Title 31—Money and Finance: Treasury--Volume 1
PART 148—QUALIFIED FINANCIAL CONTRACTS RECORDKEEPING RELATED TO THE FDIC ORDERLY LIQUIDATION AUTHORITY
§ 148.1   Scope, purpose, effective date, and compliance dates.
(a) Scope. This part applies to each financial company that is a records entity and, with respect to § 148.3(a), a top-tier financial company of a corporate group as defined in § 148.2.
(b) Purpose. This part establishes recordkeeping requirements with respect to QFCs of records entities in order to assist the Federal Deposit Insurance Corporation (“FDIC”) as receiver for a covered financial company (as defined in 12 U.S.C. 5381(a)(8)) in being able to exercise its rights and fulfill its obligations under 12 U.S.C. 5390(c)(8), (9), or (10).
(c) Effective Date. This part shall become effective December 30, 2016.
(d) Compliance —(1) Initial compliance dates. (i) A records entity subject to this part on the effective date must comply with § 148.3(a)(2) on the date that is 90 days after the effective date and with all other applicable requirements of this part on:
(A) March 31, 2019 for a records entity that:
( 1 ) Has total assets equal to or greater than $1 trillion; or
( 2 ) Is a member of the corporate group of any such records entity described in paragraph (d)(1)(i)(A)(1) of this section;
(B) June 30, 2019 for any records entity that is not subject to the compliance date set forth in paragraph (d)(1)(i)(A) of this section and:
( 1 ) Has total assets equal to or greater than $500 billion; or
( 2 ) Is a member of the corporate group of any such records entity described in paragraph (d)(1)(i)(B)(1) of this section; and
(C) June 30, 2020 for any records entity that is not subject to the compliance dates set forth in paragraph (d)(1)(i)(A) or (B) of this section and:
( 1 ) Has total assets equal to or greater than $250 billion; or
( 2 ) Is a member of the corporate group of any such records entity described in paragraph (d)(1)(i)(C)(1) of this section; and
(D) June 30, 2021 for any records entity that is not subject to the compliance dates set forth in paragraph (d)(1)(i)(A), (B), or (C) of this section.
(ii) A financial company that becomes a records entity after the effective date must comply with § 148.3(a)(2) within 90 days of becoming a records entity and with all other applicable requirements of this part within 540 days of becoming a records entity or within the remainder of the applicable period provided under paragraph (d)(1)(i) of this section, whichever period is longer.
(2) Subsequent compliance dates. If a financial company that at one time met the definition of records entity later ceases to meet the definition of records entity and thereafter, on any subsequent date, again meets the definition of a records entity, such financial company must comply with all applicable requirements of this part within 365 days after such subsequent date, or within the remainder of the applicable period provided under paragraph (d)(1)(i) of this section, whichever period is longer.
(3) Extensions of time to comply. The Secretary, in consultation with the FDIC, may grant one or more extensions of time for compliance with this part. A records entity may request an extension of time by submitting a written request to the Department of the Treasury and the FDIC at least 30 days prior to the deadline for its compliance provided under paragraph (d)(1) of this section. The written request for an extension must contain:
(i) A statement of the reasons why the records entity cannot comply by the deadline; and
(ii) A plan for achieving compliance during the requested extension period.
(4) Compliance by top-tier financial company. A top-tier financial company must comply with § 148.3(a)(1)(ii) on the same date as the date on which the records entity members of the corporate group of which it is the top-tier financial company are required to comply with this part.
§ 148.2   Definitions.
For purposes of this part:
(a) Affiliate means any entity that controls, is controlled by, or is under common control with another entity.
(b) Control. An entity “controls” another entity if:
(1) The entity directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote 25 percent or more of any class of voting securities of the other entity;
(2) The entity controls in any manner the election of a majority of the directors or trustees of the other entity; or
(3) The Board of Governors of the Federal Reserve System has determined, after notice and opportunity for hearing in accordance with 12 CFR 225.31, that the entity directly or indirectly exercises a controlling influence over the management or policies of the other entity.
(c) Corporate group means an entity and all affiliates of that entity.
(d) Counterparty means any natural person or entity (or separate foreign branch or division of any entity) that is a party to a QFC with a records entity.
(e) Derivative liabilities means the fair value of derivative instruments in a negative position as of the end of the most recent fiscal year end, as recognized and measured in accordance with U.S. generally accepted accounting principles or other applicable accounting standards. Such value shall be adjusted for the effects of master netting agreements and cash collateral held with the same counterparty on a net basis to the extent such adjustments are reflected on the audited consolidated statement of financial condition of the applicable financial company filed with its primary financial regulatory agency or agencies or, for financial companies not required to file such statements, on the consolidated balance sheet of the financial company prepared in accordance with U.S. generally accepted accounting principles or other applicable accounting standards.
(f) Excluded entity means:
(1) An insured depository institution as defined in 12 U.S.C. 1813(c)(2);
(2) A subsidiary of an insured depository institution that is not:
(i) A functionally regulated subsidiary as defined in 12 U.S.C. 1844(c)(5);
(ii) A security-based swap dealer as defined in 15 U.S.C. 78c(a)(71); or
(iii) A major security-based swap participant as defined in 15 U.S.C. 78c(a)(67); or
(3) An insurance company.
(g) Financial company has the meaning set forth in 12 U.S.C. 5381(a)(11).
(h) Insurance company means:
(1) An insurance company as defined in 12 U.S.C. 5381(a)(13); and
(2) A mutual insurance holding company that meets the conditions set forth in 12 CFR 380.11 for being treated as an insurance company for the purpose of section 203(e) of the Dodd-Frank Act, 12 U.S.C. 5383(e).
(i) Legal Entity Identifier or LEI for an entity shall mean the global legal entity identifier maintained for such entity by a utility accredited by the Global LEI Foundation or by a utility endorsed by the Regulatory Oversight Committee. As used in this definition:
(1) Regulatory Oversight Committee means the Regulatory Oversight Committee (of the Global LEI System), whose charter was set forth by the Finance Ministers and Central Bank Governors of the Group of Twenty and the Financial Stability Board, or any successor thereof; and
(2) Global LEI Foundation means the not-for-profit organization organized under Swiss law by the Financial Stability Board in 2014, or any successor thereof.
(j) Parent entity with respect to an entity is an entity that controls that entity.
(k) Position means an individual transaction under or evidenced by a QFC and includes the rights and obligations of a party to an individual transaction under or evidenced by a QFC.
(l) Primary financial regulatory agency means:
(1) With respect to any financial company, the primary financial regulatory agency as specified for such financial company in subparagraphs (A), (B), (C), and (E) of 12 U.S.C. 5301(12); and
(2) With respect to a financial market utility that is subject to a designation pursuant to 12 U.S.C. 5463 for which there is no primary financial regulatory agency under § 148.2(l)(1), the Supervisory Agency for that financial market utility as defined in 12 U.S.C. 5462(8).
(m) Qualified financial contract or QFC means any qualified financial contract defined in 12 U.S.C. 5390(c)(8)(D), including without limitation, any “swap” defined in section 1a(47) of the Commodity Exchange Act (7 U.S.C. 1a(47)) and in any rules or regulations issued by the Commodity Futures Trading Commission pursuant to such section; any “security-based swap” defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) and in any rules or regulations issued by the Securities and Exchange Commission pursuant to such section; and any securities contract, commodity contract, forward contract, repurchase agreement, swap agreement, and any similar agreement that the FDIC determines by regulation, resolution, or order to be a qualified financial contract as provided in 12 U.S.C. 5390(c)(8)(D).
(n) Records entity —
(1) Records entity means any financial company that:
(i) Is not an excluded entity as defined in § 148.2(f);
(ii) Is a party to an open QFC; and
(iii) (A) Is subject to a determination that the company shall be subject to Federal Reserve supervision and enhanced prudential standards pursuant to 12 U.S.C. 5323;
(B) Is subject to a designation as, or as likely to become, systemically important pursuant to 12 U.S.C. 5463;
(C) Is identified as a global systemically important bank holding company pursuant to 12 CFR part 217;
(D)( 1 ) Has total assets on a consolidated basis equal to or greater than $50 billion; and
( 2 ) On a consolidated basis has:
( i ) Total gross notional derivatives outstanding equal to or greater than $250 billion; or
( ii ) Derivative liabilities equal to or greater than $3.5 billion; or
(E)( 1 ) Is a member of a corporate group in which at least one financial company meets the criteria under one or more of paragraphs (n)(1)(iii)(A), (B), (C), or (D) of this section; and
( 2 )( i ) Consolidates, is consolidated by, or is consolidated with such financial company on financial statements prepared in accordance with U.S. generally accepted accounting principles or other applicable accounting standards; or
( ii ) For financial companies not subject to such principles or standards, would consolidate, be consolidated by, or be consolidated with such financial company if such principles or standards applied.
(2) A financial company that qualifies as a records entity pursuant to paragraph (n)(1)(iii)(D) will remain a records entity until one year after it ceases to meet the criteria set forth in paragraph (n)(1)(iii)(D) of this section.
(o) Secretary means the Secretary of the Treasury or the Secretary's designee.
(p) Subsidiary means any company that is controlled by another company.
(q) Top-tier financial company means a financial company that is a member of a corporate group consisting of multiple records entities and that is not itself controlled by another financial company.
(r) Total assets means the total assets reported on the audited consolidated statement of financial condition of the applicable financial company for the most recent year end filed with its primary financial regulatory agency or agencies or, for financial companies not required to file such statements, the total assets shown on the consolidated balance sheet of the financial company for the most recent fiscal year end as prepared in accordance with U.S. generally accepted accounting principles or other applicable accounting standards.
(s) Total gross notional derivatives outstanding means the gross notional value of all derivative instruments that are outstanding as of the most recent fiscal year end, as recognized and measured in accordance with U.S. generally accepted accounting principles or other applicable accounting standards.
§ 148.3   Form, availability and maintenance of records.
(a) Form and availability —(1) Electronic records. (i) Except to the extent of any relevant exemption provided under paragraph (c) of this section, a records entity is required to maintain the records described in § 148.4 in electronic form and, as applicable, in the format set forth in the tables in the appendix to this part.
(ii) A top-tier financial company must be capable of generating a single, compiled set of the records required to be maintained by § 148.4(a)-(h), in a format that allows for aggregation and disaggregation of such data by records entity and counterparty, for all records entities in its corporate group that are consolidated by or consolidated with such top-tier financial company on financial statements prepared in accordance with U.S. generally accepted accounting principles or other applicable accounting standards or, for financial companies not subject to such principles or standards, that would be consolidated by or consolidated with such financial company if such principles or standards applied.
(2) Point of contact. Each records entity and top-tier financial company must provide a point of contact who is responsible for recordkeeping under this part by written notice to its primary financial regulatory agency or agencies and the FDIC and must provide written notice to its primary financial regulatory agency or agencies and the FDIC within 30 days of any change in its point of contact.
(3) Access to records. Except to the extent of any relevant exemption provided under paragraph (c) of this section, a records entity and a top-tier financial company that are regulated by a primary financial regulatory agency shall be capable of providing electronically to such primary financial regulatory agency and the FDIC, within 24 hours of request by the primary financial regulatory agency:
(i) In the case of a records entity, the records specified in § 148.4, and
(ii) In the case of a top-tier financial company, the set of records referenced in paragraph (a)(1)(ii) of this section.
(b) Maintenance and updating —(1) Daily updating. Except to the extent of any relevant exemption provided under paragraph (c) of this section, the records maintained under § 148.4 shall be based on values and information that are no less current than previous end-of-day values and information.
(2) Records maintenance. The records required under § 148.4 and the capability of generating the set of records required by paragraph (a)(1)(ii) of this section may be maintained on behalf of the records entity or top-tier financial company, as applicable, by any affiliate of such records entity or top-tier financial company, as applicable, or any third-party service provider; provided that such records entity shall itself maintain records under this part in the event that such affiliate or service provider shall fail to maintain such records and such top-tier financial company shall itself maintain the capability of generating the set of records required by paragraph (a)(1)(ii) of this section in the event that such affiliate or service provider shall fail to maintain the capability of doing so.
(3) Record retention. A records entity shall retain records maintained under § 148.4 based on end-of-day values and information for the five preceding business days.
(c) Exemptions —(1) De minimis exemption. 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, other than the records described in § 148.4(i).
(2) Clearing organizations. A records entity that is a derivatives clearing organization registered with the Commodity Futures Trading Commission under section 5b of the Commodity Exchange Act (7 U.S.C. 7a-1) or a clearing agency registered with the Securities and Exchange Commission under section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1) is not required to maintain the records described in § 148.4 if it is:
(i) In compliance with the recordkeeping requirements of the Commodity Futures Trading Commission or the Securities and Exchange Commission, as applicable, including its maintenance of records pertaining to all QFCs cleared by such records entity; and
(ii) Capable of and not restricted from, whether by law, regulation, or agreement, transmitting electronically to the FDIC the records maintained under such recordkeeping requirements within 24 hours of request of the Commodity Futures Trading Commission or the Securities and Exchange Commission, as applicable.
(3) Requests for exemptions. One or more records entities may request an exemption from one or more of the requirements of this part by writing to the Department of the Treasury, the FDIC, and its primary financial regulatory agency or agencies, if any. 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 should apply;
(ii) Specify the requirement(s) under this part from which the identified records entities should be exempt;
(iii) Provide details as to the size, risk, complexity, leverage, frequency and dollar amount of qualified financial contracts, and interconnectedness to the financial system of each records entity identified in paragraph (c)(3)(i) of this section, to the extent appropriate, and any other relevant factors; and
(iv) Specify the reason(s) why granting the exemption will not impair or impede the FDIC's ability to exercise its rights or fulfill its statutory obligations under 12 U.S.C. 5390(c)(8), (9), and (10).
(4) Granting exemptions. (i) 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 12 U.S.C. 5390(c)(8)(H)(iv) 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 this part by issuing an exemption to one or more records entities.
(ii) In determining whether to grant an exemption to one or more records entities, including whether to grant a conditional or unconditional exemption, the Secretary will consider any factors deemed appropriate by the Secretary, including whether application of one or more requirements of this part is not necessary to achieve the purpose of this part as described in § 148.1(b).
(iii) If the FDIC does not submit, within 90 days of the date on which the FDIC and the Department of the Treasury received the exemption request, a written recommendation to the Secretary as to whether to grant or deny an exemption request, the Secretary will nevertheless determine whether to grant or deny the exemption request.
§ 148.4   Content of records.
Subject to § 148.3(c), a records entity must maintain the following records:
(a) The position level data listed in Table A-1 in appendix A to this part with respect to each QFC to which it is a party.
(b) The counterparty netting set data listed in Table A-2 in appendix A to this part for each netting set with respect to each QFC to which it is a party.
(c) The legal agreements information listed in Table A-3 in appendix A to this part with respect to each QFC to which it is a party.
(d) The collateral detail data listed in Table A-4 in appendix A to this part with respect to each QFC to which it is a party.
(e) The corporate organization master data lookup table in appendix A to this part for the records entity and each of its affiliates.
(f) The counterparty master data lookup table in appendix A to this part for each non-affiliated counterparty with respect to QFCs to which it is a party.
(g) The booking location master data lookup table in appendix A to this part for each booking location used with respect to QFCs to which it is a party.
(h) The safekeeping agent master data lookup table in the appendix to this part for each safekeeping agent used with respect to QFCs to which it is a party.
(i) All documents that govern QFC transactions between the records entity and each counterparty, including, without limitation, master agreements and annexes, schedules, netting agreements, supplements, or other modifications with respect to the agreements, confirmations for each open QFC position of the records entity that has been confirmed and all trade acknowledgments for each open QFC position that has not been confirmed, all credit support documents including, but not limited to, credit support annexes, guarantees, keep-well agreements, or net worth maintenance agreements that are relevant to one or more QFCs, and all assignment or novation documents, if applicable, including documents that confirm that all required consents, approvals, or other conditions precedent for such assignment or novation have been obtained or satisfied.
(j) A list of vendors directly supporting the QFC-related activities of the records entity and the vendors' contact information.