Economic Growth and Regulatory Paperwork Reduction Act of 1996 Amendments, 8082-8111 [2016-30502]

Download as PDF 8082 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations SUPPLEMENTARY INFORMATION: DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Parts 5, 7, 8, 9, 10, 11, 12, 16, 18, 31, 150, 151, 155, 162, 163, 193, 194, 197 [Docket ID OCC–2016–0002] RIN 1557–AD95F Economic Growth and Regulatory Paperwork Reduction Act of 1996 Amendments Office of the Comptroller of the Currency, Treasury. ACTION: Final rule. AGENCY: As part of its review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996, the Office of the Comptroller of the Currency (OCC) is revising certain of its rules to remove outdated or otherwise unnecessary provisions. Specifically, the OCC is: revising certain licensing rules related to chartering applications, business combinations involving Federal mutual savings associations, and notices for changes in permanent capital; clarifying national bank director oath requirements; revising certain fiduciary activity requirements for national banks and Federal savings associations; removing certain financial disclosure regulations for national banks; removing certain unnecessary regulatory reporting, accounting, and management policy regulations for Federal savings associations; updating the electronic activities regulation for Federal savings associations; integrating and updating OCC regulations for national banks and Federal savings associations relating to municipal securities dealers, Securities Exchange Act disclosure rules, and securities offering disclosure rules; updating and revising recordkeeping and confirmation requirements for national banks’ and Federal savings associations’ securities transactions; integrating and updating regulations relating to insider and affiliate transactions; and making other technical and clarifying changes. DATES: This final rule is effective on April 1, 2017. FOR FURTHER INFORMATION CONTACT: For additional information, contact Heidi Thomas, Special Counsel; or Rima Kundnani, Attorney, Legislative and Regulatory Activities Division, 202– 649–5490, for persons who are deaf or hard of hearing, TTY, 202–649–5597, Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219. mstockstill on DSK3G9T082PROD with RULES3 SUMMARY: VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 I. Background Section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) 1 requires that, at least once every 10 years, the Federal Financial Institutions Examination Council (FFIEC) and each appropriate Federal banking agency (Agency or, collectively, Agencies) represented on the FFIEC (the OCC, Federal Deposit Insurance Corporation (FDIC), and the Board of Governors of the Federal Reserve System (Federal Reserve Board)) conduct a review of the regulations prescribed by the FFIEC or Agency. The purpose of this review is to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions. EGRPRA requires the Agencies to provide public notice and seek comment on one or more categories of regulations at regular intervals so that all Agency regulations are published for comment within a 10-year cycle. EGRPRA also directs the Agencies to categorize their regulations by type, publish the categories, and invite the public to identify areas of regulations that are ‘‘outdated, unnecessary, or unduly burdensome.’’ 2 Once the Agencies have published the categories of regulations for comment, EGRPRA requires the Agencies to publish a comment summary and discuss the significant issues raised by the commenters. The statute also directs the Agencies to ‘‘eliminate unnecessary regulations to the extent that such action is appropriate.’’ 3 Finally, EGRPRA requires the FFIEC to submit a report to Congress summarizing significant issues and their relative merits. The report also must analyze whether the Agencies can address these issues through regulatory change or whether legislative action is required. The Agencies completed the first EGRPRA review in 2006. The Agencies expect to complete the current EGRPRA review process by the end of 2016. As with the first EGRPRA review, the Agencies have elected to conduct this current review jointly. The Agencies have divided their regulations into 12 categories and published four Federal Register notices,4 each requesting 1 Pub. L 104–208 (1996), codified at 12 U.S.C. 3311(b). 2 Id. at 3311(a). 3 Id. at 3311(d)(2). 4 See 79 FR 32172 (June 4, 2014); 80 FR 7980 (Feb. 13, 2015); 80 FR 32046 (June 5, 2015), and 80 FR 79724 (Dec. 23, 2015). More information on the current EGRPRA process, including the Federal Register notices, outreach meetings, and public PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 public comment on three of these categories. Additionally, the Agencies held a series of six outreach meetings to provide an opportunity for bankers, consumer and community groups, and other interested parties to present their views on the Agencies’ regulations directly to Agency principals, senior Agency management, and Agency staff.5 The OCC believes it is unnecessary to wait until the end of the EGRPRA process before acting to reduce regulatory burden where possible.6 To this end, the OCC published a Notice of Proposed Rulemaking (proposed rule or proposal) on March 14, 2016 7 that included amendments in response to some of the comments the OCC received on its rules to date.8 The proposed rule also included amendments to OCC rules derived from the OCC’s most recent internal review of its rules to identify outdated or unnecessary provisions beyond those suggested by EGRPRA commenters. Furthermore, the proposed rule included amendments that would integrate a number of national bank and Federal savings association rules. These proposed amendments remove unnecessary or outdated provisions and streamline and simplify OCC rules, thereby reducing regulatory burden on comments received, is available at http:// egrpra.ffiec.gov/. 5 These public outreach meetings took place in Los Angeles, California on December 2, 2014; Dallas, Texas on February 4, 2015; Boston, Massachusetts on May 4, 2015; Kansas City, Missouri on August 4, 2015 (which focused on rural banking issues), Chicago, Illinois on October 19, 2015; and Washington, DC on December 2, 2015. 6 We note that the OCC already has finalized or proposed a number of changes to our rules, in addition to this EGRPRA rulemaking. Last year, we incorporated a number of changes suggested by EGRPRA commenters into a final rule that integrates the OCC’s national bank and Federal savings association licensing rules. (80 FR 28346 (May 18, 2015)). In addition, pursuant to the Fixing America’s Surface Transportation (FAST) Act, the Agencies issued an interim final rule that provides for an 18-month examination cycle for qualifying 1and 2-rated institutions with assets of between $500 million and $1 billion. This rule provides an 18month examination cycle for 1-rated banks up to 1 billion in assets, and gives the Agencies the authority to provide an 18-month examination cycle for 2-rated banks with up to $1 billion in assets. (81 FR 10063 (Feb. 29, 2016)). Furthermore, the Agencies, acting through the FFIEC, have sought comment on proposals to eliminate or revise several items on the Consolidated Reports of Condition (Call Report). (See 80 FR 56539 (Sept. 18, 2015)). The Agencies also published a proposal for a streamlined call report for small institutions under $1 billion (See 81 FR 54190 (Aug. 15, 2016)). These Call Report initiatives are consistent with the feedback the OCC, FDIC, and Federal Reserve Board have received in this EGRPRA review. 7 81 FR 13607. 8 The OCC is continuing to review EGRPRA comments on OCC rules to determine whether additional amendments are appropriate. E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations national banks and Federal savings associations.9 received, and the resulting final rule are set forth below. II. Summary of Public Comments Organization and Functions, Availability and Release of Information (12 CFR Part 4) Twelve CFR part 4 describes the organization and functions of the OCC and sets forth the standards, policies, and procedures that the OCC applies in administering the Freedom of Information Act (FOIA) and requests for non-public OCC information, among other things. The proposed rule included technical amendments to update and correct the OCC address in several sections and replace ‘‘Licensing Department’’ with ‘‘Licensing Division’’ and ‘‘Disclosure Officer’’ with ‘‘Freedom of Information Act Officer.’’ Additionally, the proposed rule would have updated the OCC’s FOIA rules to remove references to the Office of Thrift Supervision (OTS) that are no longer necessary. Since the publication of the proposed rule, Congress enacted the FOIA Improvement Act of 2016,12 which makes a number of changes to FOIA that necessitate further amendments to the OCC’s FOIA rules in 12 CFR part 4. To avoid confusion and to include all OCC FOIA rule changes in one rulemaking, we have removed the part 4 amendments in this EGRPRA final rule and will include them in a separate FOIA rulemaking. The OCC received four comment letters in response to this proposed rule. One trade association stated that it had no objection to the proposed rule.10 A financial institution also stated that it had no objection to the various items in the proposal, but noted that the proposal does not reduce regulatory burden on the day-to-day servicing and offering of products to bank customers and consumers, noting as an example the paperwork burden associated with mortgage loans. It specifically requested that the OCC consider proposing additional reforms to simplify the process for consumers. Another trade association, while noting that the proposed rule is an early effort by the OCC to remove regulatory burden through the EGRPRA review, applauded the OCC’s effort through this rulemaking to remove certain outdated and otherwise unnecessarily burdensome provisions. This commenter also provided specific substantive comments on the proposed amendments relating to fiduciary activities (12 CFR parts 9 and 150), recordkeeping and confirmation requirements for securities transactions (12 CFR parts 12 and 151), and the sale of securities at a Federal savings association office (12 CFR 163.76). These comments are discussed in detail, below.11 As a general response to these commenters, the OCC notes that it will continue to review our rules under the EGRPRA process to determine whether further reductions in burden are warranted. We will propose additional amendments to our rules where appropriate. II. Description of the Final Rule mstockstill on DSK3G9T082PROD with RULES3 The OCC is adopting the amendments as proposed with the removal of the technical amendments to 12 CFR part 4 and one clarifying change to 12 CFR 9.13 (custody of fiduciary assets). A section-by-section discussion of the proposed rule, the public comments 9 The amendments included in this rulemaking amend rules issued only by the OCC and do not reflect comments submitted on rules the OCC has issued jointly with other agencies. We will address any modifications to interagency rules through a separate interagency rulemaking. 10 This commenter also addressed the Volcker rule, 12 CFR part 44, Bank Secrecy Act rules, 12 CFR part 21, and the appraisal rule, 12 CFR part 34, which are outside the scope of this rulemaking. 11 The fourth comment letter, from an individual, addressed the Volcker rule and Community Reinvestment Act. These topics are outside the scope of this rulemaking. VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 Rules, Policies, and Procedures for Corporate Activities (12 CFR Part 5) Twelve CFR part 5 sets forth the OCC’s rules for corporate activities and filings. These rules were included in the first EGRPRA Federal Register request for comments and, as indicated above, the OCC’s final rule integrating the OCC’s national bank and Federal savings association licensing rules incorporated changes that reflect some of the comments received in response to that notice. As discussed below, the proposed rule included a number of additional amendments to part 5 that reflected further review of these licensing rules by the OCC since the adoption of this final rule. Change in charter purpose or type (12 CFR 5.20, 5.53). The OCC proposed to amend §§ 5.20 and 5.53 to clarify what type of application is to be used when an existing national bank or Federal savings association proposes to change the purpose and type of charter under which it operates. The OCC charters national banks and Federal savings associations that are authorized to conduct any activity permitted for a 12 Public PO 00000 Law 114–185 (2016). Frm 00003 Fmt 4701 Sfmt 4700 8083 national bank or a Federal savings association, respectively (sometimes called ‘‘full-service charters’’). The OCC also charters national banks and Federal savings associations whose activities are limited to a special purpose. The most common types of special purpose institutions are (1) those whose operations are limited to those of a trust company and activities related thereto, and (2) those that conduct only a credit card business. Other special purpose charter types include: Bankers’ banks, community development banks, and cash management banks. When the OCC grants approval for a special purpose institution, the approval decision generally includes a condition requiring the institution to conduct only the limited activity. If the institution later desires to expand the scope of its business, it must seek OCC approval. A later expansion to include additional business warrants a new review to determine if the institution has the financial and managerial resources to conduct the expanded business. Similarly, when an institution that has a full-service charter later desires to limit itself to a special purpose and conduct only one business line, the OCC reviews the change to ascertain whether the institution could continue to operate safely and soundly after it narrows its focus and to evaluate the institution’s proposed capital, staffing, business plan, and risk management systems. Currently, filings to change the purpose of a charter have no established framework and the OCC addresses them on a case-by-case basis when an institution inquires. Recently revised § 5.53 13 now covers transactions that are similar to a change in purpose and type of charter (i.e., transactions that involve substantial changes in an institution’s assets, liabilities, or business lines). Because the changes to an institution’s assets, liabilities, and business lines that would be involved in a change in the purpose of a charter would necessitate a filing under § 5.53, we proposed to clarify § 5.53 to expressly add change in charter type to the transactions that are covered by § 5.53. We also proposed additional provisions to § 5.20(l), where special purpose charters are discussed, that describe changes in charter purpose, set out the requirement for an application, and direct institutions to § 5.53 for the relevant application. We received no specific comments on these proposed amendments to §§ 5.20 and 5.53 and adopt them as proposed. 13 The OCC amended § 5.53 in July 2015. See 80 FR 28346 (May 18, 2015). E:\FR\FM\23JAR3.SGM 23JAR3 8084 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations Business combinations involving Federal mutual savings associations (12 CFR 5.33). Twelve CFR 5.33 sets forth the provisions governing business combinations involving depository institutions within the OCC’s jurisdiction, including Federal mutual savings associations. Paragraph (n)(2)(iii) of this section currently provides that if any combining Federal savings association is a mutual savings association, the resulting institution must be a mutually held savings association, unless the transaction is approved under 12 CFR part 192, which governs mutual to stock conversions, or involves a mutual holding company reorganization under 12 U.S.C. 1467a(o).14 Consequently, unless one of these two exceptions applies, the resulting institution may not be a mutually held state-chartered savings bank.15 However, the merger authority set forth in 12 CFR 5.33(n)(2)(iii) is narrower than the merger authority granted to all Federal savings associations under the Home Owners’ Loan Act (HOLA). Specifically, section 10(s) of the HOLA 16 provides that ‘‘[s]ubject to sections 5(d)(3) and 18(c) of the Federal Deposit Insurance Act (FDI Act) and all other applicable laws, any Federal savings association may acquire or be acquired by any insured depository institution.’’ The statute, therefore, does not limit the resulting institution in such transactions to a savings association.17 Under § 5.33(n)(2)(iii), Federal mutual savings associations and mutual statechartered savings banks that seek to combine must undertake a multi-step transaction. For example, a Federal mutual savings association generally may convert to a mutual state-chartered savings association or a mutual statechartered savings bank pursuant to section 5(i)(3) of the HOLA, and thereafter combine with a mutual statechartered savings bank. Such a process, 14 Section 10(o) of the HOLA. paragraph is generally consistent with the rule as issued by the former OTS and originally republished by the OCC as 12 CFR 146.2(a)(4). The OCC moved this provision to § 5.33 in its licensing integration rule. See 80 FR 28346 (May 18, 2015). 16 12 U.S.C. 1467a(s). 17 Section 5(i) of the HOLA (12 U.S.C. 1464(i)) provides that transactions involving the conversion of a Federal mutual savings association to a stock Federal savings association, and vice versa, must comply with OCC regulations. As indicated above, OCC regulations relating to mutual to stock conversions are set forth at 12 CFR part 192. By limiting the resulting institution to a mutual institution, both the current rule and the amendment ensure that combinations involving Federal mutual savings associations are consistent with the mutual to stock conversion regulations at 12 CFR part 192. mstockstill on DSK3G9T082PROD with RULES3 15 This VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 while accomplishing the same purpose as a direct merger, is more expensive and time consuming than a direct merger and results in unnecessary regulatory burden for the institutions involved. Accordingly, the OCC proposed to amend § 5.33(n)(2)(iii) to permit a mutual depository institution insured by the FDIC, i.e., either a mutual savings association or a mutual savings bank, to be the resulting institution in a combination involving a Federal mutual savings association. This amendment would simplify combinations involving mutual savings banks, thereby reducing regulatory burden and costs associated with such transactions imposed under the current rule. We note that this amendment would continue to require the resulting institution to have a mutual charter so as not to implicate the mutual-to-stock conversion regulations, 12 CFR part 192. The OCC also proposed to amend 12 CFR 5.33(n)(2)(iii)(B) to allow a mutual Federal savings association to merge into an FDIC-insured depository institution subsidiary of a statechartered mutual holding company. Currently, under the exception, a mutual Federal savings association may merge into a subsidiary savings association of a section 10(o) mutual holding company, provided the depositors of the resulting association have membership rights in the mutual holding company.18 The exception does not allow the merger of a mutual Federal savings association into a state savings bank subsidiary of a mutual holding company that is established under state law. As a result, in order for the mutual Federal savings association to merge into a state savings bank subsidiary of a mutual holding company organized under state law, it must first convert to a state-chartered savings association or state-chartered savings bank, and then combine with the statechartered savings bank. In addition, we proposed to amend § 5.33(n)(2)(iii)(B) so that mergers of mutual Federal savings associations into subsidiaries of section 10(o) and nonsection 10(o) mutual holding companies are treated similarly. As with the amendment to § 5.33(n)(2)(iii) described above, this amendment would reduce regulatory burden and costs associated with such transactions imposed under the current rule. We received no specific comments on these proposed amendments to § 5.33 and adopt them as proposed. 18 The OCC deems this type of transaction to be one type of mutual holding company reorganization. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 Changes in permanent capital (12 CFR 5.46). Under 12 CFR 5.46, a national bank must submit an application to the OCC and receive prior approval for certain increases or decreases to the bank’s permanent capital accounts. In addition, a national bank must submit an after-the-fact notice of all increases or decreases to the bank’s permanent capital accounts. Furthermore, pursuant to 12 U.S.C. 57, the OCC must certify all increases to a national bank’s permanent capital accounts resulting from cash or other assets for the increase to be considered valid. The purpose of these requirements is to inform the OCC whenever the bank’s board of directors decides to change the capital structure of the institution, including when accepting additional funds from a parent holding company, issuing new shares or stock, or redeeming an existing issue of preferred stock. The OCC receives a number of applications and notices for changes to permanent capital that arise solely from applying U.S. generally accepted accounting principles (GAAP). For example, U.S. GAAP may allow a national bank to revalue certain balance sheet accounts, including permanent capital accounts, for a period after the conclusion of a merger or acquisition. As 12 U.S.C. 1831n generally requires all insured depository institutions, including national banks, to apply U.S. GAAP when preparing their financial statements, there is limited value in requiring licensing filings or certifications solely because the bank is complying with that statute by applying U.S. GAAP. These accounting adjustments often are not material and typically are reviewed by the bank’s internal accounting staff and external auditors. In addition, many of the accounting adjustments relate back to transactions reviewed or approved by the OCC under other rules, such as mergers, acquisitions, or divestitures. Furthermore, these accounting adjustments do not result in increases from cash paid or other assets and therefore do not require certification by the OCC pursuant to 12 U.S.C. 57. We proposed to amend § 5.46 to create an exemption for national banks from the prior approval, notification, and certification requirements for all changes to permanent capital that result solely from application of U.S. GAAP, and do not otherwise involve the receipt of cash or other assets. However, proposed § 5.46 would continue to require a notice for material accounting adjustments, which the amendment defines as an increase or decrease greater than 5 percent of the bank’s total E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations permanent capital prior to the adjustments in the most recent quarter, or if the national bank is subject to a letter, order, directive, written agreement, or otherwise that is related to changes in permanent capital. The national bank would be required to provide the notice within 30 days after the end of the quarter in which the material accounting adjustment occurred, and include the amount of the adjustment, a description, and a citation to the applicable U.S. GAAP provision. The OCC did not propose a similar change to § 5.45, Increases in permanent capital of a Federal stock savings association. Section 5.45 requires a Federal savings association to submit an application to the OCC and receive prior approval for increases to its permanent capital accounts under the same circumstances that national banks are required to submit an application under § 5.46(g)(1)(ii). However, unlike the national bank rule, § 5.45 requires an after-the-fact notice of the increase only if the savings association was required to obtain prior approval of the increase. In addition, there is no statutory requirement that the OCC certify the increase in capital. For these reasons, an amendment similar to the one adopted for § 5.46 is not needed for § 5.45. The OCC, however, did propose a clarifying change to § 5.45(g)(4)(i). The current wording of that section is unclear to whether a Federal savings association that increases its permanent capital account must file a notice for all increases, rather than only in the circumstances in which the savings association is required to obtain prior approval. In adopting this provision, the OCC intended the notice to be filed only in cases in which prior approval was required. We proposed to amend § 5.45(g)(4)(i) to specifically provide that an after-the-fact notice is required only if the capital increase was subject to prior approval by the OCC. We received no specific comments on the proposed amendments to §§ 5.46 and 5.45 and adopt them as proposed. Additional technical changes to 12 CFR part 5. The proposed rule also included additional technical changes to 12 CFR part 5. First, we proposed to amend § 5.8, Public notice, to provide that the public notice of a licensingrelated filing must include the closing date of the 30-day public comment period only if this information is available at the time of publication. We proposed this change because the OCC treats the comment period differently in business combinations than in other transactions. For other transactions, the comment period starts when the public notice is published. For business VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 combinations, the comment period starts on the latest of the publication date, the date when the OCC makes the application available in the OCC’s FOIA Reading Room, or the date when the OCC publishes the application in the OCC Weekly Bulletin. When the national bank or Federal savings association files the application with the OCC and publishes the notice, it typically would not know when the other two events will occur, and so would not know the comment period closing-date for these transactions at the time the public notice is published. However, in order to assist the public in determining this date, the proposed rule required that the notice include a statement indicating that information about the transaction, including the comment period closing-date, may be found in the OCC’s Weekly Bulletin. Second, for a similar reason, we proposed a technical correction to paragraph (i) of 12 CFR 5.33, Business combinations involving a national bank or Federal savings association. In general, paragraph (i) provides that a business reorganization filing or a filing that qualifies for a streamlined application is deemed approved by the OCC on the latter of the 45th day after the OCC receives the application or the 15th day after the close of the public comment period. However, because the 30-day public comment period for business combinations starts on the later of the date that the filing is published in the OCC Weekly Bulletin or the date it is available in the OCC’s FOIA Reading Room, and because this date will always be after the OCC receives the application, 15 days after the close of the public comment period always will be later than the 45th day after the OCC receives the application. Therefore, the reference to the 45-day period in § 5.33(i) is unnecessary and confusing, and we proposed to remove it. Third, we proposed to correct inaccurate cross-references in paragraphs (j)(3) and (4) of § 5.21, Federal mutual savings association charter and bylaws. Specifically, the references to paragraphs (j)(2) would be changed to paragraph (j)(3). Fourth, we proposed to correct an inaccurate cross-reference in § 5.33(o)(3)(i) by replacing the reference to paragraph (n)(3) with paragraph (o)(3). Fifth, we proposed to correct an inaccurate cross-reference to the definition of the term ‘‘tax-qualified employee stock benefit plan’’ in § 5.50(f)(2)(ii)(E) by replacing ‘‘§ 192.2(a)(39)’’ with ‘‘§ 192.25.’’ Lastly, we proposed to amend § 5.66, Dividends payable in property other PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 8085 than cash, to provide that a national bank must submit a request for prior approval of a non-cash dividend to the appropriate OCC licensing office. Currently, this section provides that the OCC must approve a non-cash dividend but does not indicate where a bank must submit the request for approval. The only direction provided in OCC dividend rules as to where a dividend application should be filed is contained in § 5.64(c)(3), which provides that a national bank must submit its request for prior approval for cash dividends to the appropriate OCC supervisory office. Because the OCC reviews non-cash dividends in the appropriate licensing office, and not the appropriate supervisory office, the amendment to § 5.66 would remove any confusion as to where a bank must submit non-cash dividend applications. We received no specific comments on these proposed technical amendments and adopt them as proposed. The OCC also is adopting additional technical and procedural amendments not included in the proposed rule. First, we are replacing the term ‘‘main office’’ with ‘‘home office’’ both in paragraph (j)(3)(iii) of § 5.21, Federal mutual savings association charter and bylaws, and in paragraph (j)(2)(iii) of § 5.22, Federal stock savings association charter and bylaws. ‘‘Main office’’ is the appropriate term for national banks, while ‘‘home office’’ is the appropriate term for Federal savings associations. Second, we are making a change in OCC procedure in paragraph (e)(2)(ii) of § 5.48, Voluntary liquidation of a national bank or Federal savings association. Currently, this provision requires a bank or savings association to receive the OCC’s supervisory nonobjection to a liquidation plan before beginning the liquidation. We are amending this provision to allow a nonsupervisory office of the OCC, such as the OCC Licensing Division, to provide this non-objection. National Bank Director Oaths (12 CFR 7.2008). Twelve U.S.C. 73 sets forth the requirements for national bank director oaths. Specifically, this statute requires that, when appointed or elected, each national bank director must take an oath that he or she (1) will diligently and honestly administer the affairs of the bank, (2) not knowingly violate or willingly permit to be violated any applicable laws, and (3) is the owner in good faith of the requisite shares of stock and that the stock is not pledged as security for any loan or debt. The statute requires the oath to be notarized and immediately transmitted to the E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8086 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations Comptroller and filed in the Comptroller’s office for 10 years. Twelve CFR 7.2008 implements this statutory requirement. Specifically, § 7.2008 provides that: (1) A notary public, including one who is a director but not an officer of the national bank, may administer the oath of directors; (2) each director attending the organization meeting must execute either a joint or individual oath, and a director not attending the organization meeting (the first meeting after the election of the directors) must execute the individual oath; (3) a director must take another oath upon re-election, notwithstanding uninterrupted service; and (4) the national bank must file the original executed oaths of directors with the OCC and retain a copy in the bank’s records in accordance with the Comptroller’s Corporate Manual filing and recordkeeping instructions for executed oaths of directors. This provision also notes that appropriate sample oaths are located in the Comptroller’s Corporate Manual. Twelve CFR 7.2008 was included in the third Federal Register EGRPRA notice and the OCC did not receive any comments on this provision in response to this request for comment. However, after conducting its own internal review, the OCC proposed to amend § 7.2008 to clarify when the director oath must be taken. As proposed, § 7.2008 would follow the statute more closely by requiring a director to execute either a joint or individual oath at the first meeting of the board of directors that the director attends after the director is appointed or elected. This proposed amendment also would remove the reference to ‘‘organizational meeting,’’ which we believe does not adequately convey when a director must execute the oath in all cases, including when a director is appointed. The OCC also proposed to replace obsolete references to the Comptroller’s Corporate Manual with references to www.occ.gov 19 and to correct a spelling error in § 7.2008. We received no specific comments on these proposed amendments to § 7.2008 and adopt them as proposed. Fidelity Bonds (12 CFR part 7, §§ 163.180, 163.190, and 163.191). Twelve CFR 7.2013 requires all national bank officers and employees to have adequate fidelity bond coverage. It also states that the bank’s directors may be liable for losses incurred in the absence of such bonds and that directors 19 The OCC’s Web site contains general instructions for filing the oath of directors and a sample individual oath and joint oath at http:// www.occ.gov/publications/publications-by-type/ licensing-manuals/index-licensing-manuals.html. VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 should not serve as bond sureties. Furthermore, the rule provides that the bank’s directors should determine the appropriate amount of bond coverage, premised on consideration of the bank’s internal auditing safeguards, number of employees, deposit liabilities, and amount of cash and securities normally held by the bank. Twelve CFR 163.180(c), 163.190, and 163.191 contain the fidelity bond rules applicable to Federal savings associations. While §§ 163.190 and 7.2013 are similar, the Federal savings association rules are more prescriptive and apply not only to officers and employees, but also to directors and agents. In addition, under § 163.190(b), the Federal savings association’s management must determine the amount of coverage, based on the potential risk exposure. Section 163.190(c) also directs the Federal savings association to provide supplemental coverage beyond that provided by the insurance underwriter industry’s standard forms if the board determines that additional coverage is warranted. Furthermore, § 163.190(d) requires the Federal savings association’s board of directors to approve the association’s bond coverage, with this approval documented in the board’s minutes, and to review annually the adequacy of coverage. Section 163.191 provides an alternative means of calculating the bond coverage that is appropriate for a Federal savings association agent, in lieu of the calculation provided in § 163.190. Finally, § 163.180(c) states that a Federal savings association maintaining a bond required by § 163.190 must promptly notify the bond company and file proof of loss for any covered loss that is greater than twice the bond’s deductible amount. Twelve CFR 163.180(c), 163.190, and 163.191 were included in the fourth Federal Register EGRPRA notice, and the OCC did not receive any comments on these rules in response to this request for comment. However, after conducting its own internal review, the OCC finds that some of the requirements are unnecessary or overly detailed, and more appropriately addressed in guidance or left to the institution’s judgment, as is currently the case for national banks. The OCC also finds that other provisions in the savings association rules should be continued and applied, as modified, to national banks. Therefore, the OCC proposed to remove §§ 163.180(c), 163.190 and 163.191 and apply § 7.2013, as amended and as described below, to Federal savings associations. PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 As a result of removing § 163.190, Federal savings associations would no longer be required to maintain fidelity bonds for directors who do not also serve as officers or employees. We proposed to remove this requirement because fidelity bond coverage generally is not available for directors unless they also are acting as officers or employees. In addition, the activities in which outside directors engage generally do not expose financial institutions to the types of losses covered by fidelity bonds. Furthermore, as a result of this proposed amendment, the board of directors of a Federal savings association no longer would be required to assess annually the adequacy of bond coverage for the association officers and employees. We also proposed to remove the requirement in § 163.180(c) because we find that a regulatory requirement that a Federal savings association notify its bond insurance company and file proof of loss for certain claims is unnecessary. The terms of a fidelity bond contract itself require such notification, and it is a prudent business practice for a financial institution. Furthermore, the Corporate and Risk Governance booklet of the Comptroller’s Handbook states that ‘‘[a]ll fidelity bonds require that a loss be reported to the bonding company within a specified time after a reportable item comes to the attention of management. Management should diligently report all potential claims . . . because failure to file a timely report may jeopardize coverage for that loss.’’ 20 In addition, we proposed to modify the treatment of fidelity bond coverage for certain agents of Federal savings associations. Currently, § 163.191 requires fidelity bond coverage for any agent who has control over or access to cash, securities, or other property of a Federal savings association. There is no comparable requirement for agents of national banks. Instead of a mandatory requirement for agent bonding, we proposed to amend § 7.2013 to provide that the boards of directors of both banks and savings associations should consider whether agents who have access to assets of a bank or savings association also should have fidelity bond coverage. The OCC recognizes that agents providing financial services, such as cash handling or payment processing, to a financial institution potentially expose that institution to significant risks. The OCC believes that these risks and associated risk mitigation strategies, including the scope and size of fidelity 20 Corporate and Risk Governance booklet of the Comptroller’s Handbook, p. 63 (July 2016). E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations bond coverage for agents, are best addressed by the board of directors. Finally, § 7.2013(b) currently provides that a national bank’s board of directors should determine the appropriate amount of fidelity bond coverage. This language is in contrast to that in § 163.190, which makes clear that this determination is mandatory. For safety and soundness reasons, the OCC believes that both national bank and Federal savings association boards of directors should be required to determine the appropriate bond coverage and proposed to amend § 7.2013(b) to make clear that this determination is a mandatory requirement. We also proposed to amend this section to allow a board committee, as an alternative to the entire board, to assess fidelity bond coverage. We did not received any specific comments on these proposed amendments to part 7 and §§ 163.180, 163.190, and 163.191 and adopt them as proposed. mstockstill on DSK3G9T082PROD with RULES3 Assessments (12 CFR Part 8) The OCC collects semiannual assessments from national banks, Federal savings associations, Federal branches, and Federal agencies in accordance with 12 CFR part 8. The OCC is adopting a technical amendment to the definition of ‘‘[f]ull-service trust Federal savings association’’ in 12 CFR 8.6(c)(iv) not included in the proposed rule. The amendment removes the extraneous word ‘‘trust’’ from the title, which corrects a drafting error from an earlier rulemaking in which the OCC combined certain rules of the OCC and the former OTS.21 This amendment will not affect the method for collecting assessments or the amount of assessments collected by the OCC. Fiduciary Activities (12 CFR Parts 9 and 150) Twelve CFR parts 9 and 150 set forth the standards that apply to the fiduciary activities of national banks and Federal savings associations, respectively. Parts 9 and 150 were included in the first EGRPRA Federal Register notice, and the OCC proposed revisions to these rules to reflect some of the public comments received in response to this notice. One commenter to the proposed rule provided a number of comments on these revisions. These comments and the revisions as adopted in this final rule are discussed below. Custody of fiduciary assets. Sections 9.13 and 150.230 require a national bank or Federal savings association, 21 76 FR 43566 (July 21, 2011). VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 respectively, to place all fiduciary account assets in the joint custody or control of no fewer than two of the fiduciary officers or employees designated by the bank’s or savings association’s board of directors or to maintain fiduciary investments off premises, if consistent with applicable law and if the bank maintains adequate safeguards and controls. The OCC proposed to amend § 9.13 to add a new § 150.245 to provide relief for arrangements under which a national bank or Federal savings association is deemed a fiduciary solely because it provides investment advice for a fee. If, under such an arrangement the bank or savings association is a fiduciary merely because it provides such advice and does not have investment discretion, the OCC does not believe that it should be required to have custody of the fiduciary assets. Specifically, the OCC proposed to amend § 9.13(a) to provide that a national bank that is deemed a fiduciary based solely on its provision of investment advice for a fee, as that capacity is defined in 12 CFR 9.101(a), is not required to serve as custodian when offering those fiduciary services. Similarly, proposed § 150.245 provides that a Federal savings association that is deemed a fiduciary based solely on its provision of investment advice for a fee, as that capacity is defined in 12 CFR 9.101(a), would not be required to maintain custody or control of fiduciary assets as set forth in § 150.220 or 150.240. We received one comment on this proposed change, which suggested that the proposal does not go far enough in that it leaves many other arrangements unaddressed and may raise uncertainty about common scenarios that arise even in traditional fiduciary relationships, such as when a client does not wish to grant the bank custody of fiduciary assets. It suggested that the final rule also provide that a national bank that has not been granted custody of fiduciary assets may still act as a fiduciary with respect to those assets, if consistent with applicable law. The OCC does not agree with the comment. Such arrangements may pose additional risks to account beneficiaries as well as additional liabilities to bank fiduciaries. The proposed amendment was deliberately and narrowly focused on situations where a bank or Federal savings association is deemed a fiduciary based solely on the provision of investment advice for a fee, as that capacity is defined in § 9.101(a). Banks that act in any other fiduciary capacity, such as directed trustees or banks that have sole or shared investment discretion, still are required to maintain PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 8087 custody of fiduciary assets in accordance with § 9.13(a). However, to avoid any confusion about the intent of the amendment the final rule specifically cross-references the definition of ‘‘investment advisor’’ instead of referencing the provision of investment advice for a fee and states that, in order not to be required to serve as custodian, the bank may not have any other specified fiduciary capacity. Specifically, as adopted in the final rule, this amendment now provides that a bank that is deemed a fiduciary based solely on its capacity as investment advisor, as that capacity is defined in § 9.101(a), and has no other fiduciary capacity as enumerated in § 9.2(e) is not required to serve as custodian when offering those fiduciary services. This language is substantively identical to the language in proposed § 9.13 but provides banks with more clarity regarding their obligations. We have made corresponding changes to § 150.245. Deposits of securities with state authorities. Pursuant to 12 U.S.C. 92a(f), § 9.14(a) provides that if a state requires corporations acting in a fiduciary capacity to deposit securities with state authorities for the protection of private or court trusts, a national bank must make a similar deposit with state authorities before acting as a private or court-appointed trustee in that state. If the state authorities refuse to accept the deposit, the bank must instead deposit the securities with the Federal Reserve Bank of the district in which the national bank is located. Section 150.490 contains a nearly identical requirement for Federal savings associations, except that savings associations must deposit the securities with state authorities or the applicable Federal Home Loan Bank. The OCC proposed to amend § 9.14(a) to permit national banks to deposit these securities either with the Federal Home Loan Bank of which the bank is a member or with the appropriate Federal Reserve Bank. Because Federal savings associations may not be members of a Federal Reserve Bank, the OCC cannot make a reciprocal amendment to § 150.490. One commenter requested that the OCC amend § 9.14 further to provide that if a bank makes a best effort to comply with this provision but is unable to meet the deposit requirement because of a state’s refusal or inaction, the bank will be deemed to have complied. The OCC does not agree with this suggested change. Twelve U.S.C. 92a(f) specifically requires national banks to make these deposits. Thus, amending 12 CFR 9.14 to deem a bank E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8088 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations to have complied when it has not actually made the deposit would be inconsistent with the plain language of the statute. Furthermore, the OCC believes that the option of depositing such funds with either a Federal Reserve Bank or a Federal Home Loan Bank, in the case of national banks, or with a Federal Home Loan Bank, in the case of Federal savings associations, provides these entities with a feasible method of complying with the regulation and statute when a state refuses to accept the deposit. The OCC therefore adopts the amendment as proposed. Collective investment funds. Section 9.18 permits a national bank, where consistent with applicable law, to invest assets that it holds as fiduciary in specified collective investment funds. Section 150.260 permits Federal savings associations also to invest funds in a fiduciary account in collective investment funds, and provides that in establishing and administering such funds, Federal savings associations must comply with the requirements of § 9.18. Therefore, the amendments to § 9.18 made by this rulemaking also apply to Federal savings associations. Section 9.18(b)(1) requires a national bank to establish and maintain each collective investment fund in accordance with a written plan approved by a resolution of the bank’s board of directors or by a committee authorized by the board. This provision also requires the bank to make a copy of the plan available for public inspection at its main office during all banking hours and to provide a copy of the plan to any person who requests it. In response to a comment letter received as part of the EGRPRA review process, the OCC proposed to amend § 9.18(b)(1) to require instead that the bank make a copy of the investment fund plan available to the public either at its main office or on its Web site. Although it is appropriate to provide the public access to this plan, we agree that requiring a bank to make the plan available for public inspection at its main office is unnecessarily burdensome and is not the most efficient method for public inspection in today’s electronic environment. The proposal maintained the option for access to the plan at a main office for those small banks that may not have a Web site, and also clarified that a bank may satisfy the requirement to provide a copy of the plan to any person who requests it by providing it in either written or electronic form. The one commenter that discussed this amendment supported it, noting that it would allow banks to lower VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 distribution costs, while satisfying participants’ requests for the information through electronic mail or an internet Web site. The OCC adopts this amendment as proposed. Section 9.18(c)(2) provides that a national bank may collectively invest assets that it holds as fiduciary in a mini-fund. A mini-fund is a fund that a bank maintains for the collective investment of cash balances received or held by the bank in its capacity as trustee, executor, administrator, guardian, or custodian under the Uniform Gifts to Minors Act that the bank considers too small to be invested separately in an economically efficient manner. This section further provides that the total assets in a mini-fund must not exceed $1,000,000 and the number of participating accounts must not exceed 100. A comment on this rule received as part of the EGRPRA review process requested that the OCC periodically adjust the asset limit for mini-funds in § 9.18(c)(2) to account for inflation and economic growth. This commenter also noted that the current limit of $1 million was last updated in 1996 22 and suggested that the OCC raise the threshold to at least $1.5 million, which is the inflation-adjusted value of $1 million in 1996. The OCC agreed with this commenter and proposed to amend § 9.18(c)(2) to increase the threshold to $1,500,000, with an annual adjustment for inflation. The OCC believes this change will continue to make minifunds a feasible investment option for national banks. The same commenter supported the increased threshold in the proposed rule. However, this commenter also noted that this proposed threshold may be too low to provide a feasible investment option for many banks and asked that the OCC consider adjustments as needed. The OCC does not believe that a threshold higher than the one proposed is necessary at this time, as it reflects the inflation adjusted value of the original threshold. Furthermore, this amendment provides that the OCC will adjust this amount to reflect inflation on a yearly basis. This commenter also recommended a number of additional amendments to § 9.18. Section 9.18(b)(5)(iii) provides that a bank managing certain collective investment funds invested primarily in real estate or other assets that are not readily marketable may require a prior notice period not to exceed one year for withdrawals. The commenter requested that the OCC amend this provision to replace references to ‘‘real estate’’ with 22 See PO 00000 61 FR 68554 (Dec. 30, 1996). Frm 00008 Fmt 4701 Sfmt 4700 references to ‘‘assets that are illiquid or otherwise not readily marketable’’ so that other illiquid assets such as guaranteed investment contracts, synthetic investment contracts, or separate account contracts with limits on transferability, may be recognized. The commenter also requested that the OCC amend the rule to permit national banks to require advance withdrawal notices longer than one year so that banks would not need to request such an extension from the OCC on a caseby-case basis. The OCC does not agree with either of these suggestions. The introduction of the term ‘‘assets that are illiquid’’ could be interpreted too broadly and, for example, could result in national banks denying participants access to funds when a collective investment fund holds assets that become illiquid due to adverse market conditions. The OCC also believes that banks should continue to be required to support, on a case-by-case basis, any request to extend the advance notice requirement. Lastly, this commenter requested that the OCC allow flexibility in the timing of a final audit required by 12 CFR 9.18(b)(6), which requires a national bank administering a collective investment fund to prepare a financial audit of the fund once every 12 months. The commenter specifically recommended allowing a bank that is terminating a fund within 15 months after the last audit to wait until the fund has terminated to complete the final audit. The OCC does not agree with this recommendation. In many cases, banks should be able to plan fund terminations at or just prior to the end of a plan year. To the extent that circumstances beyond their control prevent the fund from closing as planned, those same circumstances may delay the closing beyond 15 months, delaying the audit without reducing expenses. For the reasons stated above, the OCC adopts the proposed amendments to § 9.18 as proposed. Additional suggested amendments. This commenter provided other suggested amendments to the OCC’s fiduciary rules, most of which the commenter previously included in its response to the first Federal Register EGRPRA notice. The OCC did not include these amendments in the proposed rule, and has not included them in the final rule, for the reasons discussed below. First, the commenter requested that we amend § 9.8(a), which requires national banks to maintain fiduciary account records for a period of three years from the later of the termination E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations of the account or the termination of any litigation relating to an account, to provide instead that these account records be retained for a ‘‘necessary period’’ or to refer to applicable law on the retention of documents. The term ‘‘necessary period’’ is too vague and the OCC declined to propose this change. Second, this commenter also requested that the OCC amend 12 CFR 9.10(b)(1), which imposes requirements and restrictions on national banks that hold fiduciary funds that are awaiting investment or distribution by the bank. Section 9.10(b) specifically requires a bank to collateralize funds held in a fiduciary account if the funds are not insured by the FDIC. The commenter recommended that the OCC not require a bank to collateralize funds if the funds are directed by a third party or in the governing instrument. The commenter noted that in these situations, a third party and not the bank decides how to hold the funds at the bank, thus eliminating conflict of interest or selfdealing on the part of the bank. However, national banks are required to collateralize deposits by statute regardless of whether the bank has discretion to deposit fiduciary funds at the bank.23 This collateralization is for protection of the trust funds. Customers providing direction to a bank to selfdeposit may not fully understand the protection that they would forego by doing so. Also, in many cases, the party that could direct a bank to self-deposit may not be the party protected by the pledge. The directing party may benefit from foregoing the pledge, but not share in the risk. For these reasons, the OCC declined to include this amendment in the proposed rule. Third, 12 CFR 9.10(b)(2) stipulates the types of collateral with which a bank may satisfy the requirements of 12 CFR 9.10(b)(1). This commenter requested that the OCC expand the list of acceptable collateral listed in § 9.10(b)(2) to include other instruments that provide protection from loss similar to that provided by surety bonds, and the commenter proposed language that would allow a bank to determine whether a collateral instrument provides such ‘‘similar protection.’’ The OCC finds that this proposed change is overly broad and subject to misinterpretation, and, therefore, did not include it in the proposed rule. Lastly, this commenter urged the OCC to address electronic recordkeeping for fiduciary accounts in 12 CFR 9.8, noting that such guidance would provide clarity when state law is silent as to the medium of recordkeeping. The commenter noted that many bank fiduciaries are confused as to which fiduciary documents are covered by the Electronic Signatures in Global and National Commerce Act (E-Sign Act).24 The commenter requested that the OCC expressly permit the electronic retention of documents to satisfy regulatory requirements. The OCC notes that section 101 of the E-Sign Act provides that certain records may not be invalidated merely by virtue of being in an electronic format. However, section 103 of the E-Sign Act exempts from section 101 contracts or other records to the extent that they are governed by statutes, regulations, or other rules of law governing the creation and execution of wills, codicils, or testamentary trusts.25 Generally, wills, codicils, and testamentary trusts are governed by state law. Section 9.8 does not prohibit the electronic recordkeeping of fiduciary documents. However, in light of the provisions in the E-Sign Act, the authority to declare that fiduciary records may be kept electronically if such records are subject to state law is unclear. Therefore, electronic recordkeeping is permissible for purposes of part 9 if such recordkeeping is permitted by state law, and we decline to amend our rule specifically to permit electronic retention of such fiduciary documents. Municipal Securities Dealers (12 CFR Part 10) Part 10 requires that a national bank (or a separately identifiable department or division of a national bank) that acts as a municipal securities dealer, and an associated person that acts as a municipal securities principal or representative, file certain forms with the OCC. Specifically, § 10.2 requires national banks to submit to the OCC Form MSD–4 (Uniform Application for Municipal Securities Principal or Municipal Securities Representative Associated with a Bank Municipal Securities Dealer) before associating with a municipal securities principal or municipal securities representative. Within 30 days of terminating such person’s association with the bank, the bank must file with the OCC Form MSD–5 (Uniform Termination Notice for Municipal Securities Principal or Municipal Securities Representative Associated with a Bank Municipal Securities Dealer). Although there is no equivalent regulation applicable to Federal savings associations, these institutions and associated persons currently file these same forms with the 24 15 23 12 U.S.C. 92a(d). VerDate Sep<11>2014 19:50 Jan 19, 2017 25 15 Jkt 241001 PO 00000 U.S.C. 7001 et seq. U.S.C. 7003. Frm 00009 Fmt 4701 Sfmt 4700 8089 OCC pursuant to Municipal Securities Rulemaking Board (MSRB) rules, as incorporated in an OTS Chief Counsel Opinion.26 Part 10 was included in the fourth Federal Register EGRPRA notice and the OCC did not receive any comments on this rule in response to this request for comment. However, in order to coordinate and harmonize the requirements applicable to these practices, the OCC proposed to codify this OTS opinion in OCC regulations by amending part 10 to include Federal savings associations. In addition, the OCC proposed minor technical changes to update part 10. First, we proposed to update the citation to MSRB Rule G– 7(b) in § 10.2(a) to reflect MSRB revisions to this rule. Second, we proposed to amend § 10.2(c) to allow national banks to obtain Forms MSD–4 and MSD–5 27 on http:// www.banknet.gov/ instead of by contacting the OCC in writing.28 Third, we proposed to replace the street address of the MSRB, provided to assist institutions in obtaining MSRB rules, with the MSRB’s internet address. We did not receive any specific comments on the proposed codification and technical amendments and adopt them as proposed. This codification will not change the requirements applicable to Federal savings associations. Furthermore, by codifying this filing in OCC rules instead of referring to it in an opinion letter, this change will identify more clearly this requirement for Federal savings associations. Securities Exchange Act Rules (12 CFR Parts 11 and 194) Twelve CFR parts 11 and 194 set forth the periodic reporting requirements for 26 OTS Chief Counsel Opinion (OTS Op. Oct. 29, 2001) (noting that a Federal savings association engaged in municipal securities underwriting and dealing must comply with applicable laws and regulations, financial reporting requirements, and Municipal Securities Rulemaking Board (MSRB) rules). MSRB rules include requirements to file forms with the ‘‘appropriate regulatory agency.’’ See, e.g., MSRB Rule G–7. The Exchange Act provides that the OCC is the appropriate regulatory agency with respect to a municipal securities dealer that is a Federal savings association. 15 U.S.C. 78c(a)(34)(A)(i). 27 We note that Forms MSD–4 and MSD–5 are uniform forms developed by the Federal Reserve Board, FDIC and OCC and that these forms expressly state that they be mailed to the appropriate regulatory agency. Therefore, the OCC cannot amend part 10 to provide for the electronic filing of these forms until the Federal Reserve Board, FDIC, and OCC jointly decide to permit electronic filing. 28 BankNet is the OCC’s secure Web site for communicating with and receiving information from national banks and Federal savings associations. BankNet is only available to OCCregulated institutions and is not available to the public. E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8090 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations national banks and Federal savings associations, respectively, with securities registered under the Securities Exchange Act of 1934 (Exchange Act). These rules were included in the fourth Federal Register EGRPRA notice, and the OCC did not receive any specific comments on these rules in response to this request for comment, although we previously had received more general comments requesting that the OCC permit electronic filings. In light of the similar statutory provisions that apply to national banks and Federal savings associations as implemented by these parts, the OCC proposed to remove part 194 and amend part 11 to include Federal savings associations. In addition, we proposed to amend § 11.2 pursuant to the Jumpstart Our Business Startups Act (JOBS Act),29 to permit the electronic filing of periodic reporting requirements, and to make technical, non-substantive edits and clarifications to part 11. These changes would reduce duplication and create efficiencies by establishing a single set of rules for all entities supervised by the OCC with respect to the Exchange Act disclosure rules, while not changing the requirements applicable to national banks or Federal savings associations. These specific amendments are discussed below. Authority and OMB control number (§ 11.1). Section 11.1 sets forth the OCC’s authority to issue rules for national banks with respect to the Exchange Act as well as the Office of Management and Budget (OMB) control number assigned to part 11 for purposes of the Paperwork Reduction Act (PRA). The OCC proposed to amend this section to include its authority with respect to Federal savings associations. We also proposed to remove the reference to the OMB control number, as it is not required to be included in regulatory text and the OCC has generally not included such numbers in recently published regulations. We did not receive any specific comments on these proposed amendments to § 11.1 and adopt them as proposed. This removal is technical and will not affect the OCC’s responsibilities under the PRA. Reporting requirements for registered national banks (§ 11.2). The OCC proposed to add a new paragraph (c) to § 11.2 to state explicitly that references to registration requirements under the Securities Act of 1933 (Securities Act) pertain to the registration requirements under 12 CFR part 16. We did not receive any specific comments on this 29 Public Law 112–106, 126 Stat. 306 (2012). VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 proposed amendment and therefore adopt it as proposed. This change will clarify the applicable requirements for national banks and Federal savings associations. Emerging growth company eligibility (§ 11.2). The JOBS Act amended the Exchange Act to create a new class of issuer known as an emerging growth company.30 An emerging growth company is defined generally as an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year.31 The JOBS Act provides scaled disclosure provisions for emerging growth companies, including, among other things: (1) An exemption from proxy statement requirements concerning shareholder approval of executive compensation under section 14A of the Exchange Act; 32 (2) an exemption from proxy statement requirements concerning disclosure of executive compensation versus performance under section 14(i) of the Exchange Act; 33 (3) a limitation of applicable time periods for disclosures required under Regulation S–K 34 for selected financial data; 35 (4) treatment as a smaller reporting company for purposes of executive compensation disclosures required under Regulation S–K, Item 402; 36 and (5) an exemption from auditor attestation provisions concerning internal financial reporting controls required by the Sarbanes-Oxley Act of 2002.37 The JOBS Act and the Exchange Act contain exclusions from emerging growth company eligibility that are based on public offerings that an issuer makes under the Securities Act. First, the JOBS Act provides that an issuer is not eligible for emerging growth company status if it engaged in a public securities offering pursuant to an effective Securities Act registration statement on or before December 8, 2011.38 Second, the Exchange Act, as amended by the JOBS Act, provides that an issuer may not remain an emerging growth company beyond the close of the fiscal year following the fifth anniversary of the issuer’s first securities offering under a Securities 30 JOBS Act, section 101(b), amending section 3(a) of the Exchange Act (15 U.S.C. 78c(a)). 31 Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)). 32 Exchange Act, section 14A(e) (15 U.S.C. 78n– 1(e)). 33 Exchange Act, section 14(i) (15 U.S.C. 78n(i)). 34 17 CFR 210.1–01 et seq. 35 Exchange Act, section 13(a) (15 U.S.C. 78m(a)). 36 12 CFR 229.402. 37 Public Law 107–204, section 404, 116 Stat. 789 (2002) (15 U.S.C. 7262(b)). 38 JOBS Act, section 101(d) (15 U.S.C. 77b(note)). PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 Act registration statement.39 Because national banks and Federal savings associations file registration statements under OCC regulations rather than the Securities Act, these exclusions do not technically apply to banks and savings associations. Section 12(i) of the Exchange Act requires the OCC to issue substantially similar regulations as the Securities and Exchange Commission (SEC) for those provisions of the Exchange Act for which it is vested authority with respect to banks and savings associations.40 Parts 11 and 194 generally require national banks and Federal savings associations, respectively, with securities registered under sections 12(b) or 12(g) of the Exchange Act 41 to comply with certain Exchange Act rules. Therefore, pursuant to the JOBS Act, the OCC proposed to add a new paragraph (d) to § 11.2 to clarify national bank and Federal savings association eligibility for emerging growth company treatment for those provisions of the Exchange Act that the OCC administers. The intent of this amendment is to ensure equivalent treatment of banks and savings associations with non-bank issuers. This amendment also would provide that a bank or savings association eligible for emerging growth company status may choose to forgo such exemption and instead comply with the requirements that apply to a bank or savings association that is not an emerging growth company. Furthermore, the amendment would provide that: (1) A bank or savings association is not an emerging growth company if it sold common equity securities on or before December 8, 2011, pursuant to a registration statement or offering circular filed under 12 CFR part 16 or 197, or under the former OTS rule at 12 CFR 563g; and (2) emerging growth company status for banks and savings associations terminates no later than the end of the fiscal year following the fifth anniversary of the first sale of its common equity securities pursuant to a registration statement or offering circular under 12 CFR parts 16, 197 or 563g.42 We did not receive any specific comments on this proposed amendment to § 11.2 and adopt it as proposed. Filing requirements and inspection of documents (§ 11.3). Several comments 39 Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)). 40 15 U.S.C. 78l(i). 41 15 U.S.C. 78l(b), (g). 42 The JOBS Act and the Exchange Act, as amended by the JOBS Act, contain equivalent restrictions for non-banks. However, these restrictions are based on when an issuer files a registration statement under the Securities Act. E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 received during the EGRPRA review process requested that the OCC permit national banks and Federal savings associations to submit forms and reports to the OCC electronically. The OCC agrees that electronic filings are more efficient and less costly for national banks and Federal savings associations, are more efficient for the OCC to review, and provide a quicker response time for banks and savings associations. Therefore, we proposed to amend part 11 to provide for the electronic submission of required filings.43 Section 11.3(a) currently requires national banks to submit by mail, fax, or otherwise four copies of all papers required to be filed with the OCC (pursuant to the Exchange Act or regulations thereunder) to the Securities and Corporate Practices (SCP) Division of the OCC. Through incorporation of SEC Rule 12b–11,44 part 194 requires Federal savings associations to file three copies of Exchange Act filings with the SCP Division. We proposed to amend § 11.3(a)(1) to require instead that national banks and Federal savings associations submit one copy of their filings through electronic mail to the OCC at http://www.banknet.gov/.45 The proposed rule also included an amendment to § 11.3 to provide that documents may be signed electronically using the signature provision in SEC Rule 12b–11. SEC Rule 12b–11 provides that required signatures for Exchange Act filings may be signed using typed signatures or duplicated or facsimile versions of manual signatures. Where typed, duplicated, or facsimile signatures are used, each signatory to the filing is required to ‘‘manually sign a signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in the filing.’’ 46 As provided by Rule 12b–11, the national bank or Federal savings association must retain this document for five years and, upon request, provide a copy to the OCC. The OCC also proposed an exception to the general electronic filing requirement to permit the use of paper filings where unanticipated technical difficulties prevent the use of electronic filings. This exception is modeled on the SEC’s General Rules and Regulations 43 The OCC currently permits the electronic submission of a number of other filings, for example, Call Reports, and public welfare investment notifications and proposals. 44 17 CFR 240.12b–11. 45 As described elsewhere in this final rule, the OCC also is amending part 16, Securities offering disclosure rules, to provide for electronic submissions. 46 Id. VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 for Electronic Filings, Regulation S–T, Rule 201,47 which provides a temporary hardship exemption to the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) filing requirements in cases of unanticipated technical difficulties. Similar to Rule 201, the OCC notes that use of this exception should be extremely limited and should be relied upon only when unusual and unexpected circumstances create technical impediments to the use of electronic filings. However, this exception would not be available for statements of beneficial ownership that must be made through the FDICconnect platform, which requires electronic filings.48 Current § 11.3(a)(3)(i) provides that the date on which papers are actually received by the OCC shall be the date of filing, if the person or bank filing the papers has complied with all applicable requirements. The OCC proposed to update this provision to conform to the electronic filing requirement. Specifically, an electronic filing whose submission is commenced on a nonholiday weekday on or before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, would be deemed received by the OCC on the same business day. An electronic filing whose submission is commenced after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, or on a Saturday, Sunday, or Federal holiday would be deemed received by the OCC on the next business day. The proposal also included a new paragraph (a)(3)(iii) to § 11.3 to provide that if an electronic filer in good faith attempts to file a document pursuant to this part in a timely manner but the filing is delayed due to technical difficulties beyond the electronic filer’s control, the electronic filer may request that the OCC adjust the filing date. The OCC may grant the request if it appears that such adjustment is appropriate and consistent with the public interest and the protection of investors. These rules for dating an electronic filing, and for providing a waiver for technical difficulties with the filing, also are derived from SEC Regulation S–T.49 Finally, the OCC proposed the following technical amendments to part 11. First, the OCC proposed to rename the paragraph heading of § 11.3(a)(3)(ii), which establishes filing dates for statements of beneficial ownership that 47 17 CFR 232.201. 70 FR 46403 (Aug. 10, 2005). FDICconnect is the secure internet channel for FDIC-insured institutions to conduct business and exchange information with the FDIC. 49 17 CFR part 232. 48 See PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 8091 must be made through the FDICconnect platform,50 from Electronic filings to Beneficial ownership filings. This new heading would more accurately reflect the final rule’s application of electronic filing requirements to all part 11 filings, not just those made under § 11.3(a)(3)(ii). Second, the OCC proposed to delete paragraph (a)(4) of § 11.3. This paragraph provides a mandatory compliance date of January 1, 2004 for 12 CFR part 11. However, as this date has now passed, this mandatory compliance date no longer is needed in the rule text. Third, the OCC proposed to amend § 11.4(b), which currently provides that filing fees must be paid by check, to reflect the electronic filing of documents and the additional payment options now available. Specifically, the amendment would permit filing fees to be paid by means acceptable to the OCC, in addition to by check. We note that the OCC currently is not imposing any filing fees for part 11 filings and is not adopting any fees as part of this rulemaking. As a consequence of proposing to amend part 11 to include Federal savings associations, the OCC proposed to remove part 194 in its entirety. The OCC notes that removing § 194.3, which addresses liability for certain forwardlooking statements made by Federal savings associations, would not change the applicability of the requirements of this section for Federal savings associations. Specifically, the text of § 194.3 is substantially similar to the SEC Rule 3b–6,51 which currently applies to national banks by reference in § 11.2. Therefore, because part 11 (and its cross-reference to the SEC Rule 3b6) would apply to Federal savings associations, the requirements imposed by current § 194.3 would continue to apply to Federal savings associations. Furthermore, we note that the removal of §§ 194.801 and 194.802, Interpretations for Federal savings associations filing statements pursuant to the Exchange Act, is not intended to be a substantive change in how these filings are conducted. The interpretations included in these sections are now widely accepted and no longer need to be included in a rule. Therefore, the removal of these sections would not change how Federal savings associations prepare their reports. The OCC did not receive any specific comments on the proposed amendments to § 11.3 and the removal of part 194 50 See 51 17 E:\FR\FM\23JAR3.SGM 70 FR 46403 (Aug. 10, 2005). CFR 240.3b–6. 23JAR3 8092 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 and adopts the amendments and removal as proposed. Recordkeeping and Confirmation Requirements for Securities Transactions (12 CFR Parts 12 and 151) Twelve CFR parts 12 and 151 establish recordkeeping and confirmation requirements for national banks and Federal savings associations, respectively, that engage in securities transactions for their customers. These rules were included in the fourth Federal Register EGRPRA notice and the OCC did not receive any comments on them in response to this request for comment. However, based on our internal review of these rules, the OCC proposed a number of amendments to both parts 12 and 151. We received one comment on these amendments, with respect to 12 CFR 12.102, National bank use of electronic communications as customer notifications, as discussed below. Definitions. The OCC proposed to revise the definition of ‘‘municipal security’’ at §§ 12.2(i)(3) and 151.40 to remove an outdated citation to the Internal Revenue Code. We are adopting this change as proposed. Recordkeeping. Section 12.3 and subpart A of part 151 establish recordkeeping requirements for securities transactions conducted by national banks and Federal savings associations, respectively. Section 151.60(b) prescribes more detailed procedures for record maintenance and storage for Federal savings associations than prescribed for national banks in § 12.3(b). Specifically, § 12.3(b) provides that the required records must clearly and accurately reflect the information required and provide an adequate basis for the audit of the information, and that record maintenance may include the use of automated or electronic records provided the records are easily retrievable, readily available for inspection, and capable of being reproduced in a hard copy. In addition to what is required for national banks, § 151.60(b) imposes requirements related to indexing, paper storage, electronic storage, and the provision of records to examiners. The OCC proposed to remove § 151.60(b) and revise § 151.60(a) to include the less detailed maintenance and storage procedures found in the national bank rule. The OCC believes that this approach would provide a Federal savings association with more flexibility in making internal business decisions about record storage and maintenance. Current § 151.60(c), redesignated in the proposed rule as § 151.60(b), provides that a Federal savings VerDate Sep<11>2014 20:23 Jan 19, 2017 Jkt 241001 association may use a third-party service provider to provide record storage or maintenance. The current national bank rule does not include a similar third-party provision. The OCC proposed to amend § 12.3 to clarify that a national bank may use a third-party service provider for record storage and maintenance provided that the bank maintains effective oversight to ensure that the records are easily retrievable, are readily available for inspection, can be reproduced in a hard copy, and follow applicable OCC guidance.52 The OCC did not receive any specific comments on these proposed amendments to §§ 12.3 and 151.60 and adopts them as proposed. Content and time of notification. Sections 12.4 and 151.70, respectively, require national banks and Federal savings associations that effect securities transactions for their customers to provide notifications of the transactions. Under the current rule, a national bank or Federal savings association may choose among several types of notification. Pursuant to §§ 12.4(a) and 151.90, a national bank or Federal savings association, respectively, may provide the customer a written notice that includes the information set forth in those sections. Sections 12.5 and 151.100 permit a national bank or Federal savings association, respectively, to fulfill the notification requirement through alternative means that vary by the type of account. For transactions that use a registered broker-dealer, § 151.80(a) allows the Federal savings association to satisfy the requirement of § 151.70 by having the registered broker-dealer send the confirmation statement directly to the customer or by having the Federal savings association send a copy of the broker-dealer’s confirmation to the customer. If the broker-dealer has the necessary account level information to send the confirmation directly to the customer, the Federal savings association need not send out an additional written notification of the transaction. In contrast, under § 12.4(b), a national bank may send a copy of the broker-dealer’s confirmation but is not expressly permitted to satisfy the requirement by having the broker-dealer send the confirmation directly to the customer. The OCC believes that most national banks and Federal savings associations, particularly community institutions, effect securities transactions for customers through registered broker52 See OCC Bulletin 2013–29, Third-Party Relationships: Risk Management Guidance (Oct. 30, 2013). PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 dealers. To avoid duplicative reporting to customers and to reduce burden on institutions, the OCC proposed to amend § 12.4(b) to follow the approach of § 151.80. With this amendment, both national banks and Federal savings associations could direct a broker-dealer to mail confirmations to customers without requiring that a duplicate be sent by the bank or savings association, thereby reducing regulatory burden for national banks. This approach also would reduce confusion that may result when a customer receives duplicate confirmations for the same transaction from two different parties. In addition, the OCC proposed to amend § 151.80 to reduce regulatory burden on Federal savings associations. Currently, § 151.80(b) requires a Federal savings association that receives or will receive remuneration from any source, including the customer, in connection with the transaction to provide the customer a statement of the source and amount of the remuneration in addition to the registered broker-dealer confirmation. The OCC proposed to amend this provision to provide that, when such remuneration is determined by a written agreement between the Federal savings association and the customer, the savings association does not need to provide this remuneration statement for each securities transaction. This change is consistent with § 12.4(b), which does not require a national bank to provide a statement of the source and amount of remuneration in these circumstances. The OCC did not receive any specific comments on these proposed amendments to §§ 12.4 and 151.70 and adopts them as proposed. National bank disclosure of remuneration for mutual fund transactions. The OCC proposed to remove the interpretation in § 12.101, national bank disclosure of remuneration for mutual fund transactions. The OCC does not intend to change any existing practices with this amendment. Instead, the OCC believes that this issue is obsolete because of recent SEC actions.53 The OCC did not receive any specific comments on this proposed removal and adopts it as proposed. National bank use of electronic communications as customer notifications. Section 12.102 allows national banks, in appropriate situations, to comply with the written customer notification requirements in 53 For example, the SEC now requires all mutual funds to disclose their fee structures in registration statements. http://www.sec.gov/about/forms/formn1a.pdf. E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations §§ 12.4 and 12.5 by using electronic communications or, if a customer has a facsimile machine, through facsimile transmission. To satisfy the notification delivery requirement by other electronic communication, the parties must agree to use electronic instead of hard-copy notifications, the parties must have the ability to print or download the electronic notification, the recipient must be able to affirm or reject trades through electronic notification, the system cannot automatically delete the electronic notification, and both parties must have the capacity to receive electronic messages. Federal savings associations are subject to a similar provision at § 151.110. The OCC finds that the use of electronic communications has become widespread and is provided for in state and Federal law, such as the E-Sign Act, which allows for electronic communications with customers. Therefore, §§ 12.102 and 151.110 are outdated and duplicative of existing law, and we proposed to remove them. We received one comment on this proposed amendment, which was critical of removing this guidance for banks on the use of electronic communications. However, the OCC continues to believe that these provisions are outdated and not necessary in the current electronic environment. We therefore adopt the amendment as proposed. mstockstill on DSK3G9T082PROD with RULES3 Securities Offering Disclosures (12 CFR Parts 16 and 197) Twelve CFR parts 16 and 197 set forth securities offering disclosure rules for national banks and Federal savings associations, respectively. These rules are based on the Securities Act 54 and certain Securities Act rules, to the extent appropriate for banks.55 These rules were included in the fourth Federal Register EGRPRA notice, and the OCC did not receive any specific comments in response to this request for comment, although, as indicated above, we previously had received comments requesting that the OCC permit electronic filings. In light of the similar provisions that apply to national banks and Federal savings associations, the OCC proposed 54 National bank and Federal savings association securities are generally exempt from the Securities Act. Securities Act, sections 3(a)(2) and (5) (15 U.S.C. 77c(a)(2) and (5)). 55 59 FR 54789 (Nov. 2, 1994) (‘‘[Part 16] generally requires national bank securities offering documents to conform to the form for registration that the bank would use if it had to register the securities under the Securities Act. Accordingly, the final rule cross-references a number of provisions of the Securities Act and a number of SEC rules.’’) VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 to amend part 16 to include Federal savings associations and to remove part 197. In addition, the OCC proposed to incorporate some provisions of part 197 into part 16, to provide for the electronic submission of filings required under part 16, and to update the part 16 filing fees provision. The OCC also proposed technical changes throughout part 16 to update citations to SEC rules and to replace all references to ‘‘Commission’’ with ‘‘SEC.’’ The OCC believes that these amendments would reduce duplication and create efficiencies by establishing a single set of rules for all entities supervised by the OCC with respect to securities offerings. In addition, integrating savings associations into part 16 would clarify disclosure requirements for these institutions and provide them with additional exemptions, as described below. Furthermore, providing for the electronic submission of securities filings would reduce burden for both national banks and Federal savings associations. These specific amendments are discussed below. The JOBS Act, addressed above in the discussion of part 11, amended the Securities Act and directed the SEC both to amend existing Securities Act rules and to write new rules to implement certain JOBS Act provisions. Generally, the JOBS Act seeks to ease securities offering disclosure requirements and periodic reporting obligations for certain issuers, including emerging growth companies.56 It also creates new Securities Act private placement exemptions for crowdfunding 57 and small company 56 As indicated in the discussion of part 11, above, an emerging growth company is a new category of issuer created under the JOBS Act. Generally, an emerging growth company is an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. Securities Act section 2(a)(19) (15 U.S.C. 77b(a)(19)). An emerging growth company is eligible to rely on certain scaled disclosure requirements for registration statements filed under the Securities Act. For example, an emerging growth company need not present more than two years of audited financial statements in a registration statement for an initial public offering. Securities Act section 7(a) (15 U.S.C. 77g(a)). C.f. SEC Regulation S–X, Rule 3–02 (17 CFR 210.3–02) (requiring three years of audited financial statements). We note that under 12 CFR 16.15(e), the OCC does not generally require audited financial statements in securities offering documents for national banks in organization. An emerging growth company also is eligible for scaled disclosure requirements in the context of Exchange Act periodic reporting. A detailed discussion of this relief is set forth above in the discussion of part 11. 57 Securities Act, section 4(a)(6) (15 U.S.C. 77d(a)(6)) (crowdfunding creates a registration exemption for offerings of up to $1 million, provided that individual investments do not exceed certain thresholds and the issuer satisfies other conditions in the JOBS Act). PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 8093 capital formation.58 In addition, the JOBS Act includes provisions that reduce restrictions on certain research and communications concerning emerging growth company securities offerings.59 The OCC generally intends for part 16 to remain consistent with the Securities Act, including those provisions amended under the JOBS Act, and SEC rules. Part 16 incorporates through cross-references various SEC rules that the JOBS Act directs the SEC to amend. Therefore, amendments to these SEC rules are incorporated into part 16 by virtue of these crossreferences.60 Registration statement: form and content. The OCC proposed to replace the offering circular currently required under § 197.2 and the corresponding form and content requirements of § 197.7 with a registration statement and prospectus required by §§ 16.3 and 16.15 for national banks. We received no comments on this proposed change and adopt it as proposed. Requiring the use of the same form by both national banks and Federal savings associations will provide a consistent set of disclosure standards and format for investors. The OCC believes that this change will not impose any undue regulatory burden on Federal savings associations because these forms provide similar information to potential investors. Communications not deemed an offer. Both §§ 16.4 and 197.2(b) provide that certain communications by national banks or Federal savings associations about their securities are not deemed to be offers. However, § 16.4 more closely follows SEC regulations by additionally exempting summary prospectuses covered by SEC Rule 431,61 notices of certain proposed unregistered offerings covered by SEC Rule 135c,62 publications or distributions of research reports by brokers or dealers covered by SEC Rules 138 and 139,63 and certain communications made after providing a prospectus. Amending part 16 to include Federal savings associations would afford them the additional communication exemptions under the 58 Securities Act, section 3(b) (15 U.S.C. 77c(b)) (directing the SEC to create a registration exemption for securities offerings of up to $50 million). 59 Securities Act, sections 2(a)(3) and 5(d) (15 U.S.C. 77b(a)(3) and 77e(d)). 60 The SEC has adopted amendments to Regulation A under the Securities Act to implement section 401 of the JOBS Act. 80 FR 21806 (Apr. 20, 2015). The SEC also has adopted amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act to implement section 201(a) of the JOBS Act. 78 FR 44771 (July 24, 2013). 61 17 CFR 230.431. 62 17 CFR 230.135c. 63 17 CFR 230.138 and 230.139. E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8094 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations SEC rules currently available to national banks. The OCC received no comments on this change and adopts it as proposed. Exemptions. Section 16.5 provides exemptions to the general registration requirements for national bank securities under § 16.3. These exemptions significantly overlap with the § 197.3 exemptions to the registration requirements for Federal savings associations. However, § 16.5 applies SEC Rules 152 64 (private placement exemption), 152a 65 (exemption for sales of certain fractional interests) to transactions exempt under section 4 of the Securities Act 66), and 236 67 (offerings to shareholders in connection with a stock dividend, stock split, conversion, or merger) while § 197.3(b) does not. By amending § 16.5 to include Federal savings associations, the additional exemptions provided by these two SEC rules would apply to transactions by Federal savings associations. Section 16.5(f) specifically exempts transactions that satisfy the requirements of SEC Rule 701 68 regarding offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation. Section 197.3 does not cross-reference SEC Rule 701 but rather provides in § 197.3(g) a narrower exemption for sales only to officers, directors, or employees through an employee benefit plan or a dividend or interest reinvestment plan that has been approved by shareholders. In particular, § 197.3(g) does not exempt sales made through compensatory benefit plans for consultants, advisors, and family members, as does SEC Rule 701. By amending § 16.5 to include Federal savings associations, the exemption available for savings associations would be expanded to cover all such sales exempted by SEC Rule 701. Although the OCC did not propose to incorporate the § 197.3(g) requirement regarding shareholder approval of compensation plans, Federal savings associations still must follow all applicable corporate governance requirements under their charter provisions. Additionally, national banks and Federal savings associations that are subject to the Federal proxy rules must comply with SEC rules issued under Exchange Act Section 14A 69 concerning shareholder 64 17 CFR 230.152. CFR 230.152a. 66 15 U.S.C. 77d. 67 17 CFR 230.236. 68 17 CFR 230.701. 69 15 U.S.C. 78n–1. Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 65 17 VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 approval of executive compensation and golden parachute payments. The OCC notes that under paragraph (e) of § 197.3 certain collateralized securities issued by Federal savings associations currently are exempt from registration. Federal savings associations also rely upon SEC Regulation D 70 in addition to § 197.3(e) for this exemption.71 Therefore, the OCC did not propose to maintain the exemption in § 197.3(e) because of the availability of the Regulation D private placement exemption in part 16. We received no comments on these proposed changes to exemptions and adopt them as proposed. We believe that these changes will provide savings associations with additional flexibility when issuing securities, resulting in reduced costs and less regulatory burden for such issuances.72 Sales of nonconvertible debt. The OCC proposed to apply § 16.6, sales of nonconvertible debt, to Federal savings associations. While Federal savings associations have previously sold nonconvertible debt under similar restrictions through various interpretive letters, the OCC believes that adopting a single set of requirements is simpler and more efficient for Federal savings associations. We received no comments on this proposed change and adopt it as proposed. Small issues. Section 16.8 provides an exemption for small issues of national bank securities under the SEC’s Regulation A.73 Currently, Federal savings associations do not have a Regulation A exemption for small issuances. The OCC proposed to amend § 16.8 to include savings associations. We received no comments on this proposed change and adopt it as proposed. As a result of this amendment, Federal savings associations will be able to issue small amounts of securities and remain exempt from filing registration (Dodd-Frank Act) added section 14A to the Exchange Act. 70 17 CFR 230.501 et seq. 71 12 CFR 197.4(a). 72 The OCC notes that the JOBS Act amended section 4 of the Securities Act to create a private placement exemption for crowdfunding (Securities Act, section 4(a)(6), 15 U.S.C. 77d(a)(6)), and the SEC has adopted rules to implement this exemption (80 FR 71387 (Nov. 16, 2015)). National banks and Federal savings associations may not rely on the private placement exemption for crowdfunding in Securities Act section 4(a)(6) unless and until the OCC adopts rules implementing this provision for national banks and Federal savings associations or affirmatively adopts SEC rules that implement this provision. At this time, the OCC is not proposing to amend its rules to permit the private placement exemption for crowdfunding. 73 17 CFR 230.251 et seq. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 statements and prospectuses, thereby reducing regulatory burden. Securities offered and sold in holding company dissolution. Section 16.9 provides an exemption for securities offered and sold in a holding company dissolution. Part 197 does not contain a similar provision; however, Federal savings associations have relied on SEC rules for these transactions pursuant to informal OTS staff guidance. The OCC proposed to apply § 16.9 to securities issued by Federal savings associations to provide more certainty as to the applicability of the § 16.9 exemption to these transactions. We received no comments on this proposed change and adopt it as proposed. Effectiveness. Section 16.16 provides that a registration statement and amendments will become effective in accordance with § 8(a) and (c) of the Securities Act and SEC Regulation C, 17 CFR part 230, which is the 20th day after filing or sooner if so determined by the OCC. Section 197.6 contains the same effective date but does not reference Regulation C. The Federal savings association rule also contains other provisions regarding a delay in effectiveness and provides that the OCC may pursue any remedy under section 5(d) of the HOLA if it appears that the offering circular contains any material misstatement or omission. The OCC proposed to apply § 16.16 to Federal savings associations. We received no comments on this proposed change and adopt it as proposed. As a result, SEC regulation C now applies to Federal savings associations instead of these additional provisions in § 197.6. Sales of securities at an office of a savings association. Section 197.17 provides that the sale of securities of a Federal savings association or its affiliates at an office of the savings association may only be made in accordance with the provisions of § 163.76.74 Section 163.76 generally prohibits the offer or sale of debt or equity securities issued by a Federal savings association or an affiliate at an office of the association, unless the equity securities are issued by the association or the affiliate in connection with the association’s conversion from the mutual to stock form of organization and certain conditions are met. The OCC proposed to amend part 16 by adding a new § 16.10 to maintain this restriction on the sale of a Federal 74 Section 197.17 includes an inaccurate crossreference to § 197.76. We have provided the correct cross-reference in the discussion above and in the proposed rule. See proposed § 16.10. E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations savings association’s or affiliate’s securities. The OCC specifically requested in the proposed rule that commenters opine on whether the OCC should remove the limitations on the offer or sale of debt or equity securities at an office of a Federal savings association in light of amendments to the Exchange Act made by the Gramm-Leach-Bliley Act,75 rules promulgated by the Financial Industry Regulatory Authority,76 and the Interagency Statement on Retail Sales of Nondeposit Investment Products, all of which govern securities activities conducted on the premises of OCCregulated financial institutions 77 In the alternative, the OCC asked whether we should amend part 16 to prohibit a national bank from offering or selling debt or equity securities issued by the bank or an affiliate at an office of the bank. We received one comment on new § 16.10. This commenter did not agree with the suggestion to apply this restriction to national banks as it would be an increase in regulatory burden. In addition, this commenter suggested that the OCC remove this restriction for Federal savings associations. After further review of this provision, the OCC has decided to adopt the provision as proposed and maintain the restriction on Federal savings associations but not apply it to national banks. This provision was enacted in response to the savings and loan crisis of the 1980s, which had a devastating effect on the thrift industry as well as on its customers. This provision has prevented the recurrence of similar events and we believe that the benefit of this restriction outweighs any burden the restriction imposes on Federal savings associations. As there is no historical rationale for this restriction to be placed on national banks, and because we do not see a current need for this restriction to apply to national banks, we have not expanded it to cover these institutions. Filing requirements and inspection of documents. Current §§ 16.17 and 197.5 require national banks and Federal savings associations, respectively, to submit by mail or otherwise four copies of all registration statements, offering documents, amendments, notices, or other documents to the SCP Division or, if related to a bank in organization or a de novo Federal savings association, to the appropriate district office. Similar to 75 See 15 U.S.C. 78c(a)(4). See also Regulation R, 17 CFR 247.100 et seq. 76 See FINRA Rule 3160. 77 See OCC Bulletin 94–13, Non deposit Investment Sales Examination Procedures (Feb. 24, 1994) and OCC Bulletin 95–52, Retail Sales of Nondeposit Investment Products (Sept. 22, 1995). VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 the amendment to § 11.3, the OCC proposed to amend § 16.17 to require instead that banks and savings associations submit one copy of their filings electronically to the SCP Division or the appropriate district office, as applicable, through http:// www.banknet.gov/. Pursuant to proposed § 16.17(g), any filing of amendments or revisions to previously filed documents must include two copies, one of which must be marked to indicate clearly and precisely, by underlining or in some other appropriate manner, the changes made. Current § 16.17(e) requires a total of four copies of amendments or revisions. The amendments to § 16.17 also provide that documents may be signed electronically using the signature provision in SEC Rule 402.78 As indicated in the discussion of part 11, above, this SEC rule provides that required signatures may be typed or may be duplicated or facsimile versions of manual signatures. Where typed, duplicated, or facsimile signatures are used, each signatory to the filing is required to ‘‘manually sign a signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in the filing.’’ 79 As provided by Rule 402, this document must be retained for five years and, upon request, a copy must be provided to the OCC. Current §§ 16.17(d) and 197.1 provide the date on which papers are actually received by the OCC shall be the date of filing, if the person or bank filing the papers has complied with all applicable requirements. As with the amendment to § 11.3(a)(3)(i), the OCC proposed to update § 16.17(d) to conform to the electronic filing requirement. Specifically, we proposed that an electronic filing that is commenced on a nonholiday weekday on or before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, would be deemed received by the OCC on the same business day. An electronic filing whose submission is commenced after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, or on a Saturday, Sunday, or Federal holiday would be deemed received by the OCC on the next business day. We note, however, that paragraph (e) provides that with respect to any registration statement or any post-effective amendment filed pursuant to SEC Rule 462(b),80 the cut-off time is 10 p.m. to 78 17 80 17 PO 00000 be consistent with corresponding SEC rules. As with section § 11.3(a)(3)(iii), proposed § 16.17(d) provided that if an electronic filer in good faith attempts to file a document pursuant to this part in a timely manner but the filing is delayed due to technical difficulties beyond the electronic filer’s control, the electronic filer may request that the OCC adjust the filing date. The OCC may grant the request if it appears that such adjustment is appropriate and consistent with the public interest and the protection of investors. As indicated above, these rules for dating an electronic filing, and for providing a waiver for technical difficulties with the filing, are derived from SEC Regulation S–T.81 The OCC also proposed a new § 16.17(f) to establish an exception to the general electronic filing requirements that permits the use of paper filings where unanticipated technical difficulties prevent the use of electronic filings. This exception is modeled on SEC Regulation S–T, Rule 201,82 which provides a temporary hardship exemption to the SEC’s EDGAR filing requirements in cases of unanticipated technical difficulties. Similar to Rule 201, the OCC notes that the use of this exception should be extremely limited and should be relied upon only when unusual and unexpected circumstances create technical impediments to the use of electronic filings. Finally, the OCC proposed technical changes to § 16.17(h), currently § 16.17(f), to update a cross-reference to 12 CFR part 4. The OCC did not receive any comments on these proposed changes to the filing requirements in § 16.17 and we adopt them as proposed. Use of prospectus. Section 16.18 provides that no person may use a prospectus or amendment declared effective by the OCC more than nine months after the effective date unless the information contained in the prospectus or amendment is as of a date not more than 16 months prior to the date of use. Furthermore, this section provides that no person may use a prospectus if an event arises or fact changes after the effective date that causes the prospectus to contain an untrue statement of material fact or to omit a material fact that causes the prospectus to be misleading until an amendment reflecting the event or change has been filed with and declared effective by the OCC. The OCC proposed CFR 230.402. 79 Id. 81 17 CFR 230.462(b). Frm 00015 Fmt 4701 82 17 Sfmt 4700 8095 E:\FR\FM\23JAR3.SGM CFR 232. CFR 232.201. 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8096 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations to apply § 16.18 to Federal savings associations. We received no comments on this proposed change and adopt it as proposed. Because § 197.8 contains similar provisions, this amendment will not result in any changes for Federal savings associations. Withdrawal or abandonment. In general, § 16.19 provides that a registration statement, amendment, or exhibit may be withdrawn prior to its effective date. Furthermore, this section provides that the OCC may deem abandoned a registration statement or amendment that has been on file with the OCC for nine months and has not become effective. The OCC proposed to apply § 16.19 to Federal savings associations. We received no comments on this proposed change and adopt it as proposed. Because § 197.11 contains the same provisions as § 16.19, applying § 16.19 to Federal savings associations will not result in any changes for Federal savings associations. Request for interpretive advice or noobjection letter. As proposed, the OCC is adopting the amendment to § 16.30 that updates the cross-reference to where the address for filing a request for interpretive advice or a no-objection letter may be found. Escrow requirement. For national banks, § 16.31 provides the OCC with discretion to require the establishment of an escrow account, while § 197.9 automatically requires an escrow account for Federal savings associations. By amending part 16 to include Federal savings associations and deleting § 197.9, the OCC proposed to remove the mandatory escrow requirement for Federal savings associations. We received no comments on this proposed change and adopt it as proposed. Fraudulent transactions/unsafe or unsound practices. Section 16.32 prohibits fraudulent transactions in the offer or sale of bank securities and deems such transactions to be an unsafe or unsound practice under 12 U.S.C. 1818. Section 197.10 contains a similar prohibition. However, § 16.32 specifically cross-references the investor protections under section 17 of the Securities Act 83 and references SEC Rule 175 84 on forward-looking statements. Although section 17 by its terms applies to Federal savings associations regardless of the OCC rule, neither it nor SEC Rule 175 is referenced in § 197.10. The OCC proposed to amend § 16.32 to include Federal savings associations. As a result, part 16 would put Federal savings associations on notice that the 83 15 84 17 U.S.C. 77q. CFR 230.175. VerDate Sep<11>2014 19:50 Jan 19, 2017 Securities Act section 17 investor protections apply. Furthermore, Federal savings associations would have the additional clarifying guidance on the liability of forward-looking statements provided by SEC Rule 175. We received no comments on this proposed change and adopt it as proposed. Filing fees. Section 16.33 provides that the required filing fees, as provided for in the Notice of Comptroller of the Currency Fees published pursuant to 12 CFR 8.8, must accompany filings made pursuant to part 16. The OCC proposed to amend § 16.33(a) to clarify that the OCC may require filing fees before it may accept a filing. In addition, as with § 11.4, we proposed to amend § 16.33(b) to provide that such fees may be paid by means acceptable to the OCC, in addition to by check, to reflect the additional payment options now available. We received no comments on these proposed filing fee changes and adopt them as proposed. We note that the OCC is not currently imposing any filing fees for part 16 filings and is not imposing any new fees as part of this rulemaking. Waiver and interpretive advice requests. The proposed rule did not include the blanket waiver provisions contained in §§ 197.14 and 197.15. Commenters did not discuss these provisions and the final rule as adopted does not contain these blanket waivers. However, we note that the OCC will continue to provide interpretive advice or no-objection letters under the terms provided in § 16.30. We also note that 12 CFR 100.2 provides that the Comptroller may, for good cause and to the extent permitted by statute, waive the applicability of any provision of 12 CFR parts 1 through 197, with respect to Federal savings associations. Current and periodic reports. Section 197.18 requires a Federal savings association to file certain periodic reports with the OCC after its offering circular becomes effective, even if the savings association is not otherwise required to register its securities with the OCC under the Exchange Act. This filing requirement applies to Federal savings associations until the securities to which the savings association’s offering circular relates are held of record by fewer than 300 persons in any fiscal year other than the fiscal year in which the offering circular becomes effective. The FDIC and the Federal Reserve Board have not imposed a comparable obligation on state banks, and the OCC removed this obligation on national banks in 2008.85 Instead, a state or national bank is subject to Exchange 85 73 Jkt 241001 PO 00000 FR 22216 (Apr. 24, 2008). Frm 00016 Fmt 4701 Sfmt 4700 Act periodic and current reporting requirements if the bank’s total assets exceed $10,000,000 and it has a class of equity security (other than an exempted security) held of record by 2,000 or more persons.86 The proposed rule did not include filing requirement contained in § 197.18. As a result, a Federal savings association instead would be subject to Exchange Act periodic and current reporting requirements if it has total assets exceeding $10,000,000 and a class of equity security (other than an exempted security) held of record by 2,000 or more persons.87 Commenters did not discuss the removal of this filing requirement and we adopt this change as proposed. As a result of this final rule, current and periodic reporting requirements for national banks and Federal savings associations will be identical. In addition, regulatory burden will be reduced by eliminating such filing requirements for Federal savings associations with fewer than 1,200 holders of record.88 Financial information about a savings association will continue to be publicly available to investors through quarterly financial information, including balance sheets and statements of income, which is part of a savings association’s Call Reports and is available at https://cdr.ffiec.gov/ public/. Periodic sales reports. Under § 197.12 Federal savings associations must file periodic reports on the sales of securities that are registered under § 197.2 or that are otherwise exempt from registration under § 197.4 (nonpublic offerings, including Regulation D and sales to 35 or more persons). National banks do not have to file similar reports. Institutions generally sell securities for the purpose of increasing their capital. The OCC can review any increases to a Federal savings association’s capital through the institution’s quarterly Call Report, and therefore the periodic sales report provides limited additional value for supervision. Furthermore, § 5.45 requires Federal savings associations subject to capital plans or other regulatory actions to file reports for increases in permanent capital, so the Securities Sales Report is redundant in cases that present the most supervisory 86 Exchange Act, section 12(g) (15 U.S.C. 78l(g)), as amended by section 601(a) of the JOBS Act. 87 Id. 88 Id. National banks and Federal savings associations that are currently registered under section 12(g) of the Exchange Act and have 1,200 or more holders of record for a class of securities must continue to comply with current and periodic reporting requirements. E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations risk.89 Therefore, the OCC proposed to not include in part 16 the § 197.12 requirement that Federal savings associations file reports on sales of securities. We did not receive any comments on the removal of the periodic sales report requirement and adopt this change as proposed. mstockstill on DSK3G9T082PROD with RULES3 Disclosure of Financial and Other Information by National Banks (12 CFR Part 18) Twelve CFR part 18 sets forth annual financial disclosure requirements for national banks. Specifically, part 18 requires national banks to prepare annual disclosure statements as of December 31 to be made available to bank security holders by March 31 of the following year. The rule specifies the types of information that must be included in the disclosure statements, which includes, at a minimum, certain information from the bank’s Call Report. The Comptroller may require the inclusion of other information and the bank may include an optional narrative. Section 18.5 provides alternative ways a bank may meet the disclosure statement requirement. These alternatives include allowing Exchange Act registered banks to use the bank’s annual report and allowing banks with audited financial statements to use those statements provided the statements include certain required information. Although we did not receive any specific comments on part 18 during the EGRPRA review process, the OCC proposed to remove this rule to reduce unnecessary burden. The information part 18 requires a national bank to disclose is contained in other publicly available documents, such as the Call Report and the Uniform Bank Performance Report. Part 18 is therefore duplicative and unnecessary. We note that the Federal Reserve Board and the former OTS rescinded similar regulations for state member banks and savings associations, respectively. The OTS repealed 12 CFR 562.3 in December 1995 and the Federal Reserve Board eliminated 12 CFR 208.17 in 1998.90 We did not receive any specific comments on the removal of part 18 and, therefore, adopt the removal as proposed. Extensions of Credit to Insiders and Affiliate Transactions (12 CFR Part 31, §§ 163.41 and 163.43 National banks and Federal savings associations must comply with rules of 89 Section 5.46 requires national banks to file reports for increases in permanent capital. 90 60 FR 66866 (Dec. 27, 1995); 63 FR 37630 (July 13, 1998). VerDate Sep<11>2014 20:23 Jan 19, 2017 Jkt 241001 8097 the Federal Reserve Board regarding extensions of credit to insiders, 12 CFR part 215 (Regulation O), which implements sections 22(g) and 22(h) of the Federal Reserve Act, and transactions with affiliates, 12 CFR part 223 (Regulation W), which implements sections 23A and 23B of the Federal Reserve Act.91 Twelve CFR part 31 and 12 CFR 163.41 and 163.43 address these transactions for national banks and Federal savings associations, respectively. Specifically, § 31.2 requires national banks to comply with Regulation O. Appendix A to part 31 provides interpretive guidance on the application of Regulation W to deposits between affiliated banks. Sections 163.41 and 163.43 contain general statements that refer Federal savings associations to applicable regulations of the Federal Reserve Board, i.e., Regulation O and Regulation W. The OCC proposed to consolidate its rules that address insider lending and affiliate transactions by amending part 31 to state clearly that both national banks and Federal savings associations must comply with Regulation O and Regulation W and by removing §§ 163.41 and 163.43. Moreover, the OCC proposed to amend part 31 to add the statutory standards for authorizing an exemption from section 23A in accordance with section 608 of the Dodd-Frank Act. Specifically, we proposed to add ‘‘Federal savings associations’’ to the text of § 31.2, Insider lending restrictions and reporting requirements, and to add a new § 31.3 to require both national banks and Federal savings associations to comply with the affiliate transaction requirements contained in Regulation W. Proposed § 31.3(b) clarified that the OCC administers and enforces affiliate transaction requirements as they apply to national banks and Federal savings associations. Furthermore, proposed § 31.3(c) implemented the standards for authorizing an exemption from section 23A, as provided by section 608 of the Dodd-Frank Act. Section 608 amends section 23A and section 11 of the HOLA to authorize the OCC to exempt, by order, a transaction of a national bank or Federal savings association, respectively, from the affiliate transaction requirements of section 23A and section 11 of the HOLA if: (1) The OCC and the Federal Reserve Board jointly find the exemption to be in the public interest and consistent with the purposes of section 23A and section 11, as applicable, and (2) within 60 days of receiving notice of such finding, the FDIC does not object in writing to the finding based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund.92 Proposed § 31.3(d) described the procedures that a national bank and Federal savings association must follow for requesting such an exemption. These procedures are modeled after the Federal Reserve Board’s existing procedures in Regulation W. Under the proposal, appendix A to part 31, which is specific to national banks, remains unchanged. However, the proposal amended appendix B, which contains a comparison between selected provisions of Regulation O and the OCC’s lending limits rule, 12 CFR part 32, to include Federal savings associations and to make technical changes. Lastly, the proposal updated the authority provision in § 31.1 to reference the appropriate statutory cite for Federal savings association, 12 U.S.C. 1463 and 1468, and to correct a duplicative reference to 12 U.S.C. 1817(k). The OCC did not receive any specific comments on these proposed amendments to Part 31 and the removal of §§ 163.41 and 163.43, and we therefore adopt these changes as proposed. It should be noted that the OCC may impose additional restrictions on any transaction between a Federal savings association or national bank and its affiliates that the OCC determines to be necessary to protect the safety and soundness of the institution.93 This authority is unaffected by and not addressed in this final rule. 91 12 U.S.C. 371c, 371c–1, 375a, and 375b. In general, section 11 of the HOLA, 12 U.S.C. 1468, applies sections 22(g), 22(h), 23A and 23B of the Federal Reserve Act to savings associations in the same manner and to the same extent as if the savings association were a member bank. 92 See section 608(a)(4)(A)(iv) of the Dodd-Frank Act (exemption authority for national banks) and section 608(c) of the Dodd-Frank Act (exemption authority for Federal savings associations). 93 See, e.g., 12 U.S.C. 93a, 371c(f)(2)(B)(i), 481, 1468(a)(4), 1468(b)(2), and 1831p–1. PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 Electronic Operations and Activities of Federal Savings Associations (12 CFR Part 155) Twelve CFR part 155 addresses the use of technology by Federal savings associations to deliver products and services. Specifically, § 155.200 provides that a Federal savings association may use electronic means or facilities to perform any function, or provide any product or service, as part of an otherwise authorized activity. In addition, § 155.200 permits Federal savings associations to use, or participate with others to use, electronic E:\FR\FM\23JAR3.SGM 23JAR3 mstockstill on DSK3G9T082PROD with RULES3 8098 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations means or facilities to perform any function, or provide any product or service, as part of an authorized activity; and to market and sell, or participate with others to market and sell, electronic capacities and by-products to third parties in order to optimize the use of resources, if the savings association acquired or developed these capacities and by-products in good faith as part of providing financial services. These authorizations are similar to what is provided for national banks in 12 CFR part 7, subpart E. Section 155.210 requires management of the savings association to take steps to identify, assess and mitigate potential risks, establish prudent internal controls, and implement security measures designed to prevent unauthorized access, prevent fraud, and comply with applicable security device requirements of part 168. Paragraph (a) of § 155.300 provides that Federal savings associations are not required to inform the OCC before using electronic means or facilities, except as provided in paragraphs (b) and (c) and encourages Federal savings associations to discuss any planned new products or services that will use electronic means or facilities with their assigned OCC supervisory office. Paragraph (b) of § 155.300 requires a Federal savings association to file a written notice with the OCC prior to establishing a transactional Web site. Paragraph (c) of § 155.300 requires a Federal savings association to follow any written procedures the OCC imposes with respect to any supervisory or compliance concerns regarding its use of electronic means or facilities. Finally, § 155.310 provides the procedures for filing the transactional Web site notice. Part 155 was included in the first EGRPRA Federal Register request for comment. In response to this request, we received comments recommending that the OCC remove the transactional Web site prior notice requirement in § 155.300(b). The OCC agrees that this notice is no longer necessary and proposed to remove it, along with the related procedural requirements in § 155.310. Furthermore, the OCC proposed to remove the remaining paragraphs of § 155.300. Paragraph (a) is no longer relevant without the requirement for a transactional Web site notice. Paragraph (c) is unnecessary as, pursuant to the OCC’s safety and soundness authority, Federal savings associations are required to comply with any written procedures the OCC imposes for supervisory or compliance reasons. Finally, the OCC proposed other nonsubstantive changes to update the rule VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 and to present the regulatory provisions in a format more consistent with the OCC’s other rules. We received no specific comments on the removal of these provisions and the OCC adopts the amendments as proposed. Nonetheless, the OCC encourages Federal savings associations to discuss any planned new products or services that will use electronic means or facilities with their assigned OCC supervisory office. Regulatory Reporting Requirements for Federal Savings Associations (12 CFR Part 162 and § 163.180) Twelve CFR part 162 and § 163.180(a) set forth regulatory reporting and auditing standards and requirements for Federal savings associations. These rules were included in the first EGRPRA Federal Register notice and the OCC did not receive any comments on these rules in response to this request for comment. However, after conducting its own review of these rules, the OCC proposed to revise 12 CFR part 162 and remove § 163.180(a) in order to eliminate duplicative requirements. Various Federal statutes impose reporting and audit requirements on Federal savings associations and national banks. Specifically, 12 U.S.C. 161(a) provides that national banks must submit reports of condition to the Comptroller in accordance with the requirements of the FDI Act. Twelve U.S.C. 1464(v)(1) is the comparable statute for Federal savings associations. In addition, 12 U.S.C. 1831m and FDIC implementing regulations at 12 CFR part 363 require insured depository institutions above a specified asset threshold to have annual independent audits and to submit annual reports and audited financial statements to the FDIC and the appropriate Federal banking agency.94 These financial statements must be prepared in accordance with GAAP and such other disclosure requirements as the FDIC and the appropriate Federal banking agency may prescribe.95 The Interagency Policy 94 Among other requirements, 12 CFR part 363 requires insured depository institutions with total assets above certain thresholds to assess the effectiveness of internal controls over financial reporting, to establish independent audit committees, and to comply with related reporting requirements. 95 Other statutes further clarify the use of GAAP by insured depository institutions. See, e.g., 12 U.S.C. 1831n(a)(2)(A) (the accounting principles applicable to reports or statements required to be filed with Federal banking agencies by insured depository institutions shall be uniform and consistent with GAAP) and 12 U.S.C. 1831n(a)(2)(B) (in certain circumstances, the appropriate Federal banking agency or the FDIC may, with respect to such reports or statements, prescribe an accounting principle applicable to such institutions that is no less stringent than GAAP). PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 Statement on External Audit Programs of Banks and Savings Associations (1999 Interagency Policy Statement) 96 provides unified interagency guidance regarding independent external auditing programs of community banks and savings associations that are exempt from 12 CFR part 363 (i.e., institutions with less than $500 million in total assets) or that are not otherwise subject to audit requirements by order, agreement, statute, or agency regulations. Furthermore, 12 U.S.C. 1463(b)(1) requires the Comptroller, by regulation, to prescribe uniform accounting and disclosure standards for Federal savings associations’ compliance with all applicable regulations. As indicated above, 12 CFR part 162 and § 163.180(a) also contain regulatory reporting and auditing requirements for Federal savings associations. Specifically, § 162.1 requires Federal savings associations to use forms prescribed by the OCC and to follow such regulatory reporting requirements as the OCC may require. This section also requires Federal savings associations and their affiliates to maintain accurate and complete records of all business transactions that support the regulatory reports submitted to the OCC and any financial reports prepared in accordance with GAAP. These records must be maintained in the United States and must be readily accessible by the OCC for examination and other supervisory purposes within five business days upon request by the OCC, at a location acceptable to the OCC. Section 162.2 sets forth the minimum requirements to be included in all reports to the OCC, including Call Reports. In general, these reports must incorporate GAAP, as well as additional safety and soundness requirements more stringent than GAAP that the Comptroller prescribes. Section 163.180(a) provides that Federal savings associations and their service corporations must submit periodic and other reports as required by the appropriate Federal banking agency. Both §§ 162.1 and 162.2 implement the 12 U.S.C. 1463(b)(1) requirement, described above, that the OCC issue regulations prescribing uniform accounting and disclosure standards for Federal savings associations’ compliance with all applicable regulations. Section 162.4 sets forth requirements and standards for audits of Federal 96 See OCC Bulletin 99–37, Interagency Policy Statement on External Auditing Programs (Oct. 7, 1999) and 64 FR 52319 (Sept. 28, 1999). E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 savings associations. It generally provides that the OCC may require, at any time, an independent audit of a Federal savings association’s financial statements when necessary for safety and soundness reasons. It further requires an independent audit if a Federal savings association receives a CAMELS rating of 3, 4, or 5, specifies qualifications for independent public accountants, and states that audit engagement letters provide the OCC with access to and copies of any work papers, policies, and procedures relating to the services performed. There are no comparable OCC regulations for national banks. However, the OCC applies and enforces the abovereferenced statutory requirements, as well as the applicable FDIC reporting and auditing requirements, with respect to both national banks and Federal savings associations. The OCC proposed to remove the requirements contained in §§ 162.1 and 162.2. The OCC has adequate authority pursuant to its general examination authority to obtain records and reports from Federal savings associations, as well as national banks.97 Furthermore, the frequently changing nature of accounting standards and disclosures makes it impractical to codify detailed standards in a regulation. The OCC also proposed to remove the audit requirements of § 162.4 and the reporting requirements of § 163.180(a) because they are unnecessarily repetitive of other requirements. The OCC has adequate statutory authority to require reports and 12 CFR 363 already specifies requirements for independent audits and auditors for both Federal savings associations and national banks. In addition, as with national banks, the OCC does not believe that it is necessary to articulate this authority for Federal savings associations in a regulation.98 Because 12 U.S.C. 1463(b)(1) requires the Comptroller to prescribe by regulation uniform accounting and disclosure standards for Federal savings associations, the proposal included a provision requiring that a Federal savings association incorporate U.S. GAAP and the disclosure standards included therein when complying with all applicable regulations, unless otherwise specified by statute or regulation or by the OCC. We believe that this guidance satisfies the statutory 97 See 12 U.S.C. 1464(d)(1)(B) (Federal savings associations) and 12 U.S.C. 481 (national banks). See also 12 U.S.C. 1817. 98 See, e.g., 12 U.S.C. 1817(a)(3) and 12 CFR part 304 with respect to reports and 12 CFR part 363 and the Interagency Policy Statement on External Audit Programs of Banks and Savings Associations (64 FR 52319, Sept. 28, 1999) with respect to audits. VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 requirement while being flexible enough to accommodate the evolving nature of the standards and disclosures. With respect to national banks, a similar regulation is not required by statute and would be redundant with other provisions that require compliance with GAAP, such as 12 U.S.C. 1831m and 1831n(a)(2), discussed above. We note that we proposed to reference GAAP as ‘‘U.S. GAAP’’ in this provision to clarify that the reference is to GAAP as used in the United States, in light of evolving global accounting standards. We did not receive any specific comments on these proposed amendments to part 162 and § 163.180 and adopt them as proposed. We note that rescission of §§ 162.4 and 163.180(a) will not affect the OCC’s ability, pursuant to our safety and soundness authority, to require at any time an independent audit of a Federal savings association, or to access work papers and related documents prepared in connection with any audit of a Federal savings association.99 Furthermore, the OCC reminds Federal savings associations that rescinding § 162.4 does not eliminate or affect the requirement that a savings association with $500 million or more in assets obtain an annual audit pursuant to 12 U.S.C. 1831m and 12 CFR part 363, nor does it minimize the importance of administering an external audit program. The OCC encourages all national banks and Federal savings associations, regardless of size, to have independent external reviews of their operations and financial statements and to establish audit committees made up entirely of outside directors. The form of that review can range from financial statement audits by independent public accountants to agreed-upon procedures (i.e., directors’ examinations) performed by other independent and qualified persons. In particular, Federal savings associations should be familiar with 12 CFR part 363 and the 1999 Interagency Policy Statement, which apply to all insured depository institutions. Management and Financial Policies (12 CFR 163.161) Twelve CFR 163.161(a)(1) generally requires each Federal savings association and each service corporation to be well-managed, to operate in a safe and sound manner, and to pursue financial policies that are safe and consistent with economical home financing and the purposes of savings associations. Section 163.161(a)(2) requires each Federal savings association and service corporation to 99 See PO 00000 12 U.S.C. 1831p–1. Frm 00019 Fmt 4701 Sfmt 4700 8099 maintain sufficient liquidity to ensure its safe and sound operations. Section 163.161(b) addresses the compensation of Federal savings association and service corporation officers, directors, and employees. Federal savings associations and national banks are subject to many other regulations and guidance that require sound management and financial policies. Part 30 of the OCC’s regulations contain guidelines establishing operational and managerial standards for safety and soundness applicable to national banks and Federal savings associations. Among other things, these safety and soundness guidelines, which implement the statutory safety and soundness provisions at section 39 of the FDI Act,100 address executive compensation.101 Furthermore, the OCC, along with the other Federal banking agencies, issued a joint policy statement in 2010 that provides guidance for the sound management of liquidity risk.102 This policy statement is both more detailed and more current than the provisions of the regulation and is applicable to both national banks and Federal savings associations. Section 163.161 was included in the third EGRPRA Federal Register notice. Although we did not receive any comments on this section in response to this request for comment, we determined that § 163.161 duplicates the provisions discussed above. Therefore, the OCC proposed to delete § 163.161 in its entirety. We did not receive any specific comments on this deletion, and adopt the amendment as proposed. Financial Derivatives Transactions by Federal Savings Associations (12 CFR 163.172) Twelve CFR 163.172 states that a Federal savings association may engage in a transaction involving a financial derivative provided that the association is authorized to invest in the assets underlying the derivative, the transaction is safe and sound, and the savings association’s board of directors and management satisfy certain prudential requirements. It also states that, in general, if a Federal savings association should engage in a financial derivative transaction, it should do so to reduce its risk exposure. 100 12 U.S.C. 1831p–1. CFR part 30, appendix A. The OCC, FDIC, and Federal Reserve Board also issued joint agency guidance on incentive compensation in 2010. See 75 FR 36395 (June 25, 2010). 102 Interagency Policy Statement on Funding and Liquidity Risk Management, 75 FR 13656 (Mar. 13, 2010). 101 12 E:\FR\FM\23JAR3.SGM 23JAR3 8100 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 Section 163.172(a) defines ‘‘financial derivative’’ as a financial contract whose value depends on the value of one or more underlying assets, indices, or reference rates. It states that the most common types of financial derivatives are futures, forward commitments, options, and swaps. We note that the OCC does not have a comparable regulation governing national bank derivative transactions, but has addressed these activities through interpretive letters. Section 163.172 was included in the fourth EGRPRA Federal Register notice and we did not receive any comments on this section in response to this request for comment. However, to clarify any confusion caused by the wording of the current rule, the OCC proposed to replace the term ‘‘forward commitment’’ with ‘‘forward contract.’’ A ‘‘forward commitment’’ generally refers to an agreement to loan funds in the future and is not a financial derivative. In contrast, a ‘‘forward contract’’ is a well-known type of financial derivative to which this rule should apply. We do not expect this change to have a material effect on Federal savings associations or the securities marketplace. The OCC also proposed other non-substantive changes to clarify the rule further and to present the regulatory provisions in a format more consistent with the OCC’s other rules. We did not receive any specific comments on these amendments and adopt them as proposed. Accounting Requirements (12 CFR Part 193) Twelve U.S.C. 1463(b)(2)(A) requires savings associations to use U.S. GAAP in preparing reports to regulators. Part 193 requires Federal savings associations to make disclosures in financial statements filed in conversion applications or under the Exchange Act. These disclosures are in addition to those required under U.S. GAAP. Part 193 was included in the fourth EGRPRA Federal Register notice and we did not receive any comments on this rule in response to this request for comment. The OCC determined, however, that the additional financial disclosures required by part 193 are, in most cases, substantially similar to and largely repetitive of otherwise applicable public disclosure requirements that a Federal savings association or its holding company must satisfy under the Securities Act, the Exchange Act, or OCC regulations. Therefore, the OCC proposed to delete part 193. We did not receive any specific comments on the removal of VerDate Sep<11>2014 20:23 Jan 19, 2017 Jkt 241001 part 193, and we adopt this removal as proposed. We note that Federal savings associations still are required to follow U.S. GAAP reporting and disclosure requirements. III. Regulatory Analysis Regulatory Flexibility Act Pursuant to the Regulatory Flexibility Act (RFA), an agency must prepare a regulatory flexibility analysis for all proposed and final rules that describes the impact of the rule on small entities.103 Under section 605(b) of the RFA, this analysis is not required if the head of the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short explanatory statement in the Federal Register along with its rule. The OCC currently supervises approximately 1,032 small entities.104 Because some of the rule’s provisions could affect any national bank and other provisions could affect any Federal savings association, the rule could have an impact on a substantial number of OCC-supervised small entities. We believe that substantially all of national banks’ and Federal savings associations’ direct costs will be associated with reviewing the amendments and, when necessary, modifying policies and procedures to correct any inconsistencies between banks’ internal policies and the modified rules. Once the bank has implemented the amendments, these costs will dissipate. We estimate that the monetized direct cost per bank or savings association will range from a low of approximately $1 thousand to a high of approximately $8 thousand. Using the upper bound average direct cost per entity, we believe the rule might have a significant economic impact on approximately three OCCsupervised small entities, which is not a substantial number. In other words, although the rule could have an impact on a substantial number of small entities, this impact might be significant 103 See 5 U.S.C. 601 et seq. base our estimate of the number of small entities on the Small Business Administration’s size thresholds for commercial banks and savings institutions, and trust companies, which are $550 million and $38.5 million, respectively. Consistent with the General Principles of Affiliation 13 CFR 121.103(a), we count the assets of affiliated financial institutions when determining if we should classify a bank or savings association as a small entity. We use December 31, 2015, to determine size because a ‘‘financial institution’s assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.’’ See footnote 8 of the U.S. Small Business Administration’s Table of Size Standards. 104 We PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 for only a few small entities. Therefore the OCC certifies that this final rule does not have a significant economic impact on a substantial number of small entities supervised by the OCC. Accordingly, a regulatory flexibility analysis is not required. We note that in determining this compliance cost, we do not offset the direct cost imposed by the rulemaking with savings that certain banks and savings associations will realize as a result of the rulemaking. Therefore, the cost described here does not include offsetting reductions in regulatory cost and burden. Unfunded Mandates Reform Act of 1995 The OCC has analyzed the final rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA).105 Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation). The UMRA does not apply to regulations that incorporate requirements specifically set forth in law. The OCC finds that the rule does not trigger the UMRA cost threshold because we estimate that the UMRA cost is nil. The OCC believes that substantially all of banks’ and savings associations’ direct costs will be implementation costs associated with reviewing the amendments and, when necessary, modifying policies and procedures to correct any inconsistencies between banks’ internal policies and the modified rules. Because these costs are not associated with mandates, they are not UMRA costs. Accordingly, the OCC has not prepared the written statement described in section 202 of the UMRA. IV. Administrative Law Matters Notice and Comment Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C. 553(b)(B), notice and comment are required prior to the issuance of a final rule unless an agency, for good cause, finds that ‘‘notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ This final rule includes four amendments not originally included in the proposed rule published on March 14, 2016. Three of these amendments replace inaccurate terms in 12 CFR 5.21, 5.22, and 8.6(c)(3)(iv) and are purely technical in 105 2 E:\FR\FM\23JAR3.SGM U.S.C. 1531 et seq. 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 nature. The fourth amendment modifies a reference in 12 CFR 5.48 to an internal agency procedure that does not affect a national bank, a Federal savings association, or other non-OCC party. Because these amendments are either technical changes or only affect the OCC, the OCC has good cause to conclude that advance notice and comment under the APA are not necessary prior to their issuance. Effective Date The APA requires that a substantive rule must be published not less than 30 days before its effective date, unless, among other things, the rule grants or recognizes an exemption or relieves a restriction.106 Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires that regulations imposing additional reporting, disclosure, or other requirements on insured depository institutions take effect on the first day of the calendar quarter after publication of the final rule, unless, among other things, the agency determines for good cause that the regulations should become effective before such time.107 The April 1, 2017 effective date of this final rule meets both the APA and RCDRIA effective date requirements, as it will take effect at least 30 days after its publication date of January 23, 2017 and on the first day of the calendar quarter following publication, April 1, 2017. Section 302 of the RCDRIA also requires the OCC to consider, consistent with the principles of safety and soundness and the public interest, any administrative burdens the final rule would place on insured depository institutions, including small depository institutions, and their customers as well as the benefits of such regulations when determining the effective date and administrative compliance requirements of new regulations that impose new reporting, disclosure, or other requirements on insured depository institutions.108 The OCC has considered the changes made by this final rule and believes that the effective date of April 1, 2017 should provide national banks and Federal savings associations with adequate time to comply with these changes as they do not involve major revisions to bank or savings association operations. Furthermore, many of the changes will reduce burden on banks and savings associations or clarify requirements, which will lessen the administrative compliance burden of 106 5 U.S.C. 553(d)(1). U.S.C. 4802. 108 12 U.S.C. 4802. our regulations on these institutions. Some of these changes also will also benefit bank and savings association customers in that they eliminate unnecessary mailings or provide additional methods to access bank services or information. Paperwork Reduction Act Under the PRA of 1995,109 the OCC may not conduct or sponsor, and a person is not required to respond to, an information collection unless the information collection displays a valid OMB control number. The OCC has submitted the information collection requirements imposed by this final rule to OMB for review. The OCC also submitted the information collection requirements imposed by the proposed rule to OMB at the time the proposed rule was published. OMB filed comments on the information collections, instructing the OCC to examine public comment in response to the proposed rule and include in the supporting statement of the next submission, to be submitted to OMB at the final rule stage, a description of how the OCC has responded to any public comments on the collection, including comments on maximizing the practical utility of the collection and minimizing the burden. The OCC received no comments regarding the information collections and has resubmitted them to OMB for review in connection with the final rule. The final rule amends § 5.20, where special purpose charters are discussed, to describe changes in charter purpose, set out the requirement for an application, and direct institutions to § 5.53 for the relevant application. A nonmaterial change has been filed with OMB for these revisions. Section 9.18(b)(1) has been revised to replace the requirement that a national bank make a copy of any collective investment fund plan available for public inspection at its main office with the requirement that the plan could instead be available to the public on its Web site. A nonmaterial change has been filed with OMB for this revision. Part 194 is removed and Federal savings associations would follow part 11. Section 11.3 has been revised to require that fewer copies be filed and to allow electronic signatures. A nonmaterial change has been filed with OMB for these revisions. Section 12.4(b) has been amended to allow institutions to direct a brokerdealer to mail confirmations to customers without requiring a duplicate or other form of notification specified in 107 12 VerDate Sep<11>2014 19:50 Jan 19, 2017 109 44 Jkt 241001 PO 00000 U.S.C. 3501 et seq. Frm 00021 Fmt 4701 Sfmt 4700 8101 § 12.4 or § 12.5 to be sent by the institution. Sections 12.101 and 12.102, which require the disclosure of remuneration for mutual fund transactions and electronic communications, have been removed. Section 151.60(a) and (b) have been amended to include the less detailed maintenance and storage procedures for customer securities transaction records found in part 12. Section 151.60(b) also has been amended to allow use of a third-party service provider for records storage and maintenance. Section 151.80 has been amended to provide that a Federal savings association that has previously determined compensation in a written agreement with the customer would not need to provide a remuneration statement for each securities transaction. The Recordkeeping Requirements for Securities Transactions information collection covering parts 12 and 151 has been submitted to OMB for review: Title: Recordkeeping Requirements for Securities Transactions. OMB Control No.: 1557–0142. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Estimated Number of Respondents: Current: 399. Revised: 399. Estimated Total Annual Burden: Current: 2,315 hours. Revised: 1,916 hours. Part 197 has been removed and Federal savings associations will follow part 16. In addition, § 16.5 has been amended to provide additional exemptions for private placements and sales of certain fractional interests for Federal savings associations. The filing requirement in § 197.18 for periodic reports on sales of securities has been removed and Federal savings associations with total assets exceeding $10,000,000 and a class of equity security (other than exempted security) held of record by 2,000 or more persons are subject to Exchange Act periodic and current reporting requirements. Section 16.17 has been revised to (i) reduce from four paper copies to one electronic copy the number of copies of documents required to be filed for banks and Federal savings associations and banks and Federal savings associations in organization, with certain paper submission exceptions; and (ii) reduces from four to two the number of paper copies of amendments that must be filed. In addition, documents may be signed electronically using the signature provision in SEC Rule 402. The Securities Offering Disclosure information collection covering parts 16 E:\FR\FM\23JAR3.SGM 23JAR3 8102 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations and 197 has been submitted to OMB for review: Title: Securities Offering Disclosure Rules. OMB Control No.: 1557–0120. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Estimated Number of Respondents: Current: 61. Revised: 37. Estimated Total Burden: Current: 1,310 hours. Revised: 814 hours. Part 18 is removed and the related information collection, OMB Control No. 1557–0182, has been discontinued. Section 31.3(d) is added to provide procedures to be followed when seeking exemption from 23A of the Federal Reserve Act. A request for a new control number for this collection has been submitted to OMB: Title: Extensions of Credit to Insiders and Transactions with Affiliates. OMB Control No.: 1557–NEW. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Estimated Number of Respondents: 1 respondent. Estimated Total Annual Burden: 10 hours. The notice requirement in § 155.310, requiring a Federal savings association to file a written notice with the OCC at least 30 days prior to establishing a transactional Web site, has been removed. Therefore, OMB Control No. 1557–0301, covering § 155.310, has been discontinued. The duplicative reporting requirements found in §§ 162.1 and 162.4 have been removed. The General Reporting and Recordkeeping information collection covering part 162 has been submitted to OMB for review: Title: General Reporting and Recordkeeping. OMB Control No.: 1557–0266. Frequency of Response: On occasion. Affected Public: Businesses or other for-profit organizations. Estimated Number of Respondents: Current: 500. Revised: 500. Estimated Total Annual Burden: Current: 68,345 hours. Revised: 67,845 hours. Comments continue to be invited on: (a) Whether the collections of information are necessary for the proper performance of the functions of the OCC, including whether the information has practical utility; (b) The accuracy of the OCC’s estimates of the burden of the collections of information; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; (d) Ways to minimize the burden of the collections on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. IV. Redesignation Tables mstockstill on DSK3G9T082PROD with RULES3 Subject Current rule Electronic Notice for Securities Transactions ................................................................................ Transactions with Affiliates ............................................................................................................. Loans by savings associations to their executive officers, directors and principal shareholders Management and Financial Policies .............................................................................................. Periodic Reports ............................................................................................................................. Notification of Loss and Reports of Increase in Deductible Amount of Bond ............................... Bonds for Directors, Officers, Employees, and Agents; Form of and Amount of Bonds .............. Bonds for Agents ............................................................................................................................ Accounting Requirements .............................................................................................................. Securities of Federal Savings Associations ................................................................................... Requirements under certain sections of the Securities Exchange Act of 1934 ..................... Liability for certain statements by Federal savings associations ........................................... Form and content of financial statements .............................................................................. Application of this subpart ....................................................................................................... Description of business ........................................................................................................... Securities Offerings ........................................................................................................................ Definitions ................................................................................................................................ Offering circular requirement .................................................................................................. —In General. —Communications not deemed an offer ......................................................................... —Preliminary offering circular .......................................................................................... Exemptions .............................................................................................................................. Non-public offering .................................................................................................................. Filing and signature requirements .......................................................................................... Effective date .......................................................................................................................... Form, content, and accounting ............................................................................................... Use of the offering circular ...................................................................................................... Escrow requirement ................................................................................................................ Unsafe or unsound practices .................................................................................................. Withdrawal or abandonment ................................................................................................... Securities sale report .............................................................................................................. Public disclosure and confidential treatment .......................................................................... Waiver ..................................................................................................................................... Requests for interpretive advice or waiver ............................................................................. Delayed or continuous offering and sale of securities ........................................................... Sales of securities at an office of a savings association ........................................................ Current and periodic reports ................................................................................................... Approval of the security .......................................................................................................... Filing of copies of offering circulars in certain exempt offerings ............................................ Form for Securities Sale Report (Appendix A) ....................................................................... 12 CFR 151.110 ........ 163.41 ........................ 163.43 ........................ 163.161 ...................... 12 CFR 163.180(a) .... 12 CFR 163.180(c) .... 12 CFR 163.190 ........ 12 CFR 163.191 ........ 12 CFR part 193 ........ 12 CFR part 194 ........ § 194.1 ........................ § 194.3. § 194.210 .................... § 194.801. § 194.802. 12 CFR part 197 ........ § 197.1 ........................ § 197.2(a) ................... VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 § 197.2(b) ................... § 197.2(c) ................... § 197.3 ........................ § 197.4 ........................ § 197.5 ........................ § 197.6 ........................ § 197.7 ........................ § 197.8 ........................ § 197.9 ........................ § 197.10 ...................... § 197.11 ...................... § 197.12 ...................... § 197.13 ...................... § 197.14. § 197.15 ...................... § 197.16. § 197.17 ...................... § 197.18. § 197.19. § 197.21. § 197, Appendix A. E:\FR\FM\23JAR3.SGM 23JAR3 Final rule Removed. § 31.3. § 31.2. Removed. Removed. § 7.2013. § 7.2013. § 7.2013. Removed. 12 CFR part 11. § 11.2, § 11.3, § 11.4. § 11.2. 12 CFR part 16. § 16.2. § 16.3(a).ROW≤ § 16.4. § 16.3(b). § 16.5. § 16.7. § 16.17. § 16.16. § 16.15. § 16.18. § 16.31. § 16.32. § 16.19. § 16.17(f). § 16.30. § 16.10. Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations List of Subjects 12 CFR Part 162 12 CFR Part 5 Administrative practice and procedure, Federal savings associations, National banks, Reporting and recordkeeping requirements, Securities. Accounting, Reporting and recordkeeping requirements, Federal savings associations. 12 CFR Part 7 Computer technology, Credit, Insurance, Investments, Federal savings associations, National banks, Reporting and recordkeeping requirements, Securities, Surety bonds. 12 CFR Part 8 Assessments, National banks, Reporting and recordkeeping requirements, Savings associations. 12 CFR Part 11 Confidential business information, Federal savings associations, National banks, Reporting and recordkeeping requirements, Securities. 12 CFR Part 12 National banks, Reporting and recordkeeping requirements, Securities. 12 CFR Part 16 Federal savings associations, National banks, Reporting and recordkeeping requirements, Securities. 12 CFR Part 18 National banks, Reporting and recordkeeping requirements. mstockstill on DSK3G9T082PROD with RULES3 12 CFR Part 150 Administrative practice and procedure, Reporting and recordkeeping requirements, Federal savings associations, Trusts and trustees. 19:50 Jan 19, 2017 Jkt 241001 Authority delegations (Government agencies), Reporting and recordkeeping requirements. 12 CFR Part 197 Reporting and recordkeeping requirements, Federal savings associations, Securities. For the reasons set forth in the preamble, and under the authority of 12 U.S.C. 93a and 5412(b)(2)(B), chapter I of title 12 of the Code of Federal Regulations is amended as follows: PART 5—RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES 1. The authority citation for part 5 continues to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 24a, 93a, 215a–2, 215a–3, 481, 1462a, 1463, 1464, 2901 et seq., 3907, and 5412(b)(2)(B). § 5.8 [Amended] 2. Section 5.8 is amended in paragraph (b) by: ■ a. Adding the phrase ‘‘(if known at the time of publication of the notice)’’ after the phrase ‘‘the closing date of the public comment period’’; and ■ b. Adding the phrase ‘‘that the public may find information about the filing (including the closing date of the comment period) in the OCC’s Weekly Bulletin available at www.occ.gov,’’ before the phrase ‘‘and any other information that the OCC requires’’. ■ 3. Section 5.20 is amended by: ■ a. Adding a sentence at the end of paragraph (b); ■ b. Adding a sentence at the end of paragraph (c); ■ c. Redesignating the text in paragraph (l) as paragraph (l)(1) and adding a heading to newly redesignated paragraph (l)(1); and ■ d. Adding paragraph (l)(2). The revisions and additions read as follows: ■ 12 CFR Part 31 Credit, Federal savings associations, National banks, Reporting and recordkeeping requirements. VerDate Sep<11>2014 12 CFR Part 193 12 CFR Part 194 12 CFR Part 10 Federal savings associations, National banks, Reporting and recordkeeping requirements, Securities. 12 CFR Part 155 Accounting, Consumer protection, Electronic funds transfers, Reporting and recordkeeping requirements, Federal savings associations. Accounting, Administrative practice and procedure, Advertising, Conflict of interests, Crime, Currency, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations, Securities. Accounting, Federal savings associations, Securities. 12 CFR Part 9 Estates, Investments, National banks, Reporting and recordkeeping requirements, Trusts and trustees. 12 CFR Part 151 Reporting and recordkeeping requirements, Federal savings associations, Securities, Trusts and trustees. 12 CFR Part 163 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 8103 § 5.20 Organizing a national bank or Federal savings association. * * * * * (b) * * * An existing national bank or Federal savings association desiring to change the purpose of its charter shall submit an application and obtain prior OCC approval. (c) * * * This section also describes the requirements for an existing national bank or Federal savings association to change the purpose of its charter and refers such institutions to § 5.53 for the procedures to follow. * * * * * (l) Special purpose institutions—(1) In general. * * * (2) Changes in charter purpose. An existing national bank or Federal savings association whose activities are limited to a special purpose that desires to change to another special purpose, to add another special purpose, or to no longer be limited to a special purpose charter shall submit an application and obtain prior OCC approval under § 5.53. An existing national bank or Federal savings association whose activities are not limited that desires to limit its activities and become a special purpose institution shall submit an application and obtain prior OCC approval under § 5.53. § 5.21 [Amended] 4. Section 5.21 is amended by: a. In paragraph (j)(3)(i)(B), removing the phrase ‘‘paragraph (j)(2)’’ and adding in its place the phrase ‘‘paragraph (j)(3)’’; ■ b. In paragraph (j)(3)(ii), removing the phrase ‘‘paragraph (j)(2)(i)(A)’’ and adding in its place the phrase ‘‘paragraph (j)(3)(i)(A)’’; ■ c. In paragraph (j)(3)(iii): ■ i. Removing the phrase ‘‘main office’’ and adding in its place the phrase ‘‘home office’’; and ■ ii. Removing the phrase ‘‘paragraph (j)(2)(i)(A)’’ wherever it appears and adding in its place the phrase ‘‘paragraph (j)(3)(i)(A)’’; and ■ d. In paragraph (j)(4): ■ i. Removing the phrase ‘‘paragraph (j)(2)(ii)’’ and adding in its place the phrase ‘‘paragraph (j)(3)(ii)’’; and ■ ii. Removing the phrase ‘‘paragraph (j)(2)(i)’’ and adding in its place the phrase ‘‘paragraph (j)(3)(i)’’. ■ ■ § 5.22 [Amended] 5. Section 5.22 is amended in paragraph (j)(2)(iii) by removing the phrase ‘‘main office’’ and adding in its place the phrase ‘‘home office’’. ■ § 5.33 ■ [Amended] 6. Section 5.33 is amended by: E:\FR\FM\23JAR3.SGM 23JAR3 8104 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations a. In paragraph (i), removing the phrase ‘‘the 45th day after the application is received by the OCC, or the 15th day after the close of the comment period, whichever is later,’’ and adding in its place the phrase ‘‘the 15th day after the close of the comment period,’’; ■ b. In paragraph (n)(2)(iii) introductory text, removing the phrase ‘‘mutually held savings association,’’ and adding in its place the phrase ‘‘mutually held depository institution that is insured by the FDIC,’’; ■ c. In paragraph (n)(2)(iii)(B), adding the phrase ‘‘or a similar transaction under state law’’ at the end of the sentence; and ■ d. In paragraph (o)(3)(i), removing the phrase ‘‘paragraph (n)(3)’’ and adding in its place the phrase ‘‘paragraph (o)(3)’’. ■ § 5.45 [Amended] 7. Section 5.45 is amended in paragraph (g)(4)(i) introductory text by removing the word ‘‘After’’ and adding in its place the phrase ‘‘If prior approval is required pursuant to this paragraph (g), after’’. ■ 8. Section 5.46 is amended by adding paragraph (i)(6) to read as follows: ■ § 5.46 Changes in permanent capital of a national bank. * * * * (i) * * * (6) Exception for accounting adjustments. (i) Changes to the permanent capital accounts that result solely from application of U.S. generally accepted accounting principles are not subject to the prior approval or notice requirements in paragraph (i)(1), (3), or (4) of this section, as applicable. (ii) Within 30 days after the end of the quarter in which the adjustment occurred, a bank must notify the OCC if the accounting adjustment resulted in an increase or decrease to permanent capital in an amount greater than 5% of the bank’s total permanent capital prior to the adjustments; or, if the bank is subject to a letter, order, directive, written agreement, or otherwise related to changes in permanent capital. The notification must include the amount and description of the adjustment, including the applicable provision of U.S. GAAP. * * * * * mstockstill on DSK3G9T082PROD with RULES3 * § 5.48 [Amended] 9. Section 5.48 is amended in paragraph (e)(2)(ii) by removing the word ‘‘supervisory’’. ■ § 5.50 [Amended] 10. Section 5.50 is amended in paragraph (f)(2)(ii)(E) by removing ■ VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 ‘‘§ 192.2(a)(39)’’ and adding in its place ‘‘§ 192.25’’. ■ 11. Section 5.53 is amended by: ■ a. Removing the word ‘‘or’’ at the end of paragraph (c)(1)(iii); ■ b. Removing the period at the end of paragraph (c)(1)(iv) and adding in its place ‘‘; or’’; and ■ c. Adding a paragraph (c)(1)(v); and ■ d. Revising paragraph (d)(3)(ii). The addition and revision read as follows: § 5.53 Substantial asset change by a national bank or Federal savings association. * * * * * (c) * * * (1) * * * (v) Any change in the purpose of the charter of the national bank or Federal savings association as described in § 5.20(l)(2). (d) * * * (3) * * * (ii) Additional factors. The OCC’s review of any substantial asset change that involves the purchase or other acquisition or other expansions of the bank’s or savings association’s operations or that involves a change in the purpose of the bank’s or association’s charter, as described in § 5.20(l)(2), will include, in addition to the foregoing factors, the factors governing the organization of a bank or savings association under § 5.20. * * * * * ■ 12. Section 5.66 is amended by adding a sentence between the first and second sentences to read as follows: § 5.66 Dividends payable in property other than cash. * * * A national bank shall submit a request for prior approval of a noncash dividend to the appropriate OCC licensing office. * * * elected. A director shall take another oath upon re-election, notwithstanding uninterrupted service. Appropriate sample oaths may be found in the Charter Booklet of the Comptroller’s Licensing Manual available at www.occ.gov. (c) Filing and recordkeeping. A national bank must file the original executed oaths of directors with the appropriate OCC licensing office, as defined in 12 CFR 5.3(c), and retain a copy in the bank’s records. ■ 15. Section 7.2013 is amended by: ■ a. Revising paragraph (a) and paragraph (b) introductory text; and ■ b. In paragraph (b)(4), by adding the phrase ‘‘or savings association’’ after the word ‘‘bank’’. The revisions read as follows: § 7.2013 Fidelity bonds covering officers and employees. (a) Adequate coverage. All officers and employees of a national bank or Federal savings association must have adequate fidelity bond coverage. The failure of directors to require bonds with adequate sureties and in sufficient amount may make the directors liable for any losses that the bank or savings association sustains because of the absence of such bonds. Directors should not serve as sureties on such bonds. Directors should consider whether agents who have access to assets of the bank or savings association should also have fidelity bond coverage. (b) Factors. The board of directors of the national bank or Federal savings association, or a committee thereof, must determine the amount of such coverage, premised upon a consideration of factors, including: * * * * * PART 8—ASSESSMENT OF FEES 16. The authority citation for part 8 is revised to read as follows: ■ PART 7—ACTIVITIES AND OPERATIONS 13. The authority citation for part 7 is revised to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93, 93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465, 1818, 1828(m) and 5412(b)(2)(B). 14. Section 7.2008 is amended by revising paragraphs (b) and (c) to read as follows: ■ § 7.2008 Oath of directors. * * * * * (b) Execution of the oath. Each director shall execute either a joint or individual oath at the first meeting of the board of directors that the director attends after the director is appointed or PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 Authority: 12 U.S.C. 16, 93a, 481, 482, 1467, 1831c, 1867, 3102, 3108, and 5412(b)(2)(B); and 15 U.S.C. 78c and 78l. 17. Section 8.6 is amended by revising paragraph (c)(3)(iv) to read as follows: ■ § 8.6 Fees for special examinations and investigations. * * * * * (c) * * * (3) * * * (iv) Full-service Federal savings association is a Federal savings association that generates more than 50% of its interest and non-interest income from activities other than credit card operations or trust activities and is authorized according to its charter to engage in all types of activities E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations permissible for Federal savings associations. * * * * * PART 10—MUNICIPAL SECURITIES DEALERS 18. The authority citation for part 9 continues to read as follows: ■ 19. Section 9.13 is amended by adding a sentence at the end of paragraph (a) to read as follows: ■ Custody of fiduciary assets. (a) * * * A bank that is deemed a fiduciary based solely on its capacity as investment advisor, as that capacity is defined in § 9.101(a), and has no other fiduciary capacity as enumerated in § 9.2(e) is not required to serve as custodian when offering those fiduciary services. * * * * * § 9.14 [Amended] 20. Section 9.14 is amended in paragraph (a) by adding the phrase ‘‘or Federal Home Loan Bank’’ after the phrase ‘‘with the Federal Reserve Bank’’. ■ 21. Section 9.18 is amended: ■ a. In paragraph (b)(1) by revising the second sentence; and ■ b. In paragraph (c)(2) by: ■ i. Removing ‘‘$1,000,000’’ and adding in its place ‘‘$1,500,000’’; and ■ ii. Adding a sentence at the end. The revision and addition reads as follows: ■ § 9.18 Collective investment funds. mstockstill on DSK3G9T082PROD with RULES3 * * * * * (b) * * * (1) * * * The bank shall make a copy of the Plan available either for public inspection at its main office during all banking hours or on its Web site and shall provide a written or electronic copy of the Plan to any person who requests it. * * * * * * * * (c) * * * (2) * * * The OCC shall adjust this $1,500,000 threshold amount on January 1 of every year by the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W) that was in effect on the preceding June 1, rounded to the nearest $100 increment, and make this adjusted amount available to the public. * * * * * VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 Authority: 12 U.S.C. 93a, 481, 1462a, 1463, 1464(c), 1818, and 5412(b)(2)(B); 15 U.S.C. 78o–4(c)(5) and 78q–78w. 23. Amend § 10.1 by: a. Adding the phrase ‘‘or Federal savings association’’ after the word ‘‘bank’’, wherever it appears; ■ b. In paragraph (b), removing the phrase ‘‘to be’’ and adding in its place the phrase ‘‘will be’’; ■ c. In paragraph (b), removing footnote 1; and ■ d. Adding a sentence at the end of paragraph (b). The addition reads as follows. ■ ■ Authority: 12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q, 78q–1, and 78w. § 9.13 22. The authority citation for part 10 is revised to read as follows: ■ PART 9—FIDUCIARY ACTIVITIES OF NATIONAL BANKS § 10.1 Scope. * * * * * (b) * * * MSRB rules may be obtained at www.msrb.org. § 10.2 [Amended] 24. Amend § 10.2 by: a. In paragraph (a): i. Adding ‘‘or Federal savings association’’ after the phrase ‘‘national bank’’, wherever it appears; and ■ ii. Removing the phrase ‘‘Rule G– 7(b)(i)–(x)’’ and adding in its place the phrase ‘‘Rule G–7(b)’’; ■ b. In paragraph (b): ■ i. Removing the word ‘‘must’’ and adding in its place the phrase ‘‘or Federal savings association shall’’; and ■ ii. Removing the phrase ‘‘the bank as a municipal’’ and adding in its place the phrase ‘‘the national bank or Federal savings association as a municipal’’; and ■ c. In paragraph (c), removing the phrase ‘‘by contacting the OCC at 400 7th Street, SW., Washington, DC 20219, Attention: Bank Dealer Activities’’ and adding in its place ‘‘at http:// www.banknet.gov/’’. ■ ■ ■ PART 11—SECURITIES EXCHANGE ACT DISCLOSURE RULES 25. The authority citation for part 11 is revised to read as follows: ■ Authority: 12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B); 15 U.S.C. 78j–1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265. 26. Section 11.1 is revised to read as follows: ■ § 11.1 Authority. The Office of the Comptroller of the Currency (OCC) is vested with the powers, functions, and duties otherwise vested in the Securities and Exchange Commission (SEC) to administer and enforce the provisions of sections PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 8105 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the Securities Exchange Act of 1934, as amended (Exchange Act) (15 U.S.C. 78j–1(m), 78l, 78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78p), and sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), as amended (15 U.S.C. 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265), for national banks and Federal savings associations with one or more classes of securities subject to the registration provisions of sections 12(b) and (g) of the Exchange Act (registered national banks or registered Federal savings associations). Further, the OCC has general rulemaking authority under 12 U.S.C. 93a, 1462a, 1463, and 1464, to promulgate rules and regulations concerning the activities of national banks and Federal savings associations. ■ 27. Section 11.2 is revised to read as follows: § 11.2 Reporting requirements for registered national banks and Federal savings associations. (a) Filing, disclosure and other requirements—(1) General. Except as otherwise provided in this section, a national bank or Federal savings association whose securities are subject to registration pursuant to section 12(b) or section 12(g) of the Exchange Act (15 U.S.C. 78l(b) and (g)) shall comply with the rules, regulations, and forms adopted by the SEC pursuant to: (i) Sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the Exchange Act (15 U.S.C. 78j–1(m), 78l, 78m, 78n(a), (c), (d) and (f), and 78p); and (ii) Sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-Oxley Act (codified at 15 U.S.C. 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265). (2) [Reserved] (b) References to the Securities Exchange Commission, SEC, or Commission. Any references to the ‘‘Securities and Exchange Commission,’’ the ‘‘SEC,’’ or the ‘‘Commission’’ in the rules, regulations and forms described in paragraph (a)(1) of this section with respect to securities issued by registered national banks or registered Federal savings associations shall be deemed to refer to the OCC unless the context otherwise requires. (c) References to registration requirements. For national banks and Federal savings associations, any references to registration requirements under the Securities Act of 1933 and its accompanying rules in the rules, regulations, and forms described in paragraph (a)(1) of this section mean the E:\FR\FM\23JAR3.SGM 23JAR3 8106 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations registration requirements in 12 CFR part 16. (d) Emerging growth company eligibility—(1) General. A national bank or Federal savings association that meets the criteria to qualify as an emerging growth company under section 3(a)(80) of the Exchange Act (15 U.S.C. 78c(a)(80)) shall be eligible for treatment as an emerging growth company for purposes of any rule, regulation or form described in paragraph (a)(1) of this section, except as provided in paragraph (d)(3) of this section. (2) Opt-in right. With respect to an exemption provided to a national bank or Federal savings association that is an emerging growth company under this part, the bank or savings association may choose to forgo such exemption and instead comply with the requirements that apply to a bank or savings association that is not an emerging growth company. (3) Exclusions. A national bank or Federal savings association that otherwise meets the definition of emerging growth company in section 3(a)(80) of the Exchange Act (15 U.S.C. 78c(a)(80)) shall not be considered an emerging growth company for purposes of this part if: (i) The first sale of its common equity securities pursuant to an effective registration statement or offering circular occurred on or before December 8, 2011; or (ii) It has reached the last day of its fiscal year following the fifth anniversary of the date of the first sale of its common equity securities pursuant to an effective registration statement or offering circular. ■ 28. Section 11.3 is amended by: ■ a. Revising paragraphs (a)(1) and (a)(3)(i) and the heading to paragraph (a)(3)(ii); ■ b. Adding a paragraph (a)(3)(iii); ■ c. Removing paragraph (a)(4); and ■ d. Removing the phrase ‘‘, at the address listed in paragraph (a) of this section’’ in paragraph (b) and adding in its place the phrase ‘‘, at the address listed on www.occ.gov.’’. The revisions read as follows: mstockstill on DSK3G9T082PROD with RULES3 § 11.3 Filing requirements and inspection of documents. (a) Filing requirements—(1)(i) In general. Except as otherwise provided in this section, all papers required to be filed with the OCC pursuant to the Exchange Act or regulations thereunder shall be submitted to the Securities and Corporate Practices Division of the OCC electronically at http:// www.banknet.gov/. Documents may be signed electronically using the signature VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 provision in SEC Rule 12b–11 (17 CFR 240.12b–11). (ii) Electronic filing exception. If a national bank or Federal savings association experiences unanticipated technical difficulties preventing the timely preparation and submission of an electronic filing, other than the filings described in paragraph (a)(3)(ii) of this section, the bank may, upon notice to the OCC’s Securities and Corporate Practices Division, file the subject filing in paper format no later than one business day after the date on which the filing was to be made. Paper filings should be submitted to the Securities and Corporate Practices Division, Office of the Comptroller of the Currency at the address provided at www.occ.gov. * * * * * (3) Date of filing—(i) General. The date of filing is the date the OCC receives the filing, provided the person, bank, or savings association submitting the filing has complied with all applicable requirements. An electronic filing that is submitted on a business day by direct transmission commencing on or before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, would be deemed received by the OCC on the same business day. An electronic filing that is submitted by direct transmission commencing after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, or on a Saturday, Sunday, or Federal holiday, would be deemed received by the OCC on the next business day. (ii) Beneficial ownership filings. * * * (iii) Adjustment of filing date. If an electronic filer in good faith attempts to file a document pursuant to this part in a timely manner but the filing is delayed due to technical difficulties beyond the electronic filer’s control, the electronic filer may request that the OCC adjust the filing date of such document. The OCC may grant the request if it appears that such adjustment is appropriate and consistent with the public interest and the protection of investors. * * * * * 29. Section 11.4 is amended by revising paragraph (b) to read as follows: ■ § 11.4 Filing fees. * * * * * (b) Fees must be paid by check payable to the Comptroller of the Currency or by other means acceptable to the OCC. PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 PART 12—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS 30. The authority citation for part 12 continues to read as follows: ■ Authority: 12 U.S.C. 24, 92a, and 93a. § 12.1 [Amended] 31. Section 12.1 is amended: a. In paragraph (c)(1) by removing the phrase ‘‘Securities and Exchange Commission’’ and adding in its place the phrase ‘‘Securities and Exchange Commission (SEC)’’; and ■ b. By removing the phrase ‘‘Securities and Exchange Commission’’ in paragraph (c)(2)(iii) and the phrase ‘‘Securities and Exchange Commission (SEC)’’ in paragraph (c)(2)(v) and adding ‘‘SEC’’ in their place. ■ 32. Section 12.2 is amended by: ■ a. In paragraph (g)(3), removing the phrase ‘‘Securities and Exchange Commission’’ and adding in its place ‘‘SEC’’; and ■ b. Revising paragraph (i)(3). The revision reads as follows. ■ ■ § 12.2 Definitions. * * * * * (i) * * * (3) A security that is an industrial development bond. * * * * * ■ 33. Section 12.3 is amended by adding a sentence at the end of paragraph (b) to read as follows: § 12.3 Recordkeeping. * * * * * (b) * * * A national bank may contract with a third-party service provider to maintain the records, provided that the bank maintains effective oversight of the third-party service provider to ensure the records meet the requirements of this section. ■ 34. Section 12.4 is amended by revising paragraph (b) to read as follows: § 12.4 Content and time of notification. * * * * * (b) Copy of the registered broker/ dealer’s confirmation. A copy of the confirmation of a registered broker/ dealer relating to the securities transaction, which the bank may direct the registered broker/dealer to send directly to the customer; and, if the customer or any other source will provide remuneration to the bank in connection with the transaction and a written agreement between the bank and the customer does not determine the remuneration, a statement of the source and amount of any remuneration that the customer or any other source is to provide the bank. E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations § 12.7 [Amended] ■ 35. Section 12.7(d) is amended by removing the phrase ‘‘Securities and Exchange Commission (SEC)’’ adding in its place ‘‘SEC’’. ■ § 12.9 [Amended] 36. Section 12.9(b)(2) is amended by removing the phrase ‘‘Securities and Exchange Commission (SEC)’’ and adding in their place ‘‘SEC’’. ■ §§ 12.101 through 12.102 [Removed] 37. The undesignated center heading ‘‘Interpretations’’ and §§ 12.101 and12.102 are removed. ■ PART 16—SECURITIES OFFERING DISCLOSURE RULES 38. The authority citation for part 16 is revised to read as follows: ■ Authority: 12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and 5412(b)(2)(B). 39. Section 16.1 is amended by: a. Revising paragraph (a); and b. In paragraphs (b) and (c), removing the word ‘‘bank’’ wherever it appears and adding in its place the phrase ‘‘national bank or Federal savings association’’. The revision reads as follows: ■ ■ ■ mstockstill on DSK3G9T082PROD with RULES3 § 16.1 Authority, purpose, and scope. (a) Authority. This part is issued under the rulemaking authority of the Comptroller of the Currency (OCC) for national banks in 12 U.S.C. 1 et seq., and 93a, and for Federal savings associations in 12 U.S.C. 1462a, 1463, 1464, and 5412(b)(2)(B). * * * * * ■ 40. Section 16.2 is amended by: ■ a. In paragraph (a), removing the phrase ‘‘Commission Rule’’ and adding in its place ‘‘SEC Rule’’; ■ b. Removing paragraphs (b), (c), and (j) and redesignating paragraphs (d) through (f) as paragraphs (b) through (d), respectively; redesignating paragraphs (g) and (h) as paragraphs (f) and (g), respectively; and redesignating paragraphs (k) through (n) as paragraphs (j) through (m), respectively; ■ c. In newly designated paragraph (b), removing ‘‘2(12)’’ and ‘‘77b(12))’’ and adding ‘‘2(a)(12)’’ and ‘‘77b(a)(12))’’, respectively, in their places; ■ d. In newly redesignated paragraph (c), removing ‘‘78a through 78jj’’ and adding ‘‘78a et seq.’’ in its place; ■ e. Adding new paragraphs (e), (h), and (n); ■ f. In newly redesignated paragraph (g) and paragraph (i), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 § 16.4 ■ 8107 ■ g. In newly redesignated paragraph (j): i. Removing ‘‘2(2)’’ and ‘‘77b(2))’’ and adding ‘‘2(a)(2)’’ and ‘‘77b(a)(2))’’, respectively, in their places; and ■ ii. Removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank and a Federal savings association’’; ■ h. In newly redesignated paragraph (m), removing ‘‘2(3)’’ and ‘‘77b(3))’’ and adding ‘‘2(a)(3)’’ and ‘‘77b(a)(3))’’, respectively, in their places; ■ i. In paragraph (o), removing ‘‘through 77aa’’ and adding ‘‘et seq.’’ in its place; ■ j. In paragraph (p), removing ‘‘2(1)’’ and ‘‘77b(1))’’ and adding ‘‘2(a)(1)’’ and ‘‘77b(a)(1))’’, respectively, in their places; and ■ k. In paragraph (q): ■ i. Removing ‘‘77b(11))’’ and adding ‘‘77b(a)(11))’’ in its place; ■ ii. Removing ‘‘2(11)’’ wherever it appears and adding ‘‘2(a)(11)’’ in its place; and ■ iii. Removing the phrase ‘‘Commission Rules’’ and adding in its place ‘‘SEC Rules’’. The additions read as follows: § 16.2 Definitions. * * * * * (e) Federal savings association means an existing Federal savings association chartered under section 5 of the Home Owners’ Loan Act (HOLA) (12 U.S.C. 1464 et seq.) or a Federal savings association in organization. * * * * * (h) National bank means an existing national bank, a national bank in organization, or a Federal branch or agency of a foreign bank. * * * * * (n) SEC means the Securities and Exchange Commission. When used in the rules, regulations, or forms of the SEC referred to in this part, the term ‘‘SEC’’ shall be deemed to refer to the OCC. * * * * * § 16.3 [Amended] 41. Section 16.3 is amended by: a. In paragraphs (a) introductory text and (b) introductory text, removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ b. In paragraph (c): ■ i. Removing ‘‘Commission Rule’’ and adding in its place ‘‘SEC Rule’’; ■ ii. Removing the citation ‘‘section 4(3)’’ and adding in its place the citation ‘‘section 4(a)(3)’’; and ■ iii. Removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank and Federal savings association’’. ■ ■ PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 [Amended] 42. Section 16.4 is amended by removing the phrase ‘‘Commission Rule’’ and adding in its place the phrase ‘‘SEC Rule’’ wherever it occurs. ■ 43. Section 16.5 is amended by: ■ a. Revising the introductory text and paragraphs (a), (b), and (e); ■ b. In paragraph (f), removing the phrase ‘‘Commission Rule’’ and adding in its place the phrase ‘‘SEC Rule’’; and ■ c. In paragraph (g), removing the phrase ‘‘Commission Regulation’’ and adding in its place the phrase ‘‘SEC Regulation’’. The revisions read as follows. § 16.5 Exemptions. The registration statement and prospectus requirements of § 16.3 do not apply to an offer or sale of national bank or Federal savings association securities: (a) If the securities are exempt from registration under section 3 of the Securities Act (15 U.S.C. 77c), but only by reason of an exemption other than section 3(a)(2) (exemption for bank securities), section 3(a)(5) (exemption for savings association securities), section 3(a)(11) (exemption for intrastate offerings), and section 3(a)(12) (exemption for bank holding company formation) of the Securities Act. (b) In a transaction exempt from registration under section 4 of the Securities Act (15 U.S.C. 77d). SEC Rules 152 and 152a (17 CFR 230.152 and 230.152a) (which apply to sections 4(a)(2) and 4(a)(1) of the Securities Act) apply to this part; * * * * * (e) In a transaction that satisfies the requirements of SEC Rule 144, 144A, or 236 (17 CFR 230.144, 230.144A, or 230.236); * * * * * ■ 44. Section 16.6 is amended by: ■ a. In paragraph (a) introductory text, removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; ■ b. Revising paragraphs (a)(1) and (5); ■ c. In paragraph (a)(3), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ d. In paragraph (b), removing the phrase ‘‘Commission Rule’’ and adding in its place the phrase ‘‘SEC Rule’’, wherever it appears. The revisions read as follows: § 16.6 Sales of nonconvertible debt. (a) * * * (1) The national bank or Federal savings association issuing the debt has securities registered under the Exchange Act or is a subsidiary of a holding E:\FR\FM\23JAR3.SGM 23JAR3 8108 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations company that has securities registered under the Exchange Act; * * * * * (5) Prior to or simultaneously with the sale of the debt, each purchaser receives an offering document that contains a description of the terms of the debt, the use of proceeds, and method of distribution, and incorporates the national bank’s or Federal savings association’s latest Consolidated Reports of Condition and Income (Call Report) and the national bank’s, Federal savings association’s, or the holding company’s Forms 10–K, 10–Q, and 8–K (17 CFR part 249) filed under the Exchange Act; and * * * * * § 16.7 [Amended] 45. Section 16.7 is amended by: a. Removing the phrase ‘‘Commission Regulation’’ and adding in its place the phrase ‘‘SEC Regulation’’, wherever it appears; ■ b. In paragraphs (a) introductory text, removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; ■ c. In paragraph (b): ■ i. Removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ ii. Removing the phrase ‘‘Commission Rule’’ and adding in its place the phrase ‘‘SEC Rule’’; and ■ d. In paragraph (c), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’. ■ ■ § 16.8 [Amended] 46. Section 16.8 is amended: a. By removing the phrase ‘‘Commission Regulation’’ and adding in its place the phrase ‘‘SEC Regulation’’, wherever it appears; ■ b. In paragraph (a), by removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ c. In paragraph (b), by removing the word ‘‘Commission’s’’ and adding in its place the word ‘‘SEC’s’’. ■ 47. Section 16.9 is amended by: ■ a. Revising paragraph (a); and ■ b. In the introductory text and paragraphs (b) through (d), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’, wherever it appears. The revision reads as follows: mstockstill on DSK3G9T082PROD with RULES3 ■ ■ § 16.9 Securities offered and sold in holding company dissolution. * * * VerDate Sep<11>2014 * * 19:50 Jan 19, 2017 Jkt 241001 (a) The offer and sale of national bank or Federal savings association issued securities occurs solely as part of a dissolution in which the security holders exchange their shares of stock in a holding company that had no significant assets other than securities of the bank or savings association, for bank or savings association stock; * * * * * ■ 48. Section 16.10 is added to read as follows: § 16.10 Sales of securities at an office of a Federal savings association. Sales of securities of a Federal savings association or its affiliates at an office of a Federal savings association may be made only in accordance with the provisions of 12 CFR 163.76. For the purpose of this section, ‘‘affiliate’’ has the same meaning as in 12 CFR 161.4. § 16.15 [Amended] 49. Section 16.15 is amended by: a. In paragraph (a): i. Removing the word ‘‘Commission’s’’ and adding in its place the word ‘‘SEC’s’’; ■ ii. Removing the phrase ‘‘Commission regulations’’ and adding in its place the phrase ‘‘SEC regulations’’; and ■ iii. Removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; ■ b. In paragraph (b), removing the phrase ‘‘Commission Regulation’’ and adding in its place the phrase ‘‘SEC Regulation’’; ■ c. In paragraph (d), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ d. In paragraph (e), adding the phrase ‘‘or Federal savings association’’ after the word ‘‘bank’’, wherever it appears. ■ ■ ■ § 16.16 [Amended] 50. Section 16.16 is amended in paragraph (a) by removing the phrase ‘‘Commission Regulation’’ and adding in its place the phrase ‘‘SEC Regulation’’. ■ 51. Section 16.17 is revised to read as follows: ■ § 16.17 Filing requirements and inspection of documents. (a) Except as otherwise provided in this section, all registration statements, offering documents, amendments, notices, or other documents must be filed with the OCC’s Securities and Corporate Practices Division electronically at http:// www.banknet.gov/. Documents may be signed electronically using the signature provision in SEC Rule 402 (17 CFR 230.402). PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 (b) All registration statements, offering documents, amendments, notices, or other documents relating to a national bank or Federal savings association in organization must be filed with the appropriate district office of the OCC at http://www.banknet.gov/. (c) Where this part refers to a section of the Securities Act or the Exchange Act or an SEC rule that requires the filing of a notice or other document with the SEC, that notice or other document must be filed with the OCC. (d) Provided the person filing the document has complied with all requirements regarding the filing, including the submission of any fee required under § 16.33, the date of filing of the document is the date the OCC receives the filing. An electronic filing that is submitted on a business day by direct transmission commencing on or before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, would be deemed received by the OCC on the same business day. An electronic filing that is submitted by direct transmission commencing after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, or on a Saturday, Sunday, or Federal holiday, would be deemed received by the OCC on the next business day. If an electronic filer in good faith attempts to file a document with the OCC in a timely manner but the filing is delayed due to technical difficulties beyond the electronic filer’s control, the electronic filer may request that the OCC adjust the filing date of such document. The OCC may grant the request if it appears that such adjustment is appropriate and consistent with the public interest and the protection of investors. (e) Notwithstanding paragraph (d) of this section, any registration statement or any post-effective amendment thereto filed pursuant to SEC Rule 462(b) (17 CFR 230.462(b)) shall be deemed received by the OCC on the same business day if its submission commenced on or before 10 p.m. Eastern Standard Time or Eastern Daylight Savings Time, whichever is currently in effect, and on the next business day if its submission commenced after 10 p.m. Eastern Standard or Daylight Savings Time, whichever is currently in effect, or any time on a Saturday, Sunday, or Federal holiday. (f) If a national bank or Federal savings association experiences unanticipated technical difficulties preventing the timely preparation and submission of an electronic filing, the bank or savings association may, upon notice to the OCC’s Securities and E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations Corporate Practices Division or district office, as appropriate, file the subject filing in paper format no later than one business day after the date on which the filing was to be made. Paper filings should be submitted to the OCC’s Securities and Corporate Practices Division or appropriate district office, at the address provided at www.occ.gov. (g) Any filing of amendments or revisions must include two copies, one of which must be marked to indicate clearly and precisely, by underlining or in some other appropriate manner, the changes made. (h) The OCC will make available for public inspection copies of the registration statements, offering documents, amendments, exhibits, notices or reports filed pursuant to this part at the address identified in § 4.14 of this chapter. ■ 52. Section 16.30 is amended by revising paragraph (a) to read as follows: § 16.30 Request for interpretive advice or no-objection letter. * * * * * (a) File a copy of the request, including any supporting attachments, with the OCC’s Securities and Corporate Practices Division at the address provided at www.occ.gov; * * * * * ■ 53. Section 16.32 is amended: ■ a. By revising the section heading; ■ b. In paragraphs (a) introductory text and (a)(3), removing the word ‘‘bank’’ and adding in its place the phrase ‘‘national bank or Federal savings association’’; and ■ c. In paragraph (d), removing the phrase ‘‘Commission Rule’’ and adding in its place the phrase ‘‘SEC Rule’’. The revision reads as follows. § 16.32 Fraudulent transactions and unsafe or unsound practices. * * * * * 54. Section 16.33 is revised to read as follows: ■ mstockstill on DSK3G9T082PROD with RULES3 § 16.33 Filing fees. (a) The OCC may require filing fees to accompany certain filings made under this part before it will accept those filings. The OCC provides an applicable fee schedule in the Notice of Comptroller of the Currency Fees published pursuant to § 8.8 of this chapter. (b) Filing fees must be paid by check payable to the Comptroller of the Currency or by other means acceptable to the OCC. PART 18 [REMOVED] ■ 55. Remove part 18. VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 PART 31—EXTENSIONS OF CREDIT TO INSIDERS AND TRANSACTIONS WITH AFFILIATES 56. The authority citation for part 31 is revised to read as follows: ■ Authority: 12 U.S.C. 93a, 375a(4), 375b(3), 1463, 1467a(d), 1468, 1817(k), and 5412(b)(2)(B). 57. Section 31.1 is revised to read as follows: ■ § 31.1 Authority. This part is issued pursuant to 12 U.S.C. 93a, 375a(4), 375b(3), 1463, 1467a(d), 1468, 1817(k), and 5412(b)(2)(B), as amended. § 31.2 [Amended] 58. Section 31.2 is amended by: a. In paragraph (a): i. Removing the phrase ‘‘A national bank and its’’ and adding in its place the phrase ‘‘National banks, Federal savings associations, and their’’; and ■ ii. Adding ‘‘(Regulation O)’’ to the end of the sentence; and ■ b. In paragraph (b), adding ‘‘, Federal savings associations,’’ after the word ‘‘banks’’. ■ 59. Add § 31.3 to read as follows: ■ ■ ■ § 31.3 Affiliate transactions requirements. (a) General rule. National banks and Federal savings associations shall comply with the provisions contained in 12 CFR part 223 (Regulation W). (b) Enforcement. The Comptroller of the Currency administers and enforces affiliate transactions requirements as they apply to national banks and Federal savings associations. (c) Standard for exemptions. The OCC may, by order, exempt transactions or relationships of a national bank or Federal savings association from the requirements of section 23A and section 11 of the Home Owners’ Loan Act (HOLA), as applicable, and 12 CFR part 223 if: (1) The OCC, jointly with the Federal Reserve Board, finds the exemption to be in the public interest and consistent with the purposes of section 23A or section 11 of the HOLA, as applicable; and (2) The FDIC, within 60 days of receiving notice of such joint finding, does not object in writing to the finding based on a determination that the exemption presents an unacceptable risk to the Deposit Insurance Fund. (d) Procedures for exemptions. A national bank or Federal savings association may request an exemption from the requirements of section 23A or section 11 of the HOLA, as applicable, and 12 CFR part 223 for a national bank or Federal savings association by PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 8109 submitting a written request to the Deputy Comptroller for Licensing with a copy to the appropriate Federal Reserve Bank. Such a request must: (1) Describe in detail the transaction or relationship for which the national bank or Federal savings association seeks exemption; (2) Explain why the OCC should exempt the transaction or relationship; (3) Explain how the exemption would be in the public interest and consistent with the purposes of section 23A or section 11 of the HOLA, as applicable; and (4) Explain why the exemption does not present an unacceptable risk to the Deposit Insurance Fund. 60. Appendix B to part 31 is amended by: a. Revising the appendix heading and introductory note; b. Removing the references ‘‘part 31’’, ‘‘Part 31’’, and ‘‘Parts 31 and 32’’ and adding in their place the references ‘‘part 215’’, ‘‘Part 215’’, and ‘‘parts 32 and 215’’, respectively, wherever they appear; c. Under the heading ‘‘Definition of ‘Loan or Extension of Credit’’’, in the first sentence under ‘‘Renewals’’, removing the phrase ‘‘will be applied in the same manner’’ and adding in its place the phrase ‘‘are equivalent’’; and d. Under the heading ‘‘Combination/ Attribution Rules’’, in the fourth sentence, under ‘‘Loans to corporate groups’’, removing the word ‘‘until’’ and adding in its place the word ‘‘unless’’. The revisions read as follows: Appendix B to Part 31—Comparison of Selected Provisions of Parts 32 and 215 Note: This appendix compares certain provisions of 12 CFR part 32 with those of 12 CFR part 215. As used in this appendix, the term ‘‘bank’’ refers to both national banks and Federal savings associations. * * * * * PART 150—FIDUCIARY POWERS OF FEDERAL SAVINGS ASSOCIATIONS 61. The authority citation for part 150 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B). 62. Section 150.245 is added to read as follows: ■ § 150.245 When is a fiduciary not required to maintain custody or control of fiduciary assets? If you are deemed a fiduciary based solely on your capacity as investment advisor, as that capacity is defined in § 9.101(a) of this chapter, and have no other fiduciary capacity as enumerated in § 150.30, you are not required to E:\FR\FM\23JAR3.SGM 23JAR3 8110 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations § 162.1 Accounting and disclosure standards. maintain custody or control of fiduciary assets as set forth in § 150.220 or § 150.240. PART 155—ELECTRONIC OPERATIONS OF FEDERAL SAVINGS ASSOCIATIONS PART 151—RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES TRANSACTIONS Sec. 155.100 Scope. 155.200 Use of electronic means and facilities. 155.210 Requirements for using electronic means and facilities. A Federal savings association shall follow U.S. generally accepted accounting principles (GAAP) and the disclosure standards included therein when complying with all applicable regulations, unless otherwise required by statute, regulation, or the OCC. Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B). PART 163—SAVINGS ASSOCIATIONS—OPERATIONS § 155.100 ■ 63. The authority citation for part 151 continues to read as follows: ■ Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B). 64. Section 151.40 is amended by revising paragraph (3) of the definition of Municipal security to read as follows: ■ § 151.40 part? What definitions apply to this § 155.200 facilities. * * * * * Municipal security * * * (3) A security that is an industrial development bond. * * * * * ■ 65. Section 151.60 is revised to read as follows: § 151.60 How must I maintain my records? (a) In general. The records required by § 151.50 must clearly and accurately reflect the information required and provide an adequate basis for the audit of the information. Record maintenance may include the use of automated or electronic records provided the records are easily retrievable, readily available for inspection, and capable of being reproduced in a hard copy. (b) Use of third party. You may contract with third-party service providers to maintain the records required by this section, provided that you maintain effective oversight of the third-party vendor to ensure records meet the requirements of § 150.50 and this section. ■ 66. Revise § 151.80(b) to read as follows: § 151.80 How do I provide a registered broker-dealer confirmation? mstockstill on DSK3G9T082PROD with RULES3 * * * * * (b) Unless you have determined remuneration in a written agreement with the customer, if you have received or will receive remuneration from any source, including the customer, in connection with the transaction, you must provide a statement of the source and amount of the remuneration in addition to the registered broker-dealer confirmation described in paragraph (a) of this section. § 151.110 [Removed] 67. Section 151.110 is removed. ■ 68. Part 155 is revised to read as follows: ■ VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 Scope. This part describes how a Federal savings association may provide products and services through electronic means and facilities. Use of electronic means and § 155.210 Requirements for using electronic means and facilities. To use electronic means and facilities under this subpart, a Federal savings association’s management must: (a) Identify, assess, and mitigate potential risks and establish prudent internal controls; and (b) Implement security measures designed to ensure secure operations. Such measures must be adequate to: (1) Prevent unauthorized access to the savings association’s records and its customers’ records; (2) Prevent financial fraud through the use of electronic means or facilities; and (3) Comply with applicable security devices requirements of part 168 of this chapter. ■ 69. Part 162 is revised to read as follows: PART 162—ACCOUNTING AND DISCLOSURE STANDARDS Accounting and disclosure standards. Authority: 12 U.S.C. 1463, 5412(b)(2)(B). PO 00000 Frm 00030 Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820, 1828, 1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42 U.S.C. 4106. § 163.41 (a) General. A Federal savings association may use, or participate with others to use, electronic means or facilities to perform any function, or provide any product or service, as part of an authorized activity. Electronic means or facilities include, but are not limited to, automated teller machines, automated loan machines, personal computers, the internet, telephones, and other similar electronic devices. (b) Other. To optimize the use of resources, a Federal savings association may market and sell, or participate with others to market and sell, electronic capacities and by-products to thirdparties, if the savings association acquired or developed these capacities and by-products in good faith as part of providing financial services. Sec. 162.1 70. The authority citation for part 163 continues to read as follows: Fmt 4701 Sfmt 4700 ■ 71. Remove § 163.41. § 163.43 ■ [Removed] [Removed] 72. Remove § 163.43. § 163.161 [Removed] 73. Remove § 163.161. ■ 74. Section 163.172 is amended by: ■ a. In paragraph (a), revising the paragraph heading and removing the word ‘‘commitments’’ and adding the word ‘‘contracts’’ in its place; ■ b. Revising paragraph (b), the heading to paragraph (c) and paragraph (c)(1); ■ c. In paragraph (c)(2): ■ i. Removing the word ‘‘you’’ and adding in its place the phrase ‘‘a savings association’’; and ■ ii. Removing the word ‘‘Your’’ and adding in its place the word ‘‘The’’; ■ d. In paragraphs (c)(3) introductory text and (c)(4), removing the word ‘‘Your’’ wherever it appears and adding in its place the word ‘‘The’’; ■ e. In paragraph (c)(3)(ii), removing the word ‘‘your’’ and adding in its place the phrase ‘‘the savings association’s’’; ■ f. Revising the heading to paragraph (d); ■ g. In paragraph (d)(1), removing the word ‘‘Management’’ and adding in its place the phrase ‘‘The management of a Federal savings association’’; and ■ h. Revising paragraph (e). The revisions read as follows. ■ § 163.172 Financial derivatives. (a) Definition. * * * (b) Permissible financial derivatives transactions. A Federal savings association may engage in a transaction involving a financial derivative if the savings association is authorized to invest in the assets underlying the financial derivative, the transaction is safe and sound, and the requirements in paragraphs (c) through (e) of this section are met. In general, a Federal savings E:\FR\FM\23JAR3.SGM 23JAR3 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Rules and Regulations mstockstill on DSK3G9T082PROD with RULES3 association that engages in a transaction involving a financial derivative should do so to reduce its risk exposure. (c) Board of directors’ responsibilities. (1) A Federal savings association’s board of directors is responsible for effective oversight of financial derivatives activities. * * * * * (d) Management responsibilities. * * * (e) Recordkeeping requirement. A Federal savings association must maintain records adequate to demonstrate compliance with this VerDate Sep<11>2014 19:50 Jan 19, 2017 Jkt 241001 section and with its board of directors’ policies and procedures on financial derivatives. PART 193 [REMOVED] § 163.180 8111 PART 194—[REMOVED] [Amended] ■ 75. Section 163.180 is amended by removing and reserving paragraphs (a) and (c). ■ § 163.190 ■ ■ ■ 76. Remove § 163.190. § 163.191 ■ [Removed] [Removed] 77. Remove § 163.191. PO 00000 Frm 00031 Fmt 4701 Sfmt 9990 78. Remove part 193. 79. Remove part 194. PART 197 [REMOVED] 80. Remove part 197. Dated: December 13, 2016. Thomas J. Curry, Comptroller of the Currency. [FR Doc. 2016–30502 Filed 1–19–17; 8:45 am] BILLING CODE P E:\FR\FM\23JAR3.SGM 23JAR3

Agencies

[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Rules and Regulations]
[Pages 8082-8111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30502]



[[Page 8081]]

Vol. 82

Monday,

No. 13

January 23, 2017

Part VI





 Department of the Treasury





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Office of the Comptroller of the Currency





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12 CFR Parts 5, 7, 8, et al.





Economic Growth and Regulatory Paperwork Reduction Act of 1996 
Amendments; Final Rule

Federal Register / Vol. 82 , No. 13 / Monday, January 23, 2017 / 
Rules and Regulations

[[Page 8082]]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 5, 7, 8, 9, 10, 11, 12, 16, 18, 31, 150, 151, 155, 
162, 163, 193, 194, 197

[Docket ID OCC-2016-0002]
RIN 1557-AD95F


Economic Growth and Regulatory Paperwork Reduction Act of 1996 
Amendments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: As part of its review under the Economic Growth and Regulatory 
Paperwork Reduction Act of 1996, the Office of the Comptroller of the 
Currency (OCC) is revising certain of its rules to remove outdated or 
otherwise unnecessary provisions. Specifically, the OCC is: revising 
certain licensing rules related to chartering applications, business 
combinations involving Federal mutual savings associations, and notices 
for changes in permanent capital; clarifying national bank director 
oath requirements; revising certain fiduciary activity requirements for 
national banks and Federal savings associations; removing certain 
financial disclosure regulations for national banks; removing certain 
unnecessary regulatory reporting, accounting, and management policy 
regulations for Federal savings associations; updating the electronic 
activities regulation for Federal savings associations; integrating and 
updating OCC regulations for national banks and Federal savings 
associations relating to municipal securities dealers, Securities 
Exchange Act disclosure rules, and securities offering disclosure 
rules; updating and revising recordkeeping and confirmation 
requirements for national banks' and Federal savings associations' 
securities transactions; integrating and updating regulations relating 
to insider and affiliate transactions; and making other technical and 
clarifying changes.

DATES: This final rule is effective on April 1, 2017.

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Heidi Thomas, Special Counsel; or Rima Kundnani, Attorney, Legislative 
and Regulatory Activities Division, 202-649-5490, for persons who are 
deaf or hard of hearing, TTY, 202-649-5597, Office of the Comptroller 
of the Currency, 400 7th Street SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 2222 of the Economic Growth and Regulatory Paperwork 
Reduction Act of 1996 (EGRPRA) \1\ requires that, at least once every 
10 years, the Federal Financial Institutions Examination Council 
(FFIEC) and each appropriate Federal banking agency (Agency or, 
collectively, Agencies) represented on the FFIEC (the OCC, Federal 
Deposit Insurance Corporation (FDIC), and the Board of Governors of the 
Federal Reserve System (Federal Reserve Board)) conduct a review of the 
regulations prescribed by the FFIEC or Agency. The purpose of this 
review is to identify outdated or otherwise unnecessary regulatory 
requirements imposed on insured depository institutions.
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    \1\ Pub. L 104-208 (1996), codified at 12 U.S.C. 3311(b).
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    EGRPRA requires the Agencies to provide public notice and seek 
comment on one or more categories of regulations at regular intervals 
so that all Agency regulations are published for comment within a 10-
year cycle. EGRPRA also directs the Agencies to categorize their 
regulations by type, publish the categories, and invite the public to 
identify areas of regulations that are ``outdated, unnecessary, or 
unduly burdensome.'' \2\ Once the Agencies have published the 
categories of regulations for comment, EGRPRA requires the Agencies to 
publish a comment summary and discuss the significant issues raised by 
the commenters. The statute also directs the Agencies to ``eliminate 
unnecessary regulations to the extent that such action is 
appropriate.'' \3\ Finally, EGRPRA requires the FFIEC to submit a 
report to Congress summarizing significant issues and their relative 
merits. The report also must analyze whether the Agencies can address 
these issues through regulatory change or whether legislative action is 
required.
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    \2\ Id. at 3311(a).
    \3\ Id. at 3311(d)(2).
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    The Agencies completed the first EGRPRA review in 2006. The 
Agencies expect to complete the current EGRPRA review process by the 
end of 2016.
    As with the first EGRPRA review, the Agencies have elected to 
conduct this current review jointly. The Agencies have divided their 
regulations into 12 categories and published four Federal Register 
notices,\4\ each requesting public comment on three of these 
categories. Additionally, the Agencies held a series of six outreach 
meetings to provide an opportunity for bankers, consumer and community 
groups, and other interested parties to present their views on the 
Agencies' regulations directly to Agency principals, senior Agency 
management, and Agency staff.\5\
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    \4\ See 79 FR 32172 (June 4, 2014); 80 FR 7980 (Feb. 13, 2015); 
80 FR 32046 (June 5, 2015), and 80 FR 79724 (Dec. 23, 2015). More 
information on the current EGRPRA process, including the Federal 
Register notices, outreach meetings, and public comments received, 
is available at http://egrpra.ffiec.gov/.
    \5\ These public outreach meetings took place in Los Angeles, 
California on December 2, 2014; Dallas, Texas on February 4, 2015; 
Boston, Massachusetts on May 4, 2015; Kansas City, Missouri on 
August 4, 2015 (which focused on rural banking issues), Chicago, 
Illinois on October 19, 2015; and Washington, DC on December 2, 
2015.
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    The OCC believes it is unnecessary to wait until the end of the 
EGRPRA process before acting to reduce regulatory burden where 
possible.\6\ To this end, the OCC published a Notice of Proposed 
Rulemaking (proposed rule or proposal) on March 14, 2016 \7\ that 
included amendments in response to some of the comments the OCC 
received on its rules to date.\8\ The proposed rule also included 
amendments to OCC rules derived from the OCC's most recent internal 
review of its rules to identify outdated or unnecessary provisions 
beyond those suggested by EGRPRA commenters. Furthermore, the proposed 
rule included amendments that would integrate a number of national bank 
and Federal savings association rules. These proposed amendments remove 
unnecessary or outdated provisions and streamline and simplify OCC 
rules, thereby reducing regulatory burden on

[[Page 8083]]

national banks and Federal savings associations.\9\
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    \6\ We note that the OCC already has finalized or proposed a 
number of changes to our rules, in addition to this EGRPRA 
rulemaking. Last year, we incorporated a number of changes suggested 
by EGRPRA commenters into a final rule that integrates the OCC's 
national bank and Federal savings association licensing rules. (80 
FR 28346 (May 18, 2015)). In addition, pursuant to the Fixing 
America's Surface Transportation (FAST) Act, the Agencies issued an 
interim final rule that provides for an 18-month examination cycle 
for qualifying 1- and 2-rated institutions with assets of between 
$500 million and $1 billion. This rule provides an 18-month 
examination cycle for 1-rated banks up to 1 billion in assets, and 
gives the Agencies the authority to provide an 18-month examination 
cycle for 2-rated banks with up to $1 billion in assets. (81 FR 
10063 (Feb. 29, 2016)). Furthermore, the Agencies, acting through 
the FFIEC, have sought comment on proposals to eliminate or revise 
several items on the Consolidated Reports of Condition (Call 
Report). (See 80 FR 56539 (Sept. 18, 2015)). The Agencies also 
published a proposal for a streamlined call report for small 
institutions under $1 billion (See 81 FR 54190 (Aug. 15, 2016)). 
These Call Report initiatives are consistent with the feedback the 
OCC, FDIC, and Federal Reserve Board have received in this EGRPRA 
review.
    \7\ 81 FR 13607.
    \8\ The OCC is continuing to review EGRPRA comments on OCC rules 
to determine whether additional amendments are appropriate.
    \9\ The amendments included in this rulemaking amend rules 
issued only by the OCC and do not reflect comments submitted on 
rules the OCC has issued jointly with other agencies. We will 
address any modifications to interagency rules through a separate 
interagency rulemaking.
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II. Summary of Public Comments

    The OCC received four comment letters in response to this proposed 
rule. One trade association stated that it had no objection to the 
proposed rule.\10\ A financial institution also stated that it had no 
objection to the various items in the proposal, but noted that the 
proposal does not reduce regulatory burden on the day-to-day servicing 
and offering of products to bank customers and consumers, noting as an 
example the paperwork burden associated with mortgage loans. It 
specifically requested that the OCC consider proposing additional 
reforms to simplify the process for consumers.
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    \10\ This commenter also addressed the Volcker rule, 12 CFR part 
44, Bank Secrecy Act rules, 12 CFR part 21, and the appraisal rule, 
12 CFR part 34, which are outside the scope of this rulemaking.
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    Another trade association, while noting that the proposed rule is 
an early effort by the OCC to remove regulatory burden through the 
EGRPRA review, applauded the OCC's effort through this rulemaking to 
remove certain outdated and otherwise unnecessarily burdensome 
provisions. This commenter also provided specific substantive comments 
on the proposed amendments relating to fiduciary activities (12 CFR 
parts 9 and 150), recordkeeping and confirmation requirements for 
securities transactions (12 CFR parts 12 and 151), and the sale of 
securities at a Federal savings association office (12 CFR 163.76). 
These comments are discussed in detail, below.\11\
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    \11\ The fourth comment letter, from an individual, addressed 
the Volcker rule and Community Reinvestment Act. These topics are 
outside the scope of this rulemaking.
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    As a general response to these commenters, the OCC notes that it 
will continue to review our rules under the EGRPRA process to determine 
whether further reductions in burden are warranted. We will propose 
additional amendments to our rules where appropriate.

II. Description of the Final Rule

    The OCC is adopting the amendments as proposed with the removal of 
the technical amendments to 12 CFR part 4 and one clarifying change to 
12 CFR 9.13 (custody of fiduciary assets). A section-by-section 
discussion of the proposed rule, the public comments received, and the 
resulting final rule are set forth below.

Organization and Functions, Availability and Release of Information (12 
CFR Part 4)

    Twelve CFR part 4 describes the organization and functions of the 
OCC and sets forth the standards, policies, and procedures that the OCC 
applies in administering the Freedom of Information Act (FOIA) and 
requests for non-public OCC information, among other things. The 
proposed rule included technical amendments to update and correct the 
OCC address in several sections and replace ``Licensing Department'' 
with ``Licensing Division'' and ``Disclosure Officer'' with ``Freedom 
of Information Act Officer.'' Additionally, the proposed rule would 
have updated the OCC's FOIA rules to remove references to the Office of 
Thrift Supervision (OTS) that are no longer necessary.
    Since the publication of the proposed rule, Congress enacted the 
FOIA Improvement Act of 2016,\12\ which makes a number of changes to 
FOIA that necessitate further amendments to the OCC's FOIA rules in 12 
CFR part 4. To avoid confusion and to include all OCC FOIA rule changes 
in one rulemaking, we have removed the part 4 amendments in this EGRPRA 
final rule and will include them in a separate FOIA rulemaking.
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    \12\ Public Law 114-185 (2016).
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Rules, Policies, and Procedures for Corporate Activities (12 CFR Part 
5)

    Twelve CFR part 5 sets forth the OCC's rules for corporate 
activities and filings. These rules were included in the first EGRPRA 
Federal Register request for comments and, as indicated above, the 
OCC's final rule integrating the OCC's national bank and Federal 
savings association licensing rules incorporated changes that reflect 
some of the comments received in response to that notice. As discussed 
below, the proposed rule included a number of additional amendments to 
part 5 that reflected further review of these licensing rules by the 
OCC since the adoption of this final rule.
    Change in charter purpose or type (12 CFR 5.20, 5.53). The OCC 
proposed to amend Sec. Sec.  5.20 and 5.53 to clarify what type of 
application is to be used when an existing national bank or Federal 
savings association proposes to change the purpose and type of charter 
under which it operates. The OCC charters national banks and Federal 
savings associations that are authorized to conduct any activity 
permitted for a national bank or a Federal savings association, 
respectively (sometimes called ``full-service charters''). The OCC also 
charters national banks and Federal savings associations whose 
activities are limited to a special purpose. The most common types of 
special purpose institutions are (1) those whose operations are limited 
to those of a trust company and activities related thereto, and (2) 
those that conduct only a credit card business. Other special purpose 
charter types include: Bankers' banks, community development banks, and 
cash management banks.
    When the OCC grants approval for a special purpose institution, the 
approval decision generally includes a condition requiring the 
institution to conduct only the limited activity. If the institution 
later desires to expand the scope of its business, it must seek OCC 
approval. A later expansion to include additional business warrants a 
new review to determine if the institution has the financial and 
managerial resources to conduct the expanded business. Similarly, when 
an institution that has a full-service charter later desires to limit 
itself to a special purpose and conduct only one business line, the OCC 
reviews the change to ascertain whether the institution could continue 
to operate safely and soundly after it narrows its focus and to 
evaluate the institution's proposed capital, staffing, business plan, 
and risk management systems.
    Currently, filings to change the purpose of a charter have no 
established framework and the OCC addresses them on a case-by-case 
basis when an institution inquires. Recently revised Sec.  5.53 \13\ 
now covers transactions that are similar to a change in purpose and 
type of charter (i.e., transactions that involve substantial changes in 
an institution's assets, liabilities, or business lines). Because the 
changes to an institution's assets, liabilities, and business lines 
that would be involved in a change in the purpose of a charter would 
necessitate a filing under Sec.  5.53, we proposed to clarify Sec.  
5.53 to expressly add change in charter type to the transactions that 
are covered by Sec.  5.53. We also proposed additional provisions to 
Sec.  5.20(l), where special purpose charters are discussed, that 
describe changes in charter purpose, set out the requirement for an 
application, and direct institutions to Sec.  5.53 for the relevant 
application.
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    \13\ The OCC amended Sec.  5.53 in July 2015. See 80 FR 28346 
(May 18, 2015).
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    We received no specific comments on these proposed amendments to 
Sec. Sec.  5.20 and 5.53 and adopt them as proposed.

[[Page 8084]]

    Business combinations involving Federal mutual savings associations 
(12 CFR 5.33). Twelve CFR 5.33 sets forth the provisions governing 
business combinations involving depository institutions within the 
OCC's jurisdiction, including Federal mutual savings associations. 
Paragraph (n)(2)(iii) of this section currently provides that if any 
combining Federal savings association is a mutual savings association, 
the resulting institution must be a mutually held savings association, 
unless the transaction is approved under 12 CFR part 192, which governs 
mutual to stock conversions, or involves a mutual holding company 
reorganization under 12 U.S.C. 1467a(o).\14\ Consequently, unless one 
of these two exceptions applies, the resulting institution may not be a 
mutually held state-chartered savings bank.\15\
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    \14\ Section 10(o) of the HOLA.
    \15\ This paragraph is generally consistent with the rule as 
issued by the former OTS and originally republished by the OCC as 12 
CFR 146.2(a)(4). The OCC moved this provision to Sec.  5.33 in its 
licensing integration rule. See 80 FR 28346 (May 18, 2015).
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    However, the merger authority set forth in 12 CFR 5.33(n)(2)(iii) 
is narrower than the merger authority granted to all Federal savings 
associations under the Home Owners' Loan Act (HOLA). Specifically, 
section 10(s) of the HOLA \16\ provides that ``[s]ubject to sections 
5(d)(3) and 18(c) of the Federal Deposit Insurance Act (FDI Act) and 
all other applicable laws, any Federal savings association may acquire 
or be acquired by any insured depository institution.'' The statute, 
therefore, does not limit the resulting institution in such 
transactions to a savings association.\17\
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    \16\ 12 U.S.C. 1467a(s).
    \17\ Section 5(i) of the HOLA (12 U.S.C. 1464(i)) provides that 
transactions involving the conversion of a Federal mutual savings 
association to a stock Federal savings association, and vice versa, 
must comply with OCC regulations. As indicated above, OCC 
regulations relating to mutual to stock conversions are set forth at 
12 CFR part 192. By limiting the resulting institution to a mutual 
institution, both the current rule and the amendment ensure that 
combinations involving Federal mutual savings associations are 
consistent with the mutual to stock conversion regulations at 12 CFR 
part 192.
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    Under Sec.  5.33(n)(2)(iii), Federal mutual savings associations 
and mutual state-chartered savings banks that seek to combine must 
undertake a multi-step transaction. For example, a Federal mutual 
savings association generally may convert to a mutual state-chartered 
savings association or a mutual state-chartered savings bank pursuant 
to section 5(i)(3) of the HOLA, and thereafter combine with a mutual 
state-chartered savings bank. Such a process, while accomplishing the 
same purpose as a direct merger, is more expensive and time consuming 
than a direct merger and results in unnecessary regulatory burden for 
the institutions involved.
    Accordingly, the OCC proposed to amend Sec.  5.33(n)(2)(iii) to 
permit a mutual depository institution insured by the FDIC, i.e., 
either a mutual savings association or a mutual savings bank, to be the 
resulting institution in a combination involving a Federal mutual 
savings association. This amendment would simplify combinations 
involving mutual savings banks, thereby reducing regulatory burden and 
costs associated with such transactions imposed under the current rule. 
We note that this amendment would continue to require the resulting 
institution to have a mutual charter so as not to implicate the mutual-
to-stock conversion regulations, 12 CFR part 192.
    The OCC also proposed to amend 12 CFR 5.33(n)(2)(iii)(B) to allow a 
mutual Federal savings association to merge into an FDIC-insured 
depository institution subsidiary of a state-chartered mutual holding 
company. Currently, under the exception, a mutual Federal savings 
association may merge into a subsidiary savings association of a 
section 10(o) mutual holding company, provided the depositors of the 
resulting association have membership rights in the mutual holding 
company.\18\ The exception does not allow the merger of a mutual 
Federal savings association into a state savings bank subsidiary of a 
mutual holding company that is established under state law. As a 
result, in order for the mutual Federal savings association to merge 
into a state savings bank subsidiary of a mutual holding company 
organized under state law, it must first convert to a state-chartered 
savings association or state-chartered savings bank, and then combine 
with the state-chartered savings bank.
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    \18\ The OCC deems this type of transaction to be one type of 
mutual holding company reorganization.
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    In addition, we proposed to amend Sec.  5.33(n)(2)(iii)(B) so that 
mergers of mutual Federal savings associations into subsidiaries of 
section 10(o) and non-section 10(o) mutual holding companies are 
treated similarly. As with the amendment to Sec.  5.33(n)(2)(iii) 
described above, this amendment would reduce regulatory burden and 
costs associated with such transactions imposed under the current rule.
    We received no specific comments on these proposed amendments to 
Sec.  5.33 and adopt them as proposed.
    Changes in permanent capital (12 CFR 5.46). Under 12 CFR 5.46, a 
national bank must submit an application to the OCC and receive prior 
approval for certain increases or decreases to the bank's permanent 
capital accounts. In addition, a national bank must submit an after-
the-fact notice of all increases or decreases to the bank's permanent 
capital accounts. Furthermore, pursuant to 12 U.S.C. 57, the OCC must 
certify all increases to a national bank's permanent capital accounts 
resulting from cash or other assets for the increase to be considered 
valid. The purpose of these requirements is to inform the OCC whenever 
the bank's board of directors decides to change the capital structure 
of the institution, including when accepting additional funds from a 
parent holding company, issuing new shares or stock, or redeeming an 
existing issue of preferred stock.
    The OCC receives a number of applications and notices for changes 
to permanent capital that arise solely from applying U.S. generally 
accepted accounting principles (GAAP). For example, U.S. GAAP may allow 
a national bank to revalue certain balance sheet accounts, including 
permanent capital accounts, for a period after the conclusion of a 
merger or acquisition. As 12 U.S.C. 1831n generally requires all 
insured depository institutions, including national banks, to apply 
U.S. GAAP when preparing their financial statements, there is limited 
value in requiring licensing filings or certifications solely because 
the bank is complying with that statute by applying U.S. GAAP. These 
accounting adjustments often are not material and typically are 
reviewed by the bank's internal accounting staff and external auditors. 
In addition, many of the accounting adjustments relate back to 
transactions reviewed or approved by the OCC under other rules, such as 
mergers, acquisitions, or divestitures. Furthermore, these accounting 
adjustments do not result in increases from cash paid or other assets 
and therefore do not require certification by the OCC pursuant to 12 
U.S.C. 57.
    We proposed to amend Sec.  5.46 to create an exemption for national 
banks from the prior approval, notification, and certification 
requirements for all changes to permanent capital that result solely 
from application of U.S. GAAP, and do not otherwise involve the receipt 
of cash or other assets. However, proposed Sec.  5.46 would continue to 
require a notice for material accounting adjustments, which the 
amendment defines as an increase or decrease greater than 5 percent of 
the bank's total

[[Page 8085]]

permanent capital prior to the adjustments in the most recent quarter, 
or if the national bank is subject to a letter, order, directive, 
written agreement, or otherwise that is related to changes in permanent 
capital. The national bank would be required to provide the notice 
within 30 days after the end of the quarter in which the material 
accounting adjustment occurred, and include the amount of the 
adjustment, a description, and a citation to the applicable U.S. GAAP 
provision.
    The OCC did not propose a similar change to Sec.  5.45, Increases 
in permanent capital of a Federal stock savings association. Section 
5.45 requires a Federal savings association to submit an application to 
the OCC and receive prior approval for increases to its permanent 
capital accounts under the same circumstances that national banks are 
required to submit an application under Sec.  5.46(g)(1)(ii). However, 
unlike the national bank rule, Sec.  5.45 requires an after-the-fact 
notice of the increase only if the savings association was required to 
obtain prior approval of the increase. In addition, there is no 
statutory requirement that the OCC certify the increase in capital. For 
these reasons, an amendment similar to the one adopted for Sec.  5.46 
is not needed for Sec.  5.45.
    The OCC, however, did propose a clarifying change to Sec.  
5.45(g)(4)(i). The current wording of that section is unclear to 
whether a Federal savings association that increases its permanent 
capital account must file a notice for all increases, rather than only 
in the circumstances in which the savings association is required to 
obtain prior approval. In adopting this provision, the OCC intended the 
notice to be filed only in cases in which prior approval was required. 
We proposed to amend Sec.  5.45(g)(4)(i) to specifically provide that 
an after-the-fact notice is required only if the capital increase was 
subject to prior approval by the OCC.
    We received no specific comments on the proposed amendments to 
Sec. Sec.  5.46 and 5.45 and adopt them as proposed.
    Additional technical changes to 12 CFR part 5. The proposed rule 
also included additional technical changes to 12 CFR part 5. First, we 
proposed to amend Sec.  5.8, Public notice, to provide that the public 
notice of a licensing-related filing must include the closing date of 
the 30-day public comment period only if this information is available 
at the time of publication. We proposed this change because the OCC 
treats the comment period differently in business combinations than in 
other transactions. For other transactions, the comment period starts 
when the public notice is published. For business combinations, the 
comment period starts on the latest of the publication date, the date 
when the OCC makes the application available in the OCC's FOIA Reading 
Room, or the date when the OCC publishes the application in the OCC 
Weekly Bulletin. When the national bank or Federal savings association 
files the application with the OCC and publishes the notice, it 
typically would not know when the other two events will occur, and so 
would not know the comment period closing-date for these transactions 
at the time the public notice is published. However, in order to assist 
the public in determining this date, the proposed rule required that 
the notice include a statement indicating that information about the 
transaction, including the comment period closing-date, may be found in 
the OCC's Weekly Bulletin.
    Second, for a similar reason, we proposed a technical correction to 
paragraph (i) of 12 CFR 5.33, Business combinations involving a 
national bank or Federal savings association. In general, paragraph (i) 
provides that a business reorganization filing or a filing that 
qualifies for a streamlined application is deemed approved by the OCC 
on the latter of the 45th day after the OCC receives the application or 
the 15th day after the close of the public comment period. However, 
because the 30-day public comment period for business combinations 
starts on the later of the date that the filing is published in the OCC 
Weekly Bulletin or the date it is available in the OCC's FOIA Reading 
Room, and because this date will always be after the OCC receives the 
application, 15 days after the close of the public comment period 
always will be later than the 45th day after the OCC receives the 
application. Therefore, the reference to the 45-day period in Sec.  
5.33(i) is unnecessary and confusing, and we proposed to remove it.
    Third, we proposed to correct inaccurate cross-references in 
paragraphs (j)(3) and (4) of Sec.  5.21, Federal mutual savings 
association charter and bylaws. Specifically, the references to 
paragraphs (j)(2) would be changed to paragraph (j)(3).
    Fourth, we proposed to correct an inaccurate cross-reference in 
Sec.  5.33(o)(3)(i) by replacing the reference to paragraph (n)(3) with 
paragraph (o)(3).
    Fifth, we proposed to correct an inaccurate cross-reference to the 
definition of the term ``tax-qualified employee stock benefit plan'' in 
Sec.  5.50(f)(2)(ii)(E) by replacing ``Sec.  192.2(a)(39)'' with 
``Sec.  192.25.''
    Lastly, we proposed to amend Sec.  5.66, Dividends payable in 
property other than cash, to provide that a national bank must submit a 
request for prior approval of a non-cash dividend to the appropriate 
OCC licensing office. Currently, this section provides that the OCC 
must approve a non-cash dividend but does not indicate where a bank 
must submit the request for approval. The only direction provided in 
OCC dividend rules as to where a dividend application should be filed 
is contained in Sec.  5.64(c)(3), which provides that a national bank 
must submit its request for prior approval for cash dividends to the 
appropriate OCC supervisory office. Because the OCC reviews non-cash 
dividends in the appropriate licensing office, and not the appropriate 
supervisory office, the amendment to Sec.  5.66 would remove any 
confusion as to where a bank must submit non-cash dividend 
applications.
    We received no specific comments on these proposed technical 
amendments and adopt them as proposed.
    The OCC also is adopting additional technical and procedural 
amendments not included in the proposed rule. First, we are replacing 
the term ``main office'' with ``home office'' both in paragraph 
(j)(3)(iii) of Sec.  5.21, Federal mutual savings association charter 
and bylaws, and in paragraph (j)(2)(iii) of Sec.  5.22, Federal stock 
savings association charter and bylaws. ``Main office'' is the 
appropriate term for national banks, while ``home office'' is the 
appropriate term for Federal savings associations. Second, we are 
making a change in OCC procedure in paragraph (e)(2)(ii) of Sec.  5.48, 
Voluntary liquidation of a national bank or Federal savings 
association. Currently, this provision requires a bank or savings 
association to receive the OCC's supervisory non-objection to a 
liquidation plan before beginning the liquidation. We are amending this 
provision to allow a non-supervisory office of the OCC, such as the OCC 
Licensing Division, to provide this non-objection.
    National Bank Director Oaths (12 CFR 7.2008).
    Twelve U.S.C. 73 sets forth the requirements for national bank 
director oaths. Specifically, this statute requires that, when 
appointed or elected, each national bank director must take an oath 
that he or she (1) will diligently and honestly administer the affairs 
of the bank, (2) not knowingly violate or willingly permit to be 
violated any applicable laws, and (3) is the owner in good faith of the 
requisite shares of stock and that the stock is not pledged as security 
for any loan or debt. The statute requires the oath to be notarized and 
immediately transmitted to the

[[Page 8086]]

Comptroller and filed in the Comptroller's office for 10 years.
    Twelve CFR 7.2008 implements this statutory requirement. 
Specifically, Sec.  7.2008 provides that: (1) A notary public, 
including one who is a director but not an officer of the national 
bank, may administer the oath of directors; (2) each director attending 
the organization meeting must execute either a joint or individual 
oath, and a director not attending the organization meeting (the first 
meeting after the election of the directors) must execute the 
individual oath; (3) a director must take another oath upon re-
election, notwithstanding uninterrupted service; and (4) the national 
bank must file the original executed oaths of directors with the OCC 
and retain a copy in the bank's records in accordance with the 
Comptroller's Corporate Manual filing and recordkeeping instructions 
for executed oaths of directors. This provision also notes that 
appropriate sample oaths are located in the Comptroller's Corporate 
Manual.
    Twelve CFR 7.2008 was included in the third Federal Register EGRPRA 
notice and the OCC did not receive any comments on this provision in 
response to this request for comment. However, after conducting its own 
internal review, the OCC proposed to amend Sec.  7.2008 to clarify when 
the director oath must be taken. As proposed, Sec.  7.2008 would follow 
the statute more closely by requiring a director to execute either a 
joint or individual oath at the first meeting of the board of directors 
that the director attends after the director is appointed or elected. 
This proposed amendment also would remove the reference to 
``organizational meeting,'' which we believe does not adequately convey 
when a director must execute the oath in all cases, including when a 
director is appointed.
    The OCC also proposed to replace obsolete references to the 
Comptroller's Corporate Manual with references to www.occ.gov \19\ and 
to correct a spelling error in Sec.  7.2008.
---------------------------------------------------------------------------

    \19\ The OCC's Web site contains general instructions for filing 
the oath of directors and a sample individual oath and joint oath at 
http://www.occ.gov/publications/publications-by-type/licensing-manuals/index-licensing-manuals.html.
---------------------------------------------------------------------------

    We received no specific comments on these proposed amendments to 
Sec.  7.2008 and adopt them as proposed.
    Fidelity Bonds (12 CFR part 7, Sec. Sec.  163.180, 163.190, and 
163.191).
    Twelve CFR 7.2013 requires all national bank officers and employees 
to have adequate fidelity bond coverage. It also states that the bank's 
directors may be liable for losses incurred in the absence of such 
bonds and that directors should not serve as bond sureties. 
Furthermore, the rule provides that the bank's directors should 
determine the appropriate amount of bond coverage, premised on 
consideration of the bank's internal auditing safeguards, number of 
employees, deposit liabilities, and amount of cash and securities 
normally held by the bank.
    Twelve CFR 163.180(c), 163.190, and 163.191 contain the fidelity 
bond rules applicable to Federal savings associations. While Sec. Sec.  
163.190 and 7.2013 are similar, the Federal savings association rules 
are more prescriptive and apply not only to officers and employees, but 
also to directors and agents. In addition, under Sec.  163.190(b), the 
Federal savings association's management must determine the amount of 
coverage, based on the potential risk exposure. Section 163.190(c) also 
directs the Federal savings association to provide supplemental 
coverage beyond that provided by the insurance underwriter industry's 
standard forms if the board determines that additional coverage is 
warranted. Furthermore, Sec.  163.190(d) requires the Federal savings 
association's board of directors to approve the association's bond 
coverage, with this approval documented in the board's minutes, and to 
review annually the adequacy of coverage. Section 163.191 provides an 
alternative means of calculating the bond coverage that is appropriate 
for a Federal savings association agent, in lieu of the calculation 
provided in Sec.  163.190. Finally, Sec.  163.180(c) states that a 
Federal savings association maintaining a bond required by Sec.  
163.190 must promptly notify the bond company and file proof of loss 
for any covered loss that is greater than twice the bond's deductible 
amount.
    Twelve CFR 163.180(c), 163.190, and 163.191 were included in the 
fourth Federal Register EGRPRA notice, and the OCC did not receive any 
comments on these rules in response to this request for comment. 
However, after conducting its own internal review, the OCC finds that 
some of the requirements are unnecessary or overly detailed, and more 
appropriately addressed in guidance or left to the institution's 
judgment, as is currently the case for national banks. The OCC also 
finds that other provisions in the savings association rules should be 
continued and applied, as modified, to national banks. Therefore, the 
OCC proposed to remove Sec. Sec.  163.180(c), 163.190 and 163.191 and 
apply Sec.  7.2013, as amended and as described below, to Federal 
savings associations.
    As a result of removing Sec.  163.190, Federal savings associations 
would no longer be required to maintain fidelity bonds for directors 
who do not also serve as officers or employees. We proposed to remove 
this requirement because fidelity bond coverage generally is not 
available for directors unless they also are acting as officers or 
employees. In addition, the activities in which outside directors 
engage generally do not expose financial institutions to the types of 
losses covered by fidelity bonds. Furthermore, as a result of this 
proposed amendment, the board of directors of a Federal savings 
association no longer would be required to assess annually the adequacy 
of bond coverage for the association officers and employees.
    We also proposed to remove the requirement in Sec.  163.180(c) 
because we find that a regulatory requirement that a Federal savings 
association notify its bond insurance company and file proof of loss 
for certain claims is unnecessary. The terms of a fidelity bond 
contract itself require such notification, and it is a prudent business 
practice for a financial institution. Furthermore, the Corporate and 
Risk Governance booklet of the Comptroller's Handbook states that 
``[a]ll fidelity bonds require that a loss be reported to the bonding 
company within a specified time after a reportable item comes to the 
attention of management. Management should diligently report all 
potential claims . . . because failure to file a timely report may 
jeopardize coverage for that loss.'' \20\
---------------------------------------------------------------------------

    \20\ Corporate and Risk Governance booklet of the Comptroller's 
Handbook, p. 63 (July 2016).
---------------------------------------------------------------------------

    In addition, we proposed to modify the treatment of fidelity bond 
coverage for certain agents of Federal savings associations. Currently, 
Sec.  163.191 requires fidelity bond coverage for any agent who has 
control over or access to cash, securities, or other property of a 
Federal savings association. There is no comparable requirement for 
agents of national banks. Instead of a mandatory requirement for agent 
bonding, we proposed to amend Sec.  7.2013 to provide that the boards 
of directors of both banks and savings associations should consider 
whether agents who have access to assets of a bank or savings 
association also should have fidelity bond coverage. The OCC recognizes 
that agents providing financial services, such as cash handling or 
payment processing, to a financial institution potentially expose that 
institution to significant risks. The OCC believes that these risks and 
associated risk mitigation strategies, including the scope and size of 
fidelity

[[Page 8087]]

bond coverage for agents, are best addressed by the board of directors.
    Finally, Sec.  7.2013(b) currently provides that a national bank's 
board of directors should determine the appropriate amount of fidelity 
bond coverage. This language is in contrast to that in Sec.  163.190, 
which makes clear that this determination is mandatory. For safety and 
soundness reasons, the OCC believes that both national bank and Federal 
savings association boards of directors should be required to determine 
the appropriate bond coverage and proposed to amend Sec.  7.2013(b) to 
make clear that this determination is a mandatory requirement. We also 
proposed to amend this section to allow a board committee, as an 
alternative to the entire board, to assess fidelity bond coverage.
    We did not received any specific comments on these proposed 
amendments to part 7 and Sec. Sec.  163.180, 163.190, and 163.191 and 
adopt them as proposed.

Assessments (12 CFR Part 8)

    The OCC collects semiannual assessments from national banks, 
Federal savings associations, Federal branches, and Federal agencies in 
accordance with 12 CFR part 8. The OCC is adopting a technical 
amendment to the definition of ``[f]ull-service trust Federal savings 
association'' in 12 CFR 8.6(c)(iv) not included in the proposed rule. 
The amendment removes the extraneous word ``trust'' from the title, 
which corrects a drafting error from an earlier rulemaking in which the 
OCC combined certain rules of the OCC and the former OTS.\21\ This 
amendment will not affect the method for collecting assessments or the 
amount of assessments collected by the OCC.
---------------------------------------------------------------------------

    \21\ 76 FR 43566 (July 21, 2011).
---------------------------------------------------------------------------

Fiduciary Activities (12 CFR Parts 9 and 150)

    Twelve CFR parts 9 and 150 set forth the standards that apply to 
the fiduciary activities of national banks and Federal savings 
associations, respectively. Parts 9 and 150 were included in the first 
EGRPRA Federal Register notice, and the OCC proposed revisions to these 
rules to reflect some of the public comments received in response to 
this notice. One commenter to the proposed rule provided a number of 
comments on these revisions. These comments and the revisions as 
adopted in this final rule are discussed below.
    Custody of fiduciary assets. Sections 9.13 and 150.230 require a 
national bank or Federal savings association, respectively, to place 
all fiduciary account assets in the joint custody or control of no 
fewer than two of the fiduciary officers or employees designated by the 
bank's or savings association's board of directors or to maintain 
fiduciary investments off premises, if consistent with applicable law 
and if the bank maintains adequate safeguards and controls. The OCC 
proposed to amend Sec.  9.13 to add a new Sec.  150.245 to provide 
relief for arrangements under which a national bank or Federal savings 
association is deemed a fiduciary solely because it provides investment 
advice for a fee. If, under such an arrangement the bank or savings 
association is a fiduciary merely because it provides such advice and 
does not have investment discretion, the OCC does not believe that it 
should be required to have custody of the fiduciary assets. 
Specifically, the OCC proposed to amend Sec.  9.13(a) to provide that a 
national bank that is deemed a fiduciary based solely on its provision 
of investment advice for a fee, as that capacity is defined in 12 CFR 
9.101(a), is not required to serve as custodian when offering those 
fiduciary services. Similarly, proposed Sec.  150.245 provides that a 
Federal savings association that is deemed a fiduciary based solely on 
its provision of investment advice for a fee, as that capacity is 
defined in 12 CFR 9.101(a), would not be required to maintain custody 
or control of fiduciary assets as set forth in Sec.  150.220 or 
150.240.
    We received one comment on this proposed change, which suggested 
that the proposal does not go far enough in that it leaves many other 
arrangements unaddressed and may raise uncertainty about common 
scenarios that arise even in traditional fiduciary relationships, such 
as when a client does not wish to grant the bank custody of fiduciary 
assets. It suggested that the final rule also provide that a national 
bank that has not been granted custody of fiduciary assets may still 
act as a fiduciary with respect to those assets, if consistent with 
applicable law.
    The OCC does not agree with the comment. Such arrangements may pose 
additional risks to account beneficiaries as well as additional 
liabilities to bank fiduciaries. The proposed amendment was 
deliberately and narrowly focused on situations where a bank or Federal 
savings association is deemed a fiduciary based solely on the provision 
of investment advice for a fee, as that capacity is defined in Sec.  
9.101(a). Banks that act in any other fiduciary capacity, such as 
directed trustees or banks that have sole or shared investment 
discretion, still are required to maintain custody of fiduciary assets 
in accordance with Sec.  9.13(a).
    However, to avoid any confusion about the intent of the amendment 
the final rule specifically cross-references the definition of 
``investment advisor'' instead of referencing the provision of 
investment advice for a fee and states that, in order not to be 
required to serve as custodian, the bank may not have any other 
specified fiduciary capacity. Specifically, as adopted in the final 
rule, this amendment now provides that a bank that is deemed a 
fiduciary based solely on its capacity as investment advisor, as that 
capacity is defined in Sec.  9.101(a), and has no other fiduciary 
capacity as enumerated in Sec.  9.2(e) is not required to serve as 
custodian when offering those fiduciary services. This language is 
substantively identical to the language in proposed Sec.  9.13 but 
provides banks with more clarity regarding their obligations. We have 
made corresponding changes to Sec.  150.245.
    Deposits of securities with state authorities. Pursuant to 12 
U.S.C. 92a(f), Sec.  9.14(a) provides that if a state requires 
corporations acting in a fiduciary capacity to deposit securities with 
state authorities for the protection of private or court trusts, a 
national bank must make a similar deposit with state authorities before 
acting as a private or court-appointed trustee in that state. If the 
state authorities refuse to accept the deposit, the bank must instead 
deposit the securities with the Federal Reserve Bank of the district in 
which the national bank is located. Section 150.490 contains a nearly 
identical requirement for Federal savings associations, except that 
savings associations must deposit the securities with state authorities 
or the applicable Federal Home Loan Bank. The OCC proposed to amend 
Sec.  9.14(a) to permit national banks to deposit these securities 
either with the Federal Home Loan Bank of which the bank is a member or 
with the appropriate Federal Reserve Bank. Because Federal savings 
associations may not be members of a Federal Reserve Bank, the OCC 
cannot make a reciprocal amendment to Sec.  150.490.
    One commenter requested that the OCC amend Sec.  9.14 further to 
provide that if a bank makes a best effort to comply with this 
provision but is unable to meet the deposit requirement because of a 
state's refusal or inaction, the bank will be deemed to have complied. 
The OCC does not agree with this suggested change. Twelve U.S.C. 92a(f) 
specifically requires national banks to make these deposits. Thus, 
amending 12 CFR 9.14 to deem a bank

[[Page 8088]]

to have complied when it has not actually made the deposit would be 
inconsistent with the plain language of the statute. Furthermore, the 
OCC believes that the option of depositing such funds with either a 
Federal Reserve Bank or a Federal Home Loan Bank, in the case of 
national banks, or with a Federal Home Loan Bank, in the case of 
Federal savings associations, provides these entities with a feasible 
method of complying with the regulation and statute when a state 
refuses to accept the deposit. The OCC therefore adopts the amendment 
as proposed.
    Collective investment funds. Section 9.18 permits a national bank, 
where consistent with applicable law, to invest assets that it holds as 
fiduciary in specified collective investment funds. Section 150.260 
permits Federal savings associations also to invest funds in a 
fiduciary account in collective investment funds, and provides that in 
establishing and administering such funds, Federal savings associations 
must comply with the requirements of Sec.  9.18. Therefore, the 
amendments to Sec.  9.18 made by this rulemaking also apply to Federal 
savings associations.
    Section 9.18(b)(1) requires a national bank to establish and 
maintain each collective investment fund in accordance with a written 
plan approved by a resolution of the bank's board of directors or by a 
committee authorized by the board. This provision also requires the 
bank to make a copy of the plan available for public inspection at its 
main office during all banking hours and to provide a copy of the plan 
to any person who requests it.
    In response to a comment letter received as part of the EGRPRA 
review process, the OCC proposed to amend Sec.  9.18(b)(1) to require 
instead that the bank make a copy of the investment fund plan available 
to the public either at its main office or on its Web site. Although it 
is appropriate to provide the public access to this plan, we agree that 
requiring a bank to make the plan available for public inspection at 
its main office is unnecessarily burdensome and is not the most 
efficient method for public inspection in today's electronic 
environment. The proposal maintained the option for access to the plan 
at a main office for those small banks that may not have a Web site, 
and also clarified that a bank may satisfy the requirement to provide a 
copy of the plan to any person who requests it by providing it in 
either written or electronic form.
    The one commenter that discussed this amendment supported it, 
noting that it would allow banks to lower distribution costs, while 
satisfying participants' requests for the information through 
electronic mail or an internet Web site. The OCC adopts this amendment 
as proposed.
    Section 9.18(c)(2) provides that a national bank may collectively 
invest assets that it holds as fiduciary in a mini-fund. A mini-fund is 
a fund that a bank maintains for the collective investment of cash 
balances received or held by the bank in its capacity as trustee, 
executor, administrator, guardian, or custodian under the Uniform Gifts 
to Minors Act that the bank considers too small to be invested 
separately in an economically efficient manner. This section further 
provides that the total assets in a mini-fund must not exceed 
$1,000,000 and the number of participating accounts must not exceed 
100.
    A comment on this rule received as part of the EGRPRA review 
process requested that the OCC periodically adjust the asset limit for 
mini-funds in Sec.  9.18(c)(2) to account for inflation and economic 
growth. This commenter also noted that the current limit of $1 million 
was last updated in 1996 \22\ and suggested that the OCC raise the 
threshold to at least $1.5 million, which is the inflation-adjusted 
value of $1 million in 1996. The OCC agreed with this commenter and 
proposed to amend Sec.  9.18(c)(2) to increase the threshold to 
$1,500,000, with an annual adjustment for inflation. The OCC believes 
this change will continue to make mini-funds a feasible investment 
option for national banks.
---------------------------------------------------------------------------

    \22\ See 61 FR 68554 (Dec. 30, 1996).
---------------------------------------------------------------------------

    The same commenter supported the increased threshold in the 
proposed rule. However, this commenter also noted that this proposed 
threshold may be too low to provide a feasible investment option for 
many banks and asked that the OCC consider adjustments as needed. The 
OCC does not believe that a threshold higher than the one proposed is 
necessary at this time, as it reflects the inflation adjusted value of 
the original threshold. Furthermore, this amendment provides that the 
OCC will adjust this amount to reflect inflation on a yearly basis.
    This commenter also recommended a number of additional amendments 
to Sec.  9.18. Section 9.18(b)(5)(iii) provides that a bank managing 
certain collective investment funds invested primarily in real estate 
or other assets that are not readily marketable may require a prior 
notice period not to exceed one year for withdrawals. The commenter 
requested that the OCC amend this provision to replace references to 
``real estate'' with references to ``assets that are illiquid or 
otherwise not readily marketable'' so that other illiquid assets such 
as guaranteed investment contracts, synthetic investment contracts, or 
separate account contracts with limits on transferability, may be 
recognized. The commenter also requested that the OCC amend the rule to 
permit national banks to require advance withdrawal notices longer than 
one year so that banks would not need to request such an extension from 
the OCC on a case-by-case basis. The OCC does not agree with either of 
these suggestions. The introduction of the term ``assets that are 
illiquid'' could be interpreted too broadly and, for example, could 
result in national banks denying participants access to funds when a 
collective investment fund holds assets that become illiquid due to 
adverse market conditions. The OCC also believes that banks should 
continue to be required to support, on a case-by-case basis, any 
request to extend the advance notice requirement.
    Lastly, this commenter requested that the OCC allow flexibility in 
the timing of a final audit required by 12 CFR 9.18(b)(6), which 
requires a national bank administering a collective investment fund to 
prepare a financial audit of the fund once every 12 months. The 
commenter specifically recommended allowing a bank that is terminating 
a fund within 15 months after the last audit to wait until the fund has 
terminated to complete the final audit. The OCC does not agree with 
this recommendation. In many cases, banks should be able to plan fund 
terminations at or just prior to the end of a plan year. To the extent 
that circumstances beyond their control prevent the fund from closing 
as planned, those same circumstances may delay the closing beyond 15 
months, delaying the audit without reducing expenses.
    For the reasons stated above, the OCC adopts the proposed 
amendments to Sec.  9.18 as proposed.
    Additional suggested amendments. This commenter provided other 
suggested amendments to the OCC's fiduciary rules, most of which the 
commenter previously included in its response to the first Federal 
Register EGRPRA notice. The OCC did not include these amendments in the 
proposed rule, and has not included them in the final rule, for the 
reasons discussed below.
    First, the commenter requested that we amend Sec.  9.8(a), which 
requires national banks to maintain fiduciary account records for a 
period of three years from the later of the termination

[[Page 8089]]

of the account or the termination of any litigation relating to an 
account, to provide instead that these account records be retained for 
a ``necessary period'' or to refer to applicable law on the retention 
of documents. The term ``necessary period'' is too vague and the OCC 
declined to propose this change.
    Second, this commenter also requested that the OCC amend 12 CFR 
9.10(b)(1), which imposes requirements and restrictions on national 
banks that hold fiduciary funds that are awaiting investment or 
distribution by the bank. Section 9.10(b) specifically requires a bank 
to collateralize funds held in a fiduciary account if the funds are not 
insured by the FDIC. The commenter recommended that the OCC not require 
a bank to collateralize funds if the funds are directed by a third 
party or in the governing instrument. The commenter noted that in these 
situations, a third party and not the bank decides how to hold the 
funds at the bank, thus eliminating conflict of interest or self-
dealing on the part of the bank. However, national banks are required 
to collateralize deposits by statute regardless of whether the bank has 
discretion to deposit fiduciary funds at the bank.\23\ This 
collateralization is for protection of the trust funds. Customers 
providing direction to a bank to self-deposit may not fully understand 
the protection that they would forego by doing so. Also, in many cases, 
the party that could direct a bank to self-deposit may not be the party 
protected by the pledge. The directing party may benefit from foregoing 
the pledge, but not share in the risk. For these reasons, the OCC 
declined to include this amendment in the proposed rule.
---------------------------------------------------------------------------

    \23\ 12 U.S.C. 92a(d).
---------------------------------------------------------------------------

    Third, 12 CFR 9.10(b)(2) stipulates the types of collateral with 
which a bank may satisfy the requirements of 12 CFR 9.10(b)(1). This 
commenter requested that the OCC expand the list of acceptable 
collateral listed in Sec.  9.10(b)(2) to include other instruments that 
provide protection from loss similar to that provided by surety bonds, 
and the commenter proposed language that would allow a bank to 
determine whether a collateral instrument provides such ``similar 
protection.'' The OCC finds that this proposed change is overly broad 
and subject to misinterpretation, and, therefore, did not include it in 
the proposed rule.
    Lastly, this commenter urged the OCC to address electronic 
recordkeeping for fiduciary accounts in 12 CFR 9.8, noting that such 
guidance would provide clarity when state law is silent as to the 
medium of recordkeeping. The commenter noted that many bank fiduciaries 
are confused as to which fiduciary documents are covered by the 
Electronic Signatures in Global and National Commerce Act (E-Sign 
Act).\24\ The commenter requested that the OCC expressly permit the 
electronic retention of documents to satisfy regulatory requirements.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 7001 et seq.
---------------------------------------------------------------------------

    The OCC notes that section 101 of the E-Sign Act provides that 
certain records may not be invalidated merely by virtue of being in an 
electronic format. However, section 103 of the E-Sign Act exempts from 
section 101 contracts or other records to the extent that they are 
governed by statutes, regulations, or other rules of law governing the 
creation and execution of wills, codicils, or testamentary trusts.\25\ 
Generally, wills, codicils, and testamentary trusts are governed by 
state law. Section 9.8 does not prohibit the electronic recordkeeping 
of fiduciary documents. However, in light of the provisions in the E-
Sign Act, the authority to declare that fiduciary records may be kept 
electronically if such records are subject to state law is unclear. 
Therefore, electronic recordkeeping is permissible for purposes of part 
9 if such recordkeeping is permitted by state law, and we decline to 
amend our rule specifically to permit electronic retention of such 
fiduciary documents.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 7003.
---------------------------------------------------------------------------

Municipal Securities Dealers (12 CFR Part 10)

    Part 10 requires that a national bank (or a separately identifiable 
department or division of a national bank) that acts as a municipal 
securities dealer, and an associated person that acts as a municipal 
securities principal or representative, file certain forms with the 
OCC. Specifically, Sec.  10.2 requires national banks to submit to the 
OCC Form MSD-4 (Uniform Application for Municipal Securities Principal 
or Municipal Securities Representative Associated with a Bank Municipal 
Securities Dealer) before associating with a municipal securities 
principal or municipal securities representative. Within 30 days of 
terminating such person's association with the bank, the bank must file 
with the OCC Form MSD-5 (Uniform Termination Notice for Municipal 
Securities Principal or Municipal Securities Representative Associated 
with a Bank Municipal Securities Dealer). Although there is no 
equivalent regulation applicable to Federal savings associations, these 
institutions and associated persons currently file these same forms 
with the OCC pursuant to Municipal Securities Rulemaking Board (MSRB) 
rules, as incorporated in an OTS Chief Counsel Opinion.\26\
---------------------------------------------------------------------------

    \26\ OTS Chief Counsel Opinion (OTS Op. Oct. 29, 2001) (noting 
that a Federal savings association engaged in municipal securities 
underwriting and dealing must comply with applicable laws and 
regulations, financial reporting requirements, and Municipal 
Securities Rulemaking Board (MSRB) rules). MSRB rules include 
requirements to file forms with the ``appropriate regulatory 
agency.'' See, e.g., MSRB Rule G-7. The Exchange Act provides that 
the OCC is the appropriate regulatory agency with respect to a 
municipal securities dealer that is a Federal savings association. 
15 U.S.C. 78c(a)(34)(A)(i).
---------------------------------------------------------------------------

    Part 10 was included in the fourth Federal Register EGRPRA notice 
and the OCC did not receive any comments on this rule in response to 
this request for comment. However, in order to coordinate and harmonize 
the requirements applicable to these practices, the OCC proposed to 
codify this OTS opinion in OCC regulations by amending part 10 to 
include Federal savings associations. In addition, the OCC proposed 
minor technical changes to update part 10. First, we proposed to update 
the citation to MSRB Rule G-7(b) in Sec.  10.2(a) to reflect MSRB 
revisions to this rule. Second, we proposed to amend Sec.  10.2(c) to 
allow national banks to obtain Forms MSD-4 and MSD-5 \27\ on http://www.banknet.gov/ instead of by contacting the OCC in writing.\28\ 
Third, we proposed to replace the street address of the MSRB, provided 
to assist institutions in obtaining MSRB rules, with the MSRB's 
internet address.
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    \27\ We note that Forms MSD-4 and MSD-5 are uniform forms 
developed by the Federal Reserve Board, FDIC and OCC and that these 
forms expressly state that they be mailed to the appropriate 
regulatory agency. Therefore, the OCC cannot amend part 10 to 
provide for the electronic filing of these forms until the Federal 
Reserve Board, FDIC, and OCC jointly decide to permit electronic 
filing.
    \28\ BankNet is the OCC's secure Web site for communicating with 
and receiving information from national banks and Federal savings 
associations. BankNet is only available to OCC-regulated 
institutions and is not available to the public.
---------------------------------------------------------------------------

    We did not receive any specific comments on the proposed 
codification and technical amendments and adopt them as proposed. This 
codification will not change the requirements applicable to Federal 
savings associations. Furthermore, by codifying this filing in OCC 
rules instead of referring to it in an opinion letter, this change will 
identify more clearly this requirement for Federal savings 
associations.

Securities Exchange Act Rules (12 CFR Parts 11 and 194)

    Twelve CFR parts 11 and 194 set forth the periodic reporting 
requirements for

[[Page 8090]]

national banks and Federal savings associations, respectively, with 
securities registered under the Securities Exchange Act of 1934 
(Exchange Act). These rules were included in the fourth Federal 
Register EGRPRA notice, and the OCC did not receive any specific 
comments on these rules in response to this request for comment, 
although we previously had received more general comments requesting 
that the OCC permit electronic filings. In light of the similar 
statutory provisions that apply to national banks and Federal savings 
associations as implemented by these parts, the OCC proposed to remove 
part 194 and amend part 11 to include Federal savings associations. In 
addition, we proposed to amend Sec.  11.2 pursuant to the Jumpstart Our 
Business Startups Act (JOBS Act),\29\ to permit the electronic filing 
of periodic reporting requirements, and to make technical, non-
substantive edits and clarifications to part 11. These changes would 
reduce duplication and create efficiencies by establishing a single set 
of rules for all entities supervised by the OCC with respect to the 
Exchange Act disclosure rules, while not changing the requirements 
applicable to national banks or Federal savings associations. These 
specific amendments are discussed below.
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    \29\ Public Law 112-106, 126 Stat. 306 (2012).
---------------------------------------------------------------------------

    Authority and OMB control number (Sec.  11.1). Section 11.1 sets 
forth the OCC's authority to issue rules for national banks with 
respect to the Exchange Act as well as the Office of Management and 
Budget (OMB) control number assigned to part 11 for purposes of the 
Paperwork Reduction Act (PRA). The OCC proposed to amend this section 
to include its authority with respect to Federal savings associations. 
We also proposed to remove the reference to the OMB control number, as 
it is not required to be included in regulatory text and the OCC has 
generally not included such numbers in recently published regulations.
    We did not receive any specific comments on these proposed 
amendments to Sec.  11.1 and adopt them as proposed. This removal is 
technical and will not affect the OCC's responsibilities under the PRA.
    Reporting requirements for registered national banks (Sec.  11.2). 
The OCC proposed to add a new paragraph (c) to Sec.  11.2 to state 
explicitly that references to registration requirements under the 
Securities Act of 1933 (Securities Act) pertain to the registration 
requirements under 12 CFR part 16. We did not receive any specific 
comments on this proposed amendment and therefore adopt it as proposed. 
This change will clarify the applicable requirements for national banks 
and Federal savings associations.
    Emerging growth company eligibility (Sec.  11.2). The JOBS Act 
amended the Exchange Act to create a new class of issuer known as an 
emerging growth company.\30\ An emerging growth company is defined 
generally as an issuer that had total annual gross revenues of less 
than $1 billion during its most recently completed fiscal year.\31\ The 
JOBS Act provides scaled disclosure provisions for emerging growth 
companies, including, among other things: (1) An exemption from proxy 
statement requirements concerning shareholder approval of executive 
compensation under section 14A of the Exchange Act; \32\ (2) an 
exemption from proxy statement requirements concerning disclosure of 
executive compensation versus performance under section 14(i) of the 
Exchange Act; \33\ (3) a limitation of applicable time periods for 
disclosures required under Regulation S-K \34\ for selected financial 
data; \35\ (4) treatment as a smaller reporting company for purposes of 
executive compensation disclosures required under Regulation S-K, Item 
402; \36\ and (5) an exemption from auditor attestation provisions 
concerning internal financial reporting controls required by the 
Sarbanes-Oxley Act of 2002.\37\
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    \30\ JOBS Act, section 101(b), amending section 3(a) of the 
Exchange Act (15 U.S.C. 78c(a)).
    \31\ Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)).
    \32\ Exchange Act, section 14A(e) (15 U.S.C. 78n-1(e)).
    \33\ Exchange Act, section 14(i) (15 U.S.C. 78n(i)).
    \34\ 17 CFR 210.1-01 et seq.
    \35\ Exchange Act, section 13(a) (15 U.S.C. 78m(a)).
    \36\ 12 CFR 229.402.
    \37\ Public Law 107-204, section 404, 116 Stat. 789 (2002) (15 
U.S.C. 7262(b)).
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    The JOBS Act and the Exchange Act contain exclusions from emerging 
growth company eligibility that are based on public offerings that an 
issuer makes under the Securities Act. First, the JOBS Act provides 
that an issuer is not eligible for emerging growth company status if it 
engaged in a public securities offering pursuant to an effective 
Securities Act registration statement on or before December 8, 
2011.\38\ Second, the Exchange Act, as amended by the JOBS Act, 
provides that an issuer may not remain an emerging growth company 
beyond the close of the fiscal year following the fifth anniversary of 
the issuer's first securities offering under a Securities Act 
registration statement.\39\ Because national banks and Federal savings 
associations file registration statements under OCC regulations rather 
than the Securities Act, these exclusions do not technically apply to 
banks and savings associations.
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    \38\ JOBS Act, section 101(d) (15 U.S.C. 77b(note)).
    \39\ Exchange Act, section 3(a)(80) (15 U.S.C. 78c(a)(80)).
---------------------------------------------------------------------------

    Section 12(i) of the Exchange Act requires the OCC to issue 
substantially similar regulations as the Securities and Exchange 
Commission (SEC) for those provisions of the Exchange Act for which it 
is vested authority with respect to banks and savings associations.\40\ 
Parts 11 and 194 generally require national banks and Federal savings 
associations, respectively, with securities registered under sections 
12(b) or 12(g) of the Exchange Act \41\ to comply with certain Exchange 
Act rules. Therefore, pursuant to the JOBS Act, the OCC proposed to add 
a new paragraph (d) to Sec.  11.2 to clarify national bank and Federal 
savings association eligibility for emerging growth company treatment 
for those provisions of the Exchange Act that the OCC administers. The 
intent of this amendment is to ensure equivalent treatment of banks and 
savings associations with non-bank issuers. This amendment also would 
provide that a bank or savings association eligible for emerging growth 
company status may choose to forgo such exemption and instead comply 
with the requirements that apply to a bank or savings association that 
is not an emerging growth company. Furthermore, the amendment would 
provide that: (1) A bank or savings association is not an emerging 
growth company if it sold common equity securities on or before 
December 8, 2011, pursuant to a registration statement or offering 
circular filed under 12 CFR part 16 or 197, or under the former OTS 
rule at 12 CFR 563g; and (2) emerging growth company status for banks 
and savings associations terminates no later than the end of the fiscal 
year following the fifth anniversary of the first sale of its common 
equity securities pursuant to a registration statement or offering 
circular under 12 CFR parts 16, 197 or 563g.\42\
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    \40\ 15 U.S.C. 78l(i).
    \41\ 15 U.S.C. 78l(b), (g).
    \42\ The JOBS Act and the Exchange Act, as amended by the JOBS 
Act, contain equivalent restrictions for non-banks. However, these 
restrictions are based on when an issuer files a registration 
statement under the Securities Act.
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    We did not receive any specific comments on this proposed amendment 
to Sec.  11.2 and adopt it as proposed.
    Filing requirements and inspection of documents (Sec.  11.3). 
Several comments

[[Page 8091]]

received during the EGRPRA review process requested that the OCC permit 
national banks and Federal savings associations to submit forms and 
reports to the OCC electronically. The OCC agrees that electronic 
filings are more efficient and less costly for national banks and 
Federal savings associations, are more efficient for the OCC to review, 
and provide a quicker response time for banks and savings associations. 
Therefore, we proposed to amend part 11 to provide for the electronic 
submission of required filings.\43\
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    \43\ The OCC currently permits the electronic submission of a 
number of other filings, for example, Call Reports, and public 
welfare investment notifications and proposals.
---------------------------------------------------------------------------

    Section 11.3(a) currently requires national banks to submit by 
mail, fax, or otherwise four copies of all papers required to be filed 
with the OCC (pursuant to the Exchange Act or regulations thereunder) 
to the Securities and Corporate Practices (SCP) Division of the OCC. 
Through incorporation of SEC Rule 12b-11,\44\ part 194 requires Federal 
savings associations to file three copies of Exchange Act filings with 
the SCP Division. We proposed to amend Sec.  11.3(a)(1) to require 
instead that national banks and Federal savings associations submit one 
copy of their filings through electronic mail to the OCC at http://www.banknet.gov/.\45\
---------------------------------------------------------------------------

    \44\ 17 CFR 240.12b-11.
    \45\ As described elsewhere in this final rule, the OCC also is 
amending part 16, Securities offering disclosure rules, to provide 
for electronic submissions.
---------------------------------------------------------------------------

    The proposed rule also included an amendment to Sec.  11.3 to 
provide that documents may be signed electronically using the signature 
provision in SEC Rule 12b-11. SEC Rule 12b-11 provides that required 
signatures for Exchange Act filings may be signed using typed 
signatures or duplicated or facsimile versions of manual signatures. 
Where typed, duplicated, or facsimile signatures are used, each 
signatory to the filing is required to ``manually sign a signature page 
or other document authenticating, acknowledging, or otherwise adopting 
his or her signature that appears in the filing.'' \46\ As provided by 
Rule 12b-11, the national bank or Federal savings association must 
retain this document for five years and, upon request, provide a copy 
to the OCC.
---------------------------------------------------------------------------

    \46\ Id.
---------------------------------------------------------------------------

    The OCC also proposed an exception to the general electronic filing 
requirement to permit the use of paper filings where unanticipated 
technical difficulties prevent the use of electronic filings. This 
exception is modeled on the SEC's General Rules and Regulations for 
Electronic Filings, Regulation S-T, Rule 201,\47\ which provides a 
temporary hardship exemption to the SEC's Electronic Data Gathering, 
Analysis, and Retrieval system (EDGAR) filing requirements in cases of 
unanticipated technical difficulties. Similar to Rule 201, the OCC 
notes that use of this exception should be extremely limited and should 
be relied upon only when unusual and unexpected circumstances create 
technical impediments to the use of electronic filings. However, this 
exception would not be available for statements of beneficial ownership 
that must be made through the FDICconnect platform, which requires 
electronic filings.\48\
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    \47\ 17 CFR 232.201.
    \48\ See 70 FR 46403 (Aug. 10, 2005). FDICconnect is the secure 
internet channel for FDIC-insured institutions to conduct business 
and exchange information with the FDIC.
---------------------------------------------------------------------------

    Current Sec.  11.3(a)(3)(i) provides that the date on which papers 
are actually received by the OCC shall be the date of filing, if the 
person or bank filing the papers has complied with all applicable 
requirements. The OCC proposed to update this provision to conform to 
the electronic filing requirement. Specifically, an electronic filing 
whose submission is commenced on a nonholiday weekday on or before 5:30 
p.m. Eastern Standard or Daylight Savings Time, whichever is currently 
in effect, would be deemed received by the OCC on the same business 
day. An electronic filing whose submission is commenced after 5:30 p.m. 
Eastern Standard or Daylight Savings Time, whichever is currently in 
effect, or on a Saturday, Sunday, or Federal holiday would be deemed 
received by the OCC on the next business day. The proposal also 
included a new paragraph (a)(3)(iii) to Sec.  11.3 to provide that if 
an electronic filer in good faith attempts to file a document pursuant 
to this part in a timely manner but the filing is delayed due to 
technical difficulties beyond the electronic filer's control, the 
electronic filer may request that the OCC adjust the filing date. The 
OCC may grant the request if it appears that such adjustment is 
appropriate and consistent with the public interest and the protection 
of investors. These rules for dating an electronic filing, and for 
providing a waiver for technical difficulties with the filing, also are 
derived from SEC Regulation S-T.\49\
---------------------------------------------------------------------------

    \49\ 17 CFR part 232.
---------------------------------------------------------------------------

    Finally, the OCC proposed the following technical amendments to 
part 11. First, the OCC proposed to rename the paragraph heading of 
Sec.  11.3(a)(3)(ii), which establishes filing dates for statements of 
beneficial ownership that must be made through the FDICconnect 
platform,\50\ from Electronic filings to Beneficial ownership filings. 
This new heading would more accurately reflect the final rule's 
application of electronic filing requirements to all part 11 filings, 
not just those made under Sec.  11.3(a)(3)(ii).
---------------------------------------------------------------------------

    \50\ See 70 FR 46403 (Aug. 10, 2005).
---------------------------------------------------------------------------

    Second, the OCC proposed to delete paragraph (a)(4) of Sec.  11.3. 
This paragraph provides a mandatory compliance date of January 1, 2004 
for 12 CFR part 11. However, as this date has now passed, this 
mandatory compliance date no longer is needed in the rule text.
    Third, the OCC proposed to amend Sec.  11.4(b), which currently 
provides that filing fees must be paid by check, to reflect the 
electronic filing of documents and the additional payment options now 
available. Specifically, the amendment would permit filing fees to be 
paid by means acceptable to the OCC, in addition to by check. We note 
that the OCC currently is not imposing any filing fees for part 11 
filings and is not adopting any fees as part of this rulemaking.
    As a consequence of proposing to amend part 11 to include Federal 
savings associations, the OCC proposed to remove part 194 in its 
entirety. The OCC notes that removing Sec.  194.3, which addresses 
liability for certain forward-looking statements made by Federal 
savings associations, would not change the applicability of the 
requirements of this section for Federal savings associations. 
Specifically, the text of Sec.  194.3 is substantially similar to the 
SEC Rule 3b-6,\51\ which currently applies to national banks by 
reference in Sec.  11.2. Therefore, because part 11 (and its cross-
reference to the SEC Rule 3b-6) would apply to Federal savings 
associations, the requirements imposed by current Sec.  194.3 would 
continue to apply to Federal savings associations.
---------------------------------------------------------------------------

    \51\ 17 CFR 240.3b-6.
---------------------------------------------------------------------------

    Furthermore, we note that the removal of Sec. Sec.  194.801 and 
194.802, Interpretations for Federal savings associations filing 
statements pursuant to the Exchange Act, is not intended to be a 
substantive change in how these filings are conducted. The 
interpretations included in these sections are now widely accepted and 
no longer need to be included in a rule. Therefore, the removal of 
these sections would not change how Federal savings associations 
prepare their reports.
    The OCC did not receive any specific comments on the proposed 
amendments to Sec.  11.3 and the removal of part 194

[[Page 8092]]

and adopts the amendments and removal as proposed.

Recordkeeping and Confirmation Requirements for Securities Transactions 
(12 CFR Parts 12 and 151)

    Twelve CFR parts 12 and 151 establish recordkeeping and 
confirmation requirements for national banks and Federal savings 
associations, respectively, that engage in securities transactions for 
their customers. These rules were included in the fourth Federal 
Register EGRPRA notice and the OCC did not receive any comments on them 
in response to this request for comment. However, based on our internal 
review of these rules, the OCC proposed a number of amendments to both 
parts 12 and 151. We received one comment on these amendments, with 
respect to 12 CFR 12.102, National bank use of electronic 
communications as customer notifications, as discussed below.
    Definitions. The OCC proposed to revise the definition of 
``municipal security'' at Sec. Sec.  12.2(i)(3) and 151.40 to remove an 
outdated citation to the Internal Revenue Code. We are adopting this 
change as proposed.
    Recordkeeping. Section 12.3 and subpart A of part 151 establish 
recordkeeping requirements for securities transactions conducted by 
national banks and Federal savings associations, respectively. Section 
151.60(b) prescribes more detailed procedures for record maintenance 
and storage for Federal savings associations than prescribed for 
national banks in Sec.  12.3(b). Specifically, Sec.  12.3(b) provides 
that the required records must clearly and accurately reflect the 
information required and provide an adequate basis for the audit of the 
information, and that record maintenance may include the use of 
automated or electronic records provided the records are easily 
retrievable, readily available for inspection, and capable of being 
reproduced in a hard copy. In addition to what is required for national 
banks, Sec.  151.60(b) imposes requirements related to indexing, paper 
storage, electronic storage, and the provision of records to examiners. 
The OCC proposed to remove Sec.  151.60(b) and revise Sec.  151.60(a) 
to include the less detailed maintenance and storage procedures found 
in the national bank rule. The OCC believes that this approach would 
provide a Federal savings association with more flexibility in making 
internal business decisions about record storage and maintenance.
    Current Sec.  151.60(c), redesignated in the proposed rule as Sec.  
151.60(b), provides that a Federal savings association may use a third-
party service provider to provide record storage or maintenance. The 
current national bank rule does not include a similar third-party 
provision. The OCC proposed to amend Sec.  12.3 to clarify that a 
national bank may use a third-party service provider for record storage 
and maintenance provided that the bank maintains effective oversight to 
ensure that the records are easily retrievable, are readily available 
for inspection, can be reproduced in a hard copy, and follow applicable 
OCC guidance.\52\
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    \52\ See OCC Bulletin 2013-29, Third-Party Relationships: Risk 
Management Guidance (Oct. 30, 2013).
---------------------------------------------------------------------------

    The OCC did not receive any specific comments on these proposed 
amendments to Sec. Sec.  12.3 and 151.60 and adopts them as proposed.
    Content and time of notification. Sections 12.4 and 151.70, 
respectively, require national banks and Federal savings associations 
that effect securities transactions for their customers to provide 
notifications of the transactions. Under the current rule, a national 
bank or Federal savings association may choose among several types of 
notification. Pursuant to Sec. Sec.  12.4(a) and 151.90, a national 
bank or Federal savings association, respectively, may provide the 
customer a written notice that includes the information set forth in 
those sections. Sections 12.5 and 151.100 permit a national bank or 
Federal savings association, respectively, to fulfill the notification 
requirement through alternative means that vary by the type of account. 
For transactions that use a registered broker-dealer, Sec.  151.80(a) 
allows the Federal savings association to satisfy the requirement of 
Sec.  151.70 by having the registered broker-dealer send the 
confirmation statement directly to the customer or by having the 
Federal savings association send a copy of the broker-dealer's 
confirmation to the customer. If the broker-dealer has the necessary 
account level information to send the confirmation directly to the 
customer, the Federal savings association need not send out an 
additional written notification of the transaction. In contrast, under 
Sec.  12.4(b), a national bank may send a copy of the broker-dealer's 
confirmation but is not expressly permitted to satisfy the requirement 
by having the broker-dealer send the confirmation directly to the 
customer.
    The OCC believes that most national banks and Federal savings 
associations, particularly community institutions, effect securities 
transactions for customers through registered broker-dealers. To avoid 
duplicative reporting to customers and to reduce burden on 
institutions, the OCC proposed to amend Sec.  12.4(b) to follow the 
approach of Sec.  151.80. With this amendment, both national banks and 
Federal savings associations could direct a broker-dealer to mail 
confirmations to customers without requiring that a duplicate be sent 
by the bank or savings association, thereby reducing regulatory burden 
for national banks. This approach also would reduce confusion that may 
result when a customer receives duplicate confirmations for the same 
transaction from two different parties.
    In addition, the OCC proposed to amend Sec.  151.80 to reduce 
regulatory burden on Federal savings associations. Currently, Sec.  
151.80(b) requires a Federal savings association that receives or will 
receive remuneration from any source, including the customer, in 
connection with the transaction to provide the customer a statement of 
the source and amount of the remuneration in addition to the registered 
broker-dealer confirmation. The OCC proposed to amend this provision to 
provide that, when such remuneration is determined by a written 
agreement between the Federal savings association and the customer, the 
savings association does not need to provide this remuneration 
statement for each securities transaction. This change is consistent 
with Sec.  12.4(b), which does not require a national bank to provide a 
statement of the source and amount of remuneration in these 
circumstances.
    The OCC did not receive any specific comments on these proposed 
amendments to Sec. Sec.  12.4 and 151.70 and adopts them as proposed.
    National bank disclosure of remuneration for mutual fund 
transactions. The OCC proposed to remove the interpretation in Sec.  
12.101, national bank disclosure of remuneration for mutual fund 
transactions. The OCC does not intend to change any existing practices 
with this amendment. Instead, the OCC believes that this issue is 
obsolete because of recent SEC actions.\53\ The OCC did not receive any 
specific comments on this proposed removal and adopts it as proposed.
---------------------------------------------------------------------------

    \53\ For example, the SEC now requires all mutual funds to 
disclose their fee structures in registration statements. http://www.sec.gov/about/forms/formn-1a.pdf.
---------------------------------------------------------------------------

    National bank use of electronic communications as customer 
notifications. Section 12.102 allows national banks, in appropriate 
situations, to comply with the written customer notification 
requirements in

[[Page 8093]]

Sec. Sec.  12.4 and 12.5 by using electronic communications or, if a 
customer has a facsimile machine, through facsimile transmission. To 
satisfy the notification delivery requirement by other electronic 
communication, the parties must agree to use electronic instead of 
hard-copy notifications, the parties must have the ability to print or 
download the electronic notification, the recipient must be able to 
affirm or reject trades through electronic notification, the system 
cannot automatically delete the electronic notification, and both 
parties must have the capacity to receive electronic messages. Federal 
savings associations are subject to a similar provision at Sec.  
151.110. The OCC finds that the use of electronic communications has 
become widespread and is provided for in state and Federal law, such as 
the E-Sign Act, which allows for electronic communications with 
customers. Therefore, Sec. Sec.  12.102 and 151.110 are outdated and 
duplicative of existing law, and we proposed to remove them.
    We received one comment on this proposed amendment, which was 
critical of removing this guidance for banks on the use of electronic 
communications. However, the OCC continues to believe that these 
provisions are outdated and not necessary in the current electronic 
environment. We therefore adopt the amendment as proposed.

Securities Offering Disclosures (12 CFR Parts 16 and 197)

    Twelve CFR parts 16 and 197 set forth securities offering 
disclosure rules for national banks and Federal savings associations, 
respectively. These rules are based on the Securities Act \54\ and 
certain Securities Act rules, to the extent appropriate for banks.\55\ 
These rules were included in the fourth Federal Register EGRPRA notice, 
and the OCC did not receive any specific comments in response to this 
request for comment, although, as indicated above, we previously had 
received comments requesting that the OCC permit electronic filings.
---------------------------------------------------------------------------

    \54\ National bank and Federal savings association securities 
are generally exempt from the Securities Act. Securities Act, 
sections 3(a)(2) and (5) (15 U.S.C. 77c(a)(2) and (5)).
    \55\ 59 FR 54789 (Nov. 2, 1994) (``[Part 16] generally requires 
national bank securities offering documents to conform to the form 
for registration that the bank would use if it had to register the 
securities under the Securities Act. Accordingly, the final rule 
cross-references a number of provisions of the Securities Act and a 
number of SEC rules.'')
---------------------------------------------------------------------------

    In light of the similar provisions that apply to national banks and 
Federal savings associations, the OCC proposed to amend part 16 to 
include Federal savings associations and to remove part 197. In 
addition, the OCC proposed to incorporate some provisions of part 197 
into part 16, to provide for the electronic submission of filings 
required under part 16, and to update the part 16 filing fees 
provision. The OCC also proposed technical changes throughout part 16 
to update citations to SEC rules and to replace all references to 
``Commission'' with ``SEC.'' The OCC believes that these amendments 
would reduce duplication and create efficiencies by establishing a 
single set of rules for all entities supervised by the OCC with respect 
to securities offerings. In addition, integrating savings associations 
into part 16 would clarify disclosure requirements for these 
institutions and provide them with additional exemptions, as described 
below. Furthermore, providing for the electronic submission of 
securities filings would reduce burden for both national banks and 
Federal savings associations.
    These specific amendments are discussed below.
    The JOBS Act, addressed above in the discussion of part 11, amended 
the Securities Act and directed the SEC both to amend existing 
Securities Act rules and to write new rules to implement certain JOBS 
Act provisions. Generally, the JOBS Act seeks to ease securities 
offering disclosure requirements and periodic reporting obligations for 
certain issuers, including emerging growth companies.\56\ It also 
creates new Securities Act private placement exemptions for 
crowdfunding \57\ and small company capital formation.\58\ In addition, 
the JOBS Act includes provisions that reduce restrictions on certain 
research and communications concerning emerging growth company 
securities offerings.\59\ The OCC generally intends for part 16 to 
remain consistent with the Securities Act, including those provisions 
amended under the JOBS Act, and SEC rules. Part 16 incorporates through 
cross-references various SEC rules that the JOBS Act directs the SEC to 
amend. Therefore, amendments to these SEC rules are incorporated into 
part 16 by virtue of these cross-references.\60\
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    \56\ As indicated in the discussion of part 11, above, an 
emerging growth company is a new category of issuer created under 
the JOBS Act. Generally, an emerging growth company is an issuer 
that had total annual gross revenues of less than $1 billion during 
its most recently completed fiscal year. Securities Act section 
2(a)(19) (15 U.S.C. 77b(a)(19)). An emerging growth company is 
eligible to rely on certain scaled disclosure requirements for 
registration statements filed under the Securities Act. For example, 
an emerging growth company need not present more than two years of 
audited financial statements in a registration statement for an 
initial public offering. Securities Act section 7(a) (15 U.S.C. 
77g(a)). C.f. SEC Regulation S-X, Rule 3-02 (17 CFR 210.3-02) 
(requiring three years of audited financial statements). We note 
that under 12 CFR 16.15(e), the OCC does not generally require 
audited financial statements in securities offering documents for 
national banks in organization. An emerging growth company also is 
eligible for scaled disclosure requirements in the context of 
Exchange Act periodic reporting. A detailed discussion of this 
relief is set forth above in the discussion of part 11.
    \57\ Securities Act, section 4(a)(6) (15 U.S.C. 77d(a)(6)) 
(crowdfunding creates a registration exemption for offerings of up 
to $1 million, provided that individual investments do not exceed 
certain thresholds and the issuer satisfies other conditions in the 
JOBS Act).
    \58\ Securities Act, section 3(b) (15 U.S.C. 77c(b)) (directing 
the SEC to create a registration exemption for securities offerings 
of up to $50 million).
    \59\ Securities Act, sections 2(a)(3) and 5(d) (15 U.S.C. 
77b(a)(3) and 77e(d)).
    \60\ The SEC has adopted amendments to Regulation A under the 
Securities Act to implement section 401 of the JOBS Act. 80 FR 21806 
(Apr. 20, 2015). The SEC also has adopted amendments to Rule 506 of 
Regulation D and Rule 144A under the Securities Act to implement 
section 201(a) of the JOBS Act. 78 FR 44771 (July 24, 2013).
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    Registration statement: form and content. The OCC proposed to 
replace the offering circular currently required under Sec.  197.2 and 
the corresponding form and content requirements of Sec.  197.7 with a 
registration statement and prospectus required by Sec. Sec.  16.3 and 
16.15 for national banks. We received no comments on this proposed 
change and adopt it as proposed. Requiring the use of the same form by 
both national banks and Federal savings associations will provide a 
consistent set of disclosure standards and format for investors. The 
OCC believes that this change will not impose any undue regulatory 
burden on Federal savings associations because these forms provide 
similar information to potential investors.
    Communications not deemed an offer. Both Sec. Sec.  16.4 and 
197.2(b) provide that certain communications by national banks or 
Federal savings associations about their securities are not deemed to 
be offers. However, Sec.  16.4 more closely follows SEC regulations by 
additionally exempting summary prospectuses covered by SEC Rule 
431,\61\ notices of certain proposed unregistered offerings covered by 
SEC Rule 135c,\62\ publications or distributions of research reports by 
brokers or dealers covered by SEC Rules 138 and 139,\63\ and certain 
communications made after providing a prospectus. Amending part 16 to 
include Federal savings associations would afford them the additional 
communication exemptions under the

[[Page 8094]]

SEC rules currently available to national banks. The OCC received no 
comments on this change and adopts it as proposed.
---------------------------------------------------------------------------

    \61\ 17 CFR 230.431.
    \62\ 17 CFR 230.135c.
    \63\ 17 CFR 230.138 and 230.139.
---------------------------------------------------------------------------

    Exemptions. Section 16.5 provides exemptions to the general 
registration requirements for national bank securities under Sec.  
16.3. These exemptions significantly overlap with the Sec.  197.3 
exemptions to the registration requirements for Federal savings 
associations. However, Sec.  16.5 applies SEC Rules 152 \64\ (private 
placement exemption), 152a \65\ (exemption for sales of certain 
fractional interests) to transactions exempt under section 4 of the 
Securities Act \66\), and 236 \67\ (offerings to shareholders in 
connection with a stock dividend, stock split, conversion, or merger) 
while Sec.  197.3(b) does not. By amending Sec.  16.5 to include 
Federal savings associations, the additional exemptions provided by 
these two SEC rules would apply to transactions by Federal savings 
associations.
---------------------------------------------------------------------------

    \64\ 17 CFR 230.152.
    \65\ 17 CFR 230.152a.
    \66\ 15 U.S.C. 77d.
    \67\ 17 CFR 230.236.
---------------------------------------------------------------------------

    Section 16.5(f) specifically exempts transactions that satisfy the 
requirements of SEC Rule 701 \68\ regarding offers and sales of 
securities pursuant to certain compensatory benefit plans and contracts 
relating to compensation. Section 197.3 does not cross-reference SEC 
Rule 701 but rather provides in Sec.  197.3(g) a narrower exemption for 
sales only to officers, directors, or employees through an employee 
benefit plan or a dividend or interest reinvestment plan that has been 
approved by shareholders. In particular, Sec.  197.3(g) does not exempt 
sales made through compensatory benefit plans for consultants, 
advisors, and family members, as does SEC Rule 701.
---------------------------------------------------------------------------

    \68\ 17 CFR 230.701.
---------------------------------------------------------------------------

    By amending Sec.  16.5 to include Federal savings associations, the 
exemption available for savings associations would be expanded to cover 
all such sales exempted by SEC Rule 701. Although the OCC did not 
propose to incorporate the Sec.  197.3(g) requirement regarding 
shareholder approval of compensation plans, Federal savings 
associations still must follow all applicable corporate governance 
requirements under their charter provisions. Additionally, national 
banks and Federal savings associations that are subject to the Federal 
proxy rules must comply with SEC rules issued under Exchange Act 
Section 14A \69\ concerning shareholder approval of executive 
compensation and golden parachute payments.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78n-1. Section 951 of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank Act) added section 
14A to the Exchange Act.
---------------------------------------------------------------------------

    The OCC notes that under paragraph (e) of Sec.  197.3 certain 
collateralized securities issued by Federal savings associations 
currently are exempt from registration. Federal savings associations 
also rely upon SEC Regulation D \70\ in addition to Sec.  197.3(e) for 
this exemption.\71\ Therefore, the OCC did not propose to maintain the 
exemption in Sec.  197.3(e) because of the availability of the 
Regulation D private placement exemption in part 16.
---------------------------------------------------------------------------

    \70\ 17 CFR 230.501 et seq.
    \71\ 12 CFR 197.4(a).
---------------------------------------------------------------------------

    We received no comments on these proposed changes to exemptions and 
adopt them as proposed. We believe that these changes will provide 
savings associations with additional flexibility when issuing 
securities, resulting in reduced costs and less regulatory burden for 
such issuances.\72\
---------------------------------------------------------------------------

    \72\ The OCC notes that the JOBS Act amended section 4 of the 
Securities Act to create a private placement exemption for 
crowdfunding (Securities Act, section 4(a)(6), 15 U.S.C. 77d(a)(6)), 
and the SEC has adopted rules to implement this exemption (80 FR 
71387 (Nov. 16, 2015)). National banks and Federal savings 
associations may not rely on the private placement exemption for 
crowdfunding in Securities Act section 4(a)(6) unless and until the 
OCC adopts rules implementing this provision for national banks and 
Federal savings associations or affirmatively adopts SEC rules that 
implement this provision. At this time, the OCC is not proposing to 
amend its rules to permit the private placement exemption for 
crowdfunding.
---------------------------------------------------------------------------

    Sales of nonconvertible debt. The OCC proposed to apply Sec.  16.6, 
sales of nonconvertible debt, to Federal savings associations. While 
Federal savings associations have previously sold nonconvertible debt 
under similar restrictions through various interpretive letters, the 
OCC believes that adopting a single set of requirements is simpler and 
more efficient for Federal savings associations. We received no 
comments on this proposed change and adopt it as proposed.
    Small issues. Section 16.8 provides an exemption for small issues 
of national bank securities under the SEC's Regulation A.\73\ 
Currently, Federal savings associations do not have a Regulation A 
exemption for small issuances. The OCC proposed to amend Sec.  16.8 to 
include savings associations. We received no comments on this proposed 
change and adopt it as proposed. As a result of this amendment, Federal 
savings associations will be able to issue small amounts of securities 
and remain exempt from filing registration statements and prospectuses, 
thereby reducing regulatory burden.
---------------------------------------------------------------------------

    \73\ 17 CFR 230.251 et seq.
---------------------------------------------------------------------------

    Securities offered and sold in holding company dissolution. Section 
16.9 provides an exemption for securities offered and sold in a holding 
company dissolution. Part 197 does not contain a similar provision; 
however, Federal savings associations have relied on SEC rules for 
these transactions pursuant to informal OTS staff guidance. The OCC 
proposed to apply Sec.  16.9 to securities issued by Federal savings 
associations to provide more certainty as to the applicability of the 
Sec.  16.9 exemption to these transactions. We received no comments on 
this proposed change and adopt it as proposed.
    Effectiveness. Section 16.16 provides that a registration statement 
and amendments will become effective in accordance with Sec.  8(a) and 
(c) of the Securities Act and SEC Regulation C, 17 CFR part 230, which 
is the 20th day after filing or sooner if so determined by the OCC. 
Section 197.6 contains the same effective date but does not reference 
Regulation C. The Federal savings association rule also contains other 
provisions regarding a delay in effectiveness and provides that the OCC 
may pursue any remedy under section 5(d) of the HOLA if it appears that 
the offering circular contains any material misstatement or omission. 
The OCC proposed to apply Sec.  16.16 to Federal savings associations. 
We received no comments on this proposed change and adopt it as 
proposed. As a result, SEC regulation C now applies to Federal savings 
associations instead of these additional provisions in Sec.  197.6.
    Sales of securities at an office of a savings association. Section 
197.17 provides that the sale of securities of a Federal savings 
association or its affiliates at an office of the savings association 
may only be made in accordance with the provisions of Sec.  163.76.\74\ 
Section 163.76 generally prohibits the offer or sale of debt or equity 
securities issued by a Federal savings association or an affiliate at 
an office of the association, unless the equity securities are issued 
by the association or the affiliate in connection with the 
association's conversion from the mutual to stock form of organization 
and certain conditions are met. The OCC proposed to amend part 16 by 
adding a new Sec.  16.10 to maintain this restriction on the sale of a 
Federal

[[Page 8095]]

savings association's or affiliate's securities.
---------------------------------------------------------------------------

    \74\ Section 197.17 includes an inaccurate cross-reference to 
Sec.  197.76. We have provided the correct cross-reference in the 
discussion above and in the proposed rule. See proposed Sec.  16.10.
---------------------------------------------------------------------------

    The OCC specifically requested in the proposed rule that commenters 
opine on whether the OCC should remove the limitations on the offer or 
sale of debt or equity securities at an office of a Federal savings 
association in light of amendments to the Exchange Act made by the 
Gramm-Leach-Bliley Act,\75\ rules promulgated by the Financial Industry 
Regulatory Authority,\76\ and the Interagency Statement on Retail Sales 
of Nondeposit Investment Products, all of which govern securities 
activities conducted on the premises of OCC-regulated financial 
institutions \77\ In the alternative, the OCC asked whether we should 
amend part 16 to prohibit a national bank from offering or selling debt 
or equity securities issued by the bank or an affiliate at an office of 
the bank.
---------------------------------------------------------------------------

    \75\ See 15 U.S.C. 78c(a)(4). See also Regulation R, 17 CFR 
247.100 et seq.
    \76\ See FINRA Rule 3160.
    \77\ See OCC Bulletin 94-13, Non deposit Investment Sales 
Examination Procedures (Feb. 24, 1994) and OCC Bulletin 95-52, 
Retail Sales of Nondeposit Investment Products (Sept. 22, 1995).
---------------------------------------------------------------------------

    We received one comment on new Sec.  16.10. This commenter did not 
agree with the suggestion to apply this restriction to national banks 
as it would be an increase in regulatory burden. In addition, this 
commenter suggested that the OCC remove this restriction for Federal 
savings associations. After further review of this provision, the OCC 
has decided to adopt the provision as proposed and maintain the 
restriction on Federal savings associations but not apply it to 
national banks. This provision was enacted in response to the savings 
and loan crisis of the 1980s, which had a devastating effect on the 
thrift industry as well as on its customers. This provision has 
prevented the recurrence of similar events and we believe that the 
benefit of this restriction outweighs any burden the restriction 
imposes on Federal savings associations. As there is no historical 
rationale for this restriction to be placed on national banks, and 
because we do not see a current need for this restriction to apply to 
national banks, we have not expanded it to cover these institutions.
    Filing requirements and inspection of documents. Current Sec. Sec.  
16.17 and 197.5 require national banks and Federal savings 
associations, respectively, to submit by mail or otherwise four copies 
of all registration statements, offering documents, amendments, 
notices, or other documents to the SCP Division or, if related to a 
bank in organization or a de novo Federal savings association, to the 
appropriate district office. Similar to the amendment to Sec.  11.3, 
the OCC proposed to amend Sec.  16.17 to require instead that banks and 
savings associations submit one copy of their filings electronically to 
the SCP Division or the appropriate district office, as applicable, 
through http://www.banknet.gov/. Pursuant to proposed Sec.  16.17(g), 
any filing of amendments or revisions to previously filed documents 
must include two copies, one of which must be marked to indicate 
clearly and precisely, by underlining or in some other appropriate 
manner, the changes made. Current Sec.  16.17(e) requires a total of 
four copies of amendments or revisions.
    The amendments to Sec.  16.17 also provide that documents may be 
signed electronically using the signature provision in SEC Rule 
402.\78\ As indicated in the discussion of part 11, above, this SEC 
rule provides that required signatures may be typed or may be 
duplicated or facsimile versions of manual signatures. Where typed, 
duplicated, or facsimile signatures are used, each signatory to the 
filing is required to ``manually sign a signature page or other 
document authenticating, acknowledging, or otherwise adopting his or 
her signature that appears in the filing.'' \79\ As provided by Rule 
402, this document must be retained for five years and, upon request, a 
copy must be provided to the OCC.
---------------------------------------------------------------------------

    \78\ 17 CFR 230.402.
    \79\ Id.
---------------------------------------------------------------------------

    Current Sec. Sec.  16.17(d) and 197.1 provide the date on which 
papers are actually received by the OCC shall be the date of filing, if 
the person or bank filing the papers has complied with all applicable 
requirements. As with the amendment to Sec.  11.3(a)(3)(i), the OCC 
proposed to update Sec.  16.17(d) to conform to the electronic filing 
requirement. Specifically, we proposed that an electronic filing that 
is commenced on a nonholiday weekday on or before 5:30 p.m. Eastern 
Standard or Daylight Savings Time, whichever is currently in effect, 
would be deemed received by the OCC on the same business day. An 
electronic filing whose submission is commenced after 5:30 p.m. Eastern 
Standard or Daylight Savings Time, whichever is currently in effect, or 
on a Saturday, Sunday, or Federal holiday would be deemed received by 
the OCC on the next business day. We note, however, that paragraph (e) 
provides that with respect to any registration statement or any post-
effective amendment filed pursuant to SEC Rule 462(b),\80\ the cut-off 
time is 10 p.m. to be consistent with corresponding SEC rules.
---------------------------------------------------------------------------

    \80\ 17 CFR 230.462(b).
---------------------------------------------------------------------------

    As with section Sec.  11.3(a)(3)(iii), proposed Sec.  16.17(d) 
provided that if an electronic filer in good faith attempts to file a 
document pursuant to this part in a timely manner but the filing is 
delayed due to technical difficulties beyond the electronic filer's 
control, the electronic filer may request that the OCC adjust the 
filing date. The OCC may grant the request if it appears that such 
adjustment is appropriate and consistent with the public interest and 
the protection of investors. As indicated above, these rules for dating 
an electronic filing, and for providing a waiver for technical 
difficulties with the filing, are derived from SEC Regulation S-T.\81\
---------------------------------------------------------------------------

    \81\ 17 CFR 232.
---------------------------------------------------------------------------

    The OCC also proposed a new Sec.  16.17(f) to establish an 
exception to the general electronic filing requirements that permits 
the use of paper filings where unanticipated technical difficulties 
prevent the use of electronic filings. This exception is modeled on SEC 
Regulation S-T, Rule 201,\82\ which provides a temporary hardship 
exemption to the SEC's EDGAR filing requirements in cases of 
unanticipated technical difficulties. Similar to Rule 201, the OCC 
notes that the use of this exception should be extremely limited and 
should be relied upon only when unusual and unexpected circumstances 
create technical impediments to the use of electronic filings.
---------------------------------------------------------------------------

    \82\ 17 CFR 232.201.
---------------------------------------------------------------------------

    Finally, the OCC proposed technical changes to Sec.  16.17(h), 
currently Sec.  16.17(f), to update a cross-reference to 12 CFR part 4.
    The OCC did not receive any comments on these proposed changes to 
the filing requirements in Sec.  16.17 and we adopt them as proposed.
    Use of prospectus. Section 16.18 provides that no person may use a 
prospectus or amendment declared effective by the OCC more than nine 
months after the effective date unless the information contained in the 
prospectus or amendment is as of a date not more than 16 months prior 
to the date of use. Furthermore, this section provides that no person 
may use a prospectus if an event arises or fact changes after the 
effective date that causes the prospectus to contain an untrue 
statement of material fact or to omit a material fact that causes the 
prospectus to be misleading until an amendment reflecting the event or 
change has been filed with and declared effective by the OCC. The OCC 
proposed

[[Page 8096]]

to apply Sec.  16.18 to Federal savings associations. We received no 
comments on this proposed change and adopt it as proposed. Because 
Sec.  197.8 contains similar provisions, this amendment will not result 
in any changes for Federal savings associations.
    Withdrawal or abandonment. In general, Sec.  16.19 provides that a 
registration statement, amendment, or exhibit may be withdrawn prior to 
its effective date. Furthermore, this section provides that the OCC may 
deem abandoned a registration statement or amendment that has been on 
file with the OCC for nine months and has not become effective. The OCC 
proposed to apply Sec.  16.19 to Federal savings associations. We 
received no comments on this proposed change and adopt it as proposed. 
Because Sec.  197.11 contains the same provisions as Sec.  16.19, 
applying Sec.  16.19 to Federal savings associations will not result in 
any changes for Federal savings associations.
    Request for interpretive advice or no-objection letter. As 
proposed, the OCC is adopting the amendment to Sec.  16.30 that updates 
the cross-reference to where the address for filing a request for 
interpretive advice or a no-objection letter may be found.
    Escrow requirement. For national banks, Sec.  16.31 provides the 
OCC with discretion to require the establishment of an escrow account, 
while Sec.  197.9 automatically requires an escrow account for Federal 
savings associations. By amending part 16 to include Federal savings 
associations and deleting Sec.  197.9, the OCC proposed to remove the 
mandatory escrow requirement for Federal savings associations. We 
received no comments on this proposed change and adopt it as proposed.
    Fraudulent transactions/unsafe or unsound practices. Section 16.32 
prohibits fraudulent transactions in the offer or sale of bank 
securities and deems such transactions to be an unsafe or unsound 
practice under 12 U.S.C. 1818. Section 197.10 contains a similar 
prohibition. However, Sec.  16.32 specifically cross-references the 
investor protections under section 17 of the Securities Act \83\ and 
references SEC Rule 175 \84\ on forward-looking statements. Although 
section 17 by its terms applies to Federal savings associations 
regardless of the OCC rule, neither it nor SEC Rule 175 is referenced 
in Sec.  197.10. The OCC proposed to amend Sec.  16.32 to include 
Federal savings associations. As a result, part 16 would put Federal 
savings associations on notice that the Securities Act section 17 
investor protections apply. Furthermore, Federal savings associations 
would have the additional clarifying guidance on the liability of 
forward-looking statements provided by SEC Rule 175. We received no 
comments on this proposed change and adopt it as proposed.
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 77q.
    \84\ 17 CFR 230.175.
---------------------------------------------------------------------------

    Filing fees. Section 16.33 provides that the required filing fees, 
as provided for in the Notice of Comptroller of the Currency Fees 
published pursuant to 12 CFR 8.8, must accompany filings made pursuant 
to part 16. The OCC proposed to amend Sec.  16.33(a) to clarify that 
the OCC may require filing fees before it may accept a filing. In 
addition, as with Sec.  11.4, we proposed to amend Sec.  16.33(b) to 
provide that such fees may be paid by means acceptable to the OCC, in 
addition to by check, to reflect the additional payment options now 
available. We received no comments on these proposed filing fee changes 
and adopt them as proposed. We note that the OCC is not currently 
imposing any filing fees for part 16 filings and is not imposing any 
new fees as part of this rulemaking.
    Waiver and interpretive advice requests. The proposed rule did not 
include the blanket waiver provisions contained in Sec. Sec.  197.14 
and 197.15. Commenters did not discuss these provisions and the final 
rule as adopted does not contain these blanket waivers. However, we 
note that the OCC will continue to provide interpretive advice or no-
objection letters under the terms provided in Sec.  16.30. We also note 
that 12 CFR 100.2 provides that the Comptroller may, for good cause and 
to the extent permitted by statute, waive the applicability of any 
provision of 12 CFR parts 1 through 197, with respect to Federal 
savings associations.
    Current and periodic reports. Section 197.18 requires a Federal 
savings association to file certain periodic reports with the OCC after 
its offering circular becomes effective, even if the savings 
association is not otherwise required to register its securities with 
the OCC under the Exchange Act. This filing requirement applies to 
Federal savings associations until the securities to which the savings 
association's offering circular relates are held of record by fewer 
than 300 persons in any fiscal year other than the fiscal year in which 
the offering circular becomes effective. The FDIC and the Federal 
Reserve Board have not imposed a comparable obligation on state banks, 
and the OCC removed this obligation on national banks in 2008.\85\ 
Instead, a state or national bank is subject to Exchange Act periodic 
and current reporting requirements if the bank's total assets exceed 
$10,000,000 and it has a class of equity security (other than an 
exempted security) held of record by 2,000 or more persons.\86\
---------------------------------------------------------------------------

    \85\ 73 FR 22216 (Apr. 24, 2008).
    \86\ Exchange Act, section 12(g) (15 U.S.C. 78l(g)), as amended 
by section 601(a) of the JOBS Act.
---------------------------------------------------------------------------

    The proposed rule did not include filing requirement contained in 
Sec.  197.18. As a result, a Federal savings association instead would 
be subject to Exchange Act periodic and current reporting requirements 
if it has total assets exceeding $10,000,000 and a class of equity 
security (other than an exempted security) held of record by 2,000 or 
more persons.\87\ Commenters did not discuss the removal of this filing 
requirement and we adopt this change as proposed. As a result of this 
final rule, current and periodic reporting requirements for national 
banks and Federal savings associations will be identical. In addition, 
regulatory burden will be reduced by eliminating such filing 
requirements for Federal savings associations with fewer than 1,200 
holders of record.\88\ Financial information about a savings 
association will continue to be publicly available to investors through 
quarterly financial information, including balance sheets and 
statements of income, which is part of a savings association's Call 
Reports and is available at https://cdr.ffiec.gov/public/.
---------------------------------------------------------------------------

    \87\ Id.
    \88\ Id. National banks and Federal savings associations that 
are currently registered under section 12(g) of the Exchange Act and 
have 1,200 or more holders of record for a class of securities must 
continue to comply with current and periodic reporting requirements.
---------------------------------------------------------------------------

    Periodic sales reports. Under Sec.  197.12 Federal savings 
associations must file periodic reports on the sales of securities that 
are registered under Sec.  197.2 or that are otherwise exempt from 
registration under Sec.  197.4 (non-public offerings, including 
Regulation D and sales to 35 or more persons). National banks do not 
have to file similar reports. Institutions generally sell securities 
for the purpose of increasing their capital. The OCC can review any 
increases to a Federal savings association's capital through the 
institution's quarterly Call Report, and therefore the periodic sales 
report provides limited additional value for supervision. Furthermore, 
Sec.  5.45 requires Federal savings associations subject to capital 
plans or other regulatory actions to file reports for increases in 
permanent capital, so the Securities Sales Report is redundant in cases 
that present the most supervisory

[[Page 8097]]

risk.\89\ Therefore, the OCC proposed to not include in part 16 the 
Sec.  197.12 requirement that Federal savings associations file reports 
on sales of securities. We did not receive any comments on the removal 
of the periodic sales report requirement and adopt this change as 
proposed.
---------------------------------------------------------------------------

    \89\ Section 5.46 requires national banks to file reports for 
increases in permanent capital.
---------------------------------------------------------------------------

Disclosure of Financial and Other Information by National Banks (12 CFR 
Part 18)

    Twelve CFR part 18 sets forth annual financial disclosure 
requirements for national banks. Specifically, part 18 requires 
national banks to prepare annual disclosure statements as of December 
31 to be made available to bank security holders by March 31 of the 
following year. The rule specifies the types of information that must 
be included in the disclosure statements, which includes, at a minimum, 
certain information from the bank's Call Report. The Comptroller may 
require the inclusion of other information and the bank may include an 
optional narrative. Section 18.5 provides alternative ways a bank may 
meet the disclosure statement requirement. These alternatives include 
allowing Exchange Act registered banks to use the bank's annual report 
and allowing banks with audited financial statements to use those 
statements provided the statements include certain required 
information.
    Although we did not receive any specific comments on part 18 during 
the EGRPRA review process, the OCC proposed to remove this rule to 
reduce unnecessary burden. The information part 18 requires a national 
bank to disclose is contained in other publicly available documents, 
such as the Call Report and the Uniform Bank Performance Report. Part 
18 is therefore duplicative and unnecessary. We note that the Federal 
Reserve Board and the former OTS rescinded similar regulations for 
state member banks and savings associations, respectively. The OTS 
repealed 12 CFR 562.3 in December 1995 and the Federal Reserve Board 
eliminated 12 CFR 208.17 in 1998.\90\
---------------------------------------------------------------------------

    \90\ 60 FR 66866 (Dec. 27, 1995); 63 FR 37630 (July 13, 1998).
---------------------------------------------------------------------------

    We did not receive any specific comments on the removal of part 18 
and, therefore, adopt the removal as proposed.

Extensions of Credit to Insiders and Affiliate Transactions (12 CFR 
Part 31, Sec. Sec.  163.41 and 163.43

    National banks and Federal savings associations must comply with 
rules of the Federal Reserve Board regarding extensions of credit to 
insiders, 12 CFR part 215 (Regulation O), which implements sections 
22(g) and 22(h) of the Federal Reserve Act, and transactions with 
affiliates, 12 CFR part 223 (Regulation W), which implements sections 
23A and 23B of the Federal Reserve Act.\91\ Twelve CFR part 31 and 12 
CFR 163.41 and 163.43 address these transactions for national banks and 
Federal savings associations, respectively. Specifically, Sec.  31.2 
requires national banks to comply with Regulation O. Appendix A to part 
31 provides interpretive guidance on the application of Regulation W to 
deposits between affiliated banks. Sections 163.41 and 163.43 contain 
general statements that refer Federal savings associations to 
applicable regulations of the Federal Reserve Board, i.e., Regulation O 
and Regulation W.
---------------------------------------------------------------------------

    \91\ 12 U.S.C. 371c, 371c-1, 375a, and 375b. In general, section 
11 of the HOLA, 12 U.S.C. 1468, applies sections 22(g), 22(h), 23A 
and 23B of the Federal Reserve Act to savings associations in the 
same manner and to the same extent as if the savings association 
were a member bank.
---------------------------------------------------------------------------

    The OCC proposed to consolidate its rules that address insider 
lending and affiliate transactions by amending part 31 to state clearly 
that both national banks and Federal savings associations must comply 
with Regulation O and Regulation W and by removing Sec. Sec.  163.41 
and 163.43. Moreover, the OCC proposed to amend part 31 to add the 
statutory standards for authorizing an exemption from section 23A in 
accordance with section 608 of the Dodd-Frank Act.
    Specifically, we proposed to add ``Federal savings associations'' 
to the text of Sec.  31.2, Insider lending restrictions and reporting 
requirements, and to add a new Sec.  31.3 to require both national 
banks and Federal savings associations to comply with the affiliate 
transaction requirements contained in Regulation W. Proposed Sec.  
31.3(b) clarified that the OCC administers and enforces affiliate 
transaction requirements as they apply to national banks and Federal 
savings associations.
    Furthermore, proposed Sec.  31.3(c) implemented the standards for 
authorizing an exemption from section 23A, as provided by section 608 
of the Dodd-Frank Act. Section 608 amends section 23A and section 11 of 
the HOLA to authorize the OCC to exempt, by order, a transaction of a 
national bank or Federal savings association, respectively, from the 
affiliate transaction requirements of section 23A and section 11 of the 
HOLA if: (1) The OCC and the Federal Reserve Board jointly find the 
exemption to be in the public interest and consistent with the purposes 
of section 23A and section 11, as applicable, and (2) within 60 days of 
receiving notice of such finding, the FDIC does not object in writing 
to the finding based on a determination that the exemption presents an 
unacceptable risk to the Deposit Insurance Fund.\92\ Proposed Sec.  
31.3(d) described the procedures that a national bank and Federal 
savings association must follow for requesting such an exemption. These 
procedures are modeled after the Federal Reserve Board's existing 
procedures in Regulation W.
---------------------------------------------------------------------------

    \92\ See section 608(a)(4)(A)(iv) of the Dodd-Frank Act 
(exemption authority for national banks) and section 608(c) of the 
Dodd-Frank Act (exemption authority for Federal savings 
associations).
---------------------------------------------------------------------------

    Under the proposal, appendix A to part 31, which is specific to 
national banks, remains unchanged. However, the proposal amended 
appendix B, which contains a comparison between selected provisions of 
Regulation O and the OCC's lending limits rule, 12 CFR part 32, to 
include Federal savings associations and to make technical changes.
    Lastly, the proposal updated the authority provision in Sec.  31.1 
to reference the appropriate statutory cite for Federal savings 
association, 12 U.S.C. 1463 and 1468, and to correct a duplicative 
reference to 12 U.S.C. 1817(k).
    The OCC did not receive any specific comments on these proposed 
amendments to Part 31 and the removal of Sec. Sec.  163.41 and 163.43, 
and we therefore adopt these changes as proposed.
    It should be noted that the OCC may impose additional restrictions 
on any transaction between a Federal savings association or national 
bank and its affiliates that the OCC determines to be necessary to 
protect the safety and soundness of the institution.\93\ This authority 
is unaffected by and not addressed in this final rule.
---------------------------------------------------------------------------

    \93\ See, e.g., 12 U.S.C. 93a, 371c(f)(2)(B)(i), 481, 
1468(a)(4), 1468(b)(2), and 1831p-1.
---------------------------------------------------------------------------

Electronic Operations and Activities of Federal Savings Associations 
(12 CFR Part 155)

    Twelve CFR part 155 addresses the use of technology by Federal 
savings associations to deliver products and services. Specifically, 
Sec.  155.200 provides that a Federal savings association may use 
electronic means or facilities to perform any function, or provide any 
product or service, as part of an otherwise authorized activity. In 
addition, Sec.  155.200 permits Federal savings associations to use, or 
participate with others to use, electronic

[[Page 8098]]

means or facilities to perform any function, or provide any product or 
service, as part of an authorized activity; and to market and sell, or 
participate with others to market and sell, electronic capacities and 
by-products to third parties in order to optimize the use of resources, 
if the savings association acquired or developed these capacities and 
by-products in good faith as part of providing financial services. 
These authorizations are similar to what is provided for national banks 
in 12 CFR part 7, subpart E.
    Section 155.210 requires management of the savings association to 
take steps to identify, assess and mitigate potential risks, establish 
prudent internal controls, and implement security measures designed to 
prevent unauthorized access, prevent fraud, and comply with applicable 
security device requirements of part 168.
    Paragraph (a) of Sec.  155.300 provides that Federal savings 
associations are not required to inform the OCC before using electronic 
means or facilities, except as provided in paragraphs (b) and (c) and 
encourages Federal savings associations to discuss any planned new 
products or services that will use electronic means or facilities with 
their assigned OCC supervisory office. Paragraph (b) of Sec.  155.300 
requires a Federal savings association to file a written notice with 
the OCC prior to establishing a transactional Web site. Paragraph (c) 
of Sec.  155.300 requires a Federal savings association to follow any 
written procedures the OCC imposes with respect to any supervisory or 
compliance concerns regarding its use of electronic means or 
facilities. Finally, Sec.  155.310 provides the procedures for filing 
the transactional Web site notice.
    Part 155 was included in the first EGRPRA Federal Register request 
for comment. In response to this request, we received comments 
recommending that the OCC remove the transactional Web site prior 
notice requirement in Sec.  155.300(b). The OCC agrees that this notice 
is no longer necessary and proposed to remove it, along with the 
related procedural requirements in Sec.  155.310.
    Furthermore, the OCC proposed to remove the remaining paragraphs of 
Sec.  155.300. Paragraph (a) is no longer relevant without the 
requirement for a transactional Web site notice. Paragraph (c) is 
unnecessary as, pursuant to the OCC's safety and soundness authority, 
Federal savings associations are required to comply with any written 
procedures the OCC imposes for supervisory or compliance reasons.
    Finally, the OCC proposed other non-substantive changes to update 
the rule and to present the regulatory provisions in a format more 
consistent with the OCC's other rules.
    We received no specific comments on the removal of these provisions 
and the OCC adopts the amendments as proposed. Nonetheless, the OCC 
encourages Federal savings associations to discuss any planned new 
products or services that will use electronic means or facilities with 
their assigned OCC supervisory office.

Regulatory Reporting Requirements for Federal Savings Associations (12 
CFR Part 162 and Sec.  163.180)

    Twelve CFR part 162 and Sec.  163.180(a) set forth regulatory 
reporting and auditing standards and requirements for Federal savings 
associations. These rules were included in the first EGRPRA Federal 
Register notice and the OCC did not receive any comments on these rules 
in response to this request for comment. However, after conducting its 
own review of these rules, the OCC proposed to revise 12 CFR part 162 
and remove Sec.  163.180(a) in order to eliminate duplicative 
requirements.
    Various Federal statutes impose reporting and audit requirements on 
Federal savings associations and national banks. Specifically, 12 
U.S.C. 161(a) provides that national banks must submit reports of 
condition to the Comptroller in accordance with the requirements of the 
FDI Act. Twelve U.S.C. 1464(v)(1) is the comparable statute for Federal 
savings associations. In addition, 12 U.S.C. 1831m and FDIC 
implementing regulations at 12 CFR part 363 require insured depository 
institutions above a specified asset threshold to have annual 
independent audits and to submit annual reports and audited financial 
statements to the FDIC and the appropriate Federal banking agency.\94\ 
These financial statements must be prepared in accordance with GAAP and 
such other disclosure requirements as the FDIC and the appropriate 
Federal banking agency may prescribe.\95\ The Interagency Policy 
Statement on External Audit Programs of Banks and Savings Associations 
(1999 Interagency Policy Statement) \96\ provides unified interagency 
guidance regarding independent external auditing programs of community 
banks and savings associations that are exempt from 12 CFR part 363 
(i.e., institutions with less than $500 million in total assets) or 
that are not otherwise subject to audit requirements by order, 
agreement, statute, or agency regulations. Furthermore, 12 U.S.C. 
1463(b)(1) requires the Comptroller, by regulation, to prescribe 
uniform accounting and disclosure standards for Federal savings 
associations' compliance with all applicable regulations.
---------------------------------------------------------------------------

    \94\ Among other requirements, 12 CFR part 363 requires insured 
depository institutions with total assets above certain thresholds 
to assess the effectiveness of internal controls over financial 
reporting, to establish independent audit committees, and to comply 
with related reporting requirements.
    \95\ Other statutes further clarify the use of GAAP by insured 
depository institutions. See, e.g., 12 U.S.C. 1831n(a)(2)(A) (the 
accounting principles applicable to reports or statements required 
to be filed with Federal banking agencies by insured depository 
institutions shall be uniform and consistent with GAAP) and 12 
U.S.C. 1831n(a)(2)(B) (in certain circumstances, the appropriate 
Federal banking agency or the FDIC may, with respect to such reports 
or statements, prescribe an accounting principle applicable to such 
institutions that is no less stringent than GAAP).
    \96\ See OCC Bulletin 99-37, Interagency Policy Statement on 
External Auditing Programs (Oct. 7, 1999) and 64 FR 52319 (Sept. 28, 
1999).
---------------------------------------------------------------------------

    As indicated above, 12 CFR part 162 and Sec.  163.180(a) also 
contain regulatory reporting and auditing requirements for Federal 
savings associations. Specifically, Sec.  162.1 requires Federal 
savings associations to use forms prescribed by the OCC and to follow 
such regulatory reporting requirements as the OCC may require. This 
section also requires Federal savings associations and their affiliates 
to maintain accurate and complete records of all business transactions 
that support the regulatory reports submitted to the OCC and any 
financial reports prepared in accordance with GAAP. These records must 
be maintained in the United States and must be readily accessible by 
the OCC for examination and other supervisory purposes within five 
business days upon request by the OCC, at a location acceptable to the 
OCC.
    Section 162.2 sets forth the minimum requirements to be included in 
all reports to the OCC, including Call Reports. In general, these 
reports must incorporate GAAP, as well as additional safety and 
soundness requirements more stringent than GAAP that the Comptroller 
prescribes. Section 163.180(a) provides that Federal savings 
associations and their service corporations must submit periodic and 
other reports as required by the appropriate Federal banking agency. 
Both Sec. Sec.  162.1 and 162.2 implement the 12 U.S.C. 1463(b)(1) 
requirement, described above, that the OCC issue regulations 
prescribing uniform accounting and disclosure standards for Federal 
savings associations' compliance with all applicable regulations.
    Section 162.4 sets forth requirements and standards for audits of 
Federal

[[Page 8099]]

savings associations. It generally provides that the OCC may require, 
at any time, an independent audit of a Federal savings association's 
financial statements when necessary for safety and soundness reasons. 
It further requires an independent audit if a Federal savings 
association receives a CAMELS rating of 3, 4, or 5, specifies 
qualifications for independent public accountants, and states that 
audit engagement letters provide the OCC with access to and copies of 
any work papers, policies, and procedures relating to the services 
performed.
    There are no comparable OCC regulations for national banks. 
However, the OCC applies and enforces the above-referenced statutory 
requirements, as well as the applicable FDIC reporting and auditing 
requirements, with respect to both national banks and Federal savings 
associations.
    The OCC proposed to remove the requirements contained in Sec. Sec.  
162.1 and 162.2. The OCC has adequate authority pursuant to its general 
examination authority to obtain records and reports from Federal 
savings associations, as well as national banks.\97\ Furthermore, the 
frequently changing nature of accounting standards and disclosures 
makes it impractical to codify detailed standards in a regulation.
---------------------------------------------------------------------------

    \97\ See 12 U.S.C. 1464(d)(1)(B) (Federal savings associations) 
and 12 U.S.C. 481 (national banks). See also 12 U.S.C. 1817.
---------------------------------------------------------------------------

    The OCC also proposed to remove the audit requirements of Sec.  
162.4 and the reporting requirements of Sec.  163.180(a) because they 
are unnecessarily repetitive of other requirements. The OCC has 
adequate statutory authority to require reports and 12 CFR 363 already 
specifies requirements for independent audits and auditors for both 
Federal savings associations and national banks. In addition, as with 
national banks, the OCC does not believe that it is necessary to 
articulate this authority for Federal savings associations in a 
regulation.\98\
---------------------------------------------------------------------------

    \98\ See, e.g., 12 U.S.C. 1817(a)(3) and 12 CFR part 304 with 
respect to reports and 12 CFR part 363 and the Interagency Policy 
Statement on External Audit Programs of Banks and Savings 
Associations (64 FR 52319, Sept. 28, 1999) with respect to audits.
---------------------------------------------------------------------------

    Because 12 U.S.C. 1463(b)(1) requires the Comptroller to prescribe 
by regulation uniform accounting and disclosure standards for Federal 
savings associations, the proposal included a provision requiring that 
a Federal savings association incorporate U.S. GAAP and the disclosure 
standards included therein when complying with all applicable 
regulations, unless otherwise specified by statute or regulation or by 
the OCC. We believe that this guidance satisfies the statutory 
requirement while being flexible enough to accommodate the evolving 
nature of the standards and disclosures. With respect to national 
banks, a similar regulation is not required by statute and would be 
redundant with other provisions that require compliance with GAAP, such 
as 12 U.S.C. 1831m and 1831n(a)(2), discussed above. We note that we 
proposed to reference GAAP as ``U.S. GAAP'' in this provision to 
clarify that the reference is to GAAP as used in the United States, in 
light of evolving global accounting standards.
    We did not receive any specific comments on these proposed 
amendments to part 162 and Sec.  163.180 and adopt them as proposed. We 
note that rescission of Sec. Sec.  162.4 and 163.180(a) will not affect 
the OCC's ability, pursuant to our safety and soundness authority, to 
require at any time an independent audit of a Federal savings 
association, or to access work papers and related documents prepared in 
connection with any audit of a Federal savings association.\99\
---------------------------------------------------------------------------

    \99\ See 12 U.S.C. 1831p-1.
---------------------------------------------------------------------------

    Furthermore, the OCC reminds Federal savings associations that 
rescinding Sec.  162.4 does not eliminate or affect the requirement 
that a savings association with $500 million or more in assets obtain 
an annual audit pursuant to 12 U.S.C. 1831m and 12 CFR part 363, nor 
does it minimize the importance of administering an external audit 
program. The OCC encourages all national banks and Federal savings 
associations, regardless of size, to have independent external reviews 
of their operations and financial statements and to establish audit 
committees made up entirely of outside directors. The form of that 
review can range from financial statement audits by independent public 
accountants to agreed-upon procedures (i.e., directors' examinations) 
performed by other independent and qualified persons. In particular, 
Federal savings associations should be familiar with 12 CFR part 363 
and the 1999 Interagency Policy Statement, which apply to all insured 
depository institutions.

Management and Financial Policies (12 CFR 163.161)

    Twelve CFR 163.161(a)(1) generally requires each Federal savings 
association and each service corporation to be well-managed, to operate 
in a safe and sound manner, and to pursue financial policies that are 
safe and consistent with economical home financing and the purposes of 
savings associations. Section 163.161(a)(2) requires each Federal 
savings association and service corporation to maintain sufficient 
liquidity to ensure its safe and sound operations. Section 163.161(b) 
addresses the compensation of Federal savings association and service 
corporation officers, directors, and employees.
    Federal savings associations and national banks are subject to many 
other regulations and guidance that require sound management and 
financial policies. Part 30 of the OCC's regulations contain guidelines 
establishing operational and managerial standards for safety and 
soundness applicable to national banks and Federal savings 
associations. Among other things, these safety and soundness 
guidelines, which implement the statutory safety and soundness 
provisions at section 39 of the FDI Act,\100\ address executive 
compensation.\101\ Furthermore, the OCC, along with the other Federal 
banking agencies, issued a joint policy statement in 2010 that provides 
guidance for the sound management of liquidity risk.\102\ This policy 
statement is both more detailed and more current than the provisions of 
the regulation and is applicable to both national banks and Federal 
savings associations.
---------------------------------------------------------------------------

    \100\ 12 U.S.C. 1831p-1.
    \101\ 12 CFR part 30, appendix A. The OCC, FDIC, and Federal 
Reserve Board also issued joint agency guidance on incentive 
compensation in 2010. See 75 FR 36395 (June 25, 2010).
    \102\ Interagency Policy Statement on Funding and Liquidity Risk 
Management, 75 FR 13656 (Mar. 13, 2010).
---------------------------------------------------------------------------

    Section 163.161 was included in the third EGRPRA Federal Register 
notice. Although we did not receive any comments on this section in 
response to this request for comment, we determined that Sec.  163.161 
duplicates the provisions discussed above. Therefore, the OCC proposed 
to delete Sec.  163.161 in its entirety. We did not receive any 
specific comments on this deletion, and adopt the amendment as 
proposed.

Financial Derivatives Transactions by Federal Savings Associations (12 
CFR 163.172)

    Twelve CFR 163.172 states that a Federal savings association may 
engage in a transaction involving a financial derivative provided that 
the association is authorized to invest in the assets underlying the 
derivative, the transaction is safe and sound, and the savings 
association's board of directors and management satisfy certain 
prudential requirements. It also states that, in general, if a Federal 
savings association should engage in a financial derivative 
transaction, it should do so to reduce its risk exposure.

[[Page 8100]]

    Section 163.172(a) defines ``financial derivative'' as a financial 
contract whose value depends on the value of one or more underlying 
assets, indices, or reference rates. It states that the most common 
types of financial derivatives are futures, forward commitments, 
options, and swaps.
    We note that the OCC does not have a comparable regulation 
governing national bank derivative transactions, but has addressed 
these activities through interpretive letters.
    Section 163.172 was included in the fourth EGRPRA Federal Register 
notice and we did not receive any comments on this section in response 
to this request for comment. However, to clarify any confusion caused 
by the wording of the current rule, the OCC proposed to replace the 
term ``forward commitment'' with ``forward contract.'' A ``forward 
commitment'' generally refers to an agreement to loan funds in the 
future and is not a financial derivative. In contrast, a ``forward 
contract'' is a well-known type of financial derivative to which this 
rule should apply. We do not expect this change to have a material 
effect on Federal savings associations or the securities marketplace. 
The OCC also proposed other non-substantive changes to clarify the rule 
further and to present the regulatory provisions in a format more 
consistent with the OCC's other rules.
    We did not receive any specific comments on these amendments and 
adopt them as proposed.

Accounting Requirements (12 CFR Part 193)

    Twelve U.S.C. 1463(b)(2)(A) requires savings associations to use 
U.S. GAAP in preparing reports to regulators. Part 193 requires Federal 
savings associations to make disclosures in financial statements filed 
in conversion applications or under the Exchange Act. These disclosures 
are in addition to those required under U.S. GAAP.
    Part 193 was included in the fourth EGRPRA Federal Register notice 
and we did not receive any comments on this rule in response to this 
request for comment. The OCC determined, however, that the additional 
financial disclosures required by part 193 are, in most cases, 
substantially similar to and largely repetitive of otherwise applicable 
public disclosure requirements that a Federal savings association or 
its holding company must satisfy under the Securities Act, the Exchange 
Act, or OCC regulations. Therefore, the OCC proposed to delete part 
193. We did not receive any specific comments on the removal of part 
193, and we adopt this removal as proposed. We note that Federal 
savings associations still are required to follow U.S. GAAP reporting 
and disclosure requirements.

III. Regulatory Analysis

Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (RFA), an agency must 
prepare a regulatory flexibility analysis for all proposed and final 
rules that describes the impact of the rule on small entities.\103\ 
Under section 605(b) of the RFA, this analysis is not required if the 
head of the agency certifies that the rule will not have a significant 
economic impact on a substantial number of small entities and publishes 
its certification and a short explanatory statement in the Federal 
Register along with its rule.
---------------------------------------------------------------------------

    \103\ See 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------

    The OCC currently supervises approximately 1,032 small 
entities.\104\ Because some of the rule's provisions could affect any 
national bank and other provisions could affect any Federal savings 
association, the rule could have an impact on a substantial number of 
OCC-supervised small entities.
---------------------------------------------------------------------------

    \104\ We base our estimate of the number of small entities on 
the Small Business Administration's size thresholds for commercial 
banks and savings institutions, and trust companies, which are $550 
million and $38.5 million, respectively. Consistent with the General 
Principles of Affiliation 13 CFR 121.103(a), we count the assets of 
affiliated financial institutions when determining if we should 
classify a bank or savings association as a small entity. We use 
December 31, 2015, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the U.S. Small Business Administration's Table of 
Size Standards.
---------------------------------------------------------------------------

    We believe that substantially all of national banks' and Federal 
savings associations' direct costs will be associated with reviewing 
the amendments and, when necessary, modifying policies and procedures 
to correct any inconsistencies between banks' internal policies and the 
modified rules. Once the bank has implemented the amendments, these 
costs will dissipate. We estimate that the monetized direct cost per 
bank or savings association will range from a low of approximately $1 
thousand to a high of approximately $8 thousand. Using the upper bound 
average direct cost per entity, we believe the rule might have a 
significant economic impact on approximately three OCC-supervised small 
entities, which is not a substantial number. In other words, although 
the rule could have an impact on a substantial number of small 
entities, this impact might be significant for only a few small 
entities. Therefore the OCC certifies that this final rule does not 
have a significant economic impact on a substantial number of small 
entities supervised by the OCC. Accordingly, a regulatory flexibility 
analysis is not required.
    We note that in determining this compliance cost, we do not offset 
the direct cost imposed by the rulemaking with savings that certain 
banks and savings associations will realize as a result of the 
rulemaking. Therefore, the cost described here does not include 
offsetting reductions in regulatory cost and burden.

Unfunded Mandates Reform Act of 1995

    The OCC has analyzed the final rule under the factors in the 
Unfunded Mandates Reform Act of 1995 (UMRA).\105\ Under this analysis, 
the OCC considered whether the proposed rule includes a Federal mandate 
that may result in the expenditure by state, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation). The 
UMRA does not apply to regulations that incorporate requirements 
specifically set forth in law.
---------------------------------------------------------------------------

    \105\ 2 U.S.C. 1531 et seq.
---------------------------------------------------------------------------

    The OCC finds that the rule does not trigger the UMRA cost 
threshold because we estimate that the UMRA cost is nil. The OCC 
believes that substantially all of banks' and savings associations' 
direct costs will be implementation costs associated with reviewing the 
amendments and, when necessary, modifying policies and procedures to 
correct any inconsistencies between banks' internal policies and the 
modified rules. Because these costs are not associated with mandates, 
they are not UMRA costs. Accordingly, the OCC has not prepared the 
written statement described in section 202 of the UMRA.

IV. Administrative Law Matters

Notice and Comment

    Pursuant to the Administrative Procedure Act (APA), at 5 U.S.C. 
553(b)(B), notice and comment are required prior to the issuance of a 
final rule unless an agency, for good cause, finds that ``notice and 
public procedure thereon are impracticable, unnecessary, or contrary to 
the public interest.'' This final rule includes four amendments not 
originally included in the proposed rule published on March 14, 2016. 
Three of these amendments replace inaccurate terms in 12 CFR 5.21, 
5.22, and 8.6(c)(3)(iv) and are purely technical in

[[Page 8101]]

nature. The fourth amendment modifies a reference in 12 CFR 5.48 to an 
internal agency procedure that does not affect a national bank, a 
Federal savings association, or other non-OCC party. Because these 
amendments are either technical changes or only affect the OCC, the OCC 
has good cause to conclude that advance notice and comment under the 
APA are not necessary prior to their issuance.

Effective Date

    The APA requires that a substantive rule must be published not less 
than 30 days before its effective date, unless, among other things, the 
rule grants or recognizes an exemption or relieves a restriction.\106\ 
Section 302 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (RCDRIA) requires that regulations imposing 
additional reporting, disclosure, or other requirements on insured 
depository institutions take effect on the first day of the calendar 
quarter after publication of the final rule, unless, among other 
things, the agency determines for good cause that the regulations 
should become effective before such time.\107\ The April 1, 2017 
effective date of this final rule meets both the APA and RCDRIA 
effective date requirements, as it will take effect at least 30 days 
after its publication date of January 23, 2017 and on the first day of 
the calendar quarter following publication, April 1, 2017.
---------------------------------------------------------------------------

    \106\ 5 U.S.C. 553(d)(1).
    \107\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

    Section 302 of the RCDRIA also requires the OCC to consider, 
consistent with the principles of safety and soundness and the public 
interest, any administrative burdens the final rule would place on 
insured depository institutions, including small depository 
institutions, and their customers as well as the benefits of such 
regulations when determining the effective date and administrative 
compliance requirements of new regulations that impose new reporting, 
disclosure, or other requirements on insured depository 
institutions.\108\ The OCC has considered the changes made by this 
final rule and believes that the effective date of April 1, 2017 should 
provide national banks and Federal savings associations with adequate 
time to comply with these changes as they do not involve major 
revisions to bank or savings association operations. Furthermore, many 
of the changes will reduce burden on banks and savings associations or 
clarify requirements, which will lessen the administrative compliance 
burden of our regulations on these institutions. Some of these changes 
also will also benefit bank and savings association customers in that 
they eliminate unnecessary mailings or provide additional methods to 
access bank services or information.
---------------------------------------------------------------------------

    \108\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

Paperwork Reduction Act

    Under the PRA of 1995,\109\ the OCC may not conduct or sponsor, and 
a person is not required to respond to, an information collection 
unless the information collection displays a valid OMB control number. 
The OCC has submitted the information collection requirements imposed 
by this final rule to OMB for review.
---------------------------------------------------------------------------

    \109\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The OCC also submitted the information collection requirements 
imposed by the proposed rule to OMB at the time the proposed rule was 
published. OMB filed comments on the information collections, 
instructing the OCC to examine public comment in response to the 
proposed rule and include in the supporting statement of the next 
submission, to be submitted to OMB at the final rule stage, a 
description of how the OCC has responded to any public comments on the 
collection, including comments on maximizing the practical utility of 
the collection and minimizing the burden. The OCC received no comments 
regarding the information collections and has resubmitted them to OMB 
for review in connection with the final rule.
    The final rule amends Sec.  5.20, where special purpose charters 
are discussed, to describe changes in charter purpose, set out the 
requirement for an application, and direct institutions to Sec.  5.53 
for the relevant application. A nonmaterial change has been filed with 
OMB for these revisions.
    Section 9.18(b)(1) has been revised to replace the requirement that 
a national bank make a copy of any collective investment fund plan 
available for public inspection at its main office with the requirement 
that the plan could instead be available to the public on its Web site. 
A nonmaterial change has been filed with OMB for this revision.
    Part 194 is removed and Federal savings associations would follow 
part 11. Section 11.3 has been revised to require that fewer copies be 
filed and to allow electronic signatures. A nonmaterial change has been 
filed with OMB for these revisions.
    Section 12.4(b) has been amended to allow institutions to direct a 
broker-dealer to mail confirmations to customers without requiring a 
duplicate or other form of notification specified in Sec.  12.4 or 
Sec.  12.5 to be sent by the institution. Sections 12.101 and 12.102, 
which require the disclosure of remuneration for mutual fund 
transactions and electronic communications, have been removed. Section 
151.60(a) and (b) have been amended to include the less detailed 
maintenance and storage procedures for customer securities transaction 
records found in part 12. Section 151.60(b) also has been amended to 
allow use of a third-party service provider for records storage and 
maintenance. Section 151.80 has been amended to provide that a Federal 
savings association that has previously determined compensation in a 
written agreement with the customer would not need to provide a 
remuneration statement for each securities transaction. The 
Recordkeeping Requirements for Securities Transactions information 
collection covering parts 12 and 151 has been submitted to OMB for 
review:
    Title: Recordkeeping Requirements for Securities Transactions.
    OMB Control No.: 1557-0142.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents:
     Current: 399.
     Revised: 399.
    Estimated Total Annual Burden:
     Current: 2,315 hours.
     Revised: 1,916 hours.
    Part 197 has been removed and Federal savings associations will 
follow part 16. In addition, Sec.  16.5 has been amended to provide 
additional exemptions for private placements and sales of certain 
fractional interests for Federal savings associations. The filing 
requirement in Sec.  197.18 for periodic reports on sales of securities 
has been removed and Federal savings associations with total assets 
exceeding $10,000,000 and a class of equity security (other than 
exempted security) held of record by 2,000 or more persons are subject 
to Exchange Act periodic and current reporting requirements. Section 
16.17 has been revised to (i) reduce from four paper copies to one 
electronic copy the number of copies of documents required to be filed 
for banks and Federal savings associations and banks and Federal 
savings associations in organization, with certain paper submission 
exceptions; and (ii) reduces from four to two the number of paper 
copies of amendments that must be filed. In addition, documents may be 
signed electronically using the signature provision in SEC Rule 402. 
The Securities Offering Disclosure information collection covering 
parts 16

[[Page 8102]]

and 197 has been submitted to OMB for review:
    Title: Securities Offering Disclosure Rules.
    OMB Control No.: 1557-0120.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents:
     Current: 61.
     Revised: 37.
    Estimated Total Burden:
     Current: 1,310 hours.
     Revised: 814 hours.
    Part 18 is removed and the related information collection, OMB 
Control No. 1557-0182, has been discontinued.
    Section 31.3(d) is added to provide procedures to be followed when 
seeking exemption from 23A of the Federal Reserve Act. A request for a 
new control number for this collection has been submitted to OMB:
    Title: Extensions of Credit to Insiders and Transactions with 
Affiliates.
    OMB Control No.: 1557-NEW.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents: 1 respondent.
    Estimated Total Annual Burden: 10 hours.
    The notice requirement in Sec.  155.310, requiring a Federal 
savings association to file a written notice with the OCC at least 30 
days prior to establishing a transactional Web site, has been removed. 
Therefore, OMB Control No. 1557-0301, covering Sec.  155.310, has been 
discontinued.
    The duplicative reporting requirements found in Sec. Sec.  162.1 
and 162.4 have been removed. The General Reporting and Recordkeeping 
information collection covering part 162 has been submitted to OMB for 
review:
    Title: General Reporting and Recordkeeping.
    OMB Control No.: 1557-0266.
    Frequency of Response: On occasion.
    Affected Public: Businesses or other for-profit organizations.
    Estimated Number of Respondents:
     Current: 500.
     Revised: 500.
    Estimated Total Annual Burden:
     Current: 68,345 hours.
     Revised: 67,845 hours.
    Comments continue to be invited on:
    (a) Whether the collections of information are necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimates of the burden of the 
collections of information;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collections on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or start-up costs and costs of operation, 
maintenance, and purchase of services to provide information.

IV. Redesignation Tables

------------------------------------------------------------------------
             Subject                 Current rule         Final rule
------------------------------------------------------------------------
Electronic Notice for Securities  12 CFR 151.110....  Removed.
 Transactions.
Transactions with Affiliates....  163.41............  Sec.   31.3.
Loans by savings associations to  163.43............  Sec.   31.2.
 their executive officers,
 directors and principal
 shareholders.
Management and Financial          163.161...........  Removed.
 Policies.
Periodic Reports................  12 CFR 163.180(a).  Removed.
Notification of Loss and Reports  12 CFR 163.180(c).  Sec.   7.2013.
 of Increase in Deductible
 Amount of Bond.
Bonds for Directors, Officers,    12 CFR 163.190....  Sec.   7.2013.
 Employees, and Agents; Form of
 and Amount of Bonds.
Bonds for Agents................  12 CFR 163.191....  Sec.   7.2013.
Accounting Requirements.........  12 CFR part 193...  Removed.
Securities of Federal Savings     12 CFR part 194...  12 CFR part 11.
 Associations.
    Requirements under certain    Sec.   194.1......  Sec.   11.2, Sec.
     sections of the Securities                         11.3, Sec.
     Exchange Act of 1934.                             11.4.
    Liability for certain         Sec.   194.3.       ..................
     statements by Federal
     savings associations.
    Form and content of           Sec.   194.210....  Sec.   11.2.
     financial statements.
    Application of this subpart.  Sec.   194.801.     ..................
    Description of business.....  Sec.   194.802.     ..................
Securities Offerings............  12 CFR part 197...  12 CFR part 16.
    Definitions.................  Sec.   197.1......  Sec.   16.2.
    Offering circular             Sec.   197.2(a)...  Sec.
     requirement.                                      16.3(a).ROW>
        --In General............
        --Communications not      Sec.   197.2(b)...  Sec.   16.4.
         deemed an offer.
        --Preliminary offering    Sec.   197.2(c)...  Sec.   16.3(b).
         circular.
    Exemptions..................  Sec.   197.3......  Sec.   16.5.
    Non-public offering.........  Sec.   197.4......  Sec.   16.7.
    Filing and signature          Sec.   197.5......  Sec.   16.17.
     requirements.
    Effective date..............  Sec.   197.6......  Sec.   16.16.
    Form, content, and            Sec.   197.7......  Sec.   16.15.
     accounting.
    Use of the offering circular  Sec.   197.8......  Sec.   16.18.
    Escrow requirement..........  Sec.   197.9......  Sec.   16.31.
    Unsafe or unsound practices.  Sec.   197.10.....  Sec.   16.32.
    Withdrawal or abandonment...  Sec.   197.11.....  Sec.   16.19.
    Securities sale report......  Sec.   197.12.....  ..................
    Public disclosure and         Sec.   197.13.....  Sec.   16.17(f).
     confidential treatment.
    Waiver......................  Sec.   197.14.....
    Requests for interpretive     Sec.   197.15.....  Sec.   16.30.
     advice or waiver.
    Delayed or continuous         Sec.   197.16.      ..................
     offering and sale of
     securities.
    Sales of securities at an     Sec.   197.17.....  Sec.   16.10.
     office of a savings
     association.
    Current and periodic reports  Sec.   197.18.      ..................
    Approval of the security....  Sec.   197.19.      ..................
    Filing of copies of offering  Sec.   197.21.      ..................
     circulars in certain exempt
     offerings.
    Form for Securities Sale      Sec.   197,         ..................
     Report (Appendix A).          Appendix A.
------------------------------------------------------------------------


[[Page 8103]]

List of Subjects

12 CFR Part 5

    Administrative practice and procedure, Federal savings 
associations, National banks, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 7

    Computer technology, Credit, Insurance, Investments, Federal 
savings associations, National banks, Reporting and recordkeeping 
requirements, Securities, Surety bonds.

12 CFR Part 8

    Assessments, National banks, Reporting and recordkeeping 
requirements, Savings associations.

12 CFR Part 9

    Estates, Investments, National banks, Reporting and recordkeeping 
requirements, Trusts and trustees.

12 CFR Part 10

    Federal savings associations, National banks, Reporting and 
recordkeeping requirements, Securities.

12 CFR Part 11

    Confidential business information, Federal savings associations, 
National banks, Reporting and recordkeeping requirements, Securities.

12 CFR Part 12

    National banks, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 16

    Federal savings associations, National banks, Reporting and 
recordkeeping requirements, Securities.

12 CFR Part 18

    National banks, Reporting and recordkeeping requirements.

12 CFR Part 31

    Credit, Federal savings associations, National banks, Reporting and 
recordkeeping requirements.

12 CFR Part 150

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Federal savings associations, Trusts and trustees.

12 CFR Part 151

    Reporting and recordkeeping requirements, Federal savings 
associations, Securities, Trusts and trustees.

12 CFR Part 155

    Accounting, Consumer protection, Electronic funds transfers, 
Reporting and recordkeeping requirements, Federal savings associations.

12 CFR Part 162

    Accounting, Reporting and recordkeeping requirements, Federal 
savings associations.

12 CFR Part 163

    Accounting, Administrative practice and procedure, Advertising, 
Conflict of interests, Crime, Currency, Investments, Mortgages, 
Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 193

    Accounting, Federal savings associations, Securities.

12 CFR Part 194

    Authority delegations (Government agencies), Reporting and 
recordkeeping requirements.

12 CFR Part 197

    Reporting and recordkeeping requirements, Federal savings 
associations, Securities.

    For the reasons set forth in the preamble, and under the authority 
of 12 U.S.C. 93a and 5412(b)(2)(B), chapter I of title 12 of the Code 
of Federal Regulations is amended as follows:

PART 5--RULES, POLICIES, AND PROCEDURES FOR CORPORATE ACTIVITIES

0
1. The authority citation for part 5 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 24a, 93a, 215a-2, 215a-3, 481, 
1462a, 1463, 1464, 2901 et seq., 3907, and 5412(b)(2)(B).


Sec.  5.8   [Amended]

0
2. Section 5.8 is amended in paragraph (b) by:
0
a. Adding the phrase ``(if known at the time of publication of the 
notice)'' after the phrase ``the closing date of the public comment 
period''; and
0
b. Adding the phrase ``that the public may find information about the 
filing (including the closing date of the comment period) in the OCC's 
Weekly Bulletin available at www.occ.gov,'' before the phrase ``and any 
other information that the OCC requires''.

0
3. Section 5.20 is amended by:
0
a. Adding a sentence at the end of paragraph (b);
0
b. Adding a sentence at the end of paragraph (c);
0
c. Redesignating the text in paragraph (l) as paragraph (l)(1) and 
adding a heading to newly redesignated paragraph (l)(1); and
0
d. Adding paragraph (l)(2).
    The revisions and additions read as follows:


Sec.  5.20  Organizing a national bank or Federal savings association.

* * * * *
    (b) * * * An existing national bank or Federal savings association 
desiring to change the purpose of its charter shall submit an 
application and obtain prior OCC approval.
    (c) * * * This section also describes the requirements for an 
existing national bank or Federal savings association to change the 
purpose of its charter and refers such institutions to Sec.  5.53 for 
the procedures to follow.
* * * * *
    (l) Special purpose institutions--(1) In general. * * *
    (2) Changes in charter purpose. An existing national bank or 
Federal savings association whose activities are limited to a special 
purpose that desires to change to another special purpose, to add 
another special purpose, or to no longer be limited to a special 
purpose charter shall submit an application and obtain prior OCC 
approval under Sec.  5.53. An existing national bank or Federal savings 
association whose activities are not limited that desires to limit its 
activities and become a special purpose institution shall submit an 
application and obtain prior OCC approval under Sec.  5.53.


Sec.  5.21   [Amended]

0
4. Section 5.21 is amended by:
0
a. In paragraph (j)(3)(i)(B), removing the phrase ``paragraph (j)(2)'' 
and adding in its place the phrase ``paragraph (j)(3)'';
0
b. In paragraph (j)(3)(ii), removing the phrase ``paragraph 
(j)(2)(i)(A)'' and adding in its place the phrase ``paragraph 
(j)(3)(i)(A)'';
0
c. In paragraph (j)(3)(iii):
0
i. Removing the phrase ``main office'' and adding in its place the 
phrase ``home office''; and
0
ii. Removing the phrase ``paragraph (j)(2)(i)(A)'' wherever it appears 
and adding in its place the phrase ``paragraph (j)(3)(i)(A)''; and
0
d. In paragraph (j)(4):
0
i. Removing the phrase ``paragraph (j)(2)(ii)'' and adding in its place 
the phrase ``paragraph (j)(3)(ii)''; and
0
ii. Removing the phrase ``paragraph (j)(2)(i)'' and adding in its place 
the phrase ``paragraph (j)(3)(i)''.


Sec.  5.22   [Amended]

0
5. Section 5.22 is amended in paragraph (j)(2)(iii) by removing the 
phrase ``main office'' and adding in its place the phrase ``home 
office''.


Sec.  5.33  [Amended]

0
6. Section 5.33 is amended by:

[[Page 8104]]

0
a. In paragraph (i), removing the phrase ``the 45th day after the 
application is received by the OCC, or the 15th day after the close of 
the comment period, whichever is later,'' and adding in its place the 
phrase ``the 15th day after the close of the comment period,'';
0
b. In paragraph (n)(2)(iii) introductory text, removing the phrase 
``mutually held savings association,'' and adding in its place the 
phrase ``mutually held depository institution that is insured by the 
FDIC,'';
0
c. In paragraph (n)(2)(iii)(B), adding the phrase ``or a similar 
transaction under state law'' at the end of the sentence; and
0
d. In paragraph (o)(3)(i), removing the phrase ``paragraph (n)(3)'' and 
adding in its place the phrase ``paragraph (o)(3)''.


Sec.  5.45   [Amended]

0
7. Section 5.45 is amended in paragraph (g)(4)(i) introductory text by 
removing the word ``After'' and adding in its place the phrase ``If 
prior approval is required pursuant to this paragraph (g), after''.

0
8. Section 5.46 is amended by adding paragraph (i)(6) to read as 
follows:


Sec.  5.46  Changes in permanent capital of a national bank.

* * * * *
    (i) * * *
    (6) Exception for accounting adjustments. (i) Changes to the 
permanent capital accounts that result solely from application of U.S. 
generally accepted accounting principles are not subject to the prior 
approval or notice requirements in paragraph (i)(1), (3), or (4) of 
this section, as applicable.
    (ii) Within 30 days after the end of the quarter in which the 
adjustment occurred, a bank must notify the OCC if the accounting 
adjustment resulted in an increase or decrease to permanent capital in 
an amount greater than 5% of the bank's total permanent capital prior 
to the adjustments; or, if the bank is subject to a letter, order, 
directive, written agreement, or otherwise related to changes in 
permanent capital. The notification must include the amount and 
description of the adjustment, including the applicable provision of 
U.S. GAAP.
* * * * *


Sec.  5.48   [Amended]

0
9. Section 5.48 is amended in paragraph (e)(2)(ii) by removing the word 
``supervisory''.


Sec.  5.50  [Amended]

0
10. Section 5.50 is amended in paragraph (f)(2)(ii)(E) by removing 
``Sec.  192.2(a)(39)'' and adding in its place ``Sec.  192.25''.

0
11. Section 5.53 is amended by:
0
a. Removing the word ``or'' at the end of paragraph (c)(1)(iii);
0
b. Removing the period at the end of paragraph (c)(1)(iv) and adding in 
its place ``; or''; and
0
c. Adding a paragraph (c)(1)(v); and
0
d. Revising paragraph (d)(3)(ii).
    The addition and revision read as follows:


Sec.  5.53  Substantial asset change by a national bank or Federal 
savings association.

* * * * *
    (c) * * *
    (1) * * *
    (v) Any change in the purpose of the charter of the national bank 
or Federal savings association as described in Sec.  5.20(l)(2).
    (d) * * *
    (3) * * *
    (ii) Additional factors. The OCC's review of any substantial asset 
change that involves the purchase or other acquisition or other 
expansions of the bank's or savings association's operations or that 
involves a change in the purpose of the bank's or association's 
charter, as described in Sec.  5.20(l)(2), will include, in addition to 
the foregoing factors, the factors governing the organization of a bank 
or savings association under Sec.  5.20.
* * * * *

0
12. Section 5.66 is amended by adding a sentence between the first and 
second sentences to read as follows:


Sec.  5.66  Dividends payable in property other than cash.

    * * * A national bank shall submit a request for prior approval of 
a noncash dividend to the appropriate OCC licensing office. * * *

PART 7--ACTIVITIES AND OPERATIONS

0
13. The authority citation for part 7 is revised to read as follows:

    Authority:  12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a, 93, 
93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465, 1818, 1828(m) 
and 5412(b)(2)(B).


0
14. Section 7.2008 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec.  7.2008  Oath of directors.

* * * * *
    (b) Execution of the oath. Each director shall execute either a 
joint or individual oath at the first meeting of the board of directors 
that the director attends after the director is appointed or elected. A 
director shall take another oath upon re-election, notwithstanding 
uninterrupted service. Appropriate sample oaths may be found in the 
Charter Booklet of the Comptroller's Licensing Manual available at 
www.occ.gov.
    (c) Filing and recordkeeping. A national bank must file the 
original executed oaths of directors with the appropriate OCC licensing 
office, as defined in 12 CFR 5.3(c), and retain a copy in the bank's 
records.

0
15. Section 7.2013 is amended by:
0
a. Revising paragraph (a) and paragraph (b) introductory text; and
0
b. In paragraph (b)(4), by adding the phrase ``or savings association'' 
after the word ``bank''.
    The revisions read as follows:


Sec.  7.2013  Fidelity bonds covering officers and employees.

    (a) Adequate coverage. All officers and employees of a national 
bank or Federal savings association must have adequate fidelity bond 
coverage. The failure of directors to require bonds with adequate 
sureties and in sufficient amount may make the directors liable for any 
losses that the bank or savings association sustains because of the 
absence of such bonds. Directors should not serve as sureties on such 
bonds. Directors should consider whether agents who have access to 
assets of the bank or savings association should also have fidelity 
bond coverage.
    (b) Factors. The board of directors of the national bank or Federal 
savings association, or a committee thereof, must determine the amount 
of such coverage, premised upon a consideration of factors, including:
* * * * *

PART 8--ASSESSMENT OF FEES

0
16. The authority citation for part 8 is revised to read as follows:

    Authority: 12 U.S.C. 16, 93a, 481, 482, 1467, 1831c, 1867, 3102, 
3108, and 5412(b)(2)(B); and 15 U.S.C. 78c and 78l.

0
17. Section 8.6 is amended by revising paragraph (c)(3)(iv) to read as 
follows:


Sec.  8.6   Fees for special examinations and investigations.

* * * * *
    (c) * * *
    (3) * * *
    (iv) Full-service Federal savings association is a Federal savings 
association that generates more than 50% of its interest and non-
interest income from activities other than credit card operations or 
trust activities and is authorized according to its charter to engage 
in all types of activities

[[Page 8105]]

permissible for Federal savings associations.
* * * * *

PART 9--FIDUCIARY ACTIVITIES OF NATIONAL BANKS

0
18. The authority citation for part 9 continues to read as follows:

    Authority:  12 U.S.C. 24 (Seventh), 92a, and 93a; 15 U.S.C. 78q, 
78q-1, and 78w.

0
19. Section 9.13 is amended by adding a sentence at the end of 
paragraph (a) to read as follows:


Sec.  9.13  Custody of fiduciary assets.

    (a) * * * A bank that is deemed a fiduciary based solely on its 
capacity as investment advisor, as that capacity is defined in Sec.  
9.101(a), and has no other fiduciary capacity as enumerated in Sec.  
9.2(e) is not required to serve as custodian when offering those 
fiduciary services.
* * * * *


Sec.  9.14  [Amended]

0
20. Section 9.14 is amended in paragraph (a) by adding the phrase ``or 
Federal Home Loan Bank'' after the phrase ``with the Federal Reserve 
Bank''.

0
21. Section 9.18 is amended:
0
a. In paragraph (b)(1) by revising the second sentence; and
0
b. In paragraph (c)(2) by:
0
i. Removing ``$1,000,000'' and adding in its place ``$1,500,000''; and
0
ii. Adding a sentence at the end.
    The revision and addition reads as follows:


Sec.  9.18   Collective investment funds.

* * * * *
    (b) * * *
    (1) * * * The bank shall make a copy of the Plan available either 
for public inspection at its main office during all banking hours or on 
its Web site and shall provide a written or electronic copy of the Plan 
to any person who requests it. * * *
* * * * *
    (c) * * *
    (2) * * * The OCC shall adjust this $1,500,000 threshold amount on 
January 1 of every year by the percentage increase in the Consumer 
Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that 
was in effect on the preceding June 1, rounded to the nearest $100 
increment, and make this adjusted amount available to the public.
* * * * *

PART 10--MUNICIPAL SECURITIES DEALERS

0
22. The authority citation for part 10 is revised to read as follows:

    Authority: 12 U.S.C. 93a, 481, 1462a, 1463, 1464(c), 1818, and 
5412(b)(2)(B); 15 U.S.C. 78o-4(c)(5) and 78q-78w.

0
23. Amend Sec.  10.1 by:
0
a. Adding the phrase ``or Federal savings association'' after the word 
``bank'', wherever it appears;
0
b. In paragraph (b), removing the phrase ``to be'' and adding in its 
place the phrase ``will be'';
0
c. In paragraph (b), removing footnote 1; and
0
d. Adding a sentence at the end of paragraph (b).
    The addition reads as follows.


Sec.  10.1  Scope.

* * * * *
    (b) * * * MSRB rules may be obtained at www.msrb.org.


Sec.  10.2  [Amended]

0
24. Amend Sec.  10.2 by:
0
a. In paragraph (a):
0
i. Adding ``or Federal savings association'' after the phrase 
``national bank'', wherever it appears; and
0
ii. Removing the phrase ``Rule G-7(b)(i)-(x)'' and adding in its place 
the phrase ``Rule G-7(b)'';
0
b. In paragraph (b):
0
i. Removing the word ``must'' and adding in its place the phrase ``or 
Federal savings association shall''; and
0
ii. Removing the phrase ``the bank as a municipal'' and adding in its 
place the phrase ``the national bank or Federal savings association as 
a municipal''; and
0
c. In paragraph (c), removing the phrase ``by contacting the OCC at 400 
7th Street, SW., Washington, DC 20219, Attention: Bank Dealer 
Activities'' and adding in its place ``at http://www.banknet.gov/''.

PART 11--SECURITIES EXCHANGE ACT DISCLOSURE RULES

0
25. The authority citation for part 11 is revised to read as follows:

    Authority:  12 U.S.C. 93a, 1462a, 1463, 1464 and 5412(b)(2)(B); 
15 U.S.C. 78j-1(m), 78m, 78n, 78p, 78w, 78l, 7241, 7242, 7243, 7244, 
7261, 7262, 7264, and 7265.

0
26. Section 11.1 is revised to read as follows:


Sec.  11.1   Authority.

    The Office of the Comptroller of the Currency (OCC) is vested with 
the powers, functions, and duties otherwise vested in the Securities 
and Exchange Commission (SEC) to administer and enforce the provisions 
of sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the 
Securities Exchange Act of 1934, as amended (Exchange Act) (15 U.S.C. 
78j-1(m), 78l, 78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78p), and 
sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the Sarbanes-
Oxley Act of 2002 (Sarbanes-Oxley Act), as amended (15 U.S.C. 7241, 
7242, 7243, 7244, 7261, 7262, 7264, and 7265), for national banks and 
Federal savings associations with one or more classes of securities 
subject to the registration provisions of sections 12(b) and (g) of the 
Exchange Act (registered national banks or registered Federal savings 
associations). Further, the OCC has general rulemaking authority under 
12 U.S.C. 93a, 1462a, 1463, and 1464, to promulgate rules and 
regulations concerning the activities of national banks and Federal 
savings associations.

0
27. Section 11.2 is revised to read as follows:


Sec.  11.2  Reporting requirements for registered national banks and 
Federal savings associations.

    (a) Filing, disclosure and other requirements--(1) General. Except 
as otherwise provided in this section, a national bank or Federal 
savings association whose securities are subject to registration 
pursuant to section 12(b) or section 12(g) of the Exchange Act (15 
U.S.C. 78l(b) and (g)) shall comply with the rules, regulations, and 
forms adopted by the SEC pursuant to:
    (i) Sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of 
the Exchange Act (15 U.S.C. 78j-1(m), 78l, 78m, 78n(a), (c), (d) and 
(f), and 78p); and
    (ii) Sections 302, 303, 304, 306, 401(b), 404, 406, and 407 of the 
Sarbanes-Oxley Act (codified at 15 U.S.C. 7241, 7242, 7243, 7244, 7261, 
7262, 7264, and 7265).
    (2) [Reserved]
    (b) References to the Securities Exchange Commission, SEC, or 
Commission. Any references to the ``Securities and Exchange 
Commission,'' the ``SEC,'' or the ``Commission'' in the rules, 
regulations and forms described in paragraph (a)(1) of this section 
with respect to securities issued by registered national banks or 
registered Federal savings associations shall be deemed to refer to the 
OCC unless the context otherwise requires.
    (c) References to registration requirements. For national banks and 
Federal savings associations, any references to registration 
requirements under the Securities Act of 1933 and its accompanying 
rules in the rules, regulations, and forms described in paragraph 
(a)(1) of this section mean the

[[Page 8106]]

registration requirements in 12 CFR part 16.
    (d) Emerging growth company eligibility--(1) General. A national 
bank or Federal savings association that meets the criteria to qualify 
as an emerging growth company under section 3(a)(80) of the Exchange 
Act (15 U.S.C. 78c(a)(80)) shall be eligible for treatment as an 
emerging growth company for purposes of any rule, regulation or form 
described in paragraph (a)(1) of this section, except as provided in 
paragraph (d)(3) of this section.
    (2) Opt-in right. With respect to an exemption provided to a 
national bank or Federal savings association that is an emerging growth 
company under this part, the bank or savings association may choose to 
forgo such exemption and instead comply with the requirements that 
apply to a bank or savings association that is not an emerging growth 
company.
    (3) Exclusions. A national bank or Federal savings association that 
otherwise meets the definition of emerging growth company in section 
3(a)(80) of the Exchange Act (15 U.S.C. 78c(a)(80)) shall not be 
considered an emerging growth company for purposes of this part if:
    (i) The first sale of its common equity securities pursuant to an 
effective registration statement or offering circular occurred on or 
before December 8, 2011; or
    (ii) It has reached the last day of its fiscal year following the 
fifth anniversary of the date of the first sale of its common equity 
securities pursuant to an effective registration statement or offering 
circular.

0
28. Section 11.3 is amended by:
0
a. Revising paragraphs (a)(1) and (a)(3)(i) and the heading to 
paragraph (a)(3)(ii);
0
b. Adding a paragraph (a)(3)(iii);
0
c. Removing paragraph (a)(4); and
0
d. Removing the phrase ``, at the address listed in paragraph (a) of 
this section'' in paragraph (b) and adding in its place the phrase ``, 
at the address listed on www.occ.gov.''.
    The revisions read as follows:


Sec.  11.3  Filing requirements and inspection of documents.

    (a) Filing requirements--(1)(i) In general. Except as otherwise 
provided in this section, all papers required to be filed with the OCC 
pursuant to the Exchange Act or regulations thereunder shall be 
submitted to the Securities and Corporate Practices Division of the OCC 
electronically at http://www.banknet.gov/. Documents may be signed 
electronically using the signature provision in SEC Rule 12b-11 (17 CFR 
240.12b-11).
    (ii) Electronic filing exception. If a national bank or Federal 
savings association experiences unanticipated technical difficulties 
preventing the timely preparation and submission of an electronic 
filing, other than the filings described in paragraph (a)(3)(ii) of 
this section, the bank may, upon notice to the OCC's Securities and 
Corporate Practices Division, file the subject filing in paper format 
no later than one business day after the date on which the filing was 
to be made. Paper filings should be submitted to the Securities and 
Corporate Practices Division, Office of the Comptroller of the Currency 
at the address provided at www.occ.gov.
* * * * *
    (3) Date of filing--(i) General. The date of filing is the date the 
OCC receives the filing, provided the person, bank, or savings 
association submitting the filing has complied with all applicable 
requirements. An electronic filing that is submitted on a business day 
by direct transmission commencing on or before 5:30 p.m. Eastern 
Standard or Daylight Savings Time, whichever is currently in effect, 
would be deemed received by the OCC on the same business day. An 
electronic filing that is submitted by direct transmission commencing 
after 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever is 
currently in effect, or on a Saturday, Sunday, or Federal holiday, 
would be deemed received by the OCC on the next business day.
    (ii) Beneficial ownership filings. * * *
    (iii) Adjustment of filing date. If an electronic filer in good 
faith attempts to file a document pursuant to this part in a timely 
manner but the filing is delayed due to technical difficulties beyond 
the electronic filer's control, the electronic filer may request that 
the OCC adjust the filing date of such document. The OCC may grant the 
request if it appears that such adjustment is appropriate and 
consistent with the public interest and the protection of investors.
* * * * *

0
29. Section 11.4 is amended by revising paragraph (b) to read as 
follows:


Sec.  11.4  Filing fees.

* * * * *
    (b) Fees must be paid by check payable to the Comptroller of the 
Currency or by other means acceptable to the OCC.

PART 12--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES 
TRANSACTIONS

0
30. The authority citation for part 12 continues to read as follows:

    Authority: 12 U.S.C. 24, 92a, and 93a.


Sec.  12.1  [Amended]

0
31. Section 12.1 is amended:
0
a. In paragraph (c)(1) by removing the phrase ``Securities and Exchange 
Commission'' and adding in its place the phrase ``Securities and 
Exchange Commission (SEC)''; and
0
b. By removing the phrase ``Securities and Exchange Commission'' in 
paragraph (c)(2)(iii) and the phrase ``Securities and Exchange 
Commission (SEC)'' in paragraph (c)(2)(v) and adding ``SEC'' in their 
place.
0
32. Section 12.2 is amended by:
0
a. In paragraph (g)(3), removing the phrase ``Securities and Exchange 
Commission'' and adding in its place ``SEC''; and
0
b. Revising paragraph (i)(3).
    The revision reads as follows.


Sec.  12.2  Definitions.

* * * * *
    (i) * * *
    (3) A security that is an industrial development bond.
* * * * *

0
33. Section 12.3 is amended by adding a sentence at the end of 
paragraph (b) to read as follows:


Sec.  12.3   Recordkeeping.

* * * * *
    (b) * * * A national bank may contract with a third-party service 
provider to maintain the records, provided that the bank maintains 
effective oversight of the third-party service provider to ensure the 
records meet the requirements of this section.

0
34. Section 12.4 is amended by revising paragraph (b) to read as 
follows:


Sec.  12.4  Content and time of notification.

* * * * *
    (b) Copy of the registered broker/dealer's confirmation. A copy of 
the confirmation of a registered broker/dealer relating to the 
securities transaction, which the bank may direct the registered 
broker/dealer to send directly to the customer; and, if the customer or 
any other source will provide remuneration to the bank in connection 
with the transaction and a written agreement between the bank and the 
customer does not determine the remuneration, a statement of the source 
and amount of any remuneration that the customer or any other source is 
to provide the bank.

[[Page 8107]]

Sec.  12.7  [Amended]

0
35. Section 12.7(d) is amended by removing the phrase ``Securities and 
Exchange Commission (SEC)'' adding in its place ``SEC''.


Sec.  12.9   [Amended]

0
36. Section 12.9(b)(2) is amended by removing the phrase ``Securities 
and Exchange Commission (SEC)'' and adding in their place ``SEC''.


Sec. Sec.  12.101 through 12.102  [Removed]

0
37. The undesignated center heading ``Interpretations'' and Sec. Sec.  
12.101 and12.102 are removed.

PART 16--SECURITIES OFFERING DISCLOSURE RULES

0
38. The authority citation for part 16 is revised to read as follows:

    Authority:  12 U.S.C. 1 et seq., 93a, 1462a, 1463, 1464, and 
5412(b)(2)(B).


0
39. Section 16.1 is amended by:
0
a. Revising paragraph (a); and
0
b. In paragraphs (b) and (c), removing the word ``bank'' wherever it 
appears and adding in its place the phrase ``national bank or Federal 
savings association''.
    The revision reads as follows:


Sec.  16.1  Authority, purpose, and scope.

    (a) Authority. This part is issued under the rulemaking authority 
of the Comptroller of the Currency (OCC) for national banks in 12 
U.S.C. 1 et seq., and 93a, and for Federal savings associations in 12 
U.S.C. 1462a, 1463, 1464, and 5412(b)(2)(B).
* * * * *

0
40. Section 16.2 is amended by:
0
a. In paragraph (a), removing the phrase ``Commission Rule'' and adding 
in its place ``SEC Rule'';
0
b. Removing paragraphs (b), (c), and (j) and redesignating paragraphs 
(d) through (f) as paragraphs (b) through (d), respectively; 
redesignating paragraphs (g) and (h) as paragraphs (f) and (g), 
respectively; and redesignating paragraphs (k) through (n) as 
paragraphs (j) through (m), respectively;
0
c. In newly designated paragraph (b), removing ``2(12)'' and 
``77b(12))'' and adding ``2(a)(12)'' and ``77b(a)(12))'', respectively, 
in their places;
0
d. In newly redesignated paragraph (c), removing ``78a through 78jj'' 
and adding ``78a et seq.'' in its place;
0
e. Adding new paragraphs (e), (h), and (n);
0
f. In newly redesignated paragraph (g) and paragraph (i), removing the 
word ``bank'' and adding in its place the phrase ``national bank or 
Federal savings association'';
0
g. In newly redesignated paragraph (j):
0
i. Removing ``2(2)'' and ``77b(2))'' and adding ``2(a)(2)'' and 
``77b(a)(2))'', respectively, in their places; and
0
ii. Removing the word ``bank'' and adding in its place the phrase 
``national bank and a Federal savings association'';
0
h. In newly redesignated paragraph (m), removing ``2(3)'' and 
``77b(3))'' and adding ``2(a)(3)'' and ``77b(a)(3))'', respectively, in 
their places;
0
i. In paragraph (o), removing ``through 77aa'' and adding ``et seq.'' 
in its place;
0
j. In paragraph (p), removing ``2(1)'' and ``77b(1))'' and adding 
``2(a)(1)'' and ``77b(a)(1))'', respectively, in their places; and
0
k. In paragraph (q):
0
i. Removing ``77b(11))'' and adding ``77b(a)(11))'' in its place;
0
ii. Removing ``2(11)'' wherever it appears and adding ``2(a)(11)'' in 
its place; and
0
iii. Removing the phrase ``Commission Rules'' and adding in its place 
``SEC Rules''.
    The additions read as follows:


Sec.  16.2   Definitions.

* * * * *
    (e) Federal savings association means an existing Federal savings 
association chartered under section 5 of the Home Owners' Loan Act 
(HOLA) (12 U.S.C. 1464 et seq.) or a Federal savings association in 
organization.
* * * * *
    (h) National bank means an existing national bank, a national bank 
in organization, or a Federal branch or agency of a foreign bank.
* * * * *
    (n) SEC means the Securities and Exchange Commission. When used in 
the rules, regulations, or forms of the SEC referred to in this part, 
the term ``SEC'' shall be deemed to refer to the OCC.
* * * * *


Sec.  16.3  [Amended]

0
41. Section 16.3 is amended by:
0
a. In paragraphs (a) introductory text and (b) introductory text, 
removing the word ``bank'' and adding in its place the phrase 
``national bank or Federal savings association''; and
0
b. In paragraph (c):
0
i. Removing ``Commission Rule'' and adding in its place ``SEC Rule'';
0
ii. Removing the citation ``section 4(3)'' and adding in its place the 
citation ``section 4(a)(3)''; and
0
iii. Removing the word ``bank'' and adding in its place the phrase 
``national bank and Federal savings association''.


Sec.  16.4  [Amended]

0
42. Section 16.4 is amended by removing the phrase ``Commission Rule'' 
and adding in its place the phrase ``SEC Rule'' wherever it occurs.

0
43. Section 16.5 is amended by:
0
a. Revising the introductory text and paragraphs (a), (b), and (e);
0
b. In paragraph (f), removing the phrase ``Commission Rule'' and adding 
in its place the phrase ``SEC Rule''; and
0
c. In paragraph (g), removing the phrase ``Commission Regulation'' and 
adding in its place the phrase ``SEC Regulation''.
    The revisions read as follows.


Sec.  16.5  Exemptions.

    The registration statement and prospectus requirements of Sec.  
16.3 do not apply to an offer or sale of national bank or Federal 
savings association securities:
    (a) If the securities are exempt from registration under section 3 
of the Securities Act (15 U.S.C. 77c), but only by reason of an 
exemption other than section 3(a)(2) (exemption for bank securities), 
section 3(a)(5) (exemption for savings association securities), section 
3(a)(11) (exemption for intrastate offerings), and section 3(a)(12) 
(exemption for bank holding company formation) of the Securities Act.
    (b) In a transaction exempt from registration under section 4 of 
the Securities Act (15 U.S.C. 77d). SEC Rules 152 and 152a (17 CFR 
230.152 and 230.152a) (which apply to sections 4(a)(2) and 4(a)(1) of 
the Securities Act) apply to this part;
* * * * *
    (e) In a transaction that satisfies the requirements of SEC Rule 
144, 144A, or 236 (17 CFR 230.144, 230.144A, or 230.236);
* * * * *

0
44. Section 16.6 is amended by:
0
a. In paragraph (a) introductory text, removing the word ``bank'' and 
adding in its place the phrase ``national bank or Federal savings 
association'';
0
b. Revising paragraphs (a)(1) and (5);
0
c. In paragraph (a)(3), removing the word ``bank'' and adding in its 
place the phrase ``national bank or Federal savings association''; and
0
d. In paragraph (b), removing the phrase ``Commission Rule'' and adding 
in its place the phrase ``SEC Rule'', wherever it appears.
    The revisions read as follows:


Sec.  16.6  Sales of nonconvertible debt.

    (a) * * *
    (1) The national bank or Federal savings association issuing the 
debt has securities registered under the Exchange Act or is a 
subsidiary of a holding

[[Page 8108]]

company that has securities registered under the Exchange Act;
* * * * *
    (5) Prior to or simultaneously with the sale of the debt, each 
purchaser receives an offering document that contains a description of 
the terms of the debt, the use of proceeds, and method of distribution, 
and incorporates the national bank's or Federal savings association's 
latest Consolidated Reports of Condition and Income (Call Report) and 
the national bank's, Federal savings association's, or the holding 
company's Forms 10-K, 10-Q, and 8-K (17 CFR part 249) filed under the 
Exchange Act; and
* * * * *


Sec.  16.7   [Amended]

0
45. Section 16.7 is amended by:
0
a. Removing the phrase ``Commission Regulation'' and adding in its 
place the phrase ``SEC Regulation'', wherever it appears;
0
b. In paragraphs (a) introductory text, removing the word ``bank'' and 
adding in its place the phrase ``national bank or Federal savings 
association'';
0
c. In paragraph (b):
0
i. Removing the word ``bank'' and adding in its place the phrase 
``national bank or Federal savings association''; and
0
ii. Removing the phrase ``Commission Rule'' and adding in its place the 
phrase ``SEC Rule''; and
0
d. In paragraph (c), removing the word ``bank'' and adding in its place 
the phrase ``national bank or Federal savings association''.


Sec.  16.8  [Amended]

0
46. Section 16.8 is amended:
0
a. By removing the phrase ``Commission Regulation'' and adding in its 
place the phrase ``SEC Regulation'', wherever it appears;
0
b. In paragraph (a), by removing the word ``bank'' and adding in its 
place the phrase ``national bank or Federal savings association''; and
0
c. In paragraph (b), by removing the word ``Commission's'' and adding 
in its place the word ``SEC's''.

0
47. Section 16.9 is amended by:
0
a. Revising paragraph (a); and
0
b. In the introductory text and paragraphs (b) through (d), removing 
the word ``bank'' and adding in its place the phrase ``national bank or 
Federal savings association'', wherever it appears.
    The revision reads as follows:


Sec.  16.9   Securities offered and sold in holding company 
dissolution.

* * * * *
    (a) The offer and sale of national bank or Federal savings 
association issued securities occurs solely as part of a dissolution in 
which the security holders exchange their shares of stock in a holding 
company that had no significant assets other than securities of the 
bank or savings association, for bank or savings association stock;
* * * * *

0
48. Section 16.10 is added to read as follows:


Sec.  16.10  Sales of securities at an office of a Federal savings 
association.

    Sales of securities of a Federal savings association or its 
affiliates at an office of a Federal savings association may be made 
only in accordance with the provisions of 12 CFR 163.76. For the 
purpose of this section, ``affiliate'' has the same meaning as in 12 
CFR 161.4.


Sec.  16.15   [Amended]

0
49. Section 16.15 is amended by:
0
a. In paragraph (a):
0
i. Removing the word ``Commission's'' and adding in its place the word 
``SEC's'';
0
ii. Removing the phrase ``Commission regulations'' and adding in its 
place the phrase ``SEC regulations''; and
0
iii. Removing the word ``bank'' and adding in its place the phrase 
``national bank or Federal savings association'';
0
b. In paragraph (b), removing the phrase ``Commission Regulation'' and 
adding in its place the phrase ``SEC Regulation'';
0
c. In paragraph (d), removing the word ``bank'' and adding in its place 
the phrase ``national bank or Federal savings association''; and
0
d. In paragraph (e), adding the phrase ``or Federal savings 
association'' after the word ``bank'', wherever it appears.


Sec.  16.16   [Amended]

0
50. Section 16.16 is amended in paragraph (a) by removing the phrase 
``Commission Regulation'' and adding in its place the phrase ``SEC 
Regulation''.

0
51. Section 16.17 is revised to read as follows:


Sec.  16.17   Filing requirements and inspection of documents.

    (a) Except as otherwise provided in this section, all registration 
statements, offering documents, amendments, notices, or other documents 
must be filed with the OCC's Securities and Corporate Practices 
Division electronically at http://www.banknet.gov/. Documents may be 
signed electronically using the signature provision in SEC Rule 402 (17 
CFR 230.402).
    (b) All registration statements, offering documents, amendments, 
notices, or other documents relating to a national bank or Federal 
savings association in organization must be filed with the appropriate 
district office of the OCC at http://www.banknet.gov/.
    (c) Where this part refers to a section of the Securities Act or 
the Exchange Act or an SEC rule that requires the filing of a notice or 
other document with the SEC, that notice or other document must be 
filed with the OCC.
    (d) Provided the person filing the document has complied with all 
requirements regarding the filing, including the submission of any fee 
required under Sec.  16.33, the date of filing of the document is the 
date the OCC receives the filing. An electronic filing that is 
submitted on a business day by direct transmission commencing on or 
before 5:30 p.m. Eastern Standard or Daylight Savings Time, whichever 
is currently in effect, would be deemed received by the OCC on the same 
business day. An electronic filing that is submitted by direct 
transmission commencing after 5:30 p.m. Eastern Standard or Daylight 
Savings Time, whichever is currently in effect, or on a Saturday, 
Sunday, or Federal holiday, would be deemed received by the OCC on the 
next business day. If an electronic filer in good faith attempts to 
file a document with the OCC in a timely manner but the filing is 
delayed due to technical difficulties beyond the electronic filer's 
control, the electronic filer may request that the OCC adjust the 
filing date of such document. The OCC may grant the request if it 
appears that such adjustment is appropriate and consistent with the 
public interest and the protection of investors.
    (e) Notwithstanding paragraph (d) of this section, any registration 
statement or any post-effective amendment thereto filed pursuant to SEC 
Rule 462(b) (17 CFR 230.462(b)) shall be deemed received by the OCC on 
the same business day if its submission commenced on or before 10 p.m. 
Eastern Standard Time or Eastern Daylight Savings Time, whichever is 
currently in effect, and on the next business day if its submission 
commenced after 10 p.m. Eastern Standard or Daylight Savings Time, 
whichever is currently in effect, or any time on a Saturday, Sunday, or 
Federal holiday.
    (f) If a national bank or Federal savings association experiences 
unanticipated technical difficulties preventing the timely preparation 
and submission of an electronic filing, the bank or savings association 
may, upon notice to the OCC's Securities and

[[Page 8109]]

Corporate Practices Division or district office, as appropriate, file 
the subject filing in paper format no later than one business day after 
the date on which the filing was to be made. Paper filings should be 
submitted to the OCC's Securities and Corporate Practices Division or 
appropriate district office, at the address provided at www.occ.gov.
    (g) Any filing of amendments or revisions must include two copies, 
one of which must be marked to indicate clearly and precisely, by 
underlining or in some other appropriate manner, the changes made.
    (h) The OCC will make available for public inspection copies of the 
registration statements, offering documents, amendments, exhibits, 
notices or reports filed pursuant to this part at the address 
identified in Sec.  4.14 of this chapter.

0
52. Section 16.30 is amended by revising paragraph (a) to read as 
follows:


Sec.  16.30   Request for interpretive advice or no-objection letter.

* * * * *
    (a) File a copy of the request, including any supporting 
attachments, with the OCC's Securities and Corporate Practices Division 
at the address provided at www.occ.gov;
* * * * *

0
53. Section 16.32 is amended:
0
a. By revising the section heading;
0
b. In paragraphs (a) introductory text and (a)(3), removing the word 
``bank'' and adding in its place the phrase ``national bank or Federal 
savings association''; and
0
c. In paragraph (d), removing the phrase ``Commission Rule'' and adding 
in its place the phrase ``SEC Rule''.
    The revision reads as follows.


Sec.  16.32  Fraudulent transactions and unsafe or unsound practices.

* * * * *

0
54. Section 16.33 is revised to read as follows:


Sec.  16.33   Filing fees.

    (a) The OCC may require filing fees to accompany certain filings 
made under this part before it will accept those filings. The OCC 
provides an applicable fee schedule in the Notice of Comptroller of the 
Currency Fees published pursuant to Sec.  8.8 of this chapter.
    (b) Filing fees must be paid by check payable to the Comptroller of 
the Currency or by other means acceptable to the OCC.

PART 18 [REMOVED]

0
55. Remove part 18.

PART 31--EXTENSIONS OF CREDIT TO INSIDERS AND TRANSACTIONS WITH 
AFFILIATES

0
56. The authority citation for part 31 is revised to read as follows:

    Authority:  12 U.S.C. 93a, 375a(4), 375b(3), 1463, 1467a(d), 
1468, 1817(k), and 5412(b)(2)(B).

0
57. Section 31.1 is revised to read as follows:


Sec.  31.1   Authority.

    This part is issued pursuant to 12 U.S.C. 93a, 375a(4), 375b(3), 
1463, 1467a(d), 1468, 1817(k), and 5412(b)(2)(B), as amended.


Sec.  31.2  [Amended]

0
58. Section 31.2 is amended by:
0
a. In paragraph (a):
0
i. Removing the phrase ``A national bank and its'' and adding in its 
place the phrase ``National banks, Federal savings associations, and 
their''; and
0
ii. Adding ``(Regulation O)'' to the end of the sentence; and
0
b. In paragraph (b), adding ``, Federal savings associations,'' after 
the word ``banks''.

0
59. Add Sec.  31.3 to read as follows:


Sec.  31.3   Affiliate transactions requirements.

    (a) General rule. National banks and Federal savings associations 
shall comply with the provisions contained in 12 CFR part 223 
(Regulation W).
    (b) Enforcement. The Comptroller of the Currency administers and 
enforces affiliate transactions requirements as they apply to national 
banks and Federal savings associations.
    (c) Standard for exemptions. The OCC may, by order, exempt 
transactions or relationships of a national bank or Federal savings 
association from the requirements of section 23A and section 11 of the 
Home Owners' Loan Act (HOLA), as applicable, and 12 CFR part 223 if:
    (1) The OCC, jointly with the Federal Reserve Board, finds the 
exemption to be in the public interest and consistent with the purposes 
of section 23A or section 11 of the HOLA, as applicable; and
    (2) The FDIC, within 60 days of receiving notice of such joint 
finding, does not object in writing to the finding based on a 
determination that the exemption presents an unacceptable risk to the 
Deposit Insurance Fund.
    (d) Procedures for exemptions. A national bank or Federal savings 
association may request an exemption from the requirements of section 
23A or section 11 of the HOLA, as applicable, and 12 CFR part 223 for a 
national bank or Federal savings association by submitting a written 
request to the Deputy Comptroller for Licensing with a copy to the 
appropriate Federal Reserve Bank. Such a request must:
    (1) Describe in detail the transaction or relationship for which 
the national bank or Federal savings association seeks exemption;
    (2) Explain why the OCC should exempt the transaction or 
relationship;
    (3) Explain how the exemption would be in the public interest and 
consistent with the purposes of section 23A or section 11 of the HOLA, 
as applicable; and
    (4) Explain why the exemption does not present an unacceptable risk 
to the Deposit Insurance Fund.
    60. Appendix B to part 31 is amended by:
    a. Revising the appendix heading and introductory note;
    b. Removing the references ``part 31'', ``Part 31'', and ``Parts 31 
and 32'' and adding in their place the references ``part 215'', ``Part 
215'', and ``parts 32 and 215'', respectively, wherever they appear;
    c. Under the heading ``Definition of `Loan or Extension of 
Credit''', in the first sentence under ``Renewals'', removing the 
phrase ``will be applied in the same manner'' and adding in its place 
the phrase ``are equivalent''; and
    d. Under the heading ``Combination/Attribution Rules'', in the 
fourth sentence, under ``Loans to corporate groups'', removing the word 
``until'' and adding in its place the word ``unless''.
    The revisions read as follows:

Appendix B to Part 31--Comparison of Selected Provisions of Parts 32 
and 215

    Note:  This appendix compares certain provisions of 12 CFR part 
32 with those of 12 CFR part 215. As used in this appendix, the term 
``bank'' refers to both national banks and Federal savings 
associations.

* * * * *

PART 150--FIDUCIARY POWERS OF FEDERAL SAVINGS ASSOCIATIONS

0
61. The authority citation for part 150 continues to read as follows:

    Authority:  12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).

0
62. Section 150.245 is added to read as follows:


Sec.  150.245   When is a fiduciary not required to maintain custody or 
control of fiduciary assets?

    If you are deemed a fiduciary based solely on your capacity as 
investment advisor, as that capacity is defined in Sec.  9.101(a) of 
this chapter, and have no other fiduciary capacity as enumerated in 
Sec.  150.30, you are not required to

[[Page 8110]]

maintain custody or control of fiduciary assets as set forth in Sec.  
150.220 or Sec.  150.240.


PART 151--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS

0
63. The authority citation for part 151 continues to read as follows:

    Authority:  12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).


0
64. Section 151.40 is amended by revising paragraph (3) of the 
definition of Municipal security to read as follows:


Sec.  151.40  What definitions apply to this part?

* * * * *
    Municipal security * * *
    (3) A security that is an industrial development bond.
* * * * *

0
65. Section 151.60 is revised to read as follows:


Sec.  151.60   How must I maintain my records?

    (a) In general. The records required by Sec.  151.50 must clearly 
and accurately reflect the information required and provide an adequate 
basis for the audit of the information. Record maintenance may include 
the use of automated or electronic records provided the records are 
easily retrievable, readily available for inspection, and capable of 
being reproduced in a hard copy.
    (b) Use of third party. You may contract with third-party service 
providers to maintain the records required by this section, provided 
that you maintain effective oversight of the third-party vendor to 
ensure records meet the requirements of Sec.  150.50 and this section.

0
66. Revise Sec.  151.80(b) to read as follows:


Sec.  151.80   How do I provide a registered broker-dealer 
confirmation?

* * * * *
    (b) Unless you have determined remuneration in a written agreement 
with the customer, if you have received or will receive remuneration 
from any source, including the customer, in connection with the 
transaction, you must provide a statement of the source and amount of 
the remuneration in addition to the registered broker-dealer 
confirmation described in paragraph (a) of this section.


Sec.  151.110  [Removed]

0
67. Section 151.110 is removed.

0
68. Part 155 is revised to read as follows:

PART 155--ELECTRONIC OPERATIONS OF FEDERAL SAVINGS ASSOCIATIONS

Sec.
155.100 Scope.
155.200 Use of electronic means and facilities.
155.210 Requirements for using electronic means and facilities.


    Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).


Sec.  155.100   Scope.

    This part describes how a Federal savings association may provide 
products and services through electronic means and facilities.


Sec.  155.200   Use of electronic means and facilities.

    (a) General. A Federal savings association may use, or participate 
with others to use, electronic means or facilities to perform any 
function, or provide any product or service, as part of an authorized 
activity. Electronic means or facilities include, but are not limited 
to, automated teller machines, automated loan machines, personal 
computers, the internet, telephones, and other similar electronic 
devices.
    (b) Other. To optimize the use of resources, a Federal savings 
association may market and sell, or participate with others to market 
and sell, electronic capacities and by-products to third-parties, if 
the savings association acquired or developed these capacities and by-
products in good faith as part of providing financial services.


Sec.  155.210   Requirements for using electronic means and facilities.

    To use electronic means and facilities under this subpart, a 
Federal savings association's management must:
    (a) Identify, assess, and mitigate potential risks and establish 
prudent internal controls; and
    (b) Implement security measures designed to ensure secure 
operations. Such measures must be adequate to:
    (1) Prevent unauthorized access to the savings association's 
records and its customers' records;
    (2) Prevent financial fraud through the use of electronic means or 
facilities; and
    (3) Comply with applicable security devices requirements of part 
168 of this chapter.

0
69. Part 162 is revised to read as follows:

PART 162--ACCOUNTING AND DISCLOSURE STANDARDS

Sec.
162.1 Accounting and disclosure standards.


    Authority: 12 U.S.C. 1463, 5412(b)(2)(B).


Sec.  162.1   Accounting and disclosure standards.

    A Federal savings association shall follow U.S. generally accepted 
accounting principles (GAAP) and the disclosure standards included 
therein when complying with all applicable regulations, unless 
otherwise required by statute, regulation, or the OCC.

PART 163--SAVINGS ASSOCIATIONS--OPERATIONS

0
70. The authority citation for part 163 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1467a, 1817, 1820, 1828, 
1831o, 3806, 5101 et seq., 5412(b)(2)(B); 31 U.S.C. 5318; 42 U.S.C. 
4106.


Sec.  163.41   [Removed]

0
71. Remove Sec.  163.41.


Sec.  163.43   [Removed]

0
72. Remove Sec.  163.43.


Sec.  163.161  [Removed]

0
73. Remove Sec.  163.161.

0
74. Section 163.172 is amended by:
0
a. In paragraph (a), revising the paragraph heading and removing the 
word ``commitments'' and adding the word ``contracts'' in its place;
0
b. Revising paragraph (b), the heading to paragraph (c) and paragraph 
(c)(1);
0
c. In paragraph (c)(2):
0
i. Removing the word ``you'' and adding in its place the phrase ``a 
savings association''; and
0
ii. Removing the word ``Your'' and adding in its place the word 
``The'';
0
d. In paragraphs (c)(3) introductory text and (c)(4), removing the word 
``Your'' wherever it appears and adding in its place the word ``The'';
0
e. In paragraph (c)(3)(ii), removing the word ``your'' and adding in 
its place the phrase ``the savings association's'';
0
f. Revising the heading to paragraph (d);
0
g. In paragraph (d)(1), removing the word ``Management'' and adding in 
its place the phrase ``The management of a Federal savings 
association''; and
0
h. Revising paragraph (e).
    The revisions read as follows.


Sec.  163.172   Financial derivatives.

    (a) Definition. * * *
    (b) Permissible financial derivatives transactions. A Federal 
savings association may engage in a transaction involving a financial 
derivative if the savings association is authorized to invest in the 
assets underlying the financial derivative, the transaction is safe and 
sound, and the requirements in paragraphs (c) through (e) of this 
section are met. In general, a Federal savings

[[Page 8111]]

association that engages in a transaction involving a financial 
derivative should do so to reduce its risk exposure.
    (c) Board of directors' responsibilities. (1) A Federal savings 
association's board of directors is responsible for effective oversight 
of financial derivatives activities.
* * * * *
    (d) Management responsibilities. * * *
    (e) Recordkeeping requirement. A Federal savings association must 
maintain records adequate to demonstrate compliance with this section 
and with its board of directors' policies and procedures on financial 
derivatives.


Sec.  163.180  [Amended]

0
75. Section 163.180 is amended by removing and reserving paragraphs (a) 
and (c).


Sec.  163.190  [Removed]

0
76. Remove Sec.  163.190.


Sec.  163.191   [Removed]

0
77. Remove Sec.  163.191.

PART 193 [REMOVED]

0
78. Remove part 193.

PART 194--[REMOVED]

0
79. Remove part 194.

PART 197 [REMOVED]

0
80. Remove part 197.

    Dated: December 13, 2016.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2016-30502 Filed 1-19-17; 8:45 am]
 BILLING CODE P