Qualified Financial Contracts Recordkeeping Related to Orderly Liquidation Authority, 65509-65521 [2018-27758]

Download as PDF amozie on DSK3GDR082PROD with RULES Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations unique identifier of the agent accessing or returning the key(s). (i) For Tier A and B operations, at least two (2) drop team agents are required to be present to access and return keys. For Tier C operations, at least three (3) drop team agents are required to be present to access and return keys. (ii) For Tier A and B operations, at least two (2) count team agents are required to be present at the time count room and other count keys are issued for the count. For Tier C operations, at least three (two for card game drop box keys in operations with three tables or fewer) count team agents are required to be present at the time count room and other count keys are issued for the count. (3) Documentation of all keys, including duplicates, must be maintained, including: (i) Unique identifier for each individual key; (ii) Key storage location; (iii) Number of keys made, duplicated, and destroyed; and (iv) Authorization and access. (4) Custody of all keys involved in the drop and count must be maintained by a department independent of the count and the drop agents as well as those departments being dropped and counted. (5) Other than the count team, no agent may have access to the drop box content keys while in possession of storage rack keys and/or release keys. (6) Other than the count team, only agents authorized to remove drop boxes are allowed access to drop box release keys. (7) Any use of keys at times other than the scheduled drop and count must be properly authorized and documented. (8) Emergency manual keys, such as an override key, for computerized, electronic, and alternative key systems must be maintained in accordance with the following: (i) Access to the emergency manual key(s) used to access the box containing the player interface drop and count keys requires the physical involvement of at least three agents from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating persons signing out/ in the emergency manual key(s); (ii) The custody of the emergency manual keys requires the presence of two agents from separate departments from the time of their issuance until the time of their return; and (iii) Routine physical maintenance that requires access to the emergency manual key(s), and does not involve VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 accessing the player interface drop and count keys, only requires the presence of two agents from separate departments. The date, time, and reason for access must be documented with the signatures of all participating agents signing out/in the emergency manual key(s). (9) Controls must be established and procedures implemented to safeguard the use, access, and security of keys for kiosks. * * * * * 4. Amend § 543.18 by revising paragraph (d)(6)(v) to read as follows: ■ § 543.18 What are the minimum internal control standards for the cage, vault, kiosk, cash and cash equivalents? * * * * * (d) * * * (6) * * * (v) Dollar amount per financial instrument redeemed; * * * * * 5. Amend § 543.23 by revising paragraph (c)(1)(viii) to read as follows: ■ § 543.23 What are the minimum internal control standards for audit and accounting? * * * * * (c) * * * (1) * * * (viii) Drop and count standards, including supervision, count room access, count team, card game drop standards, player interface and financial instrument drop standards, card game count standards, player interface financial instrument count standards, collecting currency cassettes and financial instrument storage components from kiosks, kiosk count standards, and controlled keys; * * * * * 6. Amend § 543.24 by revising paragraphs (a) and (d)(5) to read as follows: ■ § 543.24 What are the minimum internal control standards for auditing revenue? (a) Supervision. Supervision must be provided as needed for revenue audit by an agent(s) with authority equal to or greater than those being supervised. * * * * * (d) * * * (5) Complimentary services or items. At least monthly, review the reports required in § 543.13(c). These reports must be made available to those entities authorized by the TGRA or by tribal law or ordinance. * * * * * Washington, DC. PO 00000 Frm 00025 Fmt 4700 Dated: December 12, 2018. Jonodev O. Chaudhuri, Chairman. Dated: December 12, 2018. Kathryn Isom-Clause, Vice Chair. Dated: December 17, 2018. E. Sequoyah Simermeyer, Associate Commissioner. [FR Doc. 2018–27651 Filed 12–20–18; 8:45 am] BILLING CODE 7565–01–P DEPARTMENT OF THE TREASURY 31 CFR Part 148 Qualified Financial Contracts Recordkeeping Related to Orderly Liquidation Authority Department of the Treasury. Notification of exemptions. AGENCY: ACTION: The Secretary of the Treasury (the ‘‘Secretary’’), as Chairperson of the Financial Stability Oversight Council (‘‘FSOC’’), after consultation with the Federal Deposit Insurance Corporation (the ‘‘FDIC’’), is issuing a determination regarding requests for exemption from certain requirements of the rule implementing the qualified financial contracts (‘‘QFC’’) recordkeeping requirements of Title II of the DoddFrank Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act’’ or the ‘‘Act’’). DATES: The exemptions granted are effective December 21, 2018. FOR FURTHER INFORMATION CONTACT: Peter Phelan, Deputy Assistant Secretary for Capital Markets, (202) 622–1746; Peter Nickoloff, Financial Economist, Office of Capital Markets, (202) 622–1692; Steven D. Laughton, Assistant General Counsel (Banking & Finance), (202) 622–8413; or Stephen T. Milligan, Acting Deputy Assistant General Counsel (Banking & Finance), (202) 622–4051. SUPPLEMENTARY INFORMATION: SUMMARY: Background On October 31, 2016, the Secretary published a final rule pursuant to section 210(c)(8)(H) of the Dodd-Frank Act requiring certain financial companies to maintain records with respect to their QFC positions, counterparties, legal documentation, and collateral that would assist the FDIC as receiver in exercising its rights and fulfilling its obligations under Title II of the Act (the ‘‘final rule’’ or ‘‘rule’’).1 1 31 Sfmt 4700 65509 E:\FR\FM\21DER1.SGM CFR part 148; 81 FR 75624 (Oct. 31, 2016). 21DER1 65510 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations Section 148.3(c)(3) of the rule provides that one or more records entities may request an exemption from one or more of the requirements of the rule by writing to the Department of the Treasury (‘‘Treasury’’), the FDIC, and the applicable primary financial regulatory agency or agencies, if any.2 The written request for an exemption must: (i) Identify the records entity or records entities or the types of records entities to which the exemption would apply; (ii) specify the requirements from which the records entities would be exempt; (iii) provide details as to the size, risk, complexity, leverage, frequency and dollar amount of QFCs, and interconnectedness to the financial system of each records entity, to the extent appropriate, and any other relevant factors; and (iv) specify the reasons why granting the exemption will not impair or impede the FDIC’s ability to exercise its rights or fulfill its statutory obligations under sections 210(c)(8), (9), and (10) of the Act.3 The rule provides that, upon receipt of a written recommendation from the FDIC, prepared in consultation with the primary financial regulatory agency or agencies for the applicable records entity or entities, that takes into consideration each of the factors referenced in section 210(c)(8)(H)(iv) of the Act 4 and any other factors the FDIC considers appropriate, the Secretary may grant, in whole or in part, a conditional or unconditional exemption from compliance with one or more of the requirements of the rule to one or more records entities.5 The rule further provides that, in determining whether to grant an exemption, the Secretary will consider any factors deemed appropriate by the Secretary, including whether application of one or more requirements of the rule is not necessary to achieve the purpose of the rule.6 Requests for Exemptions amozie on DSK3GDR082PROD with RULES Overview On August 23, 2017, The Clearing House Association L.L.C. (‘‘TCH’’) and the Securities Industry and Financial Markets Association (‘‘SIFMA’’ and, together with TCH, ‘‘TCH–SIFMA’’ or the ‘‘associations’’), jointly submitted a written request for seven separate exemptions from certain recordkeeping requirements of the rule.7 The associations’ request was submitted on 2 31 CFR 148.3(c)(3). U.S.C. 5390(c)(8), (9), and (10). 4 12 U.S.C. 5390(c)(8)(H)(iv). 5 31 CFR 148.3(c)(4)(i). 6 12 U.S.C. 148.3(c)(4)(ii). 7 TCH has since been succeeded by the Bank Policy Institute. 3 12 VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 behalf of 33 corporate groups that are members of a working group organized by TCH–SIFMA.8 As discussed in greater detail below, TCH–SIFMA requested an exemption (1) for cash market transactions, (2) for transactions that mature overnight, (3) for seeded funds, (4) for subsidiaries of excluded entities, (5) for corporate groups for which the preponderance of assets and derivatives exposures in the group are in an insured depository institution, (6) for entities that are not identified as material entities in a corporate group’s resolution plan, and (7) from the requirement to report, in the corporate organization master table, excluded entities and non-financial companies of a corporate group. As discussed more fully in the preamble to the final rule,9 the FDIC has the authority under Title II of the DoddFrank Act to transfer the assets and liabilities of any financial company for which it has been appointed receiver under Title II (a ‘‘covered financial company’’) to either a bridge financial company established by the FDIC or to another financial institution.10 The FDIC generally has broad discretion under Title II as to which QFCs it transfers to the bridge financial company or to another financial institution, subject to certain limitations, including the requirement that, if the FDIC is to transfer a QFC with a particular counterparty, it must transfer to a single financial institution (i) all QFCs between the covered financial company and such counterparty and (ii) all QFCs between the covered financial company and any affiliate of such counterparty.11 Similarly, if the FDIC determines to disaffirm or repudiate any QFC with a particular counterparty, it must disaffirm or repudiate (i) all QFCs between the covered financial company 8 The participants in the TCH–SIFMA working group are Bank of America Corporation; BancWest Corporation; The Bank of New York Mellon Corporation; Barclays US LLC; BB&T Corporation; BMO Financial Corp.; Capital One Financial Corporation; Citigroup Inc.; Citizens Financial Group, Inc.; Comerica Incorporated; Credit Suisse Holdings (USA), Inc.; Deutsche Bank Trust Corporation; Fifth Third Bancorp; The Goldman Sachs Group, Inc.; HSBC North America Holdings Inc.; JPMorgan Chase & Co.; KeyCorp; M&T Bank Corporation; Morgan Stanley; MUFG Americas Holding Corporation; Nomura Holding America Inc.; Nuveen, LLC; The PNC Financial Services Group, Inc.; RBC USA Holdco Corporation; Regions Financial Corporation; Santander Holdings USA, Inc.; State Street Corporation; SunTrust Banks, Inc.; Teachers Insurance and Annuity Association of America; Toronto Dominion Holdings (U.S.A.), Inc.; US Bancorp; UBS Americas, Inc.; and Wells Fargo & Company. 9 See 81 FR at 75624–25. 10 See, e.g., 12 U.S.C. 5390(a)(1)(G)(i). 11 12 U.S.C. 5390(c)(9)(A). PO 00000 Frm 00026 Fmt 4700 Sfmt 4700 and such counterparty and (ii) all QFCs between the covered financial company and any affiliate of such counterparty.12 This requirement is referred to as the ‘‘all or none rule.’’ Treasury received a recommendation from the FDIC, prepared in consultation with the relevant primary financial regulatory agencies,13 regarding the TCH–SIFMA exemption requests. After consultation with the FDIC, Treasury is making the determinations discussed below.14 The remaining exemption requests by TCH–SIFMA will be addressed separately. Cash Market Transactions TCH–SIFMA requested an exemption from all of the recordkeeping requirements of the rule for any cash market QFC that typically settles in accordance with a market standard settlement cycle. For purposes of this discussion, ‘‘cash market QFC’’ refers to an agreement to purchase or sell an equity or fixed income security or, in the case of a foreign exchange spot transaction, an agreement to purchase or sell one currency in exchange for another currency.15 The associations stated that requiring recordkeeping for these transactions is unnecessary because (1) cash market QFCs are standardized and do not have unique terms and, accordingly, the relevant data for FDIC decision making as to whether to transfer such QFCs would be limited to identifying counterparties to such QFCs and the net exposure with such counterparties; (2) records entities execute a high volume of cash market QFCs on a daily basis, making compliance with the daily recordkeeping requirements with respect to such transactions burdensome; (3) records entities already have systems in place for evaluating counterparty exposure on a net basis 12 12 U.S.C. 5390(c)(11). FDIC consulted with staff of the Board of Governors of the Federal Reserve System (‘‘Board of Governors’’), the Commodity Futures Trading Commission (‘‘CFTC’’), and the Securities and Exchange Commission (‘‘SEC’’). 14 All exemptions to the recordkeeping requirements of the rule are made at the discretion of the Secretary, and the Secretary’s discretion is not limited by any recommendations received from other agencies. Exemptions to the FDIC’s recordkeeping rules under 12 CFR part 371 (Recordkeeping Requirements for Qualified Financial Contracts) are at the discretion of the board of directors of the FDIC and entail a separate request and process and separate policy considerations. References to the FDIC in this notice should not be taken to imply that the FDIC has determined that similar exemptions under Part 371 would be available. 15 Such transactions are qualified financial contracts as defined in Title II of the Dodd-Frank Act and the rule. See 12 U.S.C. 5390(c)(8)(D)(ii)(I), (vi)(I); 31 CFR 148.2(m). 13 The E:\FR\FM\21DER1.SGM 21DER1 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES and the FDIC should use these existing systems for cash market QFCs, rather than imposing the burden of new recordkeeping requirements for cash market QFCs, particularly since they are short-dated and thus most will not be in existence on any particular date when the FDIC is appointed receiver of a records entity; (4) these transactions pose little risk to records entities due to their limited leverage and complexity and short settlement period; and (5) the FDIC would likely focus on ensuring the settlement of cash market QFCs rather than repudiating or disaffirming them which, TCH–SIFMA argued, would undermine financial stability in the event of adverse market conditions. The associations raised points similar to the foregoing in their comment letter submitted in response to Treasury’s proposal of the rule.16 In adopting the final rule, Treasury noted, with respect to this comment, that all QFCs, including cash market QFCs, are subject to the all or none rule. Treasury also stated that the large volume of these short-term transactions supports the determination that to be useful to the FDIC, any QFC records must be maintained in the standard format specified in the final rule to ensure rapid aggregation and evaluation of the information by the receiver. For these reasons, Treasury determined not to exclude or otherwise provide an exemption for cash market QFCs in the rule but noted the rule’s provision for requests for further exemptive relief. Treasury further stated that any request for such an exemption would need to be defined in such a way as to ensure consistency of treatment by any records entity.17 In response to the present exemption request, Treasury believes that an exemption can be granted for cash market QFCs that would be consistent across records entities and that would permit the FDIC to comply with its obligations and fulfill its responsibilities under Title II of the Act, including the all or none rule. Specifically, Treasury is granting an exemption applicable to all records entities for cash market QFCs that have standardized terms and that have a ‘‘T plus 3’’ 18 or shorter settlement cycle, conditioned on records 16 See Letter from TCH, SIFMA, the American Bankers Association, the Financial Services Roundtable, and the International Swaps and Derivatives Association, Inc. (April 7, 2015), pp. 21–22. 17 81 FR at 75637. 18 ‘‘T plus 3’’ means the trade date plus three business days. The vast majority of cash market QFCs settle on a T plus 3 or shorter basis. VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 entities maintaining certain limited records. As noted by the associations, cash market QFCs present settlement risk— the risk that the counterparty to the QFC defaults on its obligation to perform on the settlement date. In the case of a securities transaction, settlement involves the payment of a fixed price against the delivery of a security; in the case of a foreign exchange spot transaction, settlement involves the payment of a fixed amount of one currency against the delivery of an amount of a second currency equal to the fixed amount adjusted by the foreign exchange spot rate as of the time the transaction is executed. Although settlement risk may increase during a period of general financial distress that could prevail during the resolution of a covered financial company under Title II, the risk that a settlement failure could occur and the risk of any loss to the covered financial company, or the bridge financial company (or other financial institution) if the QFC is transferred, are largely mitigated by, depending on the nature of the cash market QFC, collateral posted by the counterparty and central clearing and settlement. In addition, a cash market QFC could present market risk in that the market value of a security or foreign currency that the covered financial company has agreed to purchase could fall during the settlement period to a value below the purchase price, a risk that could also increase during a period of general financial distress. This risk is partially mitigated by the limited length of the settlement period. The FDIC is required, to the extent practicable, to conduct its operations as receiver for a covered financial company, including making QFC transfer decisions, in a way that mitigates the potential for serious adverse effects to the financial system.19 Given that cash market QFCs that meet the exemption criteria generally impose relatively limited risk, the FDIC’s primary objectives in deciding whether to transfer cash market QFCs likely would be to maintain the continuity of the former operations of the covered financial company, to maintain the operations of the clearing agencies for cash market QFCs, and to otherwise avoid disruption to the financial markets. In such a case, the position level data provided by the recordkeeping requirements of the rule, as applied to cash market QFCs, would be less critical for the FDIC’s transfer decisions. 19 See PO 00000 12 U.S.C. 5390(a)(9)(E). Frm 00027 Fmt 4700 Sfmt 4700 65511 With respect to QFCs other than cash market QFCs, other considerations would more likely bear on the FDIC’s transfer decisions. In addition to considering financial stability implications, the FDIC would have to weigh whether the transfer of QFCs would be detrimental to the financial position of the bridge financial company. At a minimum, the FDIC would need to ensure that the bridge financial company would be solvent after the transfer of any assets and liabilities to it.20 But given the all or none rule, for a covered financial company that has both cash market QFCs and non-cash market QFCs with a counterparty or with that counterparty’s affiliates, the FDIC would need certain information about the cash market QFCs to inform its transfer decisions. As noted above, TCH–SIFMA argued that with respect to any cash market QFCs, the records that records entities already maintain for their own business purposes and, in the case of brokerdealers, that are required by the SEC would be sufficient for the FDIC.21 Given the time constraints imposed on the FDIC’s decisionmaking by Title II, as discussed in the preamble to the final rule, the FDIC generally needs information about QFCs to be maintained in the standardized format provided by the rule.22 As discussed below, the FDIC may be able to refer to existing records in certain cases to evaluate a covered financial company’s exposure as a result of its cash market QFCs, but the FDIC nevertheless would need certain limited information to be maintained in the standardized format provided by the rule. Under the terms of the exemption provided below, with respect to a counterparty that is a natural person, if a records entity only has cash market QFCs with that counterparty, the records entity would not be required to maintain any record of those QFCs because the all or none rule would apply only to those cash market QFCs. With respect to a counterparty that is a non-natural person, if the records entity’s QFCs with the counterparty and the counterparty’s affiliates, if any, are limited to cash market QFCs and other 20 As discussed in the preamble to the final rule, the FDIC is required to confirm that the aggregate amount of liabilities, including QFCs, of the covered financial company that are transferred to, or assumed by, the bridge financial company from the covered financial company do not exceed the aggregate amount of the assets of the covered financial company that are transferred to the bridge financial company from the covered financial company. See 12 U.S.C. 5390(h)(5)(F); 81 FR at 75626, 75649. 21 See, e.g., 17 CFR 240.17a–3, 17a–4. 22 See 81 FR at 75648. E:\FR\FM\21DER1.SGM 21DER1 amozie on DSK3GDR082PROD with RULES 65512 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations exempt QFCs (i.e., unless another exemption has been provided to a specific records entity, the overnight QFCs discussed separately below), the records entity would need to identify the date of the record (fields A1.1, A2.1, A3.1, and BL.1 of Tables A–1 through A–3 and the Booking Location Master Table, respectively, of Appendix A to the rule), the records entity identifier (fields A1.2, A2.2, A3.2, and BL.2), the position identifier (field A1.3), the counterparty identifier (fields A1.4, A1.10, A2.3, and A3.6), and the QFC type (field A1.7) and maintain the information required by the corporate organization master table and the counterparty master table. With respect to the QFC type field (field A1.7), the records entity would be permitted simply to record ‘‘cash market QFC’’ as the QFC type. This would permit the FDIC to verify that no additional QFCs would be subject to the all or none rule as a result of the transfer or retention of the cash market QFCs with that counterparty. If a records entity, in addition to its cash market QFCs with the counterparty, also has non-exempt QFCs with either the counterparty (whether the counterparty is a natural person or not) or with its affiliates, if any, the same information with respect to cash market QFCs would be required to be maintained by the records entity as described in the paragraph above except that the QFC type (field A1.7) would be required to be recorded at the same level of specificity as the records entity classifies the QFC in its internal systems (e.g., as a foreign exchange spot transaction or more specifically as a U.S. dollar/Japanese yen spot transaction, depending on how the records entity classifies the QFC in its internal systems), as is currently the case for QFCs not subject to any exemption. For such cases, a separate record would be required to be maintained for each such QFC type for each particular counterparty. Different cash market QFC types may present different considerations for the FDIC’s transfer determination, and including the QFC type in the standardized records of the records entity would permit the FDIC to identify quickly the QFC positions about which it may need more information. The FDIC may determine, for instance, that, given prevailing market conditions or the business of the covered financial company, it would need more information about the exposure of a covered financial company with respect to its spot transactions in a particular currency. The QFC product type is also VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 expected to be helpful to the FDIC in obtaining from the covered financial company the relevant internal records relating to such QFCs because corporate groups may use different internal systems to maintain records regarding different QFC types. For the reasons discussed above, in order to be useful to the FDIC, the information specified above would have to be maintained in the same standardized format as applies to the recordkeeping requirements of the rule generally, but for fields other than those specified above, records entities may provide specified default entries. No entries relating to such exempted QFCs would need to be provided with respect to Table A–4 (collateral detail data) or the safekeeping agent master table. Tables specifying the data that would be required to be provided for exempted cash market QFCs and, as discussed below, overnight QFCs are set forth in Appendix A to this notice. Overnight QFCs TCH–SIFMA requested an exemption from all of the recordkeeping requirements of the rule for QFCs that are overnight repurchase agreements and reverse repurchase agreements or overnight securities borrowing and lending agreements (‘‘overnight QFCs’’).23 Such overnight QFCs provide that the transaction will terminate on the business day following the day the transaction is entered into. The associations asserted that, for this reason, transaction-specific information regarding overnight QFCs is not relevant to any decision by the FDIC regarding which QFCs to transfer to the bridge financial company. The associations also asserted that, because the rule requires records to be maintained based on values and information that are no less current than previous end of day values, the records required by the rule would not include information regarding overnight QFCs that are outstanding on the day the receiver is appointed. The one business day stay relating to QFCs of the covered financial company discussed in the preamble to the final rule lasts until the earlier of 5:00 p.m. Eastern Time on the business day following the date of the appointment of the FDIC as receiver or the FDIC’s notice to the counterparty of the transfer of the QFC.24 During such stay, the FDIC may 23 Overnight repurchase agreements and reverse repurchase agreements and overnight securities borrowing and lending agreements are qualified financial contracts as defined in Title II of the Dodd-Frank Act and the rule. See 12 U.S.C. 5390(c)(8)(D)(ii)(I), (v); 31 CFR 148.2(m). 24 See 12 U.S.C. 5390(c)(10)(B)(i). PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 decide to structure asset transfers of a covered financial company such that QFCs would be transferred as of a time prior to the termination of the overnight QFCs, and the all or none rule would apply in connection with such a transfer. As with cash market QFCs, the FDIC could transfer overnight QFCs to the bridge financial company to help maintain the continuity of the former operations of the covered financial company and to otherwise avoid disruption to the financial markets. The settlement risk and market risk of overnight securities lending and repurchase and reverse repurchase agreements are partially mitigated by their short duration, collateralization requirements, and, with respect to much of the repurchase and reverse repurchase agreement market, central clearing. However, if the receiver decided to retain any non-overnight QFCs with a counterparty, it would also need to retain any overnight QFCs with that counterparty and that counterparty’s affiliates. TCH–SIFMA’s contention that the records would not provide information regarding any overnight QFCs entered into on the day the FDIC is appointed as receiver does not take into consideration the FDIC’s ability to obtain records on the day following its appointment as receiver of QFCs entered into on the day of its appointment as receiver. Absent a transfer of the contract by the FDIC, an overnight QFC would remain with the covered financial company and simply terminate in accordance with its terms, and the counterparty to the overnight transaction would be able to exercise its rights under the terms of the QFC. If the FDIC were to contemplate retaining an overnight transaction in the receivership, the FDIC would need more information about the transaction in order to assess the effect of doing so. As with cash market QFCs, the limited recordkeeping requirements set forth below are expected to facilitate the FDIC’s ability to consult the records entity’s internal records to obtain the information needed to make this assessment. Under the terms of the exemption, the same set of records would need to be maintained with regard to overnight QFCs as would be required to be maintained with respect to cash market QFCs as set forth above. Specifically, if the records entity’s QFCs with the counterparty and the counterparty’s affiliates, if any, are limited to overnight QFCs and other exempt QFCs (i.e., unless another exemption has been provided to a specific records entity, the cash market QFCs discussed separately E:\FR\FM\21DER1.SGM 21DER1 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES above), the records entity would need to identify the date of the record (fields A1.1, A2.1, A3.1, BL.1), the records entity identifier (fields A1.2, A2.2, A3.2, and BL.2), the position identifier (field A1.3), the counterparty identifier (fields A1.4, A1.10, A2.3, and A3.6), and the QFC type (field A1.7) and would need to maintain the information required by the counterparty master table. With respect to the QFC type field (field A1.7), in this case, the records entity would be permitted simply to record ‘‘overnight QFC’’ as the QFC type. If a records entity, in addition to its overnight QFCs with the counterparty, also has non-exempt QFCs with either the counterparty or with its affiliates, if any, the same information with respect to overnight QFCs would be required to be maintained by the records entity as provided above except that the QFC type in field A1.7 would be recorded at the same level of specificity as the records entity classifies the QFC in its internal systems (e.g., as a repurchase agreement). For such cases, a separate record would be required to be maintained for each such QFC type for each particular counterparty. Seeded Funds TCH–SIFMA requested an exemption from the rule for certain ‘‘covered funds’’ and registered investment companies and business development companies during their ‘‘seeding period’’ subject to restrictions imposed by section 13 of the Bank Holding Company Act of 1956, as amended,25 (known as the ‘‘Volcker Rule’’) and implementing rules. The requested exemption would apply only to a seeded fund that does not on its own meet the assets and derivatives thresholds for qualifying as a records entity. Seeded funds are funds in which the sponsor has made an initial investment of seed capital, amounting to up to 100% of the equity of the fund, during a limited period in which the fund establishes an investment record and attracts third party investment. Because a member of a corporate group that includes records entities could, during the seeding period, own a sufficient amount of the capital of such a seeded fund that the seeded fund would become an affiliate of the sponsor under the rule, the seeded fund, no matter its size or level of derivatives activity, would be subject to the rule as well, provided it otherwise meets the records entity definition. Treasury considered a similar issue in addressing two comments received in 25 12 U.S.C. 1851. VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 response to the proposed rule that requested an exemption for seeded funds.26 Treasury noted in response to these comments that changes made to the definition of ‘‘records entity’’ in the final rule should limit the circumstances in which a seeded fund would become a records entity by virtue of its sponsor’s investment.27 Further, Treasury noted that, in the event that such a seeded fund were to be deemed a records entity under the rule, the fund would be able to request an exemption from the recordkeeping requirements of the final rule for the duration of the seeding period; otherwise, the seeded fund would be treated as any other financial company member of the corporate group of a records entity and required to maintain records of its QFCs if they exceed the de minimis threshold.28 In their request for an exemption, TCH–SIFMA stated that the final rule presents a significant burden with regard to corporate groups’ investments in seeded funds, sponsored by their members, that are records entities even with the revised definition adopted in the final rule. The associations argued that the pursuit of individual exemptions by each seeded fund would be impractical and burdensome given the limited duration of each such fund. Further, TCH–SIFMA raised a point not previously identified by the commenters to the proposed rule as to why an exemption would be appropriate for seeded funds. Specifically, TCH–SIFMA stated that the information barriers, such as corporate firewalls intended to protect trading positions and the confidentiality of asset management customers, that companies are required to establish between their seeded funds and the rest of the corporate group would significantly increase the cost of these funds’ compliance with the recordkeeping requirements of the rule. The final rule had presumed that companies would likely comply with the rules by utilizing a centralized recordkeeping system that would 26 See Letter from TIAA–CREF (Apr. 7, 2015), p. 6; Letter from the Investment Company Institute (Apr. 7, 2015), p. 10. 27 See 81 FR at 75633. In particular, Treasury adopted in the final rule the suggestion of commenters to revise the definition of ‘‘records entity’’ to identify which members of a corporate group are records entities by reference to whether they are consolidated under accounting standards rather than by reference to whether they are controlled for purposes of the Bank Holding Company Act. See id. 28 See id. The final rule provides a de minimis exemption whereby a records entity that is a party to 50 or fewer open QFC positions is not required to maintain the records described in § 148.4 of the rule, other than the records described in § 148.4(i). See 31 CFR 148.3(c)(1). PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 65513 obviate the need for each member of the corporate group to maintain its own recordkeeping system in order to comply with the rules.29 While the additional costs imposed by information barriers established within corporate groups for regulatory and other reasons cannot be avoided in all cases, in this case, the additional cost may not be justified given that the fund would only be required to comply with the rules for the relatively short duration of its seeding period. Given the additional burden faced by such funds and the reduced probability that the FDIC would need to have QFC information from one of these funds during the relatively short duration of its seeding period, Treasury has determined to grant an exemption for certain types of seeded funds that do not on their own meet the asset or derivative thresholds of the records entity definition. As proposed by TCH– SIFMA, the exemption is formulated to be consistent with the exemptions provided by the Volcker Rule and its implementing regulations with respect to such seeded funds. Although the Volcker Rule and this recordkeeping rule have different purposes, the limitations imposed on the exemptions—particularly the limitation on the seeding period discussed below—reduce the likelihood that the FDIC would need the QFC records of such a fund. Further, using the existing framework of the Volcker Rule permits records entities that are already subject to the Volcker Rule to rely on their compliance with the Volcker Rule in order to meet the conditions of this exemption. The Volcker Rule imposes various prohibitions on proprietary trading by ‘‘banking entities’’ and on banking entities’ investments in and relationships with certain funds, including, generally, private equity and hedge funds, referred to as ‘‘covered funds.’’ The Volcker Rule and its implementing regulations provide an exemption from the general prohibition on banking entity investments in covered funds if the investment is for the purpose of establishing the fund and providing it with sufficient initial equity to permit it to attract unaffiliated investors.30 Such a seed investment must not exceed, together with other permissible investments by the banking entity and its affiliates in covered funds, 29 81 FR at 75644. 12 U.S.C. 1851(d)(4)(A); 12 CFR 248.12(a) (the rule adopted by the Board of Governors). The other agencies charged with implementing the Volcker Rule—the CFTC, the FDIC, the Office of the Comptroller of the Currency, and the SEC—have adopted substantively identical rules. 30 See E:\FR\FM\21DER1.SGM 21DER1 65514 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations amozie on DSK3GDR082PROD with RULES 3% of the tier 1 capital of the banking entity.31 Further, during the seeding period, the banking entity and its affiliates must actively seek unaffiliated investors in order to reduce the banking entity’s investment in the fund to 3% or less of the total number or value of shares or other ownership interests of the fund, and the seeding period may not last for more than one year, unless extended by the Board of Governors for up to a maximum of two additional years.32 The exemption granted by Treasury for covered funds is subject to the condition that the investments by a corporate group in the covered fund that cause the covered fund to become a member of the corporate group must be permitted pursuant to the Volcker Rule’s seeded funds exemption described above. Separately, the Volcker Rule implementing regulations provide that registered investment companies, business development companies, and companies formed for the purpose of becoming registered investment companies and business development companies are excluded from the definition of ‘‘covered fund.’’ 33 Further, the agencies implementing the Volcker Rule have provided staff guidance that such funds should not be considered to be banking entities under the implementing rules if the fund is established with a limited seeding period.34 Without this relief, such funds (referenced as ‘‘registered investment companies and business development companies’’ in the exemption below) would themselves be subject to the prohibitions on proprietary trading and covered funds investments by banking entities. As to the length of the limited seeding period, the guidance cites, as an 31 See 12 U.S.C. 1851(d)(4)(B)(ii)(II); 12 CFR 248.12(a)(1)(ii). 32 See 12 U.S.C. 1851(d)(4)(B), (C), 12 CFR 248.12(a)(2). 33 As relates to the funds discussed herein, this exemption extends to an entity (i) that is registered as an investment company under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a– 8), or that is formed and operated pursuant to a written plan to become a registered investment company as described in 12 CFR 248.20(e)(3) and that complies with the requirements of section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a–18); or (ii) that has elected to be regulated as a business development company pursuant to section 54(a) of that Act (15 U.S.C. 80a–53) and has not withdrawn its election, or that is formed and operated pursuant to a written plan to become a business development company as described in 12 CFR 248.20(e)(3) and that complies with the requirements of section 61 of the Investment Company Act of 1940 (15 U.S.C. 80a–60). See 12 CFR 248.10(c)(12)(i), (iii). 34 See Board of Governors, Frequently Asked Questions, No. 16, https://www.federalreserve.gov/ bankinforeg/volcker-rule/faq.htm. (Substantively identical frequently asked questions have been issued by the other implementing agencies.) VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 example, the maximum three year limitation on the permissible investments in seeded funds by covered funds discussed above.35 The agencies in their recent proposal to amend the implementing regulations raised questions as to whether the length of the permitted seeding period should be made more definite, perhaps with provision for extensions.36 The exemption granted by Treasury provides relief for registered investment companies and business development companies that are not deemed to be banking entities as a result of being in their seeding periods pursuant to the above described guidance or the implementing regulations, should they be amended to provide for similar relief. Corporate Organization Table The rule requires that information regarding a records entity’s affiliates be maintained in a corporate organization master data lookup table, set forth in appendix A to the rule. The rule requires this information to be maintained on a daily basis by a records entity with respect to itself and all of the members of its corporate group, which includes all of the records entity’s affiliates whether or not those entities meet the definitions of ‘‘records entity’’ or ‘‘financial company’’ under the rule. TCH–SIFMA requested an exemption from this requirement such that a records entity may exclude from the corporate organization master table any affiliate that is an excluded entity 37 or that is not a financial company because it is not organized under the provisions of Federal law or the laws of any U.S. state; i.e., because it is a non-U.S. affiliate.38 TCH–SIFMA stated that these requirements are burdensome; that the reasons cited in the preamble to the final rule for including affiliates in this table do not support the inclusion of such entities; and that information that would be included in the table about 35 Id. The guidance provides that the seeding period generally would be measured from the date on which the investment adviser or similar entity begins making investments pursuant to the written investment strategy of the fund. 36 See Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds, 83 FR 33432, 33444–45 (July 17, 2018). 37 As defined in the final rule, ‘‘excluded entity’’ means an insured depository institution, certain subsidiaries of an insured depository institution, or an insurance company. 31 CFR 148.2(f). 38 As defined in the final rule (by cross-reference to 12 U.S.C. 5381(a)(11)), the term ‘‘financial company’’ includes only companies that are ‘‘incorporated or organized under any provision of Federal law or the laws of any State.’’ 31 CFR 148.2(g). PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 these affiliates would not be useful to the FDIC as receiver. Treasury determined in the final rule, and reaffirms in this notice, that it is important for the FDIC to have access to this information in the event it is appointed receiver of a covered financial company. As discussed in the preamble to the final rule, under section 210(c)(16) of the Dodd-Frank Act, the QFCs of subsidiaries or affiliates of a covered financial company that are guaranteed or otherwise supported by or linked to such covered financial company can be enforced by the FDIC as receiver of the covered financial company notwithstanding the insolvency, financial condition, or receivership of the covered financial company if the FDIC transfers the guarantee or other support to a bridge financial company or other third party.39 The FDIC’s decision as to whether to transfer such a guarantee or credit support pursuant to sections 210(c)(9) and (10) of the Act may be influenced by the information required to be maintained as to a records entity’s affiliates. In particular, the FDIC as receiver may need to know whether the affiliate is a wholly-owned subsidiary or a partially-owned subsidiary since the extent of such control over the subsidiary would likely be a factor the FDIC considers in making any such transfer decision. Information about affiliates of the records entity will also provide the FDIC, in the event of a resolution of a covered financial company, with greater certainty that the required QFC records from each records entity have been maintained by allowing the FDIC to quickly ascertain, by reference to field CO.12 (regarding the entity’s reporting status), whether the entity has not maintained records because it is not a party to any QFCs, has availed itself of the de minimis exemption (in which case the FDIC would need to manually review the available QFC records) or another exemption, or is excluded from the definition of ‘‘records entity.’’ Furthermore, although the associations asserted the FDIC could obtain this information from other sources, particularly, in the case of bank holding companies, from the Report of Changes in Organizational Structure on Form FR Y–10, as with other elements of the recordkeeping requirements of the rule, it is important for the FDIC to have access to this information in a readilyusable format. In this case, the information in the corporate organization master data lookup table is linked to information recorded in the 39 See E:\FR\FM\21DER1.SGM 12 U.S.C. 5390(c)(16); 81 FR at 75642. 21DER1 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations other tables required under the final rule. Nevertheless, Treasury accepts that the requirement to provide daily updating of information pertaining to excluded entity and non-U.S. affiliates imposes a significant burden on records entities. Treasury has determined to grant an exemption such that this information need only be updated within 30 days of a change. This 30-day period aligns with the existing requirement imposed by Form FR Y–10, and this accommodation should not significantly impair the FDIC’s ability to make the determinations discussed above. amozie on DSK3GDR082PROD with RULES Entities That Are Not Material Entities Under a Group’s Resolution Plan TCH–SIFMA requested an exemption from the recordkeeping requirements of the rule for any records entity that is not identified as a ‘‘material entity’’ in its corporate group’s resolution plan filed under section 165(d) of the Dodd-Frank Act. Certain financial companies— including bank holding companies with at least $250 billion in total consolidated assets and nonbank financial companies for which the FSOC has made a determination under section 113 of the Act—are required to file plans with the FDIC, the Board of Governors, and FSOC for their resolution under the Bankruptcy Code.40 Under the implementing rules jointly adopted by the FDIC and Board of Governors, such financial companies are required to identify and provide certain information regarding their material entities.41 ‘‘Material entities’’ is defined by the implementing rules as including subsidiaries that are significant to the activities of a critical operation or core business line.42 The term ‘‘core business lines’’ is defined as those business lines, including associated operations, services, functions and support that, in the view 40 See 12 U.S.C. 5365(d). Pursuant to section 165 of the Dodd-Frank Act, as amended by the Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law 115–174 (May 24, 2018), enhanced prudential standards, including the resolution plan requirements provided by section 165(d) of the Act, are applied to bank holding companies with $250 billion or more in total consolidated assets and nonbank financial companies supervised by the Board of Governors. In addition, the Board of Governors has the authority to apply any such standard, including the resolution plan requirements provided by section 165(d) of the Act, to bank holding companies with $100 billion or more in total consolidated assets if it determines that application of the standard is appropriate to prevent or mitigate risks to U.S. financial stability or to promote safety and soundness. 41 See 12 CFR 243.4 (Board of Governors rule); 12 CFR 381.4 (FDIC rule). 42 12 CFR 243.2(l), 381.2(l). VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 of the financial company, upon failure of the financial company would result in a material loss of revenue, profit, or franchise value.43 ‘‘Critical operations’’ is defined as the operations of a financial company, including associated operations, services, functions and support, the failure or discontinuance of which, in the company’s view or as jointly directed by the Board of Governors and the FDIC, would pose a threat to the financial stability of the United States.44 TCH–SIFMA stated that these material entities are the entities in a group that either would be the most likely to be subject to a Title II proceeding themselves or that would otherwise be material to such a proceeding. TCH–SIFMA raised the same point in a comment letter submitted in response to the proposed rule and has not presented any additional information in support of this request.45 As discussed in the preamble to the final rule,46 Treasury noted that an entity that is part of a larger corporate group could be resolved under Title II without the Secretary making the systemic risk determination required under section 203(b) of the Act with respect to that particular entity. Section 210(a)(1)(E) of the Act provides that the FDIC may appoint itself as receiver of an entity if it is a ‘‘covered subsidiary’’ of a covered financial company of which the FDIC has been appointed as receiver and it is jointly determined by the FDIC and the Secretary that (i) the covered subsidiary is in default or in danger of default, (ii) the FDIC’s appointment as receiver would avoid or mitigate serious adverse effects on the financial stability or economic conditions of the United States, and (iii) the FDIC’s appointment as receiver would facilitate the orderly liquidation of the covered financial company.47 As Treasury noted in the preamble to the final rule, if the FDIC appoints itself receiver of a covered subsidiary, that subsidiary is treated as a covered financial company for purposes of Title II, and the FDIC as receiver would have the same rights under the Act and the same obligations under sections 210(c)(8), (9), and (10) of 43 12 U.S.C. 243.2(d), 381.2(d). U.S.C. 243.2(g), 381.2(g). 45 See Letter from TCH, SIFMA, the American Bankers Association, the Financial Services Roundtable, and the International Swaps and Derivatives Association, Inc. (April 7, 2015), pp. 14–15. 46 See 81 FR at 75630. 47 12 U.S.C. 5390(a)(1)(E)(i). ‘‘Covered subsidiary’’ is defined as any subsidiary of a covered financial company, other than an insured depository institution, an insurance company, or a covered broker or dealer. 12 U.S.C. 5381(a)(9). 44 12 PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 65515 the Act as it does for other covered financial companies.48 Furthermore, the definition of ‘‘material entity’’ for purposes of the resolution plan is not well aligned with the likelihood of a company being resolved under Title II. In particular, the question of whether an entity is material to the financial company’s core business lines is based on the materiality of its revenue, profit, or franchise value to the financial company. In contrast, Treasury, in making a systemic risk determination regarding a covered financial company under section 203(b) of the Act, and Treasury and the FDIC, in making a joint determination as to the FDIC’s appointment as receiver of a covered subsidiary under section 210(a)(1)(E) of the Act, would be making a determination as to, among other things, the effects of the company’s failure on U.S. financial stability. It is possible, for example, that an entity is not material to the core business lines of a financial company or to its critical operations and yet, because of the nature and extent of particular exposures the market has to that entity or because of the amount and nature of the assets it would liquidate if it were to be resolved in a disorderly manner outside of Title II, the entity could be resolved under Title II in order to preserve U.S. financial stability. It is not the case, therefore, that an entity that has not been identified as a material entity is, by virtue of not having been so identified, less likely to be resolved under Title II than an entity that has been identified as a material entity. Furthermore, because, as discussed above, the identification of an entity as a material entity is made based on the entity’s materiality to its own corporate group, the proposed standard cannot be applied in a uniform way across corporate groups that are required to file resolution plans. For these reasons, Treasury has determined not to provide the requested exemption. Conditions of the Exemptions Any records entity subject to the rule may avail itself of the exemptions granted herein. With respect to each of the exemptions granted herein, Treasury reserves the right to rescind or modify the exemption at any time. Treasury intends to reassess the exemptions in five years. At that time, Treasury, in consultation with the FDIC and the primary financial regulatory agencies, would evaluate any relevant changes to market structure or applicable law or other relevant factors that might affect the reasons for granting the exemptions. 48 See E:\FR\FM\21DER1.SGM 81 FR at 75630; 12 U.S.C. 5390(a)(1)(E)(ii). 21DER1 65516 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations Treasury expects that it would provide notice to records entities prior to any modification or rescission of any of the exemptions and that, in the event of a rescission or modification, Treasury would grant records entities a limited period of time in which to come into compliance with the applicable recordkeeping requirements of the rule. Terms and Conditions of the Exemptions The following exemptions from the requirements of 31 CFR 148.3 and 148.4 are hereby granted to any records entity subject to the rule. All terms undefined below but defined in 31 CFR 148.2 have the meanings set forth therein. Each of these exemptions is subject to modification or revocation at any time the Secretary determines that such action is necessary or appropriate in order to assist the FDIC as receiver for a covered financial company in being able to exercise its rights and fulfill its obligations under sections 210(c)(8), (9), or (10). Cash Market Transactions An exemption from the recordkeeping requirements of the rule for any QFC that is an agreement to purchase or sell an equity or fixed income security or a foreign exchange spot transaction (a ‘‘cash market QFC’’), provided that (i) such cash market QFC is executed on standardized terms and settles within three business days of the trade date and (ii) the records entity maintains, with respect to such cash market QFC, the records as set forth in Appendix A to this notice in the format required under the rule, provided further that no such records are required to be maintained for cash market QFCs a records entity has with a counterparty that is a natural person if the only QFCs the records entity has with such counterparty are cash market QFCs. With respect to a counterparty that is a non-natural person, if the records entity’s QFCs with the counterparty and the counterparty’s affiliates, if any, are limited to cash market QFCs or other exempt QFCs, the records entity may simply record ‘‘cash market QFC’’ as the QFC type (field A1.7); otherwise, the records entity must record the QFC type (field A1.7) for the cash market QFC at the same level of specificity as the records entity classifies the QFC in its internal systems. Overnight QFCs An exemption from the recordkeeping requirements of the rule for any QFC that is a repurchase agreement, reverse repurchase agreement, securities borrowing agreement, or securities lending agreement that terminates in accordance with its terms on the business day following the day it is entered into (each an ‘‘overnight QFC’’), provided that the records entity maintains, with respect to such an overnight QFC, the records as set forth in Appendix A to this notice in the format required under the rule. If the records entity’s QFCs with the counterparty and the counterparty’s affiliates, if any, are limited to overnight QFCs or other exempt QFCs, the records entity may simply record ‘‘overnight QFC’’ as the QFC type (field A1.7); otherwise, the records entity must record the QFC type (field A1.7) for the overnight QFC at the same level of specificity as the records entity classifies the QFC in its internal systems. Seeded Funds An exemption for an entity that is (i) a member of a corporate group with one or more banking entities; (ii) a records entity solely as a result of the application of section 148.2(n)(1)(iii)(E) of the rule; and (iii) a covered fund, provided that the investments in the entity that cause the entity to be a member of the corporate group are permitted pursuant to the section 13 rules for the purposes of establishing the fund and providing it with sufficient initial equity for investment to permit it to attract unaffiliated investors. An exemption for an entity that is (i) a member of a corporate group with one or more banking entities; (ii) a records entity solely as a result of the application of section 148.2(n)(1)(iii)(E) of the rule; and (iii) excluded from the definition of ‘‘covered fund’’ under the section 13 rules as a registered investment company or business development company, provided that the entity is deemed not to be a ‘‘banking entity’’ as a result of it being in its seeding period as provided by the section 13 rules or relevant agency guidance. For purposes of these exemptions, the ‘‘section 13 rules’’ refers to the rules of the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, or the Securities and Exchange Commission, as applicable, implementing section 13 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1851); ‘‘covered fund’’ and ‘‘banking entity’’ have the meanings provided under the section 13 rules; ‘‘registered investment company’’ means a company registered as an investment company under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a–8) or a company formed and operated pursuant to a written plan to become such a company; and ‘‘business development company’’ means a company that has elected to be registered as a business development company pursuant to section 54(a) of the Investment Company Act of 1940 (15 U.S.C. 53–a) and has not withdrawn its election or a company formed and operated pursuant to a plan to become such a company. Corporate Organization Master Table An exemption from the requirement of section 148.3(b)(1) of the rule to update all records on a daily basis with respect to the information, referenced in the corporate organization master table set forth in appendix A to the rule, regarding any affiliate of a records entity that is an excluded entity or a non-U.S. affiliate, provided that such information is updated at least 30 days after a change in such information. For purposes of this exemption, ‘‘non-U.S. affiliate’’ means an affiliate that is not organized under any provision of Federal law or the laws of any State and ‘‘State’’ has the meaning provided in 12 U.S.C. 5301(16). Appendix A TABLE A–1—POSITION-LEVEL DATA amozie on DSK3GDR082PROD with RULES Field A1.1 A1.2 As of date ...................................... Records entity identifier ................. A1.3 Position identifier ........................... VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 Instructions and data application Definition Provide data extraction date ..................................................................................... Provide LEI for records entity. Information needed to review position-level data by records entity. Provide a unique identifier. Should be used consistently across all record entities within the corporate group. Use the unique transaction identifier if available. Information needed to readily track and distinguish positions. YYYY–MM–DD. Varchar(50). PO 00000 Frm 00032 Fmt 4700 Sfmt 4700 E:\FR\FM\21DER1.SGM 21DER1 Varchar(100). 65517 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations TABLE A–1—POSITION-LEVEL DATA—Continued Field A1.4 Instructions and data application Counterparty identifier ................... A1.5 Internal booking location identifier A1.6 Unique booking unit or desk identifier. A1.7 Type of QFC .................................. A1.7.1 Type of QFC covered by guarantee or other third party credit enhancement. A1.7.2 Underlying QFC obligor identifier A1.8 Agreement identifier ...................... A1.9 Netting agreement identifier .......... A1.10 Netting agreement counterparty identifier. A1.11 Trade date ................................... A1.12 Termination date .......................... A1.13 Next call, put, or cancellation date. A1.14 Next payment date ...................... A1.15 Local currency of position ........... A1.16 Current market value of the position in local currency. A1.17 Current market value of the position in U.S. dollars. A1.18 Asset classification ...................... A1.19 Notional or principal amount of the position in local currency. A1.20 Notional or principal amount of the position In U.S. dollars. A1.21 Covered by third-party credit enhancement agreement (for the benefit of the records entity)? A1.21.1 Third-party credit enhancement provider identifier (for the benefit of the records entity). A1.21.2 Third-party credit enhancement agreement identifier (for the benefit of the records entity). A1.21.3 Covered by third-party credit enhancement agreement (for the benefit of the counterparty)? A1.21.4 Third-party credit enhancement provider identifier (for the benefit of the counterparty). A1.21.5 Third-party credit enhancement agreement identifier (for the benefit of the counterparty). A1.22 Related position of records entity A1.23 Reference number for any related loan. A1.24 Identifier of the lender of the related loan. Definition Provide a counterparty identifier. Use LEI if counterparty has one. Should be used consistently by all record entities within the corporate group. Information needed to identify counterparty by reference to Counterparty Master Table. Information not required to be provided. Enter ‘‘exempt ’’ ........................................ Information not required to be provided. Enter ‘‘exempt ’’ ........................................ Varchar(50). Provide type of QFC. Use unique product identifier if available. If records entity has only QFCs that are cash market QFCs or overnight QFCs with a counterparty and its affiliates, may enter ‘‘cash market QFCs’’ or ‘‘overnight QFCs,’’ as applicable. If records entity has both cash market/overnight QFCs and non-exempt QFCs with a counterparty or with its affiliates, the QFC type must be recorded at the same level of specificity as the records entity classifies the QFC in its internal systems. Information not required to be provided Enter ‘‘NA’’ ................................................. Varchar(100). Information not required to be provided Enter ‘‘NA’’ ................................................. Information not required to be provided. Enter ‘‘exempt ’’ ........................................ Information not required to be provided. Enter ‘‘exempt ’’ ........................................ Provide a netting agreement counterparty identifier. Use same identifier as provided in A1.4 if counterparty and netting agreement counterparty are the same. Use LEI if netting agreement counterparty has one. Information needed to identify unique netting sets. Information not required to be provided. Enter ‘‘2099–12–31’’ ................................. Information not required to be provided. Enter ‘‘2099–12–31’’ ................................. Information not required to be provided. Enter ‘‘2099–12–31’’ ................................. Varchar(50). Varchar(50). Varchar(50). Varchar(50). Information not required to be provided. Enter ‘‘2099–12–31’’ ................................. Information not required to be provided. Enter ‘‘USD ’’ ............................................ Information not required to be provided. Enter ‘‘0 ’’ .................................................. YYYY–MM–DD. Char(3). Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Information not required to be provided. Enter ‘‘0 ’’ .................................................. Char(1). Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘N ’’ ................................................. Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘N ’’ ................................................. Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(100). Varchar(500). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(500). Varchar(50). Varchar(50). Varchar(500). YYYY–MM–DD. YYYY–MM–DD. YYYY–MM–DD. amozie on DSK3GDR082PROD with RULES TABLE A–2—COUNTERPARTY NETTING SET DATA Field Instructions and data application Definition A2.1 As of date ...................................... A2.2 Records entity identifier ................. A2.3 Netting agreement counterparty identifier. A2.4 Netting agreement identifier .......... Data extraction date .................................................................................................. Provide the LEI for the records entity ....................................................................... Provide an identifier for the netting agreement counterparty. Use LEI if counterparty has one. Information not required to be provided. Enter ‘‘exempt ’’ ........................................ YYYY–MM–DD. Varchar(50). Varchar(50). VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 E:\FR\FM\21DER1.SGM 21DER1 Varchar(50). 65518 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations TABLE A–2—COUNTERPARTY NETTING SET DATA—Continued Field Instructions and data application A2.4.1 Underlying QFC obligor identifier A2.5 Covered by third-party credit enhancement agreement (for the benefit of the records entity)? A2.5.1 Third-party credit enhancement provider identifier (for the benefit of the records entity). A2.5.2 Third-party credit enhancement agreement identifier (for the benefit of the records entity). A2.5.3 Covered by third-party credit enhancement agreement (for the benefit of the counterparty)? A2.5.4 Third-party credit enhancement provider identifier (for the benefit of the counterparty). A2.5.5 Third-party credit enhancement agreement identifier (for the benefit of the counterparty). A2.6 Aggregate current market value in U.S. dollars of all positions under this netting agreement. A2.7 Current market value in U.S. dollars of all positive positions, as aggregated under this netting agreement. A2.8 Current market value in U.S. dollars of all negative positions, as aggregated under this netting agreement. A2.9 Current market value in U.S. dollars of all collateral posted by records entity, as aggregated under this netting agreement. A2.10 Current market value in U.S. dollars of all collateral posted by counterparty, as aggregated under this netting agreement. A2.11 Current market value in U.S. dollar of all collateral posted by records entity that is subject to rehypothecation, as aggregated under this netting agreement. A2.12 Current market value in U.S. dollars of all collateral posted by counterparty that is subject to rehypothecation, as aggregated under this netting agreement. A2.13 Records entity collateral—net ..... A2.14 Counterparty collateral—net ........ A2.15 Next margin payment date .......... A2.16 Next margin payment amount in U.S. dollars. A2.17 Safekeeping agent identifier for records entity. A2.18 Safekeeping agent identifier for counterparty. Information not required to be provided. Enter ‘‘NA’’ ................................................ Information not required to be provided. Enter ‘‘N ’’ ................................................. Varchar(50). Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘N ’’ ................................................. Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information not required to be provided. Enter ‘‘0 ’’ .................................................. Num (25,5). Information Information Information Information Num (25,5). Num (25,5). YYYY–MM–DD. Num (25,5). not not not not required required required required to to to to be be be be provided. provided. provided. provided. Enter Enter Enter Enter Definition ‘‘0 ’’ .................................................. ‘‘0 ’’ .................................................. ‘‘2099–12–31’’ ................................. ‘‘0 ’’ .................................................. Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). amozie on DSK3GDR082PROD with RULES TABLE A–3—LEGAL AGREEMENTS Field Instructions and data application Definition A3.1 As of date ...................................... A3.2 Records entity identifier ................. A3.3 Agreement identifier ...................... A3.4 Name of agreement or governing document. A3.5 Agreement date ............................. A3.6 Agreement counterparty identifier A3.6.1 Underlying QFC obligor identifier A3.7 Agreement governing law .............. A3.8 Cross-default provision? ................ A3.9 Identity of cross-default entities ..... Data extraction date .................................................................................................. Provide LEI for records entity .................................................................................... Information not required to be provided. Enter ‘‘exempt ’’ ........................................ Information not required to be provided. Enter ‘‘NA’’ ................................................ *YYYY–MM–DD. Varchar(50). Varchar(50). Varchar(50). Information not required to be provided. Enter ‘‘2099–12–31’’ ................................. Use LEI if counterparty has one. Information needed to identify counterparty ........ Information not required to be provided. Enter ‘‘NA’’ ................................................ Information not required to be provided. Enter ‘‘NA’’ ................................................ Information not required to be provided. Enter ‘‘N’’ .................................................. Information not required to be provided. Enter ‘‘NA’’ ................................................ YYYY–MM–DD. Varchar(50). Varchar(50). Varchar(50). Char(1). Varchar(500). VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 PO 00000 Frm 00034 Fmt 4700 Sfmt 4700 E:\FR\FM\21DER1.SGM 21DER1 65519 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations TABLE A–3—LEGAL AGREEMENTS—Continued Field Instructions and data application Definition A3.10 Covered by third-party credit enhancement agreement (for the benefit of the records entity)?. A3.11 Third-party credit enhancement provider identifier (for the benefit of the records entity). A3.12 Associated third-party credit enhancement agreement document identifier (for the benefit of the records entity). A3.12.1 Covered by third-party credit enhancement agreement (for the benefit of the counterparty)?. A3.12.2 Third-party credit enhancement provider identifier (for the benefit of the counterparty). A3.12.3 Associated third-party credit enhancement agreement document identifier (for the benefit of the counterparty). A3.13 Counterparty contact information: name. A3.14 Counterparty contact information: address. A3.15 Counterparty contact information: phone. A3.16 Counterparty’s contact information: email address. Information not required to be provided. Enter ‘‘N ’’ ................................................. Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘N ’’ ................................................. Char(1). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(200). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(100). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(50). Information not required to be provided. Enter ‘‘NA’’ ................................................ Varchar(100). TABLE A–4—COLLATERAL DETAIL DATA Field A4.1 A4.2 A4.3 A4.4 A4.5 A4.6 A4.7 A4.8 A4.9 A4.10 A4.11 A4.12 A4.13 A4.14 A4.15 Instructions and data application As of date ................................................................................................................................. Records entity identifier ............................................................................................................ Collateral posted/collateral received flag .................................................................................. Counterparty identifier .............................................................................................................. Netting agreement identifier ..................................................................................................... Unique collateral item identifier ................................................................................................ Original face amount of collateral item in local currency ......................................................... Local currency of collateral item ............................................................................................... Market value amount of collateral item in U.S. dollars ............................................................ Description of collateral item .................................................................................................. Asset classification ................................................................................................................. Collateral or portfolio segregation status ................................................................................ Collateral location ................................................................................................................... Collateral jurisdiction ............................................................................................................... Is collateral re-hypothecation allowed? .................................................................................. No No No No No No No No No No No No No No No entry entry entry entry entry entry entry entry entry entry entry entry entry entry entry required. required. required. required. required. required. required. required. required. required. required. required. required. required. required. CORPORATE ORGANIZATION MASTER TABLE 1 Field Example Instructions and data application Definition As of date .......................... Entity identifier ................... 2015–01–05 ...... 888888888 ........ YYYY–MM–DD. Varchar(50). CO.3 Has LEI been used for entity identifier?. CO.4 Legal name of entity .......... CO.5 Immediate parent entity identifier. CO.6 Has LEI been used for immediate parent entity identifier?. CO.7 Legal name of immediate parent entity. CO.8 Percentage ownership of immediate parent entity in the entity. Y/N .................... Data extraction date ............................................................................. Provide unique identifier. Use LEI if available. Information needed to identify entity. Specify whether the entity identifier provided is an LEI ....................... Char(1). John Doe & Co 77777777 .......... Provide legal name of entity ................................................................. Use LEI if available. Information needed to complete org structure .... Varchar(200). Varchar(50). Y/N .................... Char(1). John Doe & Co Specify whether the immediate parent entity identifier provided is an LEI. Information needed to complete org structure ..................................... Varchar(200). 100.00 ............... Information needed to complete org structure ..................................... Num (5,2). amozie on DSK3GDR082PROD with RULES CO.1 CO.2 VerDate Sep<11>2014 17:00 Dec 20, 2018 Jkt 247001 PO 00000 Frm 00035 Fmt 4700 Sfmt 4700 E:\FR\FM\21DER1.SGM 21DER1 65520 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations CORPORATE ORGANIZATION MASTER TABLE 1—Continued Field Example CO.9 Entity type .......................... CO.10 Domicile ........................... CO.11 Jurisdiction under which incorporated or organized. CO.12 Reporting status .............. 1 Foreign Instructions and data application Subsidiary, forInformation needed to complete org structure ..................................... eign branch, foreign division. New York, New Enter as city, state or city, foreign country ........................................... York. New York ........... Enter as state or foreign jurisdiction ..................................................... REN ................... Indicate one of the following, as appropriate, given status of entity under this part. Information needed to validate compliance with the requirements of this part: REN = Records entity (reporting) NFC= Non-financial company (not reporting) EXC = Excluded entity (not reporting) ZER = Records entity with 0 QFCs (not reporting) DEM = Records entity de minimis exemption (not reporting) OTH = Records entity using another exemption (not reporting) Definition Varchar(50). Varchar(50). Varchar(50). Char(3). branches and divisions shall be separately identified to the extent they are identified in an entity’s reports to its PFRAs. COUNTERPARTY MASTER TABLE Field Example Instructions and data application Definition As of date .......................... Counterparty identifier ....... 2015–01–05 ...... 888888888 ........ YYYY–MM–DD. Varchar(50). CP.3 Has LEI been used for counterparty identifier? CP.4 Legal name of counterparty Y/N .................... Data extraction date ............................................................................. Use LEI if counterparty has one. Should be used consistently across all records entities within a corporate group. The counterparty identifier shall be the global legal entity identifier if one has been issued to the entity. If a counterparty transacts with the records entity through one or more separate foreign branches or divisions and any such branch or division does not have its own unique global legal entity identifier, the records entity must include additional identifiers, as appropriate to enable the FDIC to aggregate or disaggregate the data for each counterparty and for each entity with the same ultimate parent entity as the counterparty. Indicate whether the counterparty identifier is an LEI .......................... CP.5 New York, New York. New York ........... CP.1 CP.2 Domicile ............................. CP.6 Jurisdiction under which incorporated or organized. CP.7 Immediate parent entity identifier. CP.8 Has LEI been used for immediate parent entity identifier? CP.9 Legal name of immediate parent entity. CP.10 Ultimate parent entity identifier. CP.11 Has LEI been used for ultimate parent entity identifier? CP.12 Legal name of ultimate parent entity. John Doe & Co 77777777 .......... Y/N .................... John Doe & Co 666666666 ........ Y/N .................... John Doe & Co Char(1). Information needed to identify and, if necessary, communicate with counterparty. Enter as city, state or city, foreign country ........................................... Varchar(50). Enter as state or foreign jurisdiction ..................................................... Varchar(50). Provide an identifier for the parent entity that directly controls the counterparty. Use LEI if immediate parent entity has one. Indicate whether the immediate parent entity identifier is an LEI ........ Varchar(50). Information needed to identify and, if necessary, communicate with counterparty. Provide an identifier for the parent entity that is a member of the corporate group of the counterparty that is not controlled by another entity. Information needed to identify counterparty. Use LEI if ultimate parent entity has one. Indicate whether the ultimate parent entity identifier is an LEI ............ Information needed to identify and, if necessary, communicate with counterparty. Varchar(200). Char(1). Varchar(200). Varchar(50). Char(1). Varchar(100). BOOKING LOCATION MASTER TABLE amozie on DSK3GDR082PROD with RULES Field BL.1 BL.2 BL.3 BL.4 BL.5 BL.6 BL.7 As of date ....................................................................... Records entity identifier .................................................. Internal booking location identifier .................................. Unique booking unit or desk identifier ............................ Unique booking unit or desk description ........................ Booking unit or desk contact—phone ............................ Booking unit or desk contact—email .............................. VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 PO 00000 Frm 00036 Instructions and data application Definition Data extraction date ................................................................. Provide LEI ............................................................................... Information not required to be provided. Enter ‘‘exempt ’’ ....... Information not required to be provided. Enter ‘‘exempt ’’ ....... Information not required to be provided. Enter ‘‘NA’’ .............. Information not required to be provided. Enter ‘‘NA’’ .............. Information not required to be provided. Enter ‘‘NA’’ .............. YYYY–MM–DD. Varchar(50). Varchar(50). Varchar(50). Varchar(50). Varchar(50). Varchar(100). Fmt 4700 Sfmt 4700 E:\FR\FM\21DER1.SGM 21DER1 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations SAFEKEEPING AGENT MASTER TABLE Instructions and data application Field SA.1 As of date ...... SA.2 Safekeeping agent identifier. SA.3 Legal name of safekeeping agent. SA.4 Point of contact—name. SA.5 Point of contact—address. SA.6 Point of contact—phone. SA.7 Point of contact—email. No entry required. No entry required. No entry required. No entry required. No entry required. No entry required. No entry required. Dated: December 14, 2018. Peter Phelan, Deputy Assistant Secretary for Capital Markets. [FR Doc. 2018–27758 Filed 12–20–18; 8:45 am] BILLING CODE 4810–25–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG–2013–0705] RIN 1625–AA00 Regulated Navigation Area and Safety Zone: Tappan Zee Bridge Construction Project, Hudson River; South Nyack and Tarrytown, NY Coast Guard, DHS. Temporary interim rule and request for comments. AGENCY: ACTION: The Coast Guard is extending the effective period of the temporary regulated navigation areas and safety zone for the navigable waters of the Hudson River, NY, surrounding the Tappan Zee Bridge. This rule will extend the effective period of the existing temporary interim rule for an additional year, now ending on December 31, 2019. This rule will continue to prohibit all persons and vessel traffic from the safety zone and enforce speed and wake restrictions for the Eastern and Western regulated navigation areas as cited in this rule unless exceptions are authorized by the First District Commander or a designated representative. These regulated navigation areas and safety zone continue to be necessary to protect personnel, vessels, and the marine environment from potential hazards during the removal of the existing Tappan Zee Bridge and construction of a new bridge. amozie on DSK3GDR082PROD with RULES SUMMARY: VerDate Sep<11>2014 16:23 Dec 20, 2018 Jkt 247001 The effective period of § 165.T01–0174 is extended to December 31, 2019. The amendments in this rule are effective from December 31, 2018, through December 31, 2019. Comments and related material must be received by the Coast Guard on or before April 1, 2019. ADDRESSES: To view documents mentioned in this preamble as being available in the docket, go to https:// www.regulations.gov, type USCG–2013– 0705 in the ‘‘SEARCH’’ box and click ‘‘SEARCH.’’ Click on Open Docket Folder on the line associated with this rule. You may submit comments identified by docket number USCG– 2013–0705 using the Federal eRulemaking Portal at https:// www.regulations.gov. See the ‘‘Public Participation and Request for Comments’’ portion for further instructions on submitting comments. FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, call or email Mr. Craig Lapiejko, Waterways Management at Coast Guard First District, telephone 617–223–8351, email craig.lapiejko@uscg.mil or, Mr. Jeff Yunker, Coast Guard Sector New York Waterways Management Division, U.S. Coast Guard; telephone 718–354–4195, email jeff.m.yunker@uscg.mil. SUPPLEMENTARY INFORMATION: DATES: I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register NYSTA New York State Thruway Authority RNA Regulated Navigation Area NPRM Notice of proposed rulemaking TIR Temporary Interim Rule § Section U.S.C. United States Code II. Background Information and Regulatory History On September 26, 2013, the Coast Guard published a temporary interim rule (TIR) establishing a regulated navigation area (RNA) on the navigable waters of the Hudson River, NY, for the Tappan Zee Bridge replacement project (78 FR 59231). We received no comments on the September 26, 2013, TIR. No public meeting was requested, and none was held. Construction on the Tappan Zee Bridge replacement project began on October 1, 2013. On July 25, 2014, the Coast Guard published a change to the original TIR which established a new safety zone and expanded the RNA to create both an Eastern and Western RNA for the Tappan Zee Bridge replacement project on navigable waters of the Hudson River, NY (79 FR 43250). We received PO 00000 Frm 00037 Fmt 4700 Sfmt 4700 65521 two comments on the July 25, 2014, TIR. The first comment referenced an unrelated rulemaking effort to establish anchorage locations along the Hudson River. The second comment merely provided the environmental checklist for the TIR. No public meeting was requested, and none was held. Today’s TIR extends the effective period of the rule for one year until December 31, 2019, due to delays of the Tappan Zee Bridge replacement project. On August 23, 2018, the NYSTA requested the RNAs and safety zone be extended until December 31, 2019, to complete all remaining contract operations in and over the Hudson River, including, but not limited to steel erection, concrete bridge deck placements, installation of navigation lighting, and removal of the original Tappan Zee Bridge. The Coast Guard is issuing this temporary interim rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are ‘‘impracticable, unnecessary, or contrary to the public interest.’’ Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a NPRM with respect to this rule because doing so would be impracticable and contrary to the public interest. The notice allowing the construction project to proceed and providing updated timelines for the project was only recently finalized and provided to the Coast Guard, which did not give the Coast Guard enough time to publish a NPRM, take public comments, and issue a final rule before the existing regulation expires. Timely action is needed to respond to the potential safety hazards associated with removal of the original bridge and construction of a new replacement bridge. It would be impracticable and contrary to the public interest to publish a NPRM because we must extend the effective period of the safety zone and RNAs as soon as possible to protect the safety of the waterway users, construction crew, and other personnel associated with the bridge project. A delay of the project to accommodate a full notice and comment period would delay necessary operations, result in increased costs, and delay the completion date of the bridge project and subsequent reopening of the Hudson River for normal operations. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for E:\FR\FM\21DER1.SGM 21DER1

Agencies

DEPARTMENT OF THE TREASURY

[Federal Register Volume 83, Number 245 (Friday, December 21, 2018)]
[Rules and Regulations]
[Pages 65509-65521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27758]

=======================================================================
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DEPARTMENT OF THE TREASURY

31 CFR Part 148

Qualified Financial Contracts Recordkeeping Related to Orderly
Liquidation Authority

AGENCY: Department of the Treasury.

ACTION: Notification of exemptions.

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SUMMARY: The Secretary of the Treasury (the ``Secretary''), as
Chairperson of the Financial Stability Oversight Council (``FSOC''),
after consultation with the Federal Deposit Insurance Corporation (the
``FDIC''), is issuing a determination regarding requests for exemption
from certain requirements of the rule implementing the qualified
financial contracts (``QFC'') recordkeeping requirements of Title II of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (the
``Dodd-Frank Act'' or the ``Act'').

DATES: The exemptions granted are effective December 21, 2018.

FOR FURTHER INFORMATION CONTACT: Peter Phelan, Deputy Assistant
Secretary for Capital Markets, (202) 622-1746; Peter Nickoloff,
Financial Economist, Office of Capital Markets, (202) 622-1692; Steven
D. Laughton, Assistant General Counsel (Banking & Finance), (202) 622-
8413; or Stephen T. Milligan, Acting Deputy Assistant General Counsel
(Banking & Finance), (202) 622-4051.

SUPPLEMENTARY INFORMATION:

Background

On October 31, 2016, the Secretary published a final rule pursuant
to section 210(c)(8)(H) of the Dodd-Frank Act requiring certain
financial companies to maintain records with respect to their QFC
positions, counterparties, legal documentation, and collateral that
would assist the FDIC as receiver in exercising its rights and
fulfilling its obligations under Title II of the Act (the ``final
rule'' or ``rule'').\1\
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\1\ 31 CFR part 148; 81 FR 75624 (Oct. 31, 2016).

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[[Page 65510]]

Section 148.3(c)(3) of the rule provides that one or more records
entities may request an exemption from one or more of the requirements
of the rule by writing to the Department of the Treasury
(``Treasury''), the FDIC, and the applicable primary financial
regulatory agency or agencies, if any.\2\ The written request for an
exemption must: (i) Identify the records entity or records entities or
the types of records entities to which the exemption would apply; (ii)
specify the requirements from which the records entities would be
exempt; (iii) provide details as to the size, risk, complexity,
leverage, frequency and dollar amount of QFCs, and interconnectedness
to the financial system of each records entity, to the extent
appropriate, and any other relevant factors; and (iv) specify the
reasons why granting the exemption will not impair or impede the FDIC's
ability to exercise its rights or fulfill its statutory obligations
under sections 210(c)(8), (9), and (10) of the Act.\3\
---------------------------------------------------------------------------

\2\ 31 CFR 148.3(c)(3).
\3\ 12 U.S.C. 5390(c)(8), (9), and (10).
---------------------------------------------------------------------------

The rule provides that, upon receipt of a written recommendation
from the FDIC, prepared in consultation with the primary financial
regulatory agency or agencies for the applicable records entity or
entities, that takes into consideration each of the factors referenced
in section 210(c)(8)(H)(iv) of the Act \4\ and any other factors the
FDIC considers appropriate, the Secretary may grant, in whole or in
part, a conditional or unconditional exemption from compliance with one
or more of the requirements of the rule to one or more records
entities.\5\ The rule further provides that, in determining whether to
grant an exemption, the Secretary will consider any factors deemed
appropriate by the Secretary, including whether application of one or
more requirements of the rule is not necessary to achieve the purpose
of the rule.\6\
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\4\ 12 U.S.C. 5390(c)(8)(H)(iv).
\5\ 31 CFR 148.3(c)(4)(i).
\6\ 12 U.S.C. 148.3(c)(4)(ii).
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Requests for Exemptions

Overview

On August 23, 2017, The Clearing House Association L.L.C. (``TCH'')
and the Securities Industry and Financial Markets Association
(``SIFMA'' and, together with TCH, ``TCH-SIFMA'' or the
``associations''), jointly submitted a written request for seven
separate exemptions from certain recordkeeping requirements of the
rule.\7\ The associations' request was submitted on behalf of 33
corporate groups that are members of a working group organized by TCH-
SIFMA.\8\ As discussed in greater detail below, TCH-SIFMA requested an
exemption (1) for cash market transactions, (2) for transactions that
mature overnight, (3) for seeded funds, (4) for subsidiaries of
excluded entities, (5) for corporate groups for which the preponderance
of assets and derivatives exposures in the group are in an insured
depository institution, (6) for entities that are not identified as
material entities in a corporate group's resolution plan, and (7) from
the requirement to report, in the corporate organization master table,
excluded entities and non-financial companies of a corporate group.
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\7\ TCH has since been succeeded by the Bank Policy Institute.
\8\ The participants in the TCH-SIFMA working group are Bank of
America Corporation; BancWest Corporation; The Bank of New York
Mellon Corporation; Barclays US LLC; BB&T Corporation; BMO Financial
Corp.; Capital One Financial Corporation; Citigroup Inc.; Citizens
Financial Group, Inc.; Comerica Incorporated; Credit Suisse Holdings
(USA), Inc.; Deutsche Bank Trust Corporation; Fifth Third Bancorp;
The Goldman Sachs Group, Inc.; HSBC North America Holdings Inc.;
JPMorgan Chase & Co.; KeyCorp; M&T Bank Corporation; Morgan Stanley;
MUFG Americas Holding Corporation; Nomura Holding America Inc.;
Nuveen, LLC; The PNC Financial Services Group, Inc.; RBC USA Holdco
Corporation; Regions Financial Corporation; Santander Holdings USA,
Inc.; State Street Corporation; SunTrust Banks, Inc.; Teachers
Insurance and Annuity Association of America; Toronto Dominion
Holdings (U.S.A.), Inc.; US Bancorp; UBS Americas, Inc.; and Wells
Fargo & Company.
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As discussed more fully in the preamble to the final rule,\9\ the
FDIC has the authority under Title II of the Dodd-Frank Act to transfer
the assets and liabilities of any financial company for which it has
been appointed receiver under Title II (a ``covered financial
company'') to either a bridge financial company established by the FDIC
or to another financial institution.\10\ The FDIC generally has broad
discretion under Title II as to which QFCs it transfers to the bridge
financial company or to another financial institution, subject to
certain limitations, including the requirement that, if the FDIC is to
transfer a QFC with a particular counterparty, it must transfer to a
single financial institution (i) all QFCs between the covered financial
company and such counterparty and (ii) all QFCs between the covered
financial company and any affiliate of such counterparty.\11\
Similarly, if the FDIC determines to disaffirm or repudiate any QFC
with a particular counterparty, it must disaffirm or repudiate (i) all
QFCs between the covered financial company and such counterparty and
(ii) all QFCs between the covered financial company and any affiliate
of such counterparty.\12\ This requirement is referred to as the ``all
or none rule.''
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\9\ See 81 FR at 75624-25.
\10\ See, e.g., 12 U.S.C. 5390(a)(1)(G)(i).
\11\ 12 U.S.C. 5390(c)(9)(A).
\12\ 12 U.S.C. 5390(c)(11).
---------------------------------------------------------------------------

Treasury received a recommendation from the FDIC, prepared in
consultation with the relevant primary financial regulatory
agencies,\13\ regarding the TCH-SIFMA exemption requests. After
consultation with the FDIC, Treasury is making the determinations
discussed below.\14\ The remaining exemption requests by TCH-SIFMA will
be addressed separately.
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\13\ The FDIC consulted with staff of the Board of Governors of
the Federal Reserve System (``Board of Governors''), the Commodity
Futures Trading Commission (``CFTC''), and the Securities and
Exchange Commission (``SEC'').
\14\ All exemptions to the recordkeeping requirements of the
rule are made at the discretion of the Secretary, and the
Secretary's discretion is not limited by any recommendations
received from other agencies. Exemptions to the FDIC's recordkeeping
rules under 12 CFR part 371 (Recordkeeping Requirements for
Qualified Financial Contracts) are at the discretion of the board of
directors of the FDIC and entail a separate request and process and
separate policy considerations. References to the FDIC in this
notice should not be taken to imply that the FDIC has determined
that similar exemptions under Part 371 would be available.
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Cash Market Transactions

TCH-SIFMA requested an exemption from all of the recordkeeping
requirements of the rule for any cash market QFC that typically settles
in accordance with a market standard settlement cycle. For purposes of
this discussion, ``cash market QFC'' refers to an agreement to purchase
or sell an equity or fixed income security or, in the case of a foreign
exchange spot transaction, an agreement to purchase or sell one
currency in exchange for another currency.\15\
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\15\ Such transactions are qualified financial contracts as
defined in Title II of the Dodd-Frank Act and the rule. See 12
U.S.C. 5390(c)(8)(D)(ii)(I), (vi)(I); 31 CFR 148.2(m).
---------------------------------------------------------------------------

The associations stated that requiring recordkeeping for these
transactions is unnecessary because (1) cash market QFCs are
standardized and do not have unique terms and, accordingly, the
relevant data for FDIC decision making as to whether to transfer such
QFCs would be limited to identifying counterparties to such QFCs and
the net exposure with such counterparties; (2) records entities execute
a high volume of cash market QFCs on a daily basis, making compliance
with the daily recordkeeping requirements with respect to such
transactions burdensome; (3) records entities already have systems in
place for evaluating counterparty exposure on a net basis

[[Page 65511]]

and the FDIC should use these existing systems for cash market QFCs,
rather than imposing the burden of new recordkeeping requirements for
cash market QFCs, particularly since they are short-dated and thus most
will not be in existence on any particular date when the FDIC is
appointed receiver of a records entity; (4) these transactions pose
little risk to records entities due to their limited leverage and
complexity and short settlement period; and (5) the FDIC would likely
focus on ensuring the settlement of cash market QFCs rather than
repudiating or disaffirming them which, TCH-SIFMA argued, would
undermine financial stability in the event of adverse market
conditions.
The associations raised points similar to the foregoing in their
comment letter submitted in response to Treasury's proposal of the
rule.\16\ In adopting the final rule, Treasury noted, with respect to
this comment, that all QFCs, including cash market QFCs, are subject to
the all or none rule. Treasury also stated that the large volume of
these short-term transactions supports the determination that to be
useful to the FDIC, any QFC records must be maintained in the standard
format specified in the final rule to ensure rapid aggregation and
evaluation of the information by the receiver. For these reasons,
Treasury determined not to exclude or otherwise provide an exemption
for cash market QFCs in the rule but noted the rule's provision for
requests for further exemptive relief. Treasury further stated that any
request for such an exemption would need to be defined in such a way as
to ensure consistency of treatment by any records entity.\17\
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\16\ See Letter from TCH, SIFMA, the American Bankers
Association, the Financial Services Roundtable, and the
International Swaps and Derivatives Association, Inc. (April 7,
2015), pp. 21-22.
\17\ 81 FR at 75637.
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In response to the present exemption request, Treasury believes
that an exemption can be granted for cash market QFCs that would be
consistent across records entities and that would permit the FDIC to
comply with its obligations and fulfill its responsibilities under
Title II of the Act, including the all or none rule. Specifically,
Treasury is granting an exemption applicable to all records entities
for cash market QFCs that have standardized terms and that have a ``T
plus 3'' \18\ or shorter settlement cycle, conditioned on records
entities maintaining certain limited records.
---------------------------------------------------------------------------

\18\ ``T plus 3'' means the trade date plus three business days.
The vast majority of cash market QFCs settle on a T plus 3 or
shorter basis.
---------------------------------------------------------------------------

As noted by the associations, cash market QFCs present settlement
risk--the risk that the counterparty to the QFC defaults on its
obligation to perform on the settlement date. In the case of a
securities transaction, settlement involves the payment of a fixed
price against the delivery of a security; in the case of a foreign
exchange spot transaction, settlement involves the payment of a fixed
amount of one currency against the delivery of an amount of a second
currency equal to the fixed amount adjusted by the foreign exchange
spot rate as of the time the transaction is executed. Although
settlement risk may increase during a period of general financial
distress that could prevail during the resolution of a covered
financial company under Title II, the risk that a settlement failure
could occur and the risk of any loss to the covered financial company,
or the bridge financial company (or other financial institution) if the
QFC is transferred, are largely mitigated by, depending on the nature
of the cash market QFC, collateral posted by the counterparty and
central clearing and settlement. In addition, a cash market QFC could
present market risk in that the market value of a security or foreign
currency that the covered financial company has agreed to purchase
could fall during the settlement period to a value below the purchase
price, a risk that could also increase during a period of general
financial distress. This risk is partially mitigated by the limited
length of the settlement period.
The FDIC is required, to the extent practicable, to conduct its
operations as receiver for a covered financial company, including
making QFC transfer decisions, in a way that mitigates the potential
for serious adverse effects to the financial system.\19\ Given that
cash market QFCs that meet the exemption criteria generally impose
relatively limited risk, the FDIC's primary objectives in deciding
whether to transfer cash market QFCs likely would be to maintain the
continuity of the former operations of the covered financial company,
to maintain the operations of the clearing agencies for cash market
QFCs, and to otherwise avoid disruption to the financial markets. In
such a case, the position level data provided by the recordkeeping
requirements of the rule, as applied to cash market QFCs, would be less
critical for the FDIC's transfer decisions.
---------------------------------------------------------------------------

\19\ See 12 U.S.C. 5390(a)(9)(E).
---------------------------------------------------------------------------

With respect to QFCs other than cash market QFCs, other
considerations would more likely bear on the FDIC's transfer decisions.
In addition to considering financial stability implications, the FDIC
would have to weigh whether the transfer of QFCs would be detrimental
to the financial position of the bridge financial company. At a
minimum, the FDIC would need to ensure that the bridge financial
company would be solvent after the transfer of any assets and
liabilities to it.\20\ But given the all or none rule, for a covered
financial company that has both cash market QFCs and non-cash market
QFCs with a counterparty or with that counterparty's affiliates, the
FDIC would need certain information about the cash market QFCs to
inform its transfer decisions.
---------------------------------------------------------------------------

\20\ As discussed in the preamble to the final rule, the FDIC is
required to confirm that the aggregate amount of liabilities,
including QFCs, of the covered financial company that are
transferred to, or assumed by, the bridge financial company from the
covered financial company do not exceed the aggregate amount of the
assets of the covered financial company that are transferred to the
bridge financial company from the covered financial company. See 12
U.S.C. 5390(h)(5)(F); 81 FR at 75626, 75649.
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As noted above, TCH-SIFMA argued that with respect to any cash
market QFCs, the records that records entities already maintain for
their own business purposes and, in the case of broker-dealers, that
are required by the SEC would be sufficient for the FDIC.\21\ Given the
time constraints imposed on the FDIC's decisionmaking by Title II, as
discussed in the preamble to the final rule, the FDIC generally needs
information about QFCs to be maintained in the standardized format
provided by the rule.\22\ As discussed below, the FDIC may be able to
refer to existing records in certain cases to evaluate a covered
financial company's exposure as a result of its cash market QFCs, but
the FDIC nevertheless would need certain limited information to be
maintained in the standardized format provided by the rule.
---------------------------------------------------------------------------

\21\ See, e.g., 17 CFR 240.17a-3, 17a-4.
\22\ See 81 FR at 75648.
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Under the terms of the exemption provided below, with respect to a
counterparty that is a natural person, if a records entity only has
cash market QFCs with that counterparty, the records entity would not
be required to maintain any record of those QFCs because the all or
none rule would apply only to those cash market QFCs. With respect to a
counterparty that is a non-natural person, if the records entity's QFCs
with the counterparty and the counterparty's affiliates, if any, are
limited to cash market QFCs and other

[[Page 65512]]

exempt QFCs (i.e., unless another exemption has been provided to a
specific records entity, the overnight QFCs discussed separately
below), the records entity would need to identify the date of the
record (fields A1.1, A2.1, A3.1, and BL.1 of Tables A-1 through A-3 and
the Booking Location Master Table, respectively, of Appendix A to the
rule), the records entity identifier (fields A1.2, A2.2, A3.2, and
BL.2), the position identifier (field A1.3), the counterparty
identifier (fields A1.4, A1.10, A2.3, and A3.6), and the QFC type
(field A1.7) and maintain the information required by the corporate
organization master table and the counterparty master table. With
respect to the QFC type field (field A1.7), the records entity would be
permitted simply to record ``cash market QFC'' as the QFC type. This
would permit the FDIC to verify that no additional QFCs would be
subject to the all or none rule as a result of the transfer or
retention of the cash market QFCs with that counterparty.
If a records entity, in addition to its cash market QFCs with the
counterparty, also has non-exempt QFCs with either the counterparty
(whether the counterparty is a natural person or not) or with its
affiliates, if any, the same information with respect to cash market
QFCs would be required to be maintained by the records entity as
described in the paragraph above except that the QFC type (field A1.7)
would be required to be recorded at the same level of specificity as
the records entity classifies the QFC in its internal systems (e.g., as
a foreign exchange spot transaction or more specifically as a U.S.
dollar/Japanese yen spot transaction, depending on how the records
entity classifies the QFC in its internal systems), as is currently the
case for QFCs not subject to any exemption. For such cases, a separate
record would be required to be maintained for each such QFC type for
each particular counterparty. Different cash market QFC types may
present different considerations for the FDIC's transfer determination,
and including the QFC type in the standardized records of the records
entity would permit the FDIC to identify quickly the QFC positions
about which it may need more information. The FDIC may determine, for
instance, that, given prevailing market conditions or the business of
the covered financial company, it would need more information about the
exposure of a covered financial company with respect to its spot
transactions in a particular currency. The QFC product type is also
expected to be helpful to the FDIC in obtaining from the covered
financial company the relevant internal records relating to such QFCs
because corporate groups may use different internal systems to maintain
records regarding different QFC types.
For the reasons discussed above, in order to be useful to the FDIC,
the information specified above would have to be maintained in the same
standardized format as applies to the recordkeeping requirements of the
rule generally, but for fields other than those specified above,
records entities may provide specified default entries. No entries
relating to such exempted QFCs would need to be provided with respect
to Table A-4 (collateral detail data) or the safekeeping agent master
table. Tables specifying the data that would be required to be provided
for exempted cash market QFCs and, as discussed below, overnight QFCs
are set forth in Appendix A to this notice.

Overnight QFCs

TCH-SIFMA requested an exemption from all of the recordkeeping
requirements of the rule for QFCs that are overnight repurchase
agreements and reverse repurchase agreements or overnight securities
borrowing and lending agreements (``overnight QFCs'').\23\ Such
overnight QFCs provide that the transaction will terminate on the
business day following the day the transaction is entered into. The
associations asserted that, for this reason, transaction-specific
information regarding overnight QFCs is not relevant to any decision by
the FDIC regarding which QFCs to transfer to the bridge financial
company. The associations also asserted that, because the rule requires
records to be maintained based on values and information that are no
less current than previous end of day values, the records required by
the rule would not include information regarding overnight QFCs that
are outstanding on the day the receiver is appointed.
---------------------------------------------------------------------------

\23\ Overnight repurchase agreements and reverse repurchase
agreements and overnight securities borrowing and lending agreements
are qualified financial contracts as defined in Title II of the
Dodd-Frank Act and the rule. See 12 U.S.C. 5390(c)(8)(D)(ii)(I),
(v); 31 CFR 148.2(m).
---------------------------------------------------------------------------

The one business day stay relating to QFCs of the covered financial
company discussed in the preamble to the final rule lasts until the
earlier of 5:00 p.m. Eastern Time on the business day following the
date of the appointment of the FDIC as receiver or the FDIC's notice to
the counterparty of the transfer of the QFC.\24\ During such stay, the
FDIC may decide to structure asset transfers of a covered financial
company such that QFCs would be transferred as of a time prior to the
termination of the overnight QFCs, and the all or none rule would apply
in connection with such a transfer. As with cash market QFCs, the FDIC
could transfer overnight QFCs to the bridge financial company to help
maintain the continuity of the former operations of the covered
financial company and to otherwise avoid disruption to the financial
markets. The settlement risk and market risk of overnight securities
lending and repurchase and reverse repurchase agreements are partially
mitigated by their short duration, collateralization requirements, and,
with respect to much of the repurchase and reverse repurchase agreement
market, central clearing. However, if the receiver decided to retain
any non-overnight QFCs with a counterparty, it would also need to
retain any overnight QFCs with that counterparty and that
counterparty's affiliates. TCH-SIFMA's contention that the records
would not provide information regarding any overnight QFCs entered into
on the day the FDIC is appointed as receiver does not take into
consideration the FDIC's ability to obtain records on the day following
its appointment as receiver of QFCs entered into on the day of its
appointment as receiver.
---------------------------------------------------------------------------

\24\ See 12 U.S.C. 5390(c)(10)(B)(i).
---------------------------------------------------------------------------

Absent a transfer of the contract by the FDIC, an overnight QFC
would remain with the covered financial company and simply terminate in
accordance with its terms, and the counterparty to the overnight
transaction would be able to exercise its rights under the terms of the
QFC. If the FDIC were to contemplate retaining an overnight transaction
in the receivership, the FDIC would need more information about the
transaction in order to assess the effect of doing so. As with cash
market QFCs, the limited recordkeeping requirements set forth below are
expected to facilitate the FDIC's ability to consult the records
entity's internal records to obtain the information needed to make this
assessment.
Under the terms of the exemption, the same set of records would
need to be maintained with regard to overnight QFCs as would be
required to be maintained with respect to cash market QFCs as set forth
above. Specifically, if the records entity's QFCs with the counterparty
and the counterparty's affiliates, if any, are limited to overnight
QFCs and other exempt QFCs (i.e., unless another exemption has been
provided to a specific records entity, the cash market QFCs discussed
separately

[[Page 65513]]

above), the records entity would need to identify the date of the
record (fields A1.1, A2.1, A3.1, BL.1), the records entity identifier
(fields A1.2, A2.2, A3.2, and BL.2), the position identifier (field
A1.3), the counterparty identifier (fields A1.4, A1.10, A2.3, and
A3.6), and the QFC type (field A1.7) and would need to maintain the
information required by the counterparty master table. With respect to
the QFC type field (field A1.7), in this case, the records entity would
be permitted simply to record ``overnight QFC'' as the QFC type. If a
records entity, in addition to its overnight QFCs with the
counterparty, also has non-exempt QFCs with either the counterparty or
with its affiliates, if any, the same information with respect to
overnight QFCs would be required to be maintained by the records entity
as provided above except that the QFC type in field A1.7 would be
recorded at the same level of specificity as the records entity
classifies the QFC in its internal systems (e.g., as a repurchase
agreement). For such cases, a separate record would be required to be
maintained for each such QFC type for each particular counterparty.

Seeded Funds

TCH-SIFMA requested an exemption from the rule for certain
``covered funds'' and registered investment companies and business
development companies during their ``seeding period'' subject to
restrictions imposed by section 13 of the Bank Holding Company Act of
1956, as amended,\25\ (known as the ``Volcker Rule'') and implementing
rules. The requested exemption would apply only to a seeded fund that
does not on its own meet the assets and derivatives thresholds for
qualifying as a records entity.
---------------------------------------------------------------------------

\25\ 12 U.S.C. 1851.
---------------------------------------------------------------------------

Seeded funds are funds in which the sponsor has made an initial
investment of seed capital, amounting to up to 100% of the equity of
the fund, during a limited period in which the fund establishes an
investment record and attracts third party investment. Because a member
of a corporate group that includes records entities could, during the
seeding period, own a sufficient amount of the capital of such a seeded
fund that the seeded fund would become an affiliate of the sponsor
under the rule, the seeded fund, no matter its size or level of
derivatives activity, would be subject to the rule as well, provided it
otherwise meets the records entity definition.
Treasury considered a similar issue in addressing two comments
received in response to the proposed rule that requested an exemption
for seeded funds.\26\ Treasury noted in response to these comments that
changes made to the definition of ``records entity'' in the final rule
should limit the circumstances in which a seeded fund would become a
records entity by virtue of its sponsor's investment.\27\ Further,
Treasury noted that, in the event that such a seeded fund were to be
deemed a records entity under the rule, the fund would be able to
request an exemption from the recordkeeping requirements of the final
rule for the duration of the seeding period; otherwise, the seeded fund
would be treated as any other financial company member of the corporate
group of a records entity and required to maintain records of its QFCs
if they exceed the de minimis threshold.\28\
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\26\ See Letter from TIAA-CREF (Apr. 7, 2015), p. 6; Letter from
the Investment Company Institute (Apr. 7, 2015), p. 10.
\27\ See 81 FR at 75633. In particular, Treasury adopted in the
final rule the suggestion of commenters to revise the definition of
``records entity'' to identify which members of a corporate group
are records entities by reference to whether they are consolidated
under accounting standards rather than by reference to whether they
are controlled for purposes of the Bank Holding Company Act. See id.
\28\ See id. The final rule provides a de minimis exemption
whereby a records entity that is a party to 50 or fewer open QFC
positions is not required to maintain the records described in Sec.
148.4 of the rule, other than the records described in Sec.
148.4(i). See 31 CFR 148.3(c)(1).
---------------------------------------------------------------------------

In their request for an exemption, TCH-SIFMA stated that the final
rule presents a significant burden with regard to corporate groups'
investments in seeded funds, sponsored by their members, that are
records entities even with the revised definition adopted in the final
rule. The associations argued that the pursuit of individual exemptions
by each seeded fund would be impractical and burdensome given the
limited duration of each such fund. Further, TCH-SIFMA raised a point
not previously identified by the commenters to the proposed rule as to
why an exemption would be appropriate for seeded funds. Specifically,
TCH-SIFMA stated that the information barriers, such as corporate
firewalls intended to protect trading positions and the confidentiality
of asset management customers, that companies are required to establish
between their seeded funds and the rest of the corporate group would
significantly increase the cost of these funds' compliance with the
recordkeeping requirements of the rule. The final rule had presumed
that companies would likely comply with the rules by utilizing a
centralized recordkeeping system that would obviate the need for each
member of the corporate group to maintain its own recordkeeping system
in order to comply with the rules.\29\ While the additional costs
imposed by information barriers established within corporate groups for
regulatory and other reasons cannot be avoided in all cases, in this
case, the additional cost may not be justified given that the fund
would only be required to comply with the rules for the relatively
short duration of its seeding period.
---------------------------------------------------------------------------

\29\ 81 FR at 75644.
---------------------------------------------------------------------------

Given the additional burden faced by such funds and the reduced
probability that the FDIC would need to have QFC information from one
of these funds during the relatively short duration of its seeding
period, Treasury has determined to grant an exemption for certain types
of seeded funds that do not on their own meet the asset or derivative
thresholds of the records entity definition. As proposed by TCH-SIFMA,
the exemption is formulated to be consistent with the exemptions
provided by the Volcker Rule and its implementing regulations with
respect to such seeded funds. Although the Volcker Rule and this
recordkeeping rule have different purposes, the limitations imposed on
the exemptions--particularly the limitation on the seeding period
discussed below--reduce the likelihood that the FDIC would need the QFC
records of such a fund. Further, using the existing framework of the
Volcker Rule permits records entities that are already subject to the
Volcker Rule to rely on their compliance with the Volcker Rule in order
to meet the conditions of this exemption.
The Volcker Rule imposes various prohibitions on proprietary
trading by ``banking entities'' and on banking entities' investments in
and relationships with certain funds, including, generally, private
equity and hedge funds, referred to as ``covered funds.'' The Volcker
Rule and its implementing regulations provide an exemption from the
general prohibition on banking entity investments in covered funds if
the investment is for the purpose of establishing the fund and
providing it with sufficient initial equity to permit it to attract
unaffiliated investors.\30\ Such a seed investment must not exceed,
together with other permissible investments by the banking entity and
its affiliates in covered funds,

[[Page 65514]]

3% of the tier 1 capital of the banking entity.\31\ Further, during the
seeding period, the banking entity and its affiliates must actively
seek unaffiliated investors in order to reduce the banking entity's
investment in the fund to 3% or less of the total number or value of
shares or other ownership interests of the fund, and the seeding period
may not last for more than one year, unless extended by the Board of
Governors for up to a maximum of two additional years.\32\ The
exemption granted by Treasury for covered funds is subject to the
condition that the investments by a corporate group in the covered fund
that cause the covered fund to become a member of the corporate group
must be permitted pursuant to the Volcker Rule's seeded funds exemption
described above.
---------------------------------------------------------------------------

\30\ See 12 U.S.C. 1851(d)(4)(A); 12 CFR 248.12(a) (the rule
adopted by the Board of Governors). The other agencies charged with
implementing the Volcker Rule--the CFTC, the FDIC, the Office of the
Comptroller of the Currency, and the SEC--have adopted substantively
identical rules.
\31\ See 12 U.S.C. 1851(d)(4)(B)(ii)(II); 12 CFR
248.12(a)(1)(ii).
\32\ See 12 U.S.C. 1851(d)(4)(B), (C), 12 CFR 248.12(a)(2).
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Separately, the Volcker Rule implementing regulations provide that
registered investment companies, business development companies, and
companies formed for the purpose of becoming registered investment
companies and business development companies are excluded from the
definition of ``covered fund.'' \33\ Further, the agencies implementing
the Volcker Rule have provided staff guidance that such funds should
not be considered to be banking entities under the implementing rules
if the fund is established with a limited seeding period.\34\ Without
this relief, such funds (referenced as ``registered investment
companies and business development companies'' in the exemption below)
would themselves be subject to the prohibitions on proprietary trading
and covered funds investments by banking entities. As to the length of
the limited seeding period, the guidance cites, as an example, the
maximum three year limitation on the permissible investments in seeded
funds by covered funds discussed above.\35\ The agencies in their
recent proposal to amend the implementing regulations raised questions
as to whether the length of the permitted seeding period should be made
more definite, perhaps with provision for extensions.\36\ The exemption
granted by Treasury provides relief for registered investment companies
and business development companies that are not deemed to be banking
entities as a result of being in their seeding periods pursuant to the
above described guidance or the implementing regulations, should they
be amended to provide for similar relief.
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\33\ As relates to the funds discussed herein, this exemption
extends to an entity (i) that is registered as an investment company
under section 8 of the Investment Company Act of 1940 (15 U.S.C.
80a-8), or that is formed and operated pursuant to a written plan to
become a registered investment company as described in 12 CFR
248.20(e)(3) and that complies with the requirements of section 18
of the Investment Company Act of 1940 (15 U.S.C. 80a-18); or (ii)
that has elected to be regulated as a business development company
pursuant to section 54(a) of that Act (15 U.S.C. 80a-53) and has not
withdrawn its election, or that is formed and operated pursuant to a
written plan to become a business development company as described
in 12 CFR 248.20(e)(3) and that complies with the requirements of
section 61 of the Investment Company Act of 1940 (15 U.S.C. 80a-60).
See 12 CFR 248.10(c)(12)(i), (iii).
\34\ See Board of Governors, Frequently Asked Questions, No. 16,
https://www.federalreserve.gov/bankinforeg/volcker-rule/faq.htm.
(Substantively identical frequently asked questions have been issued
by the other implementing agencies.)
\35\ Id. The guidance provides that the seeding period generally
would be measured from the date on which the investment adviser or
similar entity begins making investments pursuant to the written
investment strategy of the fund.
\36\ See Proposed Revisions to Prohibitions and Restrictions on
Proprietary Trading and Certain Interests in, and Relationships
With, Hedge Funds and Private Equity Funds, 83 FR 33432, 33444-45
(July 17, 2018).
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Corporate Organization Table

The rule requires that information regarding a records entity's
affiliates be maintained in a corporate organization master data lookup
table, set forth in appendix A to the rule. The rule requires this
information to be maintained on a daily basis by a records entity with
respect to itself and all of the members of its corporate group, which
includes all of the records entity's affiliates whether or not those
entities meet the definitions of ``records entity'' or ``financial
company'' under the rule.
TCH-SIFMA requested an exemption from this requirement such that a
records entity may exclude from the corporate organization master table
any affiliate that is an excluded entity \37\ or that is not a
financial company because it is not organized under the provisions of
Federal law or the laws of any U.S. state; i.e., because it is a non-
U.S. affiliate.\38\ TCH-SIFMA stated that these requirements are
burdensome; that the reasons cited in the preamble to the final rule
for including affiliates in this table do not support the inclusion of
such entities; and that information that would be included in the table
about these affiliates would not be useful to the FDIC as receiver.
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\37\ As defined in the final rule, ``excluded entity'' means an
insured depository institution, certain subsidiaries of an insured
depository institution, or an insurance company. 31 CFR 148.2(f).
\38\ As defined in the final rule (by cross-reference to 12
U.S.C. 5381(a)(11)), the term ``financial company'' includes only
companies that are ``incorporated or organized under any provision
of Federal law or the laws of any State.'' 31 CFR 148.2(g).
---------------------------------------------------------------------------

Treasury determined in the final rule, and reaffirms in this
notice, that it is important for the FDIC to have access to this
information in the event it is appointed receiver of a covered
financial company. As discussed in the preamble to the final rule,
under section 210(c)(16) of the Dodd-Frank Act, the QFCs of
subsidiaries or affiliates of a covered financial company that are
guaranteed or otherwise supported by or linked to such covered
financial company can be enforced by the FDIC as receiver of the
covered financial company notwithstanding the insolvency, financial
condition, or receivership of the covered financial company if the FDIC
transfers the guarantee or other support to a bridge financial company
or other third party.\39\ The FDIC's decision as to whether to transfer
such a guarantee or credit support pursuant to sections 210(c)(9) and
(10) of the Act may be influenced by the information required to be
maintained as to a records entity's affiliates. In particular, the FDIC
as receiver may need to know whether the affiliate is a wholly-owned
subsidiary or a partially-owned subsidiary since the extent of such
control over the subsidiary would likely be a factor the FDIC considers
in making any such transfer decision. Information about affiliates of
the records entity will also provide the FDIC, in the event of a
resolution of a covered financial company, with greater certainty that
the required QFC records from each records entity have been maintained
by allowing the FDIC to quickly ascertain, by reference to field CO.12
(regarding the entity's reporting status), whether the entity has not
maintained records because it is not a party to any QFCs, has availed
itself of the de minimis exemption (in which case the FDIC would need
to manually review the available QFC records) or another exemption, or
is excluded from the definition of ``records entity.''
---------------------------------------------------------------------------

\39\ See 12 U.S.C. 5390(c)(16); 81 FR at 75642.
---------------------------------------------------------------------------

Furthermore, although the associations asserted the FDIC could
obtain this information from other sources, particularly, in the case
of bank holding companies, from the Report of Changes in Organizational
Structure on Form FR Y-10, as with other elements of the recordkeeping
requirements of the rule, it is important for the FDIC to have access
to this information in a readily-usable format. In this case, the
information in the corporate organization master data lookup table is
linked to information recorded in the

[[Page 65515]]

other tables required under the final rule.
Nevertheless, Treasury accepts that the requirement to provide
daily updating of information pertaining to excluded entity and non-
U.S. affiliates imposes a significant burden on records entities.
Treasury has determined to grant an exemption such that this
information need only be updated within 30 days of a change. This 30-
day period aligns with the existing requirement imposed by Form FR Y-
10, and this accommodation should not significantly impair the FDIC's
ability to make the determinations discussed above.

Entities That Are Not Material Entities Under a Group's Resolution Plan

TCH-SIFMA requested an exemption from the recordkeeping
requirements of the rule for any records entity that is not identified
as a ``material entity'' in its corporate group's resolution plan filed
under section 165(d) of the Dodd-Frank Act. Certain financial
companies--including bank holding companies with at least $250 billion
in total consolidated assets and nonbank financial companies for which
the FSOC has made a determination under section 113 of the Act--are
required to file plans with the FDIC, the Board of Governors, and FSOC
for their resolution under the Bankruptcy Code.\40\ Under the
implementing rules jointly adopted by the FDIC and Board of Governors,
such financial companies are required to identify and provide certain
information regarding their material entities.\41\ ``Material
entities'' is defined by the implementing rules as including
subsidiaries that are significant to the activities of a critical
operation or core business line.\42\ The term ``core business lines''
is defined as those business lines, including associated operations,
services, functions and support that, in the view of the financial
company, upon failure of the financial company would result in a
material loss of revenue, profit, or franchise value.\43\ ``Critical
operations'' is defined as the operations of a financial company,
including associated operations, services, functions and support, the
failure or discontinuance of which, in the company's view or as jointly
directed by the Board of Governors and the FDIC, would pose a threat to
the financial stability of the United States.\44\ TCH-SIFMA stated that
these material entities are the entities in a group that either would
be the most likely to be subject to a Title II proceeding themselves or
that would otherwise be material to such a proceeding.
---------------------------------------------------------------------------

\40\ See 12 U.S.C. 5365(d). Pursuant to section 165 of the Dodd-
Frank Act, as amended by the Economic Growth, Regulatory Relief, and
Consumer Protection Act, Public Law 115-174 (May 24, 2018), enhanced
prudential standards, including the resolution plan requirements
provided by section 165(d) of the Act, are applied to bank holding
companies with $250 billion or more in total consolidated assets and
nonbank financial companies supervised by the Board of Governors. In
addition, the Board of Governors has the authority to apply any such
standard, including the resolution plan requirements provided by
section 165(d) of the Act, to bank holding companies with $100
billion or more in total consolidated assets if it determines that
application of the standard is appropriate to prevent or mitigate
risks to U.S. financial stability or to promote safety and
soundness.
\41\ See 12 CFR 243.4 (Board of Governors rule); 12 CFR 381.4
(FDIC rule).
\42\ 12 CFR 243.2(l), 381.2(l).
\43\ 12 U.S.C. 243.2(d), 381.2(d).
\44\ 12 U.S.C. 243.2(g), 381.2(g).
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TCH-SIFMA raised the same point in a comment letter submitted in
response to the proposed rule and has not presented any additional
information in support of this request.\45\ As discussed in the
preamble to the final rule,\46\ Treasury noted that an entity that is
part of a larger corporate group could be resolved under Title II
without the Secretary making the systemic risk determination required
under section 203(b) of the Act with respect to that particular entity.
Section 210(a)(1)(E) of the Act provides that the FDIC may appoint
itself as receiver of an entity if it is a ``covered subsidiary'' of a
covered financial company of which the FDIC has been appointed as
receiver and it is jointly determined by the FDIC and the Secretary
that (i) the covered subsidiary is in default or in danger of default,
(ii) the FDIC's appointment as receiver would avoid or mitigate serious
adverse effects on the financial stability or economic conditions of
the United States, and (iii) the FDIC's appointment as receiver would
facilitate the orderly liquidation of the covered financial
company.\47\ As Treasury noted in the preamble to the final rule, if
the FDIC appoints itself receiver of a covered subsidiary, that
subsidiary is treated as a covered financial company for purposes of
Title II, and the FDIC as receiver would have the same rights under the
Act and the same obligations under sections 210(c)(8), (9), and (10) of
the Act as it does for other covered financial companies.\48\
---------------------------------------------------------------------------

\45\ See Letter from TCH, SIFMA, the American Bankers
Association, the Financial Services Roundtable, and the
International Swaps and Derivatives Association, Inc. (April 7,
2015), pp. 14-15.
\46\ See 81 FR at 75630.
\47\ 12 U.S.C. 5390(a)(1)(E)(i). ``Covered subsidiary'' is
defined as any subsidiary of a covered financial company, other than
an insured depository institution, an insurance company, or a
covered broker or dealer. 12 U.S.C. 5381(a)(9).
\48\ See 81 FR at 75630; 12 U.S.C. 5390(a)(1)(E)(ii).
---------------------------------------------------------------------------

Furthermore, the definition of ``material entity'' for purposes of
the resolution plan is not well aligned with the likelihood of a
company being resolved under Title II. In particular, the question of
whether an entity is material to the financial company's core business
lines is based on the materiality of its revenue, profit, or franchise
value to the financial company. In contrast, Treasury, in making a
systemic risk determination regarding a covered financial company under
section 203(b) of the Act, and Treasury and the FDIC, in making a joint
determination as to the FDIC's appointment as receiver of a covered
subsidiary under section 210(a)(1)(E) of the Act, would be making a
determination as to, among other things, the effects of the company's
failure on U.S. financial stability. It is possible, for example, that
an entity is not material to the core business lines of a financial
company or to its critical operations and yet, because of the nature
and extent of particular exposures the market has to that entity or
because of the amount and nature of the assets it would liquidate if it
were to be resolved in a disorderly manner outside of Title II, the
entity could be resolved under Title II in order to preserve U.S.
financial stability. It is not the case, therefore, that an entity that
has not been identified as a material entity is, by virtue of not
having been so identified, less likely to be resolved under Title II
than an entity that has been identified as a material entity.
Furthermore, because, as discussed above, the identification of an
entity as a material entity is made based on the entity's materiality
to its own corporate group, the proposed standard cannot be applied in
a uniform way across corporate groups that are required to file
resolution plans. For these reasons, Treasury has determined not to
provide the requested exemption.

Conditions of the Exemptions

Any records entity subject to the rule may avail itself of the
exemptions granted herein. With respect to each of the exemptions
granted herein, Treasury reserves the right to rescind or modify the
exemption at any time. Treasury intends to reassess the exemptions in
five years. At that time, Treasury, in consultation with the FDIC and
the primary financial regulatory agencies, would evaluate any relevant
changes to market structure or applicable law or other relevant factors
that might affect the reasons for granting the exemptions.

[[Page 65516]]

Treasury expects that it would provide notice to records entities prior
to any modification or rescission of any of the exemptions and that, in
the event of a rescission or modification, Treasury would grant records
entities a limited period of time in which to come into compliance with
the applicable recordkeeping requirements of the rule.

Terms and Conditions of the Exemptions

The following exemptions from the requirements of 31 CFR 148.3 and
148.4 are hereby granted to any records entity subject to the rule. All
terms undefined below but defined in 31 CFR 148.2 have the meanings set
forth therein. Each of these exemptions is subject to modification or
revocation at any time the Secretary determines that such action is
necessary or appropriate in order to assist the FDIC as receiver for a
covered financial company in being able to exercise its rights and
fulfill its obligations under sections 210(c)(8), (9), or (10).

Cash Market Transactions

An exemption from the recordkeeping requirements of the rule for
any QFC that is an agreement to purchase or sell an equity or fixed
income security or a foreign exchange spot transaction (a ``cash market
QFC''), provided that (i) such cash market QFC is executed on
standardized terms and settles within three business days of the trade
date and (ii) the records entity maintains, with respect to such cash
market QFC, the records as set forth in Appendix A to this notice in
the format required under the rule, provided further that no such
records are required to be maintained for cash market QFCs a records
entity has with a counterparty that is a natural person if the only
QFCs the records entity has with such counterparty are cash market
QFCs. With respect to a counterparty that is a non-natural person, if
the records entity's QFCs with the counterparty and the counterparty's
affiliates, if any, are limited to cash market QFCs or other exempt
QFCs, the records entity may simply record ``cash market QFC'' as the
QFC type (field A1.7); otherwise, the records entity must record the
QFC type (field A1.7) for the cash market QFC at the same level of
specificity as the records entity classifies the QFC in its internal
systems.

Overnight QFCs

An exemption from the recordkeeping requirements of the rule for
any QFC that is a repurchase agreement, reverse repurchase agreement,
securities borrowing agreement, or securities lending agreement that
terminates in accordance with its terms on the business day following
the day it is entered into (each an ``overnight QFC''), provided that
the records entity maintains, with respect to such an overnight QFC,
the records as set forth in Appendix A to this notice in the format
required under the rule. If the records entity's QFCs with the
counterparty and the counterparty's affiliates, if any, are limited to
overnight QFCs or other exempt QFCs, the records entity may simply
record ``overnight QFC'' as the QFC type (field A1.7); otherwise, the
records entity must record the QFC type (field A1.7) for the overnight
QFC at the same level of specificity as the records entity classifies
the QFC in its internal systems.

Seeded Funds

An exemption for an entity that is (i) a member of a corporate
group with one or more banking entities; (ii) a records entity solely
as a result of the application of section 148.2(n)(1)(iii)(E) of the
rule; and (iii) a covered fund, provided that the investments in the
entity that cause the entity to be a member of the corporate group are
permitted pursuant to the section 13 rules for the purposes of
establishing the fund and providing it with sufficient initial equity
for investment to permit it to attract unaffiliated investors.
An exemption for an entity that is (i) a member of a corporate
group with one or more banking entities; (ii) a records entity solely
as a result of the application of section 148.2(n)(1)(iii)(E) of the
rule; and (iii) excluded from the definition of ``covered fund'' under
the section 13 rules as a registered investment company or business
development company, provided that the entity is deemed not to be a
``banking entity'' as a result of it being in its seeding period as
provided by the section 13 rules or relevant agency guidance.
For purposes of these exemptions, the ``section 13 rules'' refers
to the rules of the Board of Governors of the Federal Reserve System,
the Commodity Futures Trading Commission, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, or the
Securities and Exchange Commission, as applicable, implementing section
13 of the Bank Holding Company Act of 1956, as amended (12 U.S.C.
1851); ``covered fund'' and ``banking entity'' have the meanings
provided under the section 13 rules; ``registered investment company''
means a company registered as an investment company under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8) or a company
formed and operated pursuant to a written plan to become such a
company; and ``business development company'' means a company that has
elected to be registered as a business development company pursuant to
section 54(a) of the Investment Company Act of 1940 (15 U.S.C. 53-a)
and has not withdrawn its election or a company formed and operated
pursuant to a plan to become such a company.

Corporate Organization Master Table

An exemption from the requirement of section 148.3(b)(1) of the
rule to update all records on a daily basis with respect to the
information, referenced in the corporate organization master table set
forth in appendix A to the rule, regarding any affiliate of a records
entity that is an excluded entity or a non-U.S. affiliate, provided
that such information is updated at least 30 days after a change in
such information. For purposes of this exemption, ``non-U.S.
affiliate'' means an affiliate that is not organized under any
provision of Federal law or the laws of any State and ``State'' has the
meaning provided in 12 U.S.C. 5301(16).

Appendix A

Table A-1--Position-Level Data
------------------------------------------------------------------------
Instructions and
Field data application Definition
------------------------------------------------------------------------
A1.1 As of date............. Provide data YYYY-MM-DD.
extraction date.
A1.2 Records entity Provide LEI for Varchar(50).
identifier. records entity.
Information needed
to review position-
level data by
records entity.
A1.3 Position identifier.... Provide a unique Varchar(100).
identifier. Should
be used
consistently across
all record entities
within the
corporate group.
Use the unique
transaction
identifier if
available.
Information needed
to readily track
and distinguish
positions.

[[Page 65517]]

A1.4 Counterparty identifier Provide a Varchar(50).
counterparty
identifier. Use LEI
if counterparty has
one. Should be used
consistently by all
record entities
within the
corporate group.
Information needed
to identify
counterparty by
reference to
Counterparty Master
Table.
A1.5 Internal booking Information not Varchar(50).
location identifier. required to be
provided. Enter
``exempt ''.
A1.6 Unique booking unit or Information not Varchar(50).
desk identifier. required to be
provided. Enter
``exempt ''.
A1.7 Type of QFC............ Provide type of QFC. Varchar(100).
Use unique product
identifier if
available. If
records entity has
only QFCs that are
cash market QFCs or
overnight QFCs with
a counterparty and
its affiliates, may
enter ``cash market
QFCs'' or
``overnight QFCs,''
as applicable. If
records entity has
both cash market/
overnight QFCs and
non-exempt QFCs
with a counterparty
or with its
affiliates, the QFC
type must be
recorded at the
same level of
specificity as the
records entity
classifies the QFC
in its internal
systems.
A1.7.1 Type of QFC covered Information not Varchar(500).
by guarantee or other third required to be
party credit enhancement. provided Enter
``NA''.
A1.7.2 Underlying QFC Information not Varchar(50).
obligor identifier. required to be
provided Enter
``NA''.
A1.8 Agreement identifier... Information not Varchar(50).
required to be
provided. Enter
``exempt ''.
A1.9 Netting agreement Information not Varchar(50).
identifier. required to be
provided. Enter
``exempt ''.
A1.10 Netting agreement Provide a netting Varchar(50).
counterparty identifier. agreement
counterparty
identifier. Use
same identifier as
provided in A1.4 if
counterparty and
netting agreement
counterparty are
the same. Use LEI
if netting
agreement
counterparty has
one. Information
needed to identify
unique netting sets.
A1.11 Trade date............ Information not YYYY-MM-DD.
required to be
provided. Enter
``2099-12-31''.
A1.12 Termination date...... Information not YYYY-MM-DD.
required to be
provided. Enter
``2099-12-31''.
A1.13 Next call, put, or Information not YYYY-MM-DD.
cancellation date. required to be
provided. Enter
``2099-12-31''.
A1.14 Next payment date..... Information not YYYY-MM-DD.
required to be
provided. Enter
``2099-12-31''.
A1.15 Local currency of Information not Char(3).
position. required to be
provided. Enter
``USD ''.
A1.16 Current market value Information not Num (25,5).
of the position in local required to be
currency. provided. Enter ``0
''.
A1.17 Current market value Information not Num (25,5).
of the position in U.S. required to be
dollars. provided. Enter ``0
''.
A1.18 Asset classification.. Information not Char(1).
required to be
provided. Enter ``0
''.
A1.19 Notional or principal Information not Num (25,5).
amount of the position in required to be
local currency. provided. Enter ``0
''.
A1.20 Notional or principal Information not Num (25,5).
amount of the position In required to be
U.S. dollars. provided. Enter ``0
''.
A1.21 Covered by third-party Information not Char(1).
credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the records entity)? ''.
A1.21.1 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the records entity). ``NA''.
A1.21.2 Third-party credit Information not Varchar(50).
enhancement agreement required to be
identifier (for the benefit provided. Enter
of the records entity). ``NA''.
A1.21.3 Covered by third- Information not Char(1).
party credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the counterparty)? ''.
A1.21.4 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the counterparty). ``NA''.
A1.21.5 Third-party credit Information not Varchar(50).
enhancement agreement required to be
identifier (for the benefit provided. Enter
of the counterparty). ``NA''.
A1.22 Related position of Information not Varchar(100).
records entity. required to be
provided. Enter
``NA''.
A1.23 Reference number for Information not Varchar(500).
any related loan. required to be
provided. Enter
``NA''.
A1.24 Identifier of the Information not Varchar(500).
lender of the related loan. required to be
provided. Enter
``NA''.
------------------------------------------------------------------------

Table A-2--Counterparty Netting Set Data
------------------------------------------------------------------------
Instructions and
Field data application Definition
------------------------------------------------------------------------
A2.1 As of date............. Data extraction date YYYY-MM-DD.
A2.2 Records entity Provide the LEI for Varchar(50).
identifier. the records entity.
A2.3 Netting agreement Provide an Varchar(50).
counterparty identifier. identifier for the
netting agreement
counterparty. Use
LEI if counterparty
has one.
A2.4 Netting agreement Information not Varchar(50).
identifier. required to be
provided. Enter
``exempt ''.

[[Page 65518]]

A2.4.1 Underlying QFC Information not Varchar(50).
obligor identifier. required to be
provided. Enter
``NA''.
A2.5 Covered by third-party Information not Char(1).
credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the records entity)? ''.
A2.5.1 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the records entity). ``NA''.
A2.5.2 Third-party credit Information not Varchar(50).
enhancement agreement required to be
identifier (for the benefit provided. Enter
of the records entity). ``NA''.
A2.5.3 Covered by third- Information not Char(1).
party credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the counterparty)? ''.
A2.5.4 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the counterparty). ``NA''.
A2.5.5 Third-party credit Information not Varchar(50).
enhancement agreement required to be
identifier (for the benefit provided. Enter
of the counterparty). ``NA''.
A2.6 Aggregate current Information not Num (25,5).
market value in U.S. required to be
dollars of all positions provided. Enter ``0
under this netting ''.
agreement.
A2.7 Current market value in Information not Num (25,5).
U.S. dollars of all required to be
positive positions, as provided. Enter ``0
aggregated under this ''.
netting agreement.
A2.8 Current market value in Information not Num (25,5).
U.S. dollars of all required to be
negative positions, as provided. Enter ``0
aggregated under this ''.
netting agreement.
A2.9 Current market value in Information not Num (25,5).
U.S. dollars of all required to be
collateral posted by provided. Enter ``0
records entity, as ''.
aggregated under this
netting agreement.
A2.10 Current market value Information not Num (25,5).
in U.S. dollars of all required to be
collateral posted by provided. Enter ``0
counterparty, as aggregated ''.
under this netting
agreement.
A2.11 Current market value Information not Num (25,5).
in U.S. dollar of all required to be
collateral posted by provided. Enter ``0
records entity that is ''.
subject to re-
hypothecation, as
aggregated under this
netting agreement.
A2.12 Current market value Information not Num (25,5).
in U.S. dollars of all required to be
collateral posted by provided. Enter ``0
counterparty that is ''.
subject to re-
hypothecation, as
aggregated under this
netting agreement.
A2.13 Records entity Information not Num (25,5).
collateral--net. required to be
provided. Enter ``0
''.
A2.14 Counterparty Information not Num (25,5).
collateral--net. required to be
provided. Enter ``0
''.
A2.15 Next margin payment Information not YYYY-MM-DD.
date. required to be
provided. Enter
``2099-12-31''.
A2.16 Next margin payment Information not Num (25,5).
amount in U.S. dollars. required to be
provided. Enter ``0
''.
A2.17 Safekeeping agent Information not Varchar(50).
identifier for records required to be
entity. provided. Enter
``NA''.
A2.18 Safekeeping agent Information not Varchar(50).
identifier for counterparty. required to be
provided. Enter
``NA''.
------------------------------------------------------------------------

Table A-3--Legal Agreements
------------------------------------------------------------------------
Instructions and
Field data application Definition
------------------------------------------------------------------------
A3.1 As of date............. Data extraction date *YYYY-MM-DD.
A3.2 Records entity Provide LEI for Varchar(50).
identifier. records entity.
A3.3 Agreement identifier... Information not Varchar(50).
required to be
provided. Enter
``exempt ''.
A3.4 Name of agreement or Information not Varchar(50).
governing document. required to be
provided. Enter
``NA''.
A3.5 Agreement date......... Information not YYYY-MM-DD.
required to be
provided. Enter
``2099-12-31''.
A3.6 Agreement counterparty Use LEI if Varchar(50).
identifier. counterparty has
one. Information
needed to identify
counterparty.
A3.6.1 Underlying QFC Information not Varchar(50).
obligor identifier. required to be
provided. Enter
``NA''.
A3.7 Agreement governing law Information not Varchar(50).
required to be
provided. Enter
``NA''.
A3.8 Cross-default Information not Char(1).
provision?. required to be
provided. Enter
``N''.
A3.9 Identity of cross- Information not Varchar(500).
default entities. required to be
provided. Enter
``NA''.

[[Page 65519]]

A3.10 Covered by third-party Information not Char(1).
credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the records entity)?. ''.
A3.11 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the records entity). ``NA''.
A3.12 Associated third-party Information not Varchar(50).
credit enhancement required to be
agreement document provided. Enter
identifier (for the benefit ``NA''.
of the records entity).
A3.12.1 Covered by third- Information not Char(1).
party credit enhancement required to be
agreement (for the benefit provided. Enter ``N
of the counterparty)?. ''.
A3.12.2 Third-party credit Information not Varchar(50).
enhancement provider required to be
identifier (for the benefit provided. Enter
of the counterparty). ``NA''.
A3.12.3 Associated third- Information not Varchar(50).
party credit enhancement required to be
agreement document provided. Enter
identifier (for the benefit ``NA''.
of the counterparty).
A3.13 Counterparty contact Information not Varchar(200).
information: name. required to be
provided. Enter
``NA''.
A3.14 Counterparty contact Information not Varchar(100).
information: address. required to be
provided. Enter
``NA''.
A3.15 Counterparty contact Information not Varchar(50).
information: phone. required to be
provided. Enter
``NA''.
A3.16 Counterparty's contact Information not Varchar(100).
information: email address. required to be
provided. Enter
``NA''.
------------------------------------------------------------------------

Table A-4--Collateral Detail Data
----------------------------------------------------------------------------------------------------------------
Field Instructions and data application
----------------------------------------------------------------------------------------------------------------
A4.1 As of date............................ No entry required.
A4.2 Records entity identifier............. No entry required.
A4.3 Collateral posted/collateral received No entry required.
flag.
A4.4 Counterparty identifier............... No entry required.
A4.5 Netting agreement identifier.......... No entry required.
A4.6 Unique collateral item identifier..... No entry required.
A4.7 Original face amount of collateral No entry required.
item in local currency.
A4.8 Local currency of collateral item..... No entry required.
A4.9 Market value amount of collateral item No entry required.
in U.S. dollars.
A4.10 Description of collateral item....... No entry required.
A4.11 Asset classification................. No entry required.
A4.12 Collateral or portfolio segregation No entry required.
status.
A4.13 Collateral location.................. No entry required.
A4.14 Collateral jurisdiction.............. No entry required.
A4.15 Is collateral re-hypothecation No entry required.
allowed?.
----------------------------------------------------------------------------------------------------------------

Corporate Organization Master Table \1\
----------------------------------------------------------------------------------------------------------------
Instructions and data
Field Example application Definition
----------------------------------------------------------------------------------------------------------------
CO.1 As of date................... 2015-01-05........... Data extraction date...... YYYY-MM-DD.
CO.2 Entity identifier............ 888888888............ Provide unique identifier. Varchar(50).
Use LEI if available.
Information needed to
identify entity.
CO.3 Has LEI been used for entity Y/N.................. Specify whether the entity Char(1).
identifier?. identifier provided is an
LEI.
CO.4 Legal name of entity......... John Doe & Co........ Provide legal name of Varchar(200).
entity.
CO.5 Immediate parent entity 77777777............. Use LEI if available. Varchar(50).
identifier. Information needed to
complete org structure.
CO.6 Has LEI been used for Y/N.................. Specify whether the Char(1).
immediate parent entity immediate parent entity
identifier?. identifier provided is an
LEI.
CO.7 Legal name of immediate John Doe & Co........ Information needed to Varchar(200).
parent entity. complete org structure.
CO.8 Percentage ownership of 100.00............... Information needed to Num (5,2).
immediate parent entity in the complete org structure.
entity.

[[Page 65520]]

CO.9 Entity type.................. Subsidiary, foreign Information needed to Varchar(50).
branch, foreign complete org structure.
division.
CO.10 Domicile.................... New York, New York... Enter as city, state or Varchar(50).
city, foreign country.
CO.11 Jurisdiction under which New York............. Enter as state or foreign Varchar(50).
incorporated or organized. jurisdiction.
CO.12 Reporting status............ REN.................. Indicate one of the
following, as
appropriate, given status
of entity under this
part. Information needed
to validate compliance
with the requirements of
this part:
REN = Records entity Char(3).
(reporting).
NFC= Non-financial
company (not
reporting).
EXC = Excluded entity
(not reporting).
ZER = Records entity
with 0 QFCs (not
reporting).
DEM = Records entity de
minimis exemption (not
reporting).
OTH = Records entity
using another
exemption (not
reporting).
----------------------------------------------------------------------------------------------------------------
\1\ Foreign branches and divisions shall be separately identified to the extent they are identified in an
entity's reports to its PFRAs.

Counterparty Master Table
----------------------------------------------------------------------------------------------------------------
Instructions and data
Field Example application Definition
----------------------------------------------------------------------------------------------------------------
CP.1 As of date................... 2015-01-05........... Data extraction date...... YYYY-MM-DD.
CP.2 Counterparty identifier...... 888888888............ Use LEI if counterparty Varchar(50).
has one. Should be used
consistently across all
records entities within a
corporate group. The
counterparty identifier
shall be the global legal
entity identifier if one
has been issued to the
entity. If a counterparty
transacts with the
records entity through
one or more separate
foreign branches or
divisions and any such
branch or division does
not have its own unique
global legal entity
identifier, the records
entity must include
additional identifiers,
as appropriate to enable
the FDIC to aggregate or
disaggregate the data for
each counterparty and for
each entity with the same
ultimate parent entity as
the counterparty.
CP.3 Has LEI been used for Y/N.................. Indicate whether the Char(1).
counterparty identifier? counterparty identifier
is an LEI.
CP.4 Legal name of counterparty... John Doe & Co........ Information needed to Varchar(200).
identify and, if
necessary, communicate
with counterparty.
CP.5 Domicile..................... New York, New York... Enter as city, state or Varchar(50).
city, foreign country.
CP.6 Jurisdiction under which New York............. Enter as state or foreign Varchar(50).
incorporated or organized. jurisdiction.
CP.7 Immediate parent entity 77777777............. Provide an identifier for Varchar(50).
identifier. the parent entity that
directly controls the
counterparty. Use LEI if
immediate parent entity
has one.
CP.8 Has LEI been used for Y/N.................. Indicate whether the Char(1).
immediate parent entity immediate parent entity
identifier? identifier is an LEI.
CP.9 Legal name of immediate John Doe & Co........ Information needed to Varchar(200).
parent entity. identify and, if
necessary, communicate
with counterparty.
CP.10 Ultimate parent entity 666666666............ Provide an identifier for Varchar(50).
identifier. the parent entity that is
a member of the corporate
group of the counterparty
that is not controlled by
another entity.
Information needed to
identify counterparty.
Use LEI if ultimate
parent entity has one.
CP.11 Has LEI been used for Y/N.................. Indicate whether the Char(1).
ultimate parent entity ultimate parent entity
identifier? identifier is an LEI.
CP.12 Legal name of ultimate John Doe & Co........ Information needed to Varchar(100).
parent entity. identify and, if
necessary, communicate
with counterparty.
----------------------------------------------------------------------------------------------------------------

Booking Location Master Table
------------------------------------------------------------------------
Instructions and
Field data application Definition
------------------------------------------------------------------------
BL.1 As of date............. Data extraction date YYYY-MM-DD.
BL.2 Records entity Provide LEI......... Varchar(50).
identifier.
BL.3 Internal booking Information not Varchar(50).
location identifier. required to be
provided. Enter
``exempt ''.
BL.4 Unique booking unit or Information not Varchar(50).
desk identifier. required to be
provided. Enter
``exempt ''.
BL.5 Unique booking unit or Information not Varchar(50).
desk description. required to be
provided. Enter
``NA''.
BL.6 Booking unit or desk Information not Varchar(50).
contact--phone. required to be
provided. Enter
``NA''.
BL.7 Booking unit or desk Information not Varchar(100).
contact--email. required to be
provided. Enter
``NA''.
------------------------------------------------------------------------

[[Page 65521]]

Safekeeping Agent Master Table
------------------------------------------------------------------------
Instructions and data
Field application
------------------------------------------------------------------------
SA.1 As of date........................... No entry required.
SA.2 Safekeeping agent identifier......... No entry required.
SA.3 Legal name of safekeeping agent...... No entry required.
SA.4 Point of contact--name............... No entry required.
SA.5 Point of contact--address............ No entry required.
SA.6 Point of contact--phone.............. No entry required.
SA.7 Point of contact--email.............. No entry required.
------------------------------------------------------------------------

Dated: December 14, 2018.
Peter Phelan,
Deputy Assistant Secretary for Capital Markets.
[FR Doc. 2018-27758 Filed 12-20-18; 8:45 am]
BILLING CODE 4810-25-P

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