IDI be capable of providing
records on the next day in all circumstances. Finally, the proposed
rule would extend the 7:00 a.m. deadline if the FDIC does not request
access to the records at least eight hours before the 7:00 a.m.
deadline.
---------------------------------------------------------------------------
\18\ See 12 U.S.C. 1821(e)(10)(A).
\19\ See 12 CFR 371.3.
---------------------------------------------------------------------------
The proposed rule would also add a new requirement that electronic
records be compiled in a manner that permits aggregation and
disaggregation of such records by counterparty, and if a records entity
is maintaining records in accordance with Appendix B, by records entity
and reportable subsidiary. The proposed rule would add a requirement
that a records entity maintain daily records for a period of not less
than five business days in order to ensure that there are records
available to the FDIC that indicate the trends in an institution's QFC
holdings even before the actual previous end-of-day's records are
available to the FDIC.
The proposed rule also would change the requirement in Current Part
371 with respect to the point of contact at the records entity to
answer questions with respect to the electronic files being maintained
at the records entity. Section 371.1(c) of the proposed rule would
require that records entities provide the FDIC the name and contact
information for the person responsible for recordkeeping, and Sec.
371.3(b) would require that the FDIC be notified within 3 business days
of any change to such information.
The proposed rule would make no change to the requirement in
Current Part 371 that a records entity may cease maintaining records
one year after it ceases to be a records entity or, if it is acquired
by or merges with an IDI entity that is not in troubled condition,
following the time it ceases to be a separately insured IDI.
4. Content of Records
Section 371.4 of the proposed rule would set forth the requirements
for the content of the QFC records that are required to be maintained
by records entities. As discussed previously, Section 371.4(b) would
require a full scope entity to maintain QFC records in accordance with
Appendix B to Part 371, which requires significantly more comprehensive
records than are required under Current Part 371. In general, full
scope entities are likely to have significant QFC portfolios and the
expanded recordkeeping will facilitate the decisions that must be made
by the FDIC with respect to these QFC portfolios. Appendix B is
substantially similar to the tables included in the Part 148
regulations and, accordingly, if a records entity is an affiliate of an
entity that is required to keep records under Part 148, it is likely
that it would be able to use the recordkeeping infrastructure developed
to comply with Part 148. Consistency of the information as to the IDI
and its reportable subsidiaries as well as the other entities in the
corporate group will provide the FDIC with a more comprehensive
understanding of the QFC exposure of the group.
Section 371.4 (a) of the proposed rule would require a limited
scope entity to maintain less comprehensive QFC records under Appendix
A, which is similar in scope to the Appendix to Current Part 371, with
the changes discussed under ``7. Appendix A''. Section 371.4(a) would
give a limited scope entity the option to maintain the more
comprehensive QFC records required under paragraph (b). The FDIC
anticipates that if a limited scope entity expects to meet the criteria
of a full scope entity at some point in the future, it might wish to
maintain records under Appendix B in order to avoid changing its
records system.
The QFC records under Appendices A and B are necessary to assist
the FDIC in determining, during the short one-business-day stay period
applicable to QFCs, whether to transfer QFCs.
[[Page 95501]]
The proposed rule also would require records entities that are
subject to Sec. 371.4(b) to include information on QFCs to which their
reportable subsidiaries are a party. This information would be provided
by the records entity, not the reportable subsidiary. As discussed
previously, a reportable subsidiary would be defined to include a
subsidiary of an IDI that is not a functionally regulated subsidiary as
defined in 12 U.S.C. 1844(c)(5), a security-based swap dealer as
defined in 15 U.S.C. 78c(a)(71), or a major security-based swap
participant as defined in 15 U.S.C. 78c(a)(67). Like IDIs, reportable
subsidiaries are excluded from the recordkeeping requirements of Part
148, while information as to subsidiaries that are not reportable
subsidiaries would be available to the FDIC from information provided
under Part 148. Without information as to QFCs of reportable
subsidiaries, the FDIC, as receiver, might not have information that
would allow it to assess the effect of its transfer and retention
decisions for QFCs of an IDI on the entire group comprised of the IDI
and its subsidiaries. While this information would also be useful from
limited scope entities maintaining information in accordance with
Appendix A, the FDIC does not believe that the advantage of having this
information on reportable subsidiaries would outweigh the burden for
these smaller IDIs which, individually or with their subsidiaries, are
not expected to normally have significant QFC positions.
Section 371.4(c) of the proposed rule would provide requirements
for a records entity that changes its recordkeeping status. It would
require that a limited scope entity that is maintaining QFC records in
accordance with the tables in Appendix A that subsequently becomes a
full scope entity maintain QFC records in accordance with the tables in
Appendix B within 270 days of becoming a full scope entity or, if it is
an accelerated records entity, within 60 days. The proposed rule would
require such an entity to continue to maintain the records under the
tables in Appendix A until it maintains the QFC records specified in
the tables to Appendix B. A full scope entity that subsequently becomes
a limited scope entity would be permitted to opt to maintain records
under the tables in Appendix A. This entity would be required to
continue to maintain the records specified in the tables to Appendix B
until it maintains the records in accordance with Appendix A. The FDIC
is not requiring a time period for compliance in such instance because
the records under Appendix B are more comprehensive than the records
under Appendix A.
If a limited scope entity that is not yet maintaining QFC records
in accordance with Appendix A or B becomes a full scope entity, the
proposed rule would require the records entity to maintain QFC records
in accordance with Appendix B within 270 days of the date on which it
became a records entity or, if it is an accelerated records entity,
within 60 days. The same compliance timeframes would apply to a records
entity that is a full scope entity that becomes a limited scope entity
before it maintains QFC records in accordance with Appendix B. These
compliance periods for records entities that change their recordkeeping
status reflect the importance to the FDIC of promptly obtaining QFC
records from IDIs in troubled condition.
Records entities that experience a change in status, like IDIs
newly subject to Part 371, would be permitted to apply for extensions
of time to comply under Sec. 371.1(d).
The proposed rule would retain the de minimis exception included in
Current Part 371. This provision allows a records entity with fewer
than 20 QFC positions at the time it becomes a records entity to
maintain these records in any format it chooses, including paper
records, so long as the required records are capable of being updated
daily, provided that the records entity does not subsequently have 20
or more QFC positions.
5. Transition for Existing Records Entities
Section 371.5 of the proposed rule would provide rules for full
scope entities that are subject to Current Part 371 immediately prior
to the effective date of the amendments to Part 371 to transition to
the new recordkeeping requirements included in the proposed rule.
Limited scope entities that are subject to Current Part 371 immediately
prior to the effective date of the amendments would not be required to
transition to the new recordkeeping requirements. If, however, any such
limited scope entity ceases to be subject to the recordkeeping
requirements because it ceases to be in troubled condition for one year
pursuant to Sec. 371.3(d) but subsequently again becomes subject to
the recordkeeping requirements, at such subsequent time the limited
scope entity would be subject to the new recordkeeping requirements.
Under the proposed rule, a full scope entity that is maintaining
QFC records in accordance with Current Part 371 immediately prior to
the effective date of the amendments to Part 371 would be required to
comply with all recordkeeping requirements of Part 371 within 270 days
after the effective date of the amendments or, in the case of an
accelerated records entity, 60 days. Any such records entity would also
be required to continue to maintain the records required by Current
Part 371 until it maintains the records required by Sec. 371.4(b), as
applicable.
Additionally, the proposed rule contains a provision that addresses
the transition of a full scope entity that is required to keep records
under the Current Part 371 but is not in compliance with Current Part
371's recordkeeping requirements immediately prior to the effective
date of the amendments to Part 371. The proposed rule would require
such a records entity to comply with the recordkeeping requirements of
Part 371, as amended, within 270 days after the date that it first
became a records entity or, in the case of an accelerated records
entity, 60 days.
The effect of these provisions would be to provide more time for
the transition to the recordkeeping requirements of Part 371, as
amended, for full scope entities that are keeping the records required
under Current Part 371 and less time for those that are not. The FDIC
believes that it is reasonable to give IDIs that are actually
maintaining the information required by Current Part 371 more time to
transition to the recordkeeping requirements of the amendments to Part
371 because even in the worst case scenario where the IDI is placed
into receivership prior to the transition, the FDIC will have some
information on the QFCs of the IDI to use in making the transfer
determination. If the transition provisions of the proposed rule were
to give a full new 270 day period to an IDI already subject to Part
371, it might be the case that the IDI would be placed into
receivership prior to providing any of the records required by Current
Part 371 or the proposed rule.
6. Enforcement Actions
Section 371.6 of the proposed rule is unchanged from Sec. 371.5 of
Current Part 371. It provides that violation of Part 371 would subject
a records entity to enforcement action under Section 8 of the FDI Act
(12 U.S.C. 1818).
7. Appendix A
Appendix A of the proposed rule would apply to a records entity
that is
[[Page 95502]]
a limited scope entity.\20\ The file structure for Appendix A would
require two data tables: (1) Table A-1--Position-level data and (2)
Table A-2--Counterparty Netting Set Data. It would also require two
master data lookup tables: (1) Corporate Org Master Table and (2)
Counterparty Master Table. Although the scope of Appendix A is
generally similar to the scope of information required under Current
Part 371, the approach to the format of the data required is changed.
All of the proposed tables are expected to be data sets that allow for
sorting and review using readily available tools which the FDIC expects
will make them more useful to the institution as well as to the FDIC in
the event it is appointed as receiver. To accommodate this change in
format and to make it easier to input and to sort data, the lookup
tables have been added.
---------------------------------------------------------------------------
\20\ As discussed previously, a limited scope entity may elect
to report on the more comprehensive Appendix B.
---------------------------------------------------------------------------
Table A-1. Like Table A-1 of Current Part 371, Table A-1 would
require position level information as to each QFC of a records entity.
Certain changes have been made with respect to the information required
on current Table A-1, however, with two data fields eliminated and a
few others added in proposed Table A-1.
Specifically, Table A-1 of the proposed rule would make a limited
number of additions to the rows included in Table A-1 of Current Part
371 in order to provide ready electronic access to information that
FDIC staff has found to be important in determining whether to transfer
or retain QFCs of a failed IDI. These additions include Row A1.1, which
requires an ``as of'' date. This information is important because a
records entity often derives data from multiple systems in multiple
locations and the FDIC needs to be able to expeditiously determine
whether, due to differences in time zone, legal holidays or other
factors, any of the data is not current. Other additions are made to
allow for systematic, electronic identification of parties. Row A1.2
would require that a records entity identifier be provided and Row A1.4
would require use of a counterparty identifier. Current Part 371
requires that a records entity provide a list of counterparty
identifiers, but the new proposed format will facilitate the prompt and
accurate identification of counterparties as well as the determination
of whether they are affiliated entities. This is important because in
an FDIA resolution, QFCs must be transferred on an all-or-none basis
with respect to all QFCs entered into with counterparties of the same
affiliated group. This may, but does not always, comport with
straightforward netting sets, so the efficient identification of
affiliated counterparties is critical to the FDIC's decisions that must
be made within the short one-business-day stay period. In addition,
proposed Table A-1 would require that the identifier used for records
entities as well as counterparties be a Legal Entity Identifier
(``LEI''), if the records entity or counterparty has one. LEIs are
identifiers maintained for companies by a global organization and are
increasingly used by financial institutions. Accordingly, their use in
Part 371 would ensure that variations from formal names do not result
in the misidentification of a records entity or counterparty and thus
help ensure that the FDIC satisfies its obligation to transfer all, or
none, of the QFC positions between a failed IDI and a counterparty and
its affiliates.
Proposed new Rows A1.5 and A1.6, which would require that data
include the internal booking location identifier and the unique booking
unit or desk identifier of a QFC, are intended to improve the ability
of the FDIC to identify individuals at a records entity who are
familiar with a particular position. This can be of major importance to
the FDIC in determining, during the one business day stay period,
whether to retain or transfer a QFC. This requirement would replace the
requirement in Current Part 371 that the table specify a portfolio
location identifier and provide a list of booking locations.
Some of the new rows in Table A-1 are designed to provide the FDIC
with information about other positions or assets of the records entity
to which a QFC relates. For example, where an interest rate swap
relates to a loan made by an IDI or to a different swap of the IDI,
this information would be of critical importance to the FDIC in making
its determination of whether to transfer or retain that QFC. The FDIA
provides that a guarantee or other credit enhancement of a QFC is
itself a QFC.\21\ Under Current Part 371, a guarantee or other credit
enhancement was reported in the same manner as any other QFC, but
experience under Current Part 371 made clear that records on guarantees
and credit enhancements would be clearer and more complete with clear
information with respect to the type of QFC covered by the enhancement
and the QFC party whose obligations are being credit enhanced be
specified. Accordingly, new rows A1.8 and A1.9 would require that
information.
---------------------------------------------------------------------------
\21\ 12 U.S.C.(e)(8)(D).
---------------------------------------------------------------------------
Rows A1.19-A1.21 would require additional information as to third
party credit enhancements in favor of the records entity. This
information is important to assessing credit risk and net exposure with
respect to QFCs, which will facilitate decisions with respect to
transfer of those QFCs. Rows A1.22-A1.24 would require information as
to positions of the records entity to which the QFC relates. For
example, these rows would indicate if obligations relating to a loan
made by the failed IDI are being hedged by the QFC.
Other proposed changes are intended to facilitate the ability of
the FDIC to electronically identify positions and governing agreements.
Rows A1.10-A1.12 would require identifying information regarding the
QFC master agreement or primary agreement (e.g., the guarantee
agreement in the case of a guarantee) and, if different, netting
agreement, in lieu of the requirement in Current Part 371 that these
agreements be separately listed. Row A1.13 would add a requirement that
the trade date of a position be specified in order to help the FDIC
differentiate between different positions with the same counterparty.
Finally, Table A-1 does not include two data fields in Table A of
Current Part 371 that in practice have not generally proved to elicit
useful information. These are the rows that require that the purpose of
the QFC position and that documentation status be identified.
Table A-2. Like Table A-2 of Current Part 371, Table A-2 would
require information as to QFC positions aggregated by counterparty and
maintained at each level of netting under the relevant governing
agreement. If a master agreement covers multiple types of transactions,
but does not require that the different types of transactions be netted
against each other the net exposures under each type of transaction
would need to be separately reported. Thus, for example, where a single
Master Agreement covered both interest rate swaps and forward exchange
transactions but did not require netting between the swap positions and
the repo positions, the net exposures of the interest rate swaps would
be reported separately from the net exposures of the repurchase
agreements.
While there are several non-substantive, clarifying drafting
changes and additions to rows included in the existing Table A-2, the
substantive additions are limited. Like Table A-1, Table A-2 includes
new rows that require records entity identifiers,
[[Page 95503]]
information as to third party credit enhancements in favor of the
records entity and additional information relating to the underlying
contracts for QFCs that are themselves credit enhancements.
Rows A2.16-A2.17 would require information as to the next margin
payment date in order to help the receiver or transferee avoid
inadvertent defaults and analyze the positions.
Table A-2 would continue require information as to the net current
market value of all positions under a netting agreement, but would also
require that the current positive market value and current negative
market value of all such positions be separately stated. This break
down of information would assist the FDIC in its analysis of the net
overall position.
Corporate Org Master Table. The proposed rule retains the
requirement of Current Part 371 for complete information regarding the
organizational structure of the records entity, however, proposed
Appendix A would require that a records entity maintain that
information in the corporate organizational master table in lieu of any
other form of organizational chart. Requiring this information in this
format will make this information more easily accessible to the FDIC
with improved functionality.
Counterparty Master Table. The FDIA requires that in making a
transfer of a QFC the receiver must either (1) transfer all QFCs
between a records entity and a counterparty and the counterparty's
affiliates to the same transferee IDI, or (2) transfer none of such
QFCs.\22\ Thus, an understanding of the relationship of the
counterparties is critical to the FDIC's function as receiver. Current
Part 371 required this information in the form of a list of affiliates
of counterparties that are also counterparties to QFC transactions with
a records entity or its affiliates. The proposed rule would require
that a records entity maintain this information in the form of a
counterparty organizational master table that would be completed with
respect to each counterparty of a records entity. The listing on each
such table of the immediate and ultimate parent entity of the
counterparty would enable the FDIC to efficiently and reliably identify
counterparties that are affiliates of each other without requiring full
organizational charts of each counterparty group.
---------------------------------------------------------------------------
\22\ 12 U.S.C. 1821(e)(9).
---------------------------------------------------------------------------
8. Appendix B
Appendix B of the proposed rule would apply to a records entity
that is a full scope entity as well as to a limited scope entity that
elects to use Appendix B rather than Appendix A. As discussed
previously, Appendix B corresponds to the information required for
records entities under Part 148. It includes all of the data discussed
above that is required by Appendix A plus additional information that
is important for understanding the larger and more complex QFC
portfolios of the largest IDIs. The file structure for Appendix B would
require four data tables: (1) Table A-1--Position-level data, (2) Table
A-2--Counterparty Netting Set Data, (3) Table A-3--Legal Agreements and
(4) Table A-4--Collateral Detail Data. It would also require four
master data lookup tables: (1) Corporate Org Master Table, (2)
Counterparty Master Table, (3) Booking Location Master Table and (4)
Safekeeping Agent Master Table.
The most significant additional data required by Appendix B, as
compared to Appendix A, is provided for in Tables A-3 and A-4 of
Appendix B. In general, these Tables require additional information
with respect to the master agreements or other contracts governing QFCs
as well as additional information regarding collateral supporting QFCs.
In addition, Tables A-1 and A-2 for these entities require that the
market value and notional amount of positions be expressed in local
currencies, as well as in U.S. dollars, and that information as to
amount of collateral subject to re-hypothecation be provided.
Table A-3. This table would require specific information as to each
governing agreement, such as an ISDA master agreement or other netting
agreement or, in the case of a QFC that is a credit enhancement, the
agreement governing such credit enhancement. The required information
would include the agreement's governing law, whether the agreement
includes a cross-default determined by reference to an entity that is
not a party to the agreement and, if so, the identity of such other
party, and contact information for each counterparty.
The information as to governing law is needed to evaluate whether
there is any likelihood of different treatment of transfer of the QFC,
access to collateral or other matters under non-U.S. law. The cross-
default information is necessary so that the likelihood of the QFC
terminating on account of the insolvency or payment defaults or other
matters relating to a third party can be analyzed. The counterparty
contact information may be important in connection with the FDIC's
obligations under 12 U.S.C. 1821(e)(10) to take steps reasonably
calculated to give notice of transfer of a QFC.
Table A-4. This table would require data as to the different items
of collateral that support different netting sets. For each netting
set, this table would require information as to the original face
amount, local currency, market value, location and jurisdiction of each
item of collateral provided. This table would also require an
indication of whether the item of collateral is segregated from other
assets of the safekeeping agent (which can be a third party or a party
to the QFC), and whether re-hypothecation of the item of collateral is
permitted. This data would help the FDIC evaluate the adequacy of
collateral for each QFC netting set, as well as the potential for the
collateral to be subject to ring-fencing by a foreign jurisdiction.
Table A-1. Proposed Table A-1 in Appendix B is very similar to
proposed Table A-1 in Appendix A. In addition to requiring that data be
expressed in U.S. dollars, the table as proposed to be included in
Appendix B requires that certain data also be expressed in local
currency in order to assist the FDIC's analysis of positions. It also
requires that the fair value asset classification under GAAP, IFRs or
other applicable accounting standards be set forth and that additional
information be provided relating to credit enhancements that benefit a
QFC counterparty of the records entity.
Table A-2. Table A-2 in Appendix B is very similar to Table A-2 in
Appendix A. The only added rows would require information about
collateral that is subject to re-hypothecation, information as to the
identity of the safekeeping agent, i.e., the party holding the
collateral, which can be either a party to the QFC or a third party,
and information as to credit enhancements that benefit a QFC
counterparty of the records entity.
Booking Location Master Table. This master table would require
certain additional information regarding each QFC, including internal
booking location identifiers, and booking unit or desk contact
information. This information would assist the FDIC in locating
personnel at the IDI with knowledge of the QFC.
Safekeeping Agent Master Table. This table would provide
information as to points of contact for each collateral safekeeping
agent. This information would assist the FDIC in locating personnel at
the safekeeping agent who are familiar with the collateral and the
safekeeping arrangements.
[[Page 95504]]
IV. Expected Effects
The FDIC has considered the expected effects of the proposed rule
on covered institutions, the financial sector and the U.S. economy. The
proposed rule will likely pose some costs for covered institutions, but
by expanding the QFC recordkeeping requirements for institutions in
troubled condition the proposed rule will enable the FDIC to make
better informed decisions on how to manage the QFC portfolio of covered
institutions if they enter into receivership. The proposed rule also
would harmonize the scope and format of Part 371's QFC recordkeeping
requirements for full scope entities with the recordkeeping
requirements under Part 148 and thereby permit IDIs that become subject
to Part 371 and are members of corporate groups subject to Part 148 to
use information technology systems developed by their Part 148
affiliates in order to comply with Part 371. Finally, by enabling the
FDIC to more efficiently evaluate and understand QFC portfolios the
proposed rule will help the FDIC as receiver minimize unintended
defaults through failures to make timely payments or collateral
deliveries to QFC counterparties.
During the financial crisis of 2008 and ensuing recession many
banks failed, some of which were party to significant volumes of QFCs.
Through its experience of working with banks in troubled condition that
were establishing systems to comply with the recordkeeping requirements
of Current Part 371, the FDIC concluded that institutions with larger
and more complex portfolios of QFCs would be more difficult to resolve
in an efficient manner unless more QFC information was readily
accessible. Readily available information on collateral, guarantees,
credit enhancements, etc. would be necessary to evaluate counterparty
risk and maximize value to the receivership. The proposed rule should
provide benefits by reducing the likelihood that a future failure of an
insured depository institution with a large and complex portfolio of
QFCs could result in unnecessary losses to the receivership.
Full Scope Entities
The proposed rule would likely result in large implementation costs
for full scope entities. Significantly more information on QFCs is
required to be maintained by the proposed rule relative to Current Part
371, including additional information as to collateral, guarantees and
credit enhancements. The added information would enable the FDIC to
more accurately assess and understand the QFC portfolios of
institutions this size, which are more likely to be large and complex
than the QFC portfolios of limited scope entities. As of September
30th, 2016, based on Consolidated Reports of Condition and Income as of
that date, there were 40 FDIC-insured institutions with consolidated
assets in excess of $50 billion. There are another 29 FDIC-insured
institutions with consolidated assets of less than $50 billion that are
members of corporate groups that are subject to Part 148, resulting in
a total of 69 potential full-scope entities. In the event that one of
these institutions becomes in a troubled condition, as defined in the
rule, the FDIC assumes that, on average, it will take approximately
3,000 labor hours to comply with the recordkeeping requirements of the
proposed revisions to Part 371 for full scope entities over and above
the amount of time that would be expected to be required in order to
comply with Current Part 371 for comparable entities. The
implementation costs borne by covered institutions primarily include
costs that would be incurred in order to accommodate the proposed new
data elements. They are anticipated to be incurred when an institution
becomes in a troubled condition and begins maintaining the QFC
information in accordance with Part 371. Full scope entities that are
subject to Current Part 371 when the final rule becomes effective could
incur some transition expenses. Ongoing costs of recordkeeping for the
proposed rule are assumed to be approximately similar to those under
Current Part 371. The labor hours necessary to comply with the proposed
rule will vary greatly for each institution depending upon the size and
complexity of the QFC portfolio, the efficiency of the institution's
QFC information management system(s), and the availability and
accessibility of information on QFCs. Therefore, they are difficult to
accurately estimate. Additionally, some costs related to complying with
the rule might be ameliorated for an institution that is part of a
corporate group subject to the Part 148, since its parent company may
have already developed the capacity to meet the recordkeeping
requirements for Part 148, which cover the same information, in the
same format, as the proposed rule.
Finally, any implementation costs of the proposed rule are
contingent upon an entity becoming in a troubled condition and subject
to the proposed rule. Based on FDIC supervisory experience, it is
estimated that two full scope entities per year, on average, will be
subject to the recordkeeping requirements of the proposed rule. It is
anticipated that the proposed rule would result in an additional 6,000
labor hours per year for covered institutions.\23\ To comply with the
recordkeeping requirements of the rule it is assumed that IDIs in
troubled condition will employ attorneys, compliance officers, credit
analysts, computer programmers, computer systems analysts, database
administrators, financial managers, and computer information systems
managers. The FDIC has estimated that the average hourly wage rate for
recordkeepers to comply with the recordkeeping burden is approximately
$57 per hour based on average hourly wage information by occupation
from the U.S. Department of Labor, Bureau of Labor Statistics.\24\
Therefore the FDIC estimates that the proposed rule will pose
approximately $342,000 in expected additional compliance costs on
average, each year, for full scope entities.
---------------------------------------------------------------------------
\23\ This estimate is potentially somewhat greater than would be
expected based upon past practice for two reasons. First, not all
institutions that become in a troubled condition ultimately complete
recordkeeping compliance, as their condition may improve so that
they are no longer in a troubled condition before the commencement
or completion of recordkeeping. Secondly, the same institution may
have cycled in and out of troubled condition more than once in the
16-year look back period and therefore their recordkeeping costs may
have been counted more than once. The additional recordkeeping costs
could be significantly lower for subsequent instances of
institutions becoming in troubled condition because the
recordkeeping procedures and systems have already been established.
\24\ Wage estimate is in nominal dollars and has not been
adjusted for inflation. The average hourly wage estimate is derived
from May 2015 Occupational Employment Statistics (OES) from the
Bureau of Labor Statistics (BLS) for occupations in depository
credit intermediation organizations. Hourly wage rates represent the
75th percentile for Legal Occupations ($75.90), Computer Programmers
($49.86), Computer Systems Analyst ($53.12), Database Administrators
($54.25), Compliance Officers ($38.40), Credit Analysts ($44.99),
Financial Managers ($63.22), and Computer and Information Systems
Managers ($78.17).
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Limited Scope Entities
The proposed rule would likely pose some costs for limited scope
entities, but those costs would be relatively small. Only slightly more
QFC information is required to be maintained by limited scope entities
to comply with the proposed rule relative to Current Part 371. The FDIC
is proposing to remove three data elements from the Current Part 371
recordkeeping requirements while adding less than twenty additional
data elements. The FDIC understands that most of the added data
elements cover information
[[Page 95505]]
that is either information that an IDI would need to ascertain in order
to comply with Current Part 371 or that would otherwise be readily
available to the IDI.
As of September 30th, 2016 there were 6,009 FDIC-insured
institutions with total consolidated assets less than $50 billion. Of
those institutions only 1,238 (21 percent) reported some amount of
QFCs.\25\ To estimate the number of institutions affected by the
proposed rule the FDIC analyzed the frequency with which FDIC-insured
institutions with consolidated assets of less than $50 billion became
in a troubled condition. Based on supervisory experience, it is
estimated that limited scope entities become in a troubled condition
310 times per year on average. The annual average estimate of
institutions in troubled condition with consolidated assets of less
than $50 billion is adjusted to 65 to reflect the number of
institutions in troubled condition that are likely to be a party to
some volume of QFCs, and therefore subject to the proposed rule.\26\
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\25\ Consolidated Reports of Condition and Income, September 30,
2016.
\26\ 1,238 FDIC-insured institutions out of 6,009 reported some
volume of QFCs on their Consolidated Reports of Condition and
Income. Therefore it is estimated that only 21 percent of the
historical average annual rate of institutions in a troubled
condition had some volume of QFCs (310*0.21 = 65).
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In the event that a limited scope entity becomes in a troubled
condition, the FDIC assumes that it will take approximately 5 labor
hours, on average, to comply with the added recordkeeping requirements
of the proposed revisions to Part 371. The implementation costs borne
by covered institutions primarily include costs that would be incurred
in order to accommodate the proposed new data elements. They are
anticipated to be incurred when an institution becomes in a troubled
condition and begins maintaining the QFC information in accordance with
Part 371. Ongoing costs of recordkeeping for the proposed rule are
assumed to be approximately similar to those under Current Part 371.
Therefore, the FDIC estimates that the added compliance costs
associated with the proposed rule are 325 hours annually \27\ for
limited scope entities that are likely to become in a troubled
condition.\28\ However, assuming that the proportion of limited scope
entities that become in a troubled condition in future years remains
constant, 29 of the 65 estimated average annual limited scope entities
that are likely to become in a troubled condition have less than $550
million in assets. They are therefore likely to have insignificant
volumes of QFCs and an associated burden estimate of 1 hour or less.
The labor hours necessary to comply with the proposed rule will vary
greatly for each institution depending upon the size and complexity of
its QFC portfolio, the efficiency of the institution's QFC information
management system(s) and the availability and accessibility of
information on QFCs. Therefore, the added compliance costs associated
with the proposed rule are difficult to accurately estimate.
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\27\ The estimated average annual compliance burden hours for
limited scope entities is the calculated as 65*5 hours, which equals
325 hours.
\28\ As discussed previously with respect to full scope
entities, this estimate is potentially somewhat greater than would
be expected based upon past practice for two reasons. First, not all
institutions that become in a troubled condition ultimately complete
recordkeeping compliance, as their condition may improve so that
they are no longer in a troubled condition before the commencement
or completion of recordkeeping. Secondly, some institutions may be
double-counted, because the same institution may have cycled in and
out of troubled condition more than once in the 16-year look back
period. The additional recordkeeping costs could be significantly
lower the second time around.
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To comply with the recordkeeping requirements of the rule it is
assumed that entities in troubled condition will employ attorneys,
compliance officers, credit analysts, computer programmers, computer
systems analysts, database administrators, financial managers, and
computer information systems managers. The FDIC has estimated that the
average hourly wage rate for recordkeepers to comply with the initial
recordkeeping burden is approximately $57 per hour based on average
hourly wage information by occupation from the U.S. Department of
Labor, Bureau of Labor Statistics.\29\ Therefore the FDIC estimates
that the proposed rule would pose approximately $19,000 in expected
compliance costs each year on average, for limited scope entities.
However, the costs realized by limited scope entities as a result of
the proposed rule are likely to be lower in the first few years given
that the proposed rule allows covered entities already maintaining
information in accordance with the current Part 371 rule to continue to
do so.
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\29\ Wage estimate is in nominal dollars and has not been
adjusted for inflation. The average hourly wage estimate is derived
from May 2015 Occupational Employment Statistics (OES) from the
Bureau of Labor Statistics (BLS) for depository credit
intermediation occupations. Hourly wage rates represent the 75th
percentile for Legal Occupations ($75.90), Computer Programmers
($49.86), Computer Systems Analyst ($53.12), Database Administrators
($54.25), Compliance Officers ($38.40), Credit Analysts ($44.99),
Financial Managers ($63.22), and Computer and Information Systems
Managers ($78.17).
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All Covered Entities
The total estimated compliance costs for all covered entities, both
full scope and limited scope, is approximately $361,000 each year. The
realized compliance costs for covered entities are dependent upon
future utilization rates of QFCs, and the propensity of institutions to
become troubled. Therefore it is difficult to accurately estimate.
The proposed rule provides some relief from compliance costs
relative to Current Part 371 by extending the time period allotted for
an institution in troubled condition to start maintaining the required
QFC information from 60 days to 270 days, with the exception of
accelerated records entities. It has been the FDIC's experience that
large institutions with complex QFC portfolios had difficulty meeting
the current 60-day compliance deadline. Failure to meet the initial
deadline necessitated multiple rounds of extension requests that were
cumbersome and time-consuming for institutions in troubled condition
and their primary regulator. By extending the compliance period to 270
days for all institutions, both ``full scope'' and ``limited scope''
entities, the proposed rule will reduce the overall compliance costs.
Along with the extended compliance period the proposed rule also
requires institutions to include a project plan with their extension
request. However, the proposed inclusion of the project plan provision
reflects current FDIC practice, and therefore, poses no additional
burden.
The proposed rule would harmonize QFC recordkeeping requirements
for full scope entities in troubled condition with the Part 148
requirements for other members of their corporate groups. This
harmonization benefits these IDIs by enabling them to reduce costs by
using information technology created for compliance with Part 148 by
other members of their corporate group. Moreover, consistency of
reporting across the corporate group would benefit the FDIC as receiver
by enabling it to better analyze how an IDI's QFC positions relate to
QFC positions of other members of the corporate group.
The proposed rule should also provide indirect benefits to QFC
counterparties of institutions in troubled condition by helping the
FDIC as receiver avoid unintended payment or delivery disruptions. The
additional information required by the proposed rule includes detailed
information about collateral, guarantees and credit enhancements which
will significantly enhance the ability of the FDIC to
[[Page 95506]]
judiciously exercise its rights and responsibilities related to QFC
portfolios for institutions in troubled condition within the statutory
one-business day stay period.
V. Alternatives Considered
The FDIC considered a number of alternatives in developing the
proposed rule. The major alternatives include: (i) Expanding the
recordkeeping scope to include IDIs subject to any cease-and-desist
order by, or written agreement with, the appropriate federal banking
agency; (ii) expanding the recordkeeping scope for records entities to
include all subsidiaries; (iii) recordkeeping thresholds of above and
below $10 billion or $50 billion in total consolidated assets; (iv)
requiring all records entities to maintain QFC records under the tables
in Appendix B; (iv) requiring the same compliance period for all
records entities; (v) not requiring existing full scope records
entities to transition to the new recordkeeping requirements; and (vi)
requiring existing limited scope entities to transition to the new
recordkeeping requirements.
The FDIC considered expanding the definition of ``troubled
condition'' to include all cease-and-desist orders or written
agreements issued by the appropriate Federal banking agency in addition
to those requiring action to improve the financial condition of an IDI.
In reviewing the types of orders and agreements, including stipulations
and consent orders, that may be issued or entered into, the FDIC
determined that the requirement with respect to an action to improve
the financial condition of the IDI is appropriate because it is more
likely that such orders relate to an institution for which failure is
less remote than is likely the case in connection with other types of
orders and agreements. As a result, the FDIC decided not to expand this
prong of the definition of ``troubled condition.'' Nonetheless, this
preamble clarifies (in section III.B.2) that an ``action to improve the
financial condition,'' for purposes of this Part, may include, but is
not limited to, an action to improve capital adequacy, asset quality,
management, earnings, liquidity, and sensitivity to market risk.
The FDIC also considered requiring IDIs that report on Appendix B
to report QFC information for all subsidiaries rather than only
``reportable subsidiaries.'' However, expanding the scope of
recordkeeping to all subsidiaries would be burdensome and would also be
redundant for corporate groups that are subject to Part 148 because QFC
information for subsidiaries that are not reportable subsidiaries
(other than IDIs and insurance companies) is required under Part 148.
In determining the scope of recordkeeping for records entities, the
FDIC considered total consolidated asset thresholds above and below $50
billion. As discussed under ``III.A The Proposed Rule, Summary'', the
FDIC determined the $50 billion threshold was appropriate because
institutions at or above this threshold are more likely to have complex
QFC portfolios and it is an asset level used in the several regulations
cited in the above section that has been deemed appropriate for
enhanced regulation and supervision. The FDIC determined that a
threshold below $50 billion would impact smaller IDIs and unduly burden
community banks.
The proposed rule requires certain records entities, as described
previously, to maintain QFC records according to the tables in Appendix
A or B depending on the size of the records entity.
The FDIC considered requiring the same compliance period for all
records entities subject to this Part. Based on its experience, the
FDIC has found that the longer period (270 days) is appropriate for
larger entities. Larger entities that are required to report on
Appendix B due to a composite CAMEL rating of 3 generally need a longer
period to comply and, because an entity with a composite CAMEL rating
of 3 is less likely to fail imminently, the additional time for
recordkeeping should not pose significant additional risks that the
FDIC as receiver will lack the information it needs with respect to the
QFC portfolio. Entities with a composite CAMEL rating of 4 or 5 pose
greater risk of near-term failure. For the same reason, the proposed
rule would not increase the length of extensions available for 4 and 5
rated entities (30 days), regardless of their size. Although it may not
be feasible for large entities with complex QFC portfolios to complete
the recordkeeping requirements within 60 days, the short deadline with
the requirement that extension requests be accompanied by progress
reports and action plans will help assure that the recordkeeping
requirements are being met in the most expeditious manner and that
appropriate resources are being devoted to the effort by the IDI in
troubled condition.
Finally, the FDIC considered other transition requirements. The
alternative of not requiring transition to the new recordkeeping
requirements by full scope entities was rejected because of the
importance of having available for these entities, that are more likely
to have complex QFC portfolios, all of the additional information
included in the proposed rule, should such an entity become subject to
receivership. The FDIC also considered requiring existing limited scope
entities to transition to the new recordkeeping requirements, but
determined that given the limited nature of almost all existing limited
scope entity QFC portfolios the added burden would exceed the benefit
of requiring this transition.
VI. Request for Comments
The FDIC invites comments on all aspects of the proposed rule and
requests feedback on the following specific questions.
A. Scope of Coverage
The proposed rule requires records entities, which are IDIs in
troubled condition that receive notice from the FDIC that it is subject
to this rule, to maintain QFC records in compliance with the provisions
of this Part.
Should the definition of ``troubled condition'' be
modified to increase or decrease the scope of IDIs that potentially may
be subject to this rule? If so, how?
B. Requirements
Records entities would be required to maintain QFC records subject
to the provisions of this Part. The FDIC requests comments on all
aspects of the proposed requirement. In particular:
Should the same compliance periods apply to all records
entities, including accelerated records entities and existing records
entities?
Are the compliance periods in the proposed rule
appropriate? If not, how much time should be provided?
A full scope entity is a records entity that has total
consolidated assets equal to or greater than $50 billion or that is a
member of a corporate group where at least one affiliate is required to
maintain QFC records pursuant to 31 CFR part 148. Is the full scope
entity threshold of $50 billion in total consolidated assets
appropriate? If not, what threshold would be more appropriate and why?
Are the differences in recordkeeping requirements between
full scope and limited scope entities appropriate? Are the additional
requirements of Appendix B appropriate?
Should a limited scope entity be required to report under
the tables in Appendix A, Appendix B, or be given the option of either
Appendix A or B?
Should a records entity be provided a compliance timeframe
when transitioning from being required to
[[Page 95507]]
maintain records under the tables in Appendix B to deciding on
maintaining records under the tables in Appendix A?
Should a limited scope entity have the option to maintain
records under Appendix B in anticipation of meeting the criteria of a
full scope entity at some point in the future?
Are there any data fields in the proposed tables of
Appendix A or Appendix B that should be modified? Which fields and why?
Are there any additional data fields that should be
included in the tables of Appendix A or Appendix B? What fields and
why?
Is the proposed 7:00 a.m. deadline for an IDI to be
capable of providing records to the FDIC unduly burdensome?
Is the new information that would be required of limited
scope entities information that such entities would maintain in order
to comply with Current Part 371 or information that is otherwise
readily available to such entities? For example, would an IDI with a
QFC that benefits from a guarantee ordinarily keep records concerning
the guarantor? Would an IDI that is required to provide margin under
its QFC ordinarily keep track of current margin delivery requirements
either by keeping its own records or having access to data made
available by its counterparty? Do the proposed changes to the
recordkeeping requirements for limited scope entities impose a
significant new burden on these entities as compared to the
requirements currently in effect? If so, which aspects of the proposed
requirements are significantly burdensome? Please be as specific as
possible in your comments and quantify costs where possible.
C. Implementation
The FDIC recognizes implementing information technology systems
that will be required for compliance with this Part will take time and
has proposed 270 days for records entities other than accelerated
records entities and 60 days for accelerated records entities.
Are there any aspects of the requirements that would take
more time to implement? Which aspects and why? How much more time would
be required?
Should accelerated records entities be given more or less
time to comply with the recordkeeping requirements than is provided in
the proposed rule? How much time and why?
Regarding Sec. 371.5 (Transition for Existing Records
Entities), should records entities that are not maintaining records
under Part 371 at the time the proposed amendments to Part 371 become
effective be given the same amount of time to comply with the
recordkeeping requirements of this Part, as amended, as records
entities that are maintaining such records on the effective date?
Should existing full scope entities that are maintaining
records in accordance with Part 371 when the proposed amendments become
effective be required to transition to the new recordkeeping
requirements?
Should existing limited scope entities be required to
transition to the new recordkeeping requirements?
D. Benefits and Costs
The proposed rule would impose costs on certain records entities,
but it would also provide some benefits.
To what extent would the proposed rule impact the QFC
recordkeeping operations and IT systems normally maintained by IDIs?
What would be the costs or savings associated with these
changes?
By aligning the data requirements of Part 371 with those
of Part 148, would it reduce the burden on corporate groups that are
subject to the QFC recordkeeping requirements of both Part 148 and that
contain an IDI subject to Part 371? Please quantify costs or burden to
the extent possible.
How burdensome would it be for a records entity that is
maintaining records according to the appendix and tables in the
existing Part 371 to transition to the requirements of Appendix B? What
costs would be associated with that burden?
VII. Regulatory Process
A. Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA), 44 U.S.C. 3501 et seq., the FDIC may not conduct or
sponsor, and the respondent is not required to respond to, an
information collection unless it displays a currently valid Office of
Management and Budget (OMB) control number. The FDIC has determined
that this proposed rule would revise an existing collection of
information. The FDIC will request approval from the OMB for this
proposed information collection. OMB will assign an OMB control number.
Certain provisions of the proposed rule contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with
the requirements of the PRA, the FDIC may not conduct or sponsor, and
the respondent is not required to respond to, an information collection
unless it displays a currently-valid Office of Management and Budget
(OMB) control number. The OMB control number is 3064-0163 and will be
revised. The information collection requirements contained in this
proposed rulemaking will be submitted by the FDIC to OMB for review and
approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and Sec.
1320.11 of the OMB's implementing regulations (5 CFR 1320.11).
As discussed above, the FDIC proposes to amend its regulations
regarding Part 371 which requires IDIs in a troubled condition to keep
records relating to QFCs to which they are party. The FDIC estimates
that the total compliance burden for covered entities, including full
scope and limited scope entities, is as follows:
[[Page 95508]]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Total annual
Estimated Estimated time per estimated
Title Type of burden number of number of response Frequency of response burden
respondents responses (hours) (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full Scope Entities: Recordkeeping.............. 2 1 3,000 On Occasion............... 6,000
Recordkeeping related to QFCs
to which they are a party when
they are in troubled condition.
Limited Scope Entities: Recordkeeping.............. 65 1 5 On Occasion............... 325
Recordkeeping related to QFCs
to which they are a party when
they are in troubled condition.
-------------------------------------------------------------------------------------------
Total Burden............... ........................... .............. .............. .............. .......................... 6,325
--------------------------------------------------------------------------------------------------------------------------------------------------------
Comments are invited on:
(a) Whether the collections of information are necessary for the
proper performance of the agencies' functions, including whether the
information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collections, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected; and
(d) Estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on
aspects of this notice that may affect reporting, recordkeeping, or
disclosure requirements and burden estimates should be sent to the
addresses listed in the ADDRESSES section of this document. A copy of
the comments may also be submitted to the OMB desk officer for the
agencies: By mail to U.S. Office of Management and Budget, 725 17th
Street NW., #10235, Washington, DC 20503; by facsimile to (202) 395-
5806; or by email to: [email protected], Attention, Federal
Banking Agency Desk Officer.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,
requires an agency to provide an initial regulatory flexibility
analysis with a proposed rule, unless the agency certifies that the
rule would not have a significant economic impact on a substantial
number of small entities (defined by the Small Business Administration
for purposes of the RFA to include banking entities with total assets
of $550 million or less).
For the same reasons as stated in the NPR of the existing Part 371
(73 FR 43635, 43640 (July 28, 2008)), the proposed rule would not have
a significant economic impact on a substantial number of small
entities. Most small entities do not participate in capital markets
involving QFCs since QFCs are ``generally sophisticated financial
instruments that are usually used by larger financial institutions to
hedge assets, provide funding, or increase income.'' Id. According to
data from the September 30th, 2016 Consolidated Reports of Condition
and Income the FDIC insures 4,748 small depository institutions and 543
(11 percent) report some volume of QFCs. To estimate the number of
small institutions affected by the proposed rule the FDIC analyzed the
frequency with which FDIC-insured institutions with consolidated assets
less than $550 million became in a troubled condition. Based on FDIC
supervisory experience, it is estimated that small institutions became
in a troubled condition 267 times per year on average. The annual
average estimate of institutions in troubled condition with
consolidated assets less than $550 million is adjusted to 29 to reflect
the number of institutions in troubled condition that are likely to be
a party to some volume of QFCs, and therefore subject to the proposed
rule.\30\
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\30\ 543 small FDIC-insured institutions out of 4,748 reported
some volume of QFCs on their Consolidated Reports of Condition and
Income. Therefore it is estimated that only 11 percent of the
historical average annual rate of small institutions in a troubled
condition had some volume of QFCs (267*0.11 = 29).
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In the event that one of these small institutions becomes in a
troubled condition, the FDIC assumes that it will take approximately
one labor hour, on average, to comply with the added recordkeeping
requirements of the proposed revisions to Part 371. Small depository
institutions generally do not have large and complex portfolios of QFCs
and, therefore, the anticipated burden hours associated with the
proposed rule is going to be low. Accordingly, the FDIC estimates that
the added compliance costs associated with the proposed rule are 29
hours annually for all small institutions with some volume of QFCs that
become in a troubled condition. The labor hours necessary to comply
with the proposed rule will vary greatly for each institution depending
upon the size and complexity of the QFC portfolio, the efficiency of
the institution's QFC information management system(s) and the
availability and accessibility of information on QFCs.
To comply with the recordkeeping requirements of the rule it is
assumed that entities in troubled condition will employ attorneys,
compliance officers, credit analysts, computer programmers, computer
systems analysts, database administrators, financial managers, and
computer information systems managers. The FDIC has estimated that the
average hourly wage rate for recordkeepers to comply with the initial
recordkeeping burden is approximately $57 per hour based on average
hourly wage information by occupation from the U.S. Department of
Labor, Bureau of Labor Statistics.\31\ Therefore the FDIC estimates
that the proposed rule would pose $1,653 in expected compliance costs
each year on average, for small depository institutions. However, the
costs realized by limited scope entities as a result of the proposed
rule are likely to be lower in the first few years given that the
proposed rule allows covered entities already maintaining information
in accordance with the
[[Page 95509]]
current Part 371 rule to continue to do so. For these reasons, the FDIC
hereby certifies that the proposed rule would not have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\31\ Wage estimate is in nominal dollars and has not been
adjusted for inflation. The average hourly wage estimate is derived
from May 2015 Occupational Employment Statistics (OES) from the
Bureau of Labor Statistics (BLS) for depository credit
intermediation occupations. Hourly wage rates represent the 75th
percentile for Legal Occupations ($75.90), Computer Programmers
($49.86), Computer Systems Analyst ($53.12), Database Administrators
($54.25), Compliance Officers ($38.40), Credit Analysts ($44.99),
Financial Managers ($63.22), and Computer and Information Systems
Managers ($78.17).
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C. The Treasury and General Government Appropriations Act, 1999
The FDIC has determined that the proposed rule will not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, enacted as part of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999
(Pub. L. 105-277, 112 Stat. 2681).
D. Plain Language
Section 722 of the Gramm-Leach-Bliley Act (Pub. L. 106-102, sec.
722, 113 Stat. 1338, 1471 (1999)) requires the FDIC to use plain
language in all proposed and final rules published after January 1,
2000. The FDIC invites your comments on how to make this proposed rule
easier to understand. For example:
Has the FDIC organized the material to suit your needs? If
not, how could this material be better organized?
Are the requirements in the proposed regulation clearly
stated? If not, how could the regulation be stated more clearly?
Does the proposed regulation contain language or jargon
that is unclear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand?
What else could the FDIC do to make the regulation easier
to understand?
Text of the Proposed Rule
Federal Deposit Insurance Corporation
12 CFR Chapter III
List of Subjects in 12 CFR Part 371
Administrative practice and procedure, Bank deposit insurance,
Banking, Banks, Reporting and recordkeeping requirements, Securities,
State non-member banks.
Authority and Issuance
For the reasons set forth in the preamble, the Federal Insurance
Deposit Corporation proposes to revise 12 CFR part 371 to read as
follows:
PART 371--RECORDKEEPING REQUIREMENTS FOR QUALIFIED FINANCIAL
CONTRACTS
Sec.
371.1 Scope, purpose, and compliance dates.
371.2 Definitions.
371.3 Maintenance of records.
371.4 Content of records.
371.5 Enforcement actions.
Appendix A to Part 371--File structure for qualified financial
contract records for Limited Scope Entities.
Appendix B to Part 371--File structure for qualified financial
contract records for Full Scope Entities.
Authority: 12 U.S.C. 1819(a)(Tenth); 1820(g); 1821(e)(8)(D) and
(H); 1831g; 1831i; and 1831s.
Sec. 371.1 Scope, purpose, and compliance dates.
(a) Scope. This part applies to each insured depository institution
that qualifies as a ``records entity'' under the definition set forth
in Sec. 371.2(q).
(b) Purpose. This part establishes recordkeeping requirements with
respect to qualified financial contracts for insured depository
institutions that are in a troubled condition.
(c) Compliance Dates. (1) Within 3 business days of becoming a
records entity, the records entity shall provide to the FDIC, in
writing, the name and contact information for the person at the records
entity who is responsible for recordkeeping under this part and, unless
not required to maintain files in electronic form pursuant to Sec.
371.4(d), a directory of the electronic files that will be used to
maintain the information required to be kept by this part.
(2) Except as provided in Sec. 371.5:
(i) A records entity, other than an accelerated records entity,
shall comply with all applicable recordkeeping requirements of this
part within 270 days after it becomes a records entity.
(ii) An accelerated records entity shall comply with all applicable
recordkeeping requirements of this part within 60 days after it becomes
a records entity.
(iii) Notwithstanding paragraphs (c)(2)(i) and (ii) of this
section, a records entity that becomes an accelerated records entity
after it became a records entity shall comply with all applicable
recordkeeping requirements of this part within 60 days after it becomes
an accelerated records entity or its original 270 day compliance
period, whichever time period is shorter.
(d) Extensions of time to comply. The FDIC may, in its discretion,
grant one or more extensions of time for compliance with the
recordkeeping requirements of this part.
(1) Except as provided in paragraph (d)(2) of this section, no
single extension for a records entity shall be for a period of more
than 120 days.
(2) For a records entity that is an accelerated records entity at
the time of a request for an extension, no single extension shall be
for a period of more than 30 days.
(3) A records entity may request an extension of time by submitting
a written request to the FDIC at least 15 days prior to the deadline
for its compliance with the recordkeeping requirements of this part.
The written request for an extension must contain a statement of the
reasons why the records entity cannot comply by the deadline for
compliance, a project plan (including timeline) for achieving
compliance, and a progress report describing the steps taken to achieve
compliance.
Sec. 371.2 Definitions.
For purposes of this part:
(a) Accelerated records entity means a records entity that:
(1) Has a composite rating, as determined by its appropriate
Federal banking agency in its most recent report of examination, of 4
or 5 under the Uniform Financial Institution Rating System, or in the
case of an insured branch of a foreign bank, an equivalent rating; or
(2) Is determined by the appropriate Federal banking agency or by
the FDIC in consultation with the appropriate Federal banking agency to
be experiencing a significant deterioration of capital or significant
funding difficulties or liquidity stress, notwithstanding the composite
rating of the institution by its appropriate Federal banking agency in
its most recent report of examination.
(b) Affiliate means any entity that controls, is controlled by, or
is under common control with another entity.
(c) Amendment Effective Date means [insert effective date of
amendment].
(d) Appropriate Federal banking agency means the agency or agencies
designated under 12 U.S.C. 1813(q).
(e) Business day means any day other than any Saturday, Sunday or
any day on which either the New York Stock Exchange or the Federal
Reserve Bank of New York is closed.
(f) Control. An entity controls another entity if:
(1) The entity directly or indirectly or acting through one or more
persons owns, controls, or has power to vote 25 per centum or more of
any class of voting securities of the other entity;
(2) The entity controls in any manner the election of a majority of
the directors or trustees of the other entity; or
[[Page 95510]]
(3) The Board of Governors of the Federal Reserve System has
determined, after notice and opportunity for hearing in accordance with
12 CFR 225.31, that the entity directly or indirectly exercises a
controlling influence over the management or policies of the other
entity.
(g) Corporate group means an entity and all affiliates of that
entity.
(h) Counterparty means any natural person or entity (or separate
non-U.S. branch of any entity) that is a party to a QFC with a records
entity or, if the records entity is required or chooses to maintain the
records specified in Sec. 371.4(b), a reportable subsidiary of such
records entity.
(i) Full scope entity means a records entity that has total
consolidated assets equal to or greater than $50 billion or that is a
Part 148 affiliate.
(j) Insured depository institution means any bank or savings
association, as defined in 12 U.S.C. 1813, the deposits of which are
insured by the FDIC.
(k) Legal entity identifier or LEI for an entity means the global
legal entity identifier maintained for such entity by a utility
accredited by the Global LEI Foundation or by a utility endorsed by the
Regulatory Oversight Committee. As used in this definition:
(1) Regulatory Oversight Committee means the Regulatory Oversight
Committee (of the Global LEI System), whose charter was set forth by
the Finance Ministers and Central Bank Governors of the Group of Twenty
and the Financial Stability Board, or any successor thereof; and
(2) Global LEI Foundation means the not-for-profit organization
organized under Swiss law by the Financial Stability Board in 2014, or
any successor thereof.
(l) Limited scope entity means a records entity that is not a full
scope entity.
(m) Parent entity with respect to an entity means an entity that
controls that entity.
(n) Part 148 affiliate means a records entity that is a member of a
corporate group one or more other members of which are required to
maintain QFC records pursuant to 31 CFR part 148.
(o) Position means an individual transaction under a qualified
financial contract and includes the rights and obligations of a person
or entity as a party to an individual transaction under a qualified
financial contract.
(p) Qualified financial contract or QFC means any qualified
financial contract as defined in 12 U.S.C. 1821(e)(8)(D), and any
agreement or transaction that the FDIC determines by regulation,
resolution, or order to be a QFC, including without limitation, any
securities contract, commodity contract, forward contract, repurchase
agreement, and swap agreement.
(q) Records entity means any insured depository institution that
has received written notice from the institution's appropriate Federal
banking agency or the FDIC that it is in a troubled condition and
written notice from the FDIC that it is subject to the recordkeeping
requirements of this part.
(r) Reportable subsidiary means any subsidiary of a records entity
that is not:
(1) A functionally regulated subsidiary as defined in 12 U.S.C.
1844(c)(5);
(2) A security-based swap dealer as defined in 15 U.S.C.
78c(a)(71); or
(3) A major security-based swap participant as defined in 15 U.S.C.
78c(a)(67).
(s) Subsidiary has the meaning set forth in 12 U.S.C. 1813(w)(4).
(t) Total consolidated assets means the total consolidated assets
of a records entity and its consolidated subsidiaries as reported in
the records entity's most recent year-end audited consolidated
statement of financial condition filed with the appropriate Federal
banking agency.
(u) Troubled condition means an insured depository institution
that:
(1) Has a composite rating, as determined by its appropriate
Federal banking agency in its most recent report of examination, of 3
(only for insured depository institutions with total consolidated
assets of $10 billion or greater), 4 or 5 under the Uniform Financial
Institution Rating System, or in the case of an insured branch of a
foreign bank, an equivalent rating;
(2) Is subject to a proceeding initiated by the FDIC for
termination or suspension of deposit insurance;
(3) Is subject to a cease-and-desist order or written agreement
issued by the appropriate Federal banking agency, as defined in 12
U.S.C. 1813(q), that requires action to improve the financial condition
of the insured depository institution or is subject to a proceeding
initiated by the appropriate Federal banking agency which contemplates
the issuance of an order that requires action to improve the financial
condition of the insured depository institution, unless otherwise
informed in writing by the appropriate Federal banking agency;
(4) Is informed in writing by the insured depository institution's
appropriate Federal banking agency that it is in troubled condition for
purposes of 12 U.S.C. 1831i on the basis of the institution's most
recent report of condition or report of examination, or other
information available to the institution's appropriate Federal banking
agency; or
(5) Is determined by the appropriate Federal banking agency or the
FDIC in consultation with the appropriate Federal banking agency to be
experiencing a significant deterioration of capital or significant
funding difficulties or liquidity stress, notwithstanding the composite
rating of the institution by its appropriate Federal banking agency in
its most recent report of examination.
Sec. 371.3 Maintenance of records.
(a) Form and availability.
(1) Unless it is not required to maintain records in electronic
form as provided in Sec. 371.4(d), a records entity shall maintain the
records described in Sec. 371.4 in electronic form and shall be
capable of producing such records electronically in the format set
forth in the appendices of this part.
(2) All such records shall be updated on a daily basis and shall be
based upon values and information no less current than previous end-of-
day values and information.
(3) Except as provided in Sec. 371.4(d), a records entity shall
compile the records described in Sec. 371.4(a) or Sec. 371.4(b) (as
applicable) in a manner that permits aggregation and disaggregation of
such records by counterparty. If the records are maintained pursuant to
Sec. 371.4(b), they must be compiled by the records entity on a
consolidated basis for itself and its reportable subsidiaries in a
manner that also permits aggregation and disaggregation of such records
by the records entity and its reportable subsidiary.
(4) Records maintained pursuant to Sec. 371.4(b) by a records
entity that is a Part 148 affiliate shall be compiled consistently, in
all respects, with records compiled by its affiliate(s) pursuant to 31
CFR part 148.
(5) A records entity shall maintain each set of daily records for a
period of not less than five business days.
(b) Change in Point of Contact. A records entity shall provide to
the FDIC, in writing, any change to the name and contact information
for the person at the records entity who is responsible for
recordkeeping under this part within 3 business days of any change to
such information.
(c) Access to Records. A records entity shall be capable of
providing the records specified in Sec. 371.4 (based on the
immediately preceding day's end-of-day values and information) to the
FDIC no later than 7:00 a.m. (Eastern Time) each day. A records entity
is required to make such records available to the FDIC
[[Page 95511]]
following a written request by the FDIC for such records. Any such
written request shall specify the date such records are to be made
available (and the period of time covered by the request) and shall
provide the records entity at least 8 hours to respond to the request.
If the request is made less than 8 hours before such 7:00 a.m.
deadline, the deadline shall be automatically extended to the time that
is 8 hours following the time of the request.
(d) Maintenance of records after a records entity is no longer in a
troubled condition. A records entity shall continue to maintain the
capacity to produce the records required under this part on a daily
basis for a period of one year after the date that the appropriate
Federal banking agency or the FDIC notifies the institution, in
writing, that it is no longer in a troubled condition as defined in
Sec. 371.2 (u).
(e) Maintenance of records after an acquisition of a records
entity. If a records entity ceases to exist as an insured depository
institution as a result of a merger or a similar transaction with an
insured depository institution that is not in a troubled condition
immediately following the transaction, the obligation to maintain
records under this part on a daily basis will terminate when the
records entity ceases to exist as a separately insured depository
institution.
Sec. 371.4 Content of records.
(a) Limited scope entities. Except as provided in Sec. 371.5, a
limited scope entity must maintain (at the election of such records
entity) either the records described in paragraph (b) of this section
or the following records:
(1) The position-level data listed in Table A-1 in Appendix A of
this part with respect to each QFC to which it is a party, without
duplication.
(2) The counterparty-level data listed in Table A-2 in Appendix A
of this part with respect to each QFC to which it is a party, without
duplication.
(3) The corporate organization master table in Appendix A of this
part for the records entity and its affiliates.
(4) The counterparty master table in Appendix A of this part with
respect to each QFC to which it is a party, without duplication.
(5) All documents that govern QFC transactions between the records
entity and each counterparty, including, without limitation, master
agreements and annexes, schedules, netting agreements, supplements, or
other modifications with respect to the agreements, confirmations for
each QFC position that has been confirmed and all trade acknowledgments
for each QFC position that has not been confirmed, all credit support
documents including, but not limited to, credit support annexes,
guarantees, keep-well agreements, or net worth maintenance agreements
that are relevant to one or more QFCs, and all assignment or novation
documents, if applicable, including documents that confirm that all
required consents, approvals, or other conditions precedent for such
assignment or novation have been obtained or satisfied.
(6) A list of vendors directly supporting the QFC-related
activities of the records entity and the vendors' contact information.
(b) Full scope entities. A full scope entity must maintain the
following records:
(1) The position-level data listed in Table A-1 in Appendix B of
this part with respect to each QFC to which it or any of its reportable
subsidiaries is a party, without duplication.
(2) The counterparty-level data listed in Table A-2 in Appendix B
of this part with respect to each QFC to which it or any of its
reportable subsidiaries is a party, without duplication.
(3) The legal agreements information listed in Table A-3 in
Appendix B of this part with respect to each QFC to which it or any of
its reportable subsidiaries is a party, without duplication.
(4) The collateral detail data listed in Table A-4 in Appendix B of
this part with respect to each QFC to which it or any of its reportable
subsidiaries is a party, without duplication.
(5) The corporate organization master table in Appendix B of this
part for the records entity and its affiliates.
(6) The counterparty master table in Appendix B of this part with
respect to each QFC to which it or any of its reportable subsidiaries
is a party, without duplication.
(7) The booking location master table in Appendix B of this part
for each booking location used with respect to each QFC to which it or
any of its reportable subsidiaries is a party, without duplication.
(8) The safekeeping agent master table in Appendix B of this part
for each safekeeping agent used with respect to each QFC to which it or
any of its reportable subsidiaries is a party, without duplication.
(9) All documents that govern QFC transactions between the records
entity (or any of its reportable subsidiaries) and each counterparty,
including, without limitation, master agreements and annexes,
schedules, netting agreements, supplements, or other modifications with
respect to the agreements, confirmations for each QFC position that has
been confirmed and all trade acknowledgments for each QFC position that
has not been confirmed, all credit support documents including, but not
limited to, credit support annexes, guarantees, keep-well agreements,
or net worth maintenance agreements that are relevant to one or more
QFCs, and all assignment or novation documents, if applicable,
including documents that confirm that all required consents, approvals,
or other conditions precedent for such assignment or novation have been
obtained or satisfied.
(10) A list of vendors directly supporting the QFC-related
activities of the records entity and its reportable subsidiaries and
the vendors' contact information.
(c) Change in recordkeeping status. (1) A records entity that was a
limited scope entity maintaining the records specified in paragraphs
(a)(1) through (a)(6) of this section and that subsequently becomes a
full scope entity must maintain the records specified in paragraph (b)
of this section within 270 days of becoming a full scope entity (or 60
days of becoming a full scope entity if it is an accelerated records
entity). Until the records entity maintains the records required by
paragraph (b) of this section it must continue to maintain the records
required by paragraphs (a)(1) through (a)(6) of this section.
(2) A records entity that was a full scope entity maintaining the
records specified in paragraph (b) of this section and that
subsequently becomes a limited scope entity may continue to maintain
the records specified in paragraph (b) of this section or, at its
option, may maintain the records specified in paragraphs (a)(1) through
(a)(6) of this section, provided however, that such records entity
shall continue to maintain the records specified in paragraph (b) of
this section until it maintains the records specified in paragraphs
(a)(1) through (a)(6) of this section.
(3) A records entity that changes from a limited scope entity to a
full scope entity and at the time it becomes a full scope entity is not
yet maintaining the records specified in paragraph (a) of this section
or paragraph (b) of this section must satisfy the recordkeeping
requirements of paragraph (b) of this section within 270 days of first
becoming a records entity (or 60 days of first becoming a records
entity if it is an accelerated records entity).
(4) A records entity that changes from a full scope entity to a
limited scope entity and at the time it becomes a limited scope entity
is not yet maintaining the records specified in
[[Page 95512]]
paragraph (b) of this section must satisfy the recordkeeping
requirements of paragraph (a) of this section within 270 days of first
becoming a record entity (or 60 days of first becoming a record entity
if it is an accelerated records entity).
(d) Records entities with fewer than 20 QFC positions.
Notwithstanding any other requirement of this part, if a records entity
and, if it is a full scope entity, its reportable subsidiaries, have
fewer than 20 open QFC positions in total (without duplication) on the
date the institution becomes a records entity, the records required by
this section are not required to be recorded and maintained in
electronic form as would otherwise be required by this section, so long
as all required records are capable of being updated on a daily basis.
If at any time after it becomes a records entity, the institution and,
if it is a full scope entity, its reportable subsidiaries, if
applicable, have 20 or more open QFC positions in total (without
duplication), it must record and maintain records in electronic form as
required by this section within 270 days (or, if it is an accelerated
records entity at that time, within 60 days). The records entity must
provide to the FDIC, within 3 business days of reaching the 20-QFC
threshold, a directory of the electronic files that will be used to
maintain the information required to be kept by this section.
Sec. 371.5 Transition for existing records entities.
(a) Limited Scope Entities. Notwithstanding any other provision of
this part, an insured depository institution that became a records
entity prior to the Amendment Effective Date and constitutes a limited
scope entity on the Amendment Effective Date shall continue to comply
with this part as in effect immediately prior to the Amendment
Effective Date or, if it elects to comply with this part as in effect
on and after such date, as so in effect, for so long as the entity
remains a limited scope entity that has not ceased to be required to
maintain the capacity to produce records pursuant to Sec. 371.3(d).
(b) Transition for full scope entities maintaining records on
effective date. If an insured depository institution that constitutes a
full scope entity on the Amendment Effective Date became a records
entity prior to the Amendment Effective Date and is maintaining the
records required by this part immediately prior to the Amendment
Effective Date, such records entity shall comply with all recordkeeping
requirements of this part within 270 days after the Amendment Effective
Date (or no later than 60 days after the Amendment Effective Date if it
is an accelerated records entity). Until the records entity maintains
the records required by Sec. 371.4(a) or Sec. 371.4(b), as
applicable, it must continue to maintain the records required by this
part immediately prior to the Amendment Effective Date.
(c) Transition for full scope entities not maintaining records on
effective date. If an insured depository institution that constitutes a
full scope entity on the Amendment Effective Date became a records
entity prior to the Amendment Effective Date but is not maintaining the
records required by this part immediately prior to the Amendment
Effective Date, such records entity shall comply with all recordkeeping
requirements of this part within 270 days after the date that it first
became a records entity (or no later than 60 days after it first became
a records entity if it is an accelerated records entity).
Sec. 371.6 Enforcement Actions.
Violating the terms or requirements set forth in this part
constitutes a violation of a regulation and subjects the records entity
to enforcement actions under Section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818).
Appendix A to Part 371--File Structure for Qualified Financial Contract
(QFC) Records for Limited Scope Entities
Table A-1--Position-Level Data
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Definition Validation
----------------------------------------------------------------------------------------------------------------
A1.1........ As of date........ 2015-01-05........ Provide data YYYY-MM-DD........
extraction date.
A1.2........ Records entity 999999999......... Provide LEI for Varchar(50)....... Validated against
identifier. records entity if CO.2.
available.
Information
needed to review
position-level
data by records
entity.
A1.3........ Position 20058953.......... Provide a position Varchar(100)......
identifier. identifier. Use
the unique
transaction
identifier if
available.
Information
needed to readily
track and
distinguish
positions.
A1.4........ Counterparty 888888888......... Provide a Varchar(50)....... Validated against
identifier. counterparty CP.2
identifier. Use
LEI if
counterparty has
one. Information
needed to
identify
counterparty by
reference to
Counterparty
Master Table.
A1.5........ Internal booking New York, New York Provide office Varchar(50).......
location where the
identifier. position is
booked.
Information
needed to
determine system
on which the
trade is booked
and settled.
A1.6........ Unique booking xxxxxx............ Provide an Varchar(50).......
unit or desk identifier for
identifier. unit or desk at
which the
position is
booked.
Information
needed to help
determine purpose
of position.
[[Page 95513]]
A1.7........ Type of QFC....... Credit, equity, Provide type of Varchar(100)......
foreign exchange, QFC. Use unique
interest rate product
(including cross- identifier if
currency), other available.
commodity, Information
securities needed to
repurchase determine the
agreement, nature of the QFC.
securities
lending, loan
repurchase
agreement,
guarantee or
other third party
credit
enhancement of a
QFC.
A1.8........ Type of QFC Credit, equity, If QFC type is Varchar(200)...... Only required if
covered by foreign exchange, guarantee or QFC type (A1.7)
guarantee or interest rate other third party is a guarantee or
other third party (including cross- credit other third party
credit currency), other enhancement, credit
enhancement. commodity, provide type of enhancement.
securities QFC that is
repurchase covered by such
agreement, guarantee or
securities other third party
lending, or loan credit
repurchase enhancement. Use
agreement. unique product
identifier if
available. If
multiple asset
classes are
covered by the
guarantee or
credit
enhancement,
enter the asset
classes separated
by comma. If all
the QFCs of the
underlying QFC
obligor
identifier are
covered by the
guarantee or
other third party
credit
enhancement,
enter ``All.''.
A1.9........ Underlying QFC 888888888......... If QFC type is Varchar(50)....... Only required if
obligor guarantee or QFC asset type
identifier. other third party (A1.7) is a
credit guarantee or
enhancement, other third party
provide an credit
identifier for enhancement.
the QFC obligor Validated against
whose obligation CO.2 if affiliate
is covered by the or CP.2 if non-
guarantee or affiliate.
other third party
credit
enhancement. Use
LEI if underlying
QFC obligor has
one. Complete the
counterparty
master table with
respect to a QFC
obligor that is a
non-affiliate.
A1.10....... Agreement xxxxxxxxx......... Provide an Varchar(50).......
identifier. identifier for
primary governing
documentation,
e.g. the master
agreement or
guarantee
agreement, as
applicable.
A1.11....... Netting agreement xxxxxxxxx......... Provide an Varchar(50).......
identifier. identifier for
netting
agreement. If
this agreement is
the same as
provided in
A1.10, use same
identifier.
Information
needed to
identify unique
netting sets.
A1.12....... Netting agreement xxxxxxxxx......... Provide a netting Varchar(50)....... Validated against
counterparty agreement CP.2.
identifier. counterparty
identifier. Use
same identifier
as provided in
A1.4 if
counterparty and
netting agreement
counterparty are
the same. Use LEI
if netting
agreement
counterparty has
one. Information
needed to
identify unique
netting sets.
[[Page 95514]]
A1.13....... Trade date........ 2014-12-20........ Provide trade or YYYY-MM-DD........
other commitment
date for the QFC.
Information
needed to
determine when
the entity's
rights and
obligations
regarding the
position
originated.
A1.14....... Termination date.. 2014-03-31........ Provide date the YYYY-MM-DD........
QFC terminates or
is expected to
terminate,
expire, mature,
or when final
performance is
required.
Information
needed to
determine when
the entity's
rights and
obligations
regarding the
position are
expected to end.
A1.15....... Next call, put, or 2015-01-25........ Provide next call, YYYY-MM-DD........
cancellation date. put, or
cancellation date.
A1.16....... Next payment date. 2015-01-25........ Provide next YYYY-MM-DD........
payment date.
A1.17....... Current market 995000............ In the case of a Num (25,5)........
value of the guarantee or
position in U.S. other third party
dollars. credit
enhancements,
provide the
current mark-to-
market expected
value of the
exposure.
Information
needed to
determine the
current size of
the obligation/
benefit
associated with
the QFC.
A1.18....... Notional or 1000000........... Provide the Num (25,5)........
principal amount notional or
of the position principal amount,
In U.S. dollars. as applicable, in
U.S. dollars. In
the case of a
guarantee or
other third party
credit
enhancements,
provide the
maximum possible
exposure.
Information
needed to help
evaluate the
position.
A1.19....... Covered by third- Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
party credit QFC is covered by ``N``
enhancement a guarantee or
agreement (for other third-party
the benefit of credit
the records enhancement.
entity)?. Information
needed to
determine credit
enhancement.
A1.20....... Third-party credit 999999999......... If QFC is covered Varchar(50)....... Required if A1.20
enhancement by a guarantee or is ``Y''.
provider other third-party Validated against
identifier (for credit CP.2
the benefit of enhancement,
the records provide an
entity). identifier for
provider. Use LEI
if available.
Complete the
counterparty
master table with
respect to a
provider that is
a non-affiliate.
A1.21....... Third-party credit .................. If QFC is covered Varchar(50)....... Required if A1.20
enhancement by a guarantee or is ``Y''.
agreement other third-party
identifier (for credit
the benefit of enhancement,
the records provide an
entity). identifier for
the agreement.
A1.22....... Related position 3333333........... Use this field to Varchar(100)......
of records entity. link any related
positions of the
records entity .
All positions
that are related
to one another
should have same
designation in
this field.
A1.23....... Reference number 9999999........... Provide a unique Varchar(500)......
for any related reference number
loan. for any loan held
by the records
entity or a
member of its
corporate group
related to the
position (with
multiple entries
delimited by
commas).
[[Page 95515]]
A1.24....... Identifier of the 999999999......... For any loan Varchar(500)......
lender of the recorded in
related loan. A1.23, provide
identifier for
records entity or
member of its
corporate group
that holds any
related loan. Use
LEI if entity has
one.
----------------------------------------------------------------------------------------------------------------
Table A-2--Counterparty Netting Set Data
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
A2.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
A2.2........ Records entity 999999999......... Provide the LEI Varchar(50)....... Validated against
identifier. for the records CO.2.
entity if
available.
A2.3........ Netting agreement 888888888......... Provide an Varchar(50)....... Validated against
counterparty identifier for CP.2.
identifier. the netting
agreement
counterparty. Use
LEI if
counterparty has
one.
A2.4........ Netting agreement xxxxxxxxx......... Provide an Varchar(50).......
identifier. identifier for
the netting
agreement.
A2.5........ Underlying QFC 888888888......... Provide identifier Varchar(50)....... Validated against
obligor for underlying CO.2 or CP.2.
identifier. QFC obligor if
netting agreement
is associated
with a guarantee
or other third
party credit
enhancement. Use
LEI if available.
A2.6........ Covered by third- Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
party credit the positions ``N``.
enhancement subject to the
agreement (for netting set
the benefit of agreement are
the records covered by a
entity)? third-party
credit
enhancement
agreement.
A2.7 Third-party credit 999999999......... Use LEI if Varchar(50)....... Required if A2.6
enhancement available. is ``Y''. Should
provider Information be a valid entry
identifier (for needed to in the
the benefit of identity third- Counterparty
the records party credit Master Table.
entity). enhancement Validated against
provider. CP.2.
A2.8........ Third-party credit 4444444........... .................. Varchar(50)....... Required if A2.6
enhancement is ``Y''.
agreement Validated against
identifier (for A3.3.
the benefit of
the records
entity).
A2.9........ Aggregate current -1000000.......... Information needed Num (25,5)........ Market value of
market value in to help evaluate all positions in
U.S. dollars of the positions A1 for the given
all positions subject to the netting agreement
under this netting agreement. identifier should
netting agreement. be equal to this
value. A2.9 =
A2.10 + A2.11.
A2.10....... Current market 3000000........... Information needed Num (25,5)........ Market value of
value in U.S. to help evaluate all positive
dollars of all the positions positions in A1
positive subject to the for the given
positions, as netting agreement. netting agreement
aggregated under identifier should
this netting be equal to this
agreement. value. A2.9 =
A2.10 + A2.11.
A2.11....... Current market -4000000.......... Information needed Num (25,5)........ Market value of
value in U.S. to help evaluate all negative
dollars of all the positions positions in A1
negative subject to the for the given
positions, as netting agreement. Netting Agreement
aggregated under Identifier should
this netting be equal to this
agreement. value. A2.9 =
A2.10 + A2.11.
A2.12....... Current market 950000............ Information needed Num (25,5)........
value in U.S. to determine the
dollars of all extent to which
collateral posted collateral has
by records been provided by
entity, as records entity.
aggregated under
this netting
agreement.
A2.13....... Current market 50000............. Information needed Num (25,5)........
value in U.S. to determine the
dollars of all extent to which
collateral posted collateral has
by counterparty, been provided by
as aggregated counterparty.
under this
netting agreement.
[[Page 95516]]
A2.14....... Records entity 950,000........... Provide records Num (25,5)........ Should be less
collateral--net. entity's than or equal to
collateral excess A2.15.
or deficiency
with respect to
all of its
positions, as
determined under
each applicable
agreement,
including
thresholds and
haircuts where
applicable.
A2.15....... Counterparty 950,000........... Provide Num (25,5)........ Should be less
collateral--net. counterparty's than or equal to
collateral excess A2.16.
or deficiency
with respect to
all of its
positions, as
determined under
each applicable
agreement,
including
thresholds and
haircuts where
applicable.
A2.16....... Next margin 2015-11-05........ Provide next YYYY-MM-DD........
payment date. margin payment
date for position.
A2.17....... Next margin 150,000........... Use positive value Num (25,5)........
payment amount in if records entity
U.S. dollars. is due a payment
and use negative
value if records
entity has to
make the payment.
----------------------------------------------------------------------------------------------------------------
Corporate Organization Master Table *
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
CO.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
CO.2........ Entity identifier. 888888888......... Provide unique Varchar(50)....... Should be unique
identifier. Use across all record
LEI if available. entities.
Information
needed to
identify entity.
CO.3........ Has LEI been used Y/N............... Specify whether Char(1)........... Should be ``Y'' or
for entity the entity ``N``.
identifier? identifier
provided is an
LEI.
CO.4........ Legal name of John Doe & Co..... Provide legal name Varchar(200)......
entity. of entity.
CO.5........ Immediate parent 77777777.......... Use LEI if Varchar(50).......
entity identifier. available.
Information
needed to
complete org
structure.
CO.6........ Has LEI been used Y/N............... Specify whether Char(1)........... Should be ``Y'' or
for immediate the immediate ``N``.
parent entity parent entity
identifier? identifier
provided is an
LEI.
CO.7........ Legal name of John Doe & Co..... Information needed Varchar(200)......
immediate parent to complete org
entity. structure.
CO.8........ Percentage 100.00............ Information needed Num (5,2).........
ownership of to complete org
immediate parent structure.
entity in the
entity.
CO.9........ Entity type....... Subsidiary, Information needed Varchar(50).......
foreign branch, to complete org
foreign division. structure.
CO.10....... Domicile.......... New York, New York Enter as city, Varchar(50).......
state or city,
foreign country.
CO.11....... Jurisdiction under New York.......... Enter as state or Varchar(50).......
which foreign
incorporated or jurisdiction.
organized.
----------------------------------------------------------------------------------------------------------------
* Foreign branches and divisions shall be separately identified to the extent they are identified in an entity's
reports to its PFRAs.
[[Page 95517]]
Counterparty Master Table
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
CP.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
CP.2........ Counterparty 888888888......... Use LEI if Varchar(50).......
identifier. counterparty has
one. The
counterparty
identifier shall
be the global
legal entity
identifier if one
has been issued
to the entity. If
a counterparty
transacts with
the records
entity through
one or more
separate foreign
branches or
divisions and any
such branch or
division does not
have its own
unique global
legal entity
identifier, the
records entity
must include
additional
identifiers, as
appropriate to
enable the FDIC
to aggregate or
disaggregate the
data for each
counterparty and
for each entity
with the same
ultimate parent
entity as the
counterparty.
CP.3........ Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for counterparty the counterparty ``N``.
identifier? identifier is an
LEI.
CP.4........ Legal name of John Doe & Co..... Information needed Varchar(200)......
counterparty. to identify and,
if necessary,
communicate with
counterparty.
CP.5........ Domicile.......... New York, New York Enter as city, Varchar(50).......
state or city,
foreign country.
CP.6........ Jurisdiction under New York.......... Enter as state or Varchar(50).......
which foreign
incorporated or jurisdiction.
organized.
CP.7........ Immediate parent 77777777.......... Provide an Varchar(50).......
entity identifier. identifier for
the parent entity
that directly
controls the
counterparty. Use
LEI if immediate
parent entity has
one.
CP.8........ Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for immediate the immediate ``N``.
parent entity parent entity
identifier? identifier is an
LEI.
CP.9........ Legal name of John Doe & Co..... Information needed Varchar(200)......
immediate parent to identify and,
entity. if necessary,
communicate with
counterparty.
CP.10....... Ultimate parent 666666666......... Provide an Varchar(50).......
entity identifier. identifier for
the parent entity
that is a member
of the corporate
group of the
counterparty that
is not controlled
by another
entity.
Information
needed to
identify
counterparty. Use
LEI if ultimate
parent entity has
one.
CP.11....... Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for ultimate the ultimate ``N``.
parent entity parent entity
identifier? identifier is an
LEI.
CP.12....... Legal name of John Doe & Co..... Information needed Varchar(100)......
ultimate parent to identify and,
entity. if necessary,
communicate with
counterparty.
----------------------------------------------------------------------------------------------------------------
[[Page 95518]]
Details of Formats
----------------------------------------------------------------------------------------------------------------
Format Content in brief Additional explanation Examples
----------------------------------------------------------------------------------------------------------------
YYYY-MM-DD........................... Date................... YYYY = four digit date, 2015-11-12.
MM = 2 digit month, DD
= 2 digit date.
Num (25,5)........................... Up to 25 numerical Up to 20 numerical 1352.67.
characters including 5 characters before the 12345678901234567890.12
decimals. decimal point and up 345.
to 5 numerical 0.
characters after the -20000.25.
decimal point. The dot -0.257.
character is used to
separate decimals.
Char(3).............................. 3 alphanumeric The length is fixed at USD.
characters. 3 alphanumeric X1X.
characters. 999.
Varchar(25).......................... Up to 25 alphanumeric The length is not fixed asgaGEH3268EFdsagtTRCF5
characters. but limited at up to 43.
25 alphanumeric
characters.
----------------------------------------------------------------------------------------------------------------
Appendix B to Part 371--File Structure for Qualified Financial Contract
Records for Full Scope Entities 32
---------------------------------------------------------------------------
\32\ Pursuant to Sec. 374(b), the records entity is required to
provide the information required by Appendix B for itself and each
of its reportable subsidiaries in manner that can be disaggregated
by legal entities (i.e., the records entity and each reportable
subsidiary).
Table A-1--Position-Level Data
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Definition Validation
----------------------------------------------------------------------------------------------------------------
A1.1......... As of date........ 2015-01-05........ Provide data YYYY-MM-DD........ .................
extraction date.
A1.2......... Records entity 999999999......... Provide LEI for Varchar(50)....... Validated against
identifier. records entity. CO.2.
Information
needed to review
position-level
data by records
entity.
A1.3......... Position 20058953.......... Provide a position Varchar(100)...... .................
identifier. identifier.
Should be used
consistently
across all
records entities.
Use the unique
transaction
identifier if
available.
Information
needed to readily
track and
distinguish
positions.
A1.4......... Counterparty 888888888......... Provide a Varchar(50)....... Validated against
identifier. counterparty CP.2.
identifier. Use
LEI if
counterparty has
one. Should be
used consistently
by all records
entities.
Information
needed to
identify
counterparty by
reference to
Counterparty
Master Table.
A1.5......... Internal booking New York, New York Provide office Varchar(50)....... Combination A1.2
location where the + A1.5 + A1.6
identifier. position is should have a
booked. corresponding
Information unique
needed to combination BL.2
determine system + BL.3 + BL.4
on which the entry in Booking
trade is booked Location Master
and settled. Table.
A1.6......... Unique booking xxxxxx............ Provide an Varchar(50)....... Combination A1.2
unit or desk identifier for + A1.5 + A1.6
identifier. unit or desk at should have a
which the corresponding
position is unique
booked. combination BL.2
Information + BL.3 + BL.4
needed to help entry in Booking
determine purpose Location Master
of position. Table.
[[Page 95519]]
A1.7......... Type of QFC....... Credit, equity, Provide type of Varchar(100)......
foreign exchange, QFC. Use unique
interest rate product
(including cross- identifier if
currency), other available.
commodity, Information
securities needed to
repurchase determine the
agreement, nature of the QFC.
securities
lending, loan
repurchase
agreement,
guarantee or
other third party
credit
enhancement of a
QFC.
A1.7.1....... Type of QFC Credit, equity, If QFC type is Varchar(500)...... Only required if
covered by foreign exchange, guarantee or QFC type (A1.7)
guarantee or interest rate other third party is a guarantee
other third party (including cross- credit or other third
credit currency), other enhancement, party credit
enhancement. commodity, provide type of enhancement.
securities QFC of the QFC
repurchase that is covered
agreement, by such guarantee
securities or other third
lending, or loan party credit
repurchase enhancement. Use
agreement. unique product
identifier if
available. If
multiple asset
classes are
covered by the
guarantee or
credit
enhancement,
enter the asset
classes separated
by comma. If all
the QFCs of the
underlying QFC
obligor
identifier are
covered by the
guarantee or
other third party
credit
enhancement,
enter ``All''.
A1.7.2....... Underlying QFC 888888888......... If QFC type is Varchar(50)....... Only required if
obligor guarantee or QFC asset type
identifier. other third party (A1.7) is a
credit guarantee or
enhancement, other third
provide an party credit
identifier for enhancement.
the QFC obligor Validated
whose obligation against CO.2 if
is covered by the affiliate or
guarantee or CP.2 if non-
other third party affiliate.
credit
enhancement. Use
LEI if underlying
QFC obligor has
one. Complete the
counterparty
master table with
respect to a QFC
obligor that is a
non-affiliate.
A1.8......... Agreement xxxxxxxxx......... Provide an Varchar(50)....... Validated against
identifier. identifier for A3.3.
the primary
governing
documentation,
e.g., the master
agreement or
guarantee
agreement, as
applicable.
A1.9......... Netting agreement xxxxxxxxx......... Provide an Varchar(50)....... Validated against
identifier. identifier for A3.3.
netting
agreement. If
this agreement is
the same as
provided in
A1.10, use same
identifier.
Information
needed to
identify unique
netting sets.
A1.10........ Netting agreement xxxxxxxxx......... Provide a netting Varchar(50)....... Validated against
counterparty agreement CP.2.
identifier. counterparty
identifier. Use
same identifier
as provided in
A1.4 if
counterparty and
netting agreement
counterparty are
the same. Use LEI
if netting
agreement
counterparty has
one. Information
needed to
identify unique
netting sets.
[[Page 95520]]
A1.11........ Trade date........ 2014-12-20........ Provide trade or YYYY-MM-DD........
other commitment
date for the QFC.
Information
needed to
determine when
the entity's
rights and
obligations
regarding the
position
originated.
A1.12........ Termination date.. 2014-03-31........ Provide date the YYYY-MM-DD........
QFC terminates or
is expected to
terminate,
expire, mature,
or when final
performance is
required.
Information
needed to
determine when
the entity's
rights and
obligations
regarding the
position are
expected to end.
A1.13........ Next call, put, or 2015-01-25........ Provide next call, YYYY-MM-DD........
cancellation date. put, or
cancellation date.
A1.14........ Next payment date. 2015-01-25........ Provide next YYYY-MM-DD........
payment date.
A1.15........ Local Currency Of USD............... Provide currency Char(3)...........
Position. in which QFC is
denominated. Use
ISO currency code.
A1.16........ Current market 995000............ Provide current Num (25,5)........
value of the market value of
position in local the position in
currency. local currency.
In the case of a
guarantee or
other third party
credit
enhancements,
provide the
current mark-to-
market expected
value of the
exposure.
Information
needed to
determine the
current size of
the obligation or
benefit
associated with
the QFC.
A1.17........ Current market 995000............ In the case of a Num (25,5)........
value of the guarantee or
position in U.S. other third party
dollars. credit
enhancements,
provide the
current mark-to-
market expected
value of the
exposure.
Information
needed to
determine the
current size of
the obligation/
benefit
associated with
the QFC.
A1.18........ Asset 1................. Provide fair value Char(1)...........
Classification. asset
classification
under GAAP, IFRS,
or other
accounting
principles or
standards used by
records entity.
Provide ``1'' for
Level 1, ``2''
for Level 2, or
``3'' for Level
3. Information
needed to assess
fair value of the
position.
A1.19........ Notional or 1000000........... Provide the Num (25,5)........
principal amount notional or
of the position principal amount,
in local currency. as applicable, in
local currency.
In the case of a
guarantee or
other third party
credit
enhancement,
provide the
maximum possible
exposure.
Information
needed to help
evaluate the
position.
[[Page 95521]]
A1.20........ Notional or 1000000........... Provide the Num (25,5)........
principal amount notional or
of the position principal amount,
In U.S. dollars. as applicable, in
U.S. dollars. In
the case of a
guarantee or
other third party
credit
enhancements,
provide the
maximum possible
exposure.
Information
needed to help
evaluate the
position.
A1.21........ Covered by third- Y/N............... Indicate whether Char(1)........... Should be ``Y''
party credit QFC is covered by or ``N``.
enhancement a guarantee or
agreement (for other third-party
the benefit of credit
the records enhancement.
entity)?. Information
needed to
determine credit
enhancement.
A1.21.1...... Third-party credit 999999999......... If QFC is covered Varchar(50)....... Required if A1.21
enhancement by a guarantee or is ``Y''.
provider other third-party Validated
identifier (for credit against CP.2.
the benefit of enhancement,
the records provide an
entity). identifier for
provider. Use LEI
if available.
Complete the
counterparty
master table with
respect to a
provider that is
a non-affiliate.
A1.21.2...... Third-party credit 4444444........... If QFC is covered Varchar(50)....... Required if A1.21
enhancement by a guarantee or is ``Y.''
agreement other third-party Validated
identifier (for credit against A3.3.
the benefit of enhancement,
the records provide an
entity). identifier for
the agreement.
A1.21.3...... Covered by third- Y/N............... Indicate whether Char(1)........... Should be ``Y''
party credit QFC is covered by or ``N``.
enhancement a guarantee or
agreement (for other third-party
the benefit of credit
the enhancement.
counterparty)?. Information
needed to
determine credit
enhancement.
A1.21.4...... Third-party credit 999999999......... If QFC is covered Varchar(50)....... Required if
enhancement by a guarantee or A1.21.3 is
provider other third-party ``Y''. Validated
identifier (for credit against CO.2 or
the benefit of enhancement, CP.2.
the counterparty). provide an
identifier for
provider. Use LEI
if available.
Complete the
counterparty
master table with
respect to a
provider that is
a non-affiliate.
A1.21.5...... Third-party credit 4444444........... If QFC is covered Varchar(50)....... Required if
enhancement by a guarantee or A1.21.3 is
agreement other third-party ``Y''. Validated
identifier (for credit against A3.3.
the benefit of enhancement,
the counterparty). provide an
identifier for
agreement.
A1.22........ Related position 3333333........... Use this field to Varchar(100)......
of records entity. link any related
positions of the
records entity.
All positions
that are related
to one another
should have same
designation in
this field.
A1.23........ Reference number 9999999........... Provide a unique Varchar(500)......
for any related reference number
loan. for any loan held
by the records
entity or a
member of its
corporate group
related to the
position (with
multiple entries
delimited by
commas).
A1.24........ Identifier of the 999999999......... For any loan Varchar(500)......
lender of the recorded in
related loan. A1.23, provide
identifier for
records entity or
member of its
corporate group
that holds any
related loan. Use
LEI if entity has
one.
----------------------------------------------------------------------------------------------------------------
[[Page 95522]]
Table A-2--Counterparty Netting Set Data
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
A2.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........ ..................
date.
A2.2........ Records entity 999999999......... Provide the LEI Varchar(50)....... Validated against
identifier. for the records CO.2.
entity.
A2.3........ Netting agreement 888888888......... Provide an Varchar(50)....... Validated against
counterparty identifier for CP.2.
identifier. the netting
agreement
counterparty. Use
LEI if
counterparty has
one.
A2.4........ Netting agreement xxxxxxxxx......... Provide an Varchar(50)....... Validated against
identifier. identifier for A3.3.
the netting
agreement.
A2.4.1...... Underlying QFC 888888888......... Provide identifier Varchar(50)....... Validated against
obligor for underlying CO.2 or CP.2.
identifier. QFC obligor if
netting agreement
is associated
with a guarantee
or other third
party credit
enhancement. Use
LEI if available.
A2.5........ Covered by third- Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
party credit the positions ``N``.
enhancement subject to the
agreement (for netting set
the benefit of agreement are
the records covered by a
entity)? third-party
credit
enhancement
agreement.
A2.5.1...... Third-party credit 999999999......... Use LEI if Varchar(50)....... Required if A2.5
enhancement available. is ``Y''.
provider Information Validated against
identifier (for needed to CP.2.
the benefit of identity third-
the records party credit
entity). enhancement
provider.
A2.5.2...... Third-party credit 4444444........... .................. Varchar(50)....... Required if A2.5
enhancement is ``Y''.
agreement Validated against
identifier (for A3.3.
the benefit of
the records
entity).
A2.5.3...... Covered by third- Y/N............... Information needed Char(1)........... Should be ``Y'' or
party credit to determine ``N``.
enhancement credit
agreement (for enhancement.
the benefit of
the
counterparty)?
A2.5.4...... Third-party credit 999999999......... Use LEI if Varchar(50)....... Required if A2.5.3
enhancement available. is ``Y''. Should
provider Information be a valid entry
identifier (for needed to in the
the benefit of identity third- Counterparty
the counterparty). party credit Master Table.
enhancement Validated against
provider. CP.2.
A2.5.5...... Third-party credit 4444444........... Information used Varchar(50)....... Required if A2.5.3
enhancement to determine is ``Y''.
agreement guarantee or Validated against
identifier (for other third-party A3.3.
the benefit of credit
the counterparty). enhancement.
A2.6........ Aggregate current -1000000.......... Information needed Num (25,5)........ Market value of
market value in to help evaluate all positions in
U.S. dollars of the positions A1 for the given
all positions subject to the netting agreement
under this netting agreement. identifier should
netting agreement. be equal to this
value. A2.6 =
A2.7 + A2.8.
A2.7........ Current market 3000000........... Information needed Num (25,5)........ Market value of
value in U.S. to help evaluate all positive
dollars of all the positions positions in A1
positive subject to the for the given
positions, as netting agreement. netting agreement
aggregated under identifier should
this netting be equal to this
agreement. value. A2.6 =
A2.7 + A2.8.
A2.8........ Current market -4000000.......... Information needed Num (25,5)........ Market value of
value in U.S. to help evaluate all negative
dollars of all the positions positions in A1
negative subject to the for the given
positions, as netting agreement. Netting Agreement
aggregated under Identifier should
this netting be equal to this
agreement. value. A2.6 =
A2.7 + A2.8.
A2.9........ Current market 950000............ Information needed Num (25,5)........ Market value of
value in U.S. to determine the all collateral
dollars of all extent to which posted by records
collateral posted collateral has entity for the
by records been provided by given netting
entity, as records entity. agreement
aggregated under Identifier should
this netting be equal to sum
agreement. of all A4.9 for
the same netting
agreement
identifier in A4.
[[Page 95523]]
A2.10....... Current market 50000............. Information needed Num (25,5)........ Market value of
value in U.S. to determine the all collateral
dollars of all extent to which posted by
collateral posted collateral has counterparty for
by counterparty, been provided by the given netting
as aggregated counterparty. agreement
under this identifier should
netting agreement. be equal to sum
of all A4.9 for
the same netting
agreement
identifier in A4.
A2.11....... Current market 950,000........... Information needed Num (25,5)........
value in U.S. to determine the
dollars of all extent to which
collateral posted collateral has
by records entity been provided by
that is subject records entity.
to re-
hypothecation, as
aggregated under
this netting
agreement.
A2.12....... Current market 950,000........... Information needed Num (25,5)........
value in U.S. to determine the
dollars of all extent to which
collateral posted collateral has
by counterparty been provided by
that is subject records entity.
to re-
hypothecation, as
aggregated under
this netting
agreement.
A2.13....... Records entity 950,000........... Provide records Num (25,5)........ Should be less
collateral--net. entity's than or equal to
collateral excess A2.9.
or deficiency
with respect to
all of its
positions, as
determined under
each applicable
agreement,
including
thresholds and
haircuts where
applicable.
A2.14....... Counterparty 950,000........... Provide Num (25,5)........ Should be less
collateral--net. counterparty's than or equal to
collateral excess A2.10.
or deficiency
with respect to
all of its
positions, as
determined under
each applicable
agreement,
including
thresholds and
haircuts where
applicable.
A2.15....... Next margin 2015-11-05........ Provide next YYYY-MM-DD........
payment date. margin payment
date for position.
A2.16....... Next margin 150,000........... Use positive value Num (25,5)........
payment amount in if records entity
U.S. dollars. is due a payment
and use negative
value if records
entity has to
make the payment.
A2.17....... Safekeeping agent 888888888......... Provide an Varchar(50)....... Validated against
identifier for identifier for SA.2.
records entity. the records
entity's
safekeeping
agent, if any.
Use LEI if
safekeeping agent
has one.
A2.18....... Safekeeping agent 888888888......... Provide an Varchar(50)....... Validated against
identifier for identifier for SA.2.
counterparty. the
counterparty's
safekeeping
agent, if any.
Use LEI if
safekeeping agent
has one.
----------------------------------------------------------------------------------------------------------------
Table A-3--Legal Agreements
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
A3.1......... As of Date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
A3.2......... Records entity 999999999......... Provide LEI for Varchar(50)....... Validated against
identifier. records entity. CO.2.
A3.3......... Agreement xxxxxx............ Provide identifier Varchar(50).......
identifier. for each master
agreement,
governing
document, netting
agreement or
third-party
credit
enhancement
agreement.
A3.4......... Name of agreement ISDA Master 1992 Provide name of Varchar(50).......
or governing or Guarantee agreement or
document. Agreement or governing
Master Netting document.
Agreement.
[[Page 95524]]
A3.5......... Agreement date.... 2010-01-25........ Provide the date YYYY-MM-DD........
of the agreement.
A3.6......... Agreement 888888888......... Use LEI if Varchar(50)....... Validated against
counterparty counterparty has field CP.2.
identifier. one. Information
needed to
identify
counterparty.
A3.6.1....... Underlying QFC 888888888......... Provide underlying Varchar(50)....... Validated against
obligor QFC obligor CO.2 or CP.2.
identifier. identifier if
document
identifier is
associated with a
guarantee or
other third party
credit
enhancement. Use
LEI if underlying
QFC obligor has
one.
A3.7......... Agreement New York.......... Provide law Varchar(50).......
governing law. governing
contract disputes.
A3.8......... Cross-default Y/N............... Specify whether Char(1)........... Should be ``Y''
provision? agreement or ``N``.
includes default
or other
termination event
provisions that
reference an
entity not a
party to the
agreement
(``cross-default
Entity'').
Information
needed to
determine
exposure to
affiliates or
other entities.
A3.9......... Identity of cross- 777777777......... Provide identity Varchar(500)...... Required if A3.8
default entities. of any cross- is ``Y``. ID
default entities should be a
referenced in valid entry in
A3.8. Use LEI if Corporate Org
entity has one. Master Table or
Information Counterparty
needed to Master Table, if
determine applicable.
exposure to other Multiple entries
entities. comma separated.
A3.10........ Covered by third- Y/N............... Information needed Char(1)........... Should be ``Y''
party credit to determine or ``N``.
enhancement credit
agreement (for enhancement.
the benefit of
the records
entity)?
A3.11........ Third-party credit 999999999......... Use LEI if Varchar(50)....... Required if A3.10
enhancement available. is ``Y''. Should
provider Information be a valid entry
identifier (for needed to in the
the benefit of identity Third- Counterparty
the records Party Credit Master Table.
entity). Enhancement Validated
Provider. against CP.2.
A3.12........ Associated third- 33333333.......... Information needed Varchar(50)....... Required if A3.10
party credit to determine is ``Y''.
enhancement credit Validated
agreement enhancement. against field
document A3.3.
identifier (for
the benefit of
the records
entity).
A3.12.1...... Covered by third- Y/N............... Information needed Char(1)........... Should be ``Y''
party credit to determine or ``N``.
enhancement credit
agreement (for enhancement.
the benefit of
the
counterparty)?
A3.12.2...... Third-party credit 999999999......... Use LEI if Varchar(50)....... Required if A3.12
enhancement available. is ``Y''. Should
provider Information be a valid entry
identifier (for needed to in the
the benefit of identity Third- Counterparty
the counterparty). Party Credit Master.
Enhancement Validated
Provider. against CP.2.
A3.12.3...... Associated third- 33333333.......... Information needed Varchar(50)....... Required if
party credit to determine A3.12.2 is
enhancement credit ``Y''. Validated
agreement enhancement. against field
document A3.3.
identifier (for
the benefit of
the counterparty).
A3.13........ Counterparty John Doe & Co..... Provide contact Varchar(200)......
contact name for
information: name. counterparty as
provided under
notice section of
agreement.
A3.14........ Counterparty 123 Main St, City, Provide contact Varchar(100)......
contact State Zip code. address for
information: counterparty as
address. provided under
notice section of
agreement.
A3.15........ Counterparty 1-999-999-9999.... Provide contact Varchar(50).......
contact phone number for
information: counterparty as
phone. provided under
notice section of
agreement.
[[Page 95525]]
A3.16........ Counterparty's [email protected].. Provide contact Varchar(100)......
contact email address for
information: counterparty as
email address. provided under
notice section of
agreement.
----------------------------------------------------------------------------------------------------------------
Table A-4--Collateral Detail Data
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
A4.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
A4.2........ Records entity 999999999......... Provide LEI for Varchar(50)....... Validated against
identifier. records entity. CO.2.
A4.3........ Collateral posted/ P/N............... Enter ``P'' if Char(1)...........
collateral collateral has
received flag. been posted by
the records
entity. Enter
``R'' for
collateral
received by
Records Entity.
A4.4........ Counterparty 888888888......... Provide identifier Varchar(50)....... Validated against
identifier. for counterparty. CP.2.
Use LEI if
counterparty has
one.
A4.5........ Netting agreement xxxxxxxxx......... Provide identifier Varchar(50)....... Validated against
identifier. for applicable field A3.3.
netting agreement.
A4.6........ Unique collateral CUSIP/ISIN........ Provide identifier Varchar(50).......
item identifier. to reference
individual
collateral posted.
A4.7........ Original face 1500000........... Information needed Num (25,5)........
amount of to evaluate
collateral item collateral
in local currency. sufficiency and
marketability.
A4.8........ Local currency of USD............... Use ISO currency Char(3)...........
collateral item. code.
A4.9........ Market value 850000............ Information needed Num (25,5)........ Market value of
amount of to evaluate all collateral
collateral item collateral posted by Records
in U.S. dollars. sufficiency and Entity or
marketability and Counterparty A2.9
to permit or A2.10 for the
aggregation given netting
across currencies. agreement
identifier should
be equal to sum
of all A4.9 for
the same netting
agreement
identifier in A4.
A4.10....... Description of U.S. Treasury Information needed Varchar(200)......
collateral item. Strip, maturity to evaluate
2020/6/30. collateral
sufficiency and
marketability.
A4.11....... Asset 1................. Provide fair value Char(1)........... Should be ``1'' or
classification. asset ``2'' or ``3''.
classification
for the
collateral item
under GAAP, IFRS,
or other
accounting
principles or
standards used by
records entity.
Provide ``1'' for
Level 1, ``2''
for Level 2, or
``3'' for Level 3.
A4.12....... Collateral or Y/N............... Specify whether Char(1)........... Should be ``Y'' or
portfolio the specific item ``N''.
segregation of collateral or
status. the related
collateral
portfolio is
segregated from
assets of the
safekeeping agent.
A4.13....... Collateral ABC broker-dealer Provide location Varchar(200)......
location. (in safekeeping of collateral
account of posted.
counterparty).
A4.14....... Collateral New York, New York Provide Varchar(50).......
jurisdiction. jurisdiction of
location of
collateral posted.
A4.15....... Is collateral re- Y/N............... Information needed Char(1)........... Should be ``Y'' or
hypothecation to evaluate ``N''.
allowed? exposure of the
records entity to
the counterparty
or vice-versa for
re-hypothecated
collateral.
----------------------------------------------------------------------------------------------------------------
[[Page 95526]]
Corporate Organization Master Table *
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
CO.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
CO.2........ Entity identifier. 888888888......... Provide unique Varchar(50)....... Should be unique
identifier. Use across all
LEI if available. records entities.
Information
needed to
identify entity.
CO.3........ Has LEI been used Y/N............... Specify whether Char(1)........... Should be ``Y'' or
for entity the entity ``N''.
identifier? identifier
provided is an
LEI.
CO.4........ Legal name of John Doe & Co..... Provide legal name Varchar(200)......
entity. of entity.
CO.5........ Immediate parent 77777777.......... Use LEI if Varchar(50).......
entity identifier. available.
Information
needed to
complete org
structure.
CO.6........ Has LEI been used Y/N............... Specify whether Char(1)........... Should be ``Y'' or
for immediate the immediate ``N''.
parent entity parent entity
identifier?. identifier
provided is an
LEI.
CO.7........ Legal name of John Doe & Co..... Information needed Varchar(200)......
immediate parent to complete org
entity. structure.
CO.8........ Percentage 100.00............ Information needed Num (5,2).........
ownership of to complete org
immediate parent structure.
entity in the
entity.
CO.9........ Entity type....... Subsidiary, Information needed Varchar(50).......
foreign branch, to complete org
foreign division. structure.
CO.10....... Domicile.......... New York, New York Enter as city, Varchar(50).......
state or city,
foreign country.
CO.11....... Jurisdiction under New York.......... Enter as state or Varchar(50).......
which foreign
incorporated or jurisdiction.
organized.
----------------------------------------------------------------------------------------------------------------
* Foreign branches and divisions shall be separately identified to the extent they are identified in an entity's
reports to its PFRAs.
Counterparty Master Table
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
CP.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
CP.2........ Counterparty 888888888......... Use LEI if Varchar(50).......
identifier. counterparty has
one. Should be
used consistently
across all
records entities
within a
corporate group.
The counterparty
identifier shall
be the global
legal entity
identifier if one
has been issued
to the entity. If
a counterparty
transacts with
the records
entity through
one or more
separate foreign
branches or
divisions and any
such branch or
division does not
have its own
unique global
legal entity
identifier, the
records entity
must include
additional
identifiers, as
appropriate to
enable the FDIC
to aggregate or
disaggregate the
data for each
counterparty and
for each entity
with the same
ultimate parent
entity as the
counterparty.
CP.3........ Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for counterparty the counterparty ``N''.
identifier? identifier is an
LEI.
CP.4........ Legal name of John Doe & Co..... Information needed Varchar(200)......
counterparty. to identify and,
if necessary,
communicate with
counterparty.
[[Page 95527]]
CP.5........ Domicile.......... New York, New York Enter as city, Varchar(50).......
state or city,
foreign country.
CP.6........ Jurisdiction under New York.......... Enter as state or Varchar(50).......
which foreign
incorporated or jurisdiction.
organized.
CP.7........ Immediate parent 77777777.......... Provide an Varchar(50).......
entity identifier. identifier for
the parent entity
that directly
controls the
counterparty. Use
LEI if immediate
parent entity has
one.
CP.8........ Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for immediate the immediate ``N''.
parent entity parent entity
identifier? identifier is an
LEI.
CP.9........ Legal name of John Doe & Co..... Information needed Varchar(200)......
immediate parent to identify and,
entity. if necessary,
communicate with
counterparty.
CP.10....... Ultimate parent 666666666......... Provide an Varchar(50).......
entity identifier. identifier for
the parent entity
that is a member
of the corporate
group of the
counterparty that
is not controlled
by another
entity.
Information
needed to
identify
counterparty. Use
LEI if ultimate
parent entity has
one.
CP.11....... Has LEI been used Y/N............... Indicate whether Char(1)........... Should be ``Y'' or
for ultimate the ultimate ``N''.
parent entity parent entity
identifier? identifier is an
LEI.
CP.12....... Legal name of John Doe & Co..... Information needed Varchar(100)......
ultimate parent to identify and,
entity. if necessary,
communicate with
Counterparty.
----------------------------------------------------------------------------------------------------------------
Booking Location Master Table
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
BL.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
BL.2........ Records entity 999999999......... Provide LEI....... Varchar(50)....... Should be a valid
identifier. entry in the
Corporate Org
Master Table.
BL.3........ Internal booking New York, New York Provide office Varchar(50).......
location where the
identifier. position is
booked.
Information
needed to
determine the
headquarters or
branch where the
position is
booked, including
the system on
which the trade
is booked, as
well as the
system on which
the trade is
settled.
BL.4........ Unique booking xxxxxx............ Provide unit or Varchar(50).......
unit or desk desk at which the
identifier. position is
booked.
Information
needed to help
determine purpose
of position.
BL.5........ Unique booking North American Additional Varchar(50).......
unit or desk trading desk. information to
description. help determine
purpose of
position.
BL.6........ Booking unit or 1-999-999-9999.... Information needed Varchar(50).......
desk contact-- to communicate
phone. with the booking
unit or desk.
BL.7........ Booking unit or [email protected]..... Information needed Varchar(100)......
desk contact-- to communicate
email. with the booking
unit or desk.
----------------------------------------------------------------------------------------------------------------
[[Page 95528]]
Safekeeping Agent Master Table
----------------------------------------------------------------------------------------------------------------
Instructions and
Field Example data application Def Validation
----------------------------------------------------------------------------------------------------------------
SA.1........ As of date........ 2015-01-05........ Data extraction YYYY-MM-DD........
date.
SA.2........ Safekeeping agent 888888888......... Provide an Varchar(50).......
identifier. identifier for
the safekeeping
agent. Use LEI if
safekeeping agent
has one.
SA.3........ Legal name of John Doe & Co..... Information needed Varchar(200)......
safekeeping agent. to identify and,
if necessary,
communicate with
the safekeeping
agent.
SA.4........ Point of contact-- John Doe.......... Information needed Varchar(200)......
name. to identify and,
if necessary,
communicate with
the safekeeping
agent.
SA.5........ Point of contact-- 123 Main St, City, Information needed Varchar(100)......
address. State Zip Code. to identify and,
if necessary,
communicate with
the safekeeping
agent.
SA.6........ Point of contact-- 1-999-999-9999.... Information needed Varchar(50).......
phone. to identify and,
if necessary,
communicate with
the safekeeping
agent.
SA.7........ Point of contact-- [email protected].. Information needed Varchar(100)......
email. to identify and,
if necessary,
communicate with
the safekeeping
agent.
----------------------------------------------------------------------------------------------------------------
Details of Formats
----------------------------------------------------------------------------------------------------------------
Format Content in brief Additional explanation Examples
----------------------------------------------------------------------------------------------------------------
YYYY-MM-DD........................... Date................... YYYY = four digit date, 2015-11-12.
MM = 2 digit month, DD
= 2 digit date.
Num (25,5)........................... Up to 25 numerical Up to 20 numerical 1352.67.
characters including 5 characters before the 12345678901234567890.12
decimals. decimal point and up 345.
to 5 numerical 0.
characters after the -20000.25.
decimal point. The dot -0.257.
character is used to
separate decimals.
Char(3).............................. 3 alphanumeric The length is fixed at USD.
characters. 3 alphanumeric X1X.
characters. 999.
Varchar(25).......................... Up to 25 alphanumeric The length is not fixed asgaGEH3268EFdsagtTRCF5
characters. but limited at up to 43.
25 alphanumeric
characters.
----------------------------------------------------------------------------------------------------------------
Dated at Washington, DC, this 13th day of December 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 2016-30734 Filed 12-27-16; 8:45 am]
BILLING CODE 6714-01-P