Federal Banking Agencies Adopt Final Liquidity
Coverage Ratio Regulations
September 24, 2014
On September 3, 2014, the Federal Reserve Board, the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation approved a final rule that establishes, for the
first time, a quantitative minimum liquidity coverage ratio (“LCR”) for large, internationallyactive banking organizations, as well as a less stringent LCR for depository institution holding
companies that are not internationally active, but have at least $50 billion in total consolidated
assets (the “Modified LCR”). By requiring banking organizations to hold a stock of high quality
liquid assets (“HQLA”) sufficient to survive a sustained acute liquidity stress scenario, the final
rule aims to avoid the liquidity squeeze and subsequent deterioration of financial markets
experienced during the 2007-2008 financial crisis.
Although the final rule, to be known as “Regulation WW,” is largely similar to the LCR rule
initially proposed in October 2013, it includes a number of important changes in response to
public comment. Notable changes from the proposed rule include:•

More Time to Comply with Daily Reporting Requirements—In response tocommenters’ concerns regarding the operational difficulties of daily LCR
calculations, the final rule introduces a monthly reporting phase-in period forcovered firms. As compared to the proposed rule, the final rule delays the daily
LCR reporting requirement by six months (to July 1, 2015) for covered firms
with at least $700 billion in total consolidated assets or $10 trillion in assets
under custody, and delays daily LCR reporting by 18 months (to July 1, 2016)
for all other covered firms subject to the unmodified LCR requirement. The
final rule eliminates the daily reporting requirement entirely for covered firms
subject to the Modified LCR, and delays the initial compliance date for such
firms until January 1, 2016.

•

Expansion of Eligible HQLA—Although the federal banking agencies declined to
add to the list of eligible HQLA certain categories of assets such as state andmunicipal debt securities, asset-backed securities and private label mortgagebacked securities, the final rule modestly expands eligible HQLA byeliminating the requirement that corporate debt securities be publicly tradedon a national securities exchange to qualify as HQLA, and by recognizing abroader scope of equity securities as eligible HQLA.

•

Modified Outflow Rate Assumptions—The final rule introduces a “maturity
mismatch add-on” approach to the calculation of total net cash outflows forpurposes of the LCR denominator. This approach eliminates the proposed
rule’s assumption that deposits and other borrowings and commitments
without a contractual maturity flow out on the first day of the 30-day stressperiod, and carves out such non-maturity outflows from the required “peakMemorandum – September 24, 2014

day” calculation. Nevertheless, the federal banking agencies acknowledge inthe final rule that the required total net cash outflows calculation may involve
significant operational complexities for covered firms.
•

Nonbank SIFIs Excluded—The final rule does not apply to nonbank financial
companies designated by the Financial Stability Oversight Council for Federal
Reserve supervision (“nonbank SIFIs”). Instead, the Federal Reserve plans toapply enhanced prudential liquidity standards to such institutions through asubsequently issued order or rule.

The final rule is generally consistent with the international LCR published by the BaselCommittee on Banking Supervision (the “BCBS”), 1 but is more stringent in several respects.
Most notably, as compared to the BCBS LCR, the final rule includes an accelerated transition
period, allows fewer types of assets to qualify as HQLA, and incorporates more conservative
assumptions regarding a firm’s net cash outflow during the stress period.
SCOPE OF APPLICATION
The final rule generally imposes the minimum LCR requirement on any U.S. banking
organization (e.g., bank holding companies, savings and loan holding companies, anddepository institutions) that (i) has $250 billion or more in total consolidated assets, (ii) has $10
billion or more in total consolidated on-balance sheet foreign exposure, or (iii) is a depository
institution subsidiary of an organization described in (i) or (ii) and has $10 billion or more in
total consolidated assets. Top-tier U.S. bank holding companies and savings and loan holding
companies with less than $10 billion in on-balance sheet foreign exposure and total consolidated
assets between $50 billion and $250 billion are subject to the Modified LCR (although theirsubsidiary depository institutions are not). A banking organization that does not meet the asset
thresholds for automatic application of the LCR or Modified LCR may nevertheless be subject to
the LCR requirement if the applicable federal banking agency determines that application
would be appropriate in light of the company’s asset size, complexity, and risk profile (subject
to notice and response procedures established under the prompt corrective action provisions of
the Federal Deposit Insurance Act).
Consistent with the proposed rule, top-tier bank holding companies and savings and loan
holding companies with substantial insurance activities (i.e., companies that perform insurance
underwriting activities or hold at least 25% of their total assets in subsidiaries that performinsurance underwriting activities) and top-tier savings and loan holding companies with
substantial commercial operations (i.e., grandfathered unitary thrift holding companies with
50% or more of their total consolidated assets or revenues on an enterprise-wide basis derived
from activities that are not covered by Section 4(k) of the Bank Holding Company Act) are notsubject to the final rule. This exemption reflects the Federal Reserve’s view that the liquidity
requirements in the final rule were not designed to address the liquidity risk profile ofinsurance companies.

1

BCBS, “Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools” (January 2013),
available at http://www.bis.org/publ/bcbs238.htm.
Page 2

Memorandum – September 24, 2014

Unlike the proposed rule, however, the final rule will not apply the minimum LCR requirement
to nonbank SIFIs or their consolidated subsidiary depository institutions. Instead, the Federal
Reserve indicated that it may establish LCR requirements for nonbank SIFIs by separate rule ororder.
Notably, the final rule also does not apply to foreign banking organizations or to U.S.
intermediate holding companies that are required to be established under the Federal Reserve’s
Regulation YY and that do not otherwise qualify as covered institutions. However, the Federal
Reserve noted that it anticipates future rulemaking implementing an LCR-based standard for
the U.S. operations of some or all foreign banking organizations with $50 billion or more in
combined U.S. assets. 2
THE MINIMUM LCR REQUIREMENT
Upon taking full effect, the final rule will require covered institutions to achieve and maintainan LCR of at least 100%. The LCR is calculated as the ratio of two components: (i) the value ofthe firm’s stock of HQLA under stressed conditions; and (ii) total projected net cash outflows
during a 30-day stress scenario.
While the proposed rule would have required firms subject to the Modified LCR to calculate
total projected net cash outflows over a 21-day stress scenario, the final rule applies a 30-day
stress period to all covered firms. Instead, the final rule caps the total net cash outflows for firms
subject to the Modified LCR at 70% of the total net cash outflows as calculated under theunmodified LCR requirements, effectively requiring firms subject to the Modified LCR tomaintain an LCR of 70%.
It is important to note that the LCR requirement is a minimum requirement. In the preamble
commentary accompanying the final rule, the agencies emphasized that banking organizations
that “pose more systemic risk to the U.S. banking system or whose liquidity stress testing
indicates a need for higher liquidity reserves may need to take additional steps beyond meetingthe minimum ratio in order to meet supervisory expectations.”
1. The LCR Numerator: High Quality Liquid Assets
To achieve the LCR’s goal of ensuring sufficient liquidity during an acute stress scenario, assets
to be counted towards the minimum LCR as HQLA must be readily convertible into cash,
through sale or secured borrowing, with little or no loss of value during a period of liquidity
strain. Accordingly, the final rule requires all HQLA to satisfy the following criteria:•

2“Liquid and Readily Marketable”—Securities included in HQLA must be tradedin an active secondary market with more than two committed market makers,a large number of non-market maker participants on both the buying and

The Federal Reserve indicated that an LCR standard for firms subject to Regulation YY would bedesigned to complement the liquidity stress-test requirements under Regulation YY. Whereas
Regulation YY’s internal liquidity stress-test requirements provide a view of an individual firm undermultiple scenarios, and include assumptions tailored to the idiosyncratic aspects of the company’s
liquidity profile, the LCR standard is meant to provide a standardized measure of liquidity adequacy
to facilitate comparison across covered companies.

Page 3

Memorandum – September 24, 2014selling sides of transactions, timely and observable market prices, and a hightrading volume.
•“Unencumbered”—All assets included in HQLA must be free of legal,
regulatory, contractual, or other restrictions on the ability of the firm tomonetize the asset, and the assets must not be pledged to secure or provide
credit enhancement to any transaction. Assets may nevertheless be included in
HQLA if they are pledged to a central bank or U.S. government-sponsoredenterprise (“GSE”).

•“Not an Obligation of a Financial Sector Entity”—Assets included in HQLA mustnot be issued by financial sector entities (including investment advisors,
investment companies, pension funds, non-regulated funds and regulated
financial companies), since such assets would carry wrong-way risk correlation
with covered institutions.

•

Separate Assets of the Banking Organization—Assets included in HQLA must not
be designated to cover operational costs of the covered banking organization,and must not be securities owned by a customer of the covered banking
organization, regardless of the banking organization’s hypothecation rights tothe customer’s securities.

The final rule further divides qualifying HQLA into three sub-categories, based on thenature of the asset and its issuer. Because the three HQLA categories involve varying
risk profiles, each is subject to corresponding caps and asset-value “haircuts,” asdescribed below. The LCR numerator is then calculated by summing the risk-adjusted
asset values from each of the following HQLA categories:

3•

Level 1 Liquid Assets: Assets with the highest potential to generate liquidity for acovered institution during periods of acute liquidity stress. Level 1 assets are includedin the HQLA amount without limit and without being subject to a value-based haircut.
Under the final rule, Level 1 assets include (i) excess reserves held at the Federal
Reserve; (ii) withdrawable reserves held at a foreign central bank; (iii) securities issued
by, or guaranteed by the full faith and credit of, the U.S. government; and (iv) certain
securities issued by or guaranteed by a foreign sovereign, central bank, or otherinternational entity that are assigned a 0% risk-weight under the standardized
approach of the revised regulatory capital rules. 3•

Level 2A Liquid Assets: Level 2A assets are included in the HQLA amount subject to a
15% haircut off the assets’ current market value. The combined values of Level 2A andLevel 2B assets may not comprise more than 40% of a covered institution’s total HQLA
stock, after applicable haircuts have been applied. Under the final rule, Level 2A assets
include (i) claims on or guaranteed by a GSE that are investment-grade and senior topreferred stock in the GSE, and (ii) claims on or guaranteed by a foreign sovereign orThis generally would include all OECD sovereign debt unless the debt was in default or restructured
consistent with the Federal Reserve’s recently revised capital regulations under Basel III. See 78 Fed.
Reg. 62018 (Oct. 11, 2013).

Page 4

Memorandum – September 24, 2014

multilateral development bank that are assigned a 20% risk-weight under the
standardized approach of the revised regulatory capital rules.
•

Level 2B Liquid Assets: Level 2B assets are included in the HQLA amount subject to a
50% haircut off the assets’ current market value. The combined values of Level 2A andLevel 2B assets may not comprise more than 40% of a covered institution’s total HQLA
stock, after applicable haircuts have been applied. Level 2B assets may comprise no
more than 15% of a covered institution’s total HQLA stock, after applicable haircuts
have been applied. Under the final rule, Level 2B assets include (i) investment-grade
corporate debt securities, and (ii) publicly traded equity securities that are included in
the Russell 1000 Index.

Unlike the proposed rule, the final rule does not require corporate debt securities to be publicly
traded on a national securities exchange to qualify as Level 2B HQLA, and eligible equity
securities are expanded beyond those included in the S&P 500 to include those within the more
expansive Russell 1000 index. However, the final rule also removes the proposed rule’salternative for a covered institution to demonstrate to its primary federal banking regulator that
equity securities represented in another index are as liquid and readily marketable as thoseincluded in the S&P 500, such that they should be acceptable as Level 2B HQLA. Furthermore,
the federal banking agencies declined to add to the list of eligible HQLA other categories ofassets, such as state and municipal debt securities, asset-backed securities and private label
mortgage-backed securities, despite the concerns expressed by numerous commentersregarding these exclusions. The agencies did, however, indicate that they would consider future
proposals to allow certain state and municipal securities to qualify as HQLA.
Consistent with the proposed rule, and as illustrated in the table below, the final rule isconsiderably more stringent than the BCBS approach in that some categories of assets, such as
non-investment-grade corporate debt securities and private label residential mortgage-backed
securities, will have no value for purposes of U.S. liquidity requirements.
COMPARISON OF CERTAIN ASSET CATEGORIES
U.S. RuleBCBS
HQLA Category
HQLA Category
Claims On or Guaranteed by
Level 2A
Level 1
U.S. GSEs
Investment-Grade Corporate
Level 2B
Level 2A
Debt Securities
Non-Investment-Grade
Corporate Debt Securities

Not HQLA

Level 2B

Private Label Residential
Mortgage-Backed Securities

Not HQLA

Level 2B
(subject only to a 25% haircut)

To prevent covered institutions from manipulating their stock of HQLA through asset
exchanges, secured transactions or collateralized derivative transactions, the final rule requires
each covered institution to calculate compliance with the HQLA composition requirements by
Page 5

Memorandum – September 24, 2014

applying a hypothetical unwind to such transactions that mature within 30 calendar days of thecalculation date. Unlike the proposed rule, however, the final rule does not require covered
institutions to unwind certain collateralized deposits that must be collateralized underapplicable law, such as corporate trust deposits or preferred deposits by public sector entities,
since firms are especially unlikely to pursue these transactions for purposes of manipulating
HQLA.
2. The LCR Denominator: Total Net Cash Outflow
Each covered firm’s stock of HQLA must be sufficient to offset the firm’s total net cash outflow
amount during a 30-day liquidity stress period. Like the proposed rule, the final rule recognizes
the importance of measuring a covered firm’s ability to withstand the largest liquidity demands
within a 30-day stress period, and so deviates from the BCBS LCR which relies only on
cumulative net cash outflows at the end of the 30-day stress period. The final rule modifies the
proposed net cumulative peak day approach, however, by introducing an “add-on” approachto account for maturity mismatches between outflows and inflows while correcting for the
proposed rule’s rigid assumptions regarding non-maturity outflows.
Specifically, the final rule eliminates the proposed rule’s assumption that all transactions
without a contractual maturity date flow out on the first day of the 30-day stress period.
Instead, the final rule requires covered firms to calculate a “maturity mismatch add-on,” or thedifference between the net cumulative peak day amount and the final day net cumulative
outflow amount, without regard for most non-maturity outflows. The firm must then subtract
the aggregate cash inflows for the entire stress period (including non-maturity inflows), or 75%
of the aggregate cash outflows (whichever is lower), from the aggregate cash outflows(including non-maturity outflows). This difference is then added to the maturity mismatch addon to obtain the firm’s total net cash outflow for the stress period. A simplified example of thiscalculation is provided in the table set forth in Annex A.
(i)Stressed Cash Outflows

The final rule includes various predetermined run-off rates to be used in calculating projectedcash outflow, which are intended to approximate outflows experienced during periods ofsevere liquidity stress. The run-off rates are consistent with those included in the BCBS LCR,
and vary based on the source of the covered firm’s funding. Examples of relevant run-off rates
in the final rule include:•

Unsecured Retail Funding Cash Outflow—Outflow rates range from 3% for stableretail deposits that are fully FDIC-insured to 40% for uninsured retail brokered
sweep deposits. Brokered deposits that are entirely covered by FDIC deposit
insurance have an outflow rate of 10%, if issued by a consolidated subsidiary,and 25%, if not issued by a consolidated subsidiary.

•

Unsecured Wholesale Funding Cash Outflow—Outflow rates range from 25% foroperational deposits to 100% for commercial paper or non-operational deposits
from financial entities.

•

Secured Short-Term Funding Cash Outflow—Outflow rates correspond to theliquidity characteristics of the collateral, including 0% for funding secured byPage 6

Memorandum – September 24, 2014

Level 1 HQLA, 15% for funding secured by Level 2A HQLA, 50% for funding
secured by Level 2B HQLA, and 100% for funding secured by non-HQLA.
•

Commitments Cash Outflow—Outflow rates range from 5% for undrawn retailcredit facilities to 40% for most undrawn corporate credit facilities, and 50% forundrawn credit facilities to banks.
(ii)

Stressed Cash Inflows

In calculating projected cash inflow, the final rule specifically excludes from cash
inflows several categories of items that the federal banking agencies consider to be
insufficiently reliable sources of liquidity during a stressed scenario. Items that are notcounted towards a covered firm’s cash inflows include (i) operational deposits that thecovered firm holds at other regulated financial companies; (ii) amounts that the covered
firm expects to receive from mortgage-related derivative transactions; (iii) amounts
arising from credit or liquidity facilities extended to the covered firm; (iv) any assets thatthe covered firm has included in its HQLA amount, and any amounts payable to thecovered firm with respect to those assets; (v) outstanding exposures that are
nonperforming as of the calculation date, or which the covered firm has reason to expect
will become nonperforming within the stress period; and (vi) items that have nocontractual maturity date.
For non-excluded inflow items, the final rule includes various assumed inflow rates thatare meant to reflect the likelihood of the projected inflow items materializing during a
stressed liquidity scenario. Examples of relevant inflow rates in the final rule include:••

Unsecured Retail Cash Inflow—A covered firm may count as inflow 50% of allcontractual payments it expects to receive from retail customers within theapplicable stress period.
Unsecured Wholesale Cash Inflow— A covered firm may count as inflow 100% of
all wholesale inflows (including principal and interest) it expects to receivefrom financial sector entities or their consolidated subsidiaries. However, acovered firm may count as inflow only 50% of inflows due from wholesalecustomers that are not financial sector entities or their consolidated
subsidiaries.

•

Secured Short-Term Lending Cash Inflow—Inflow rates correspond to theliquidity characteristics of the collateral, including 0% for lending secured by
Level 1 HQLA, 15% for lending secured by Level 2A HQLA, 50% for lending
secured by Level 2B HQLA, and 100% for lending secured by non-HQLA. The
final rule also assigns a 0% inflow rate to all contractual payments due to thecovered firm to the extent that the payments are secured by collateral that has
been rehypothecated and, as of the calculation date, will not be returned to thefirm within 30 calendar days.

•

Securities Cash Inflow— A covered firm may count as inflow 100% of allcontractual payments it expects to receive from securities owned by thecovered firm that are not included in the firm’s HQLA amount.

Page 7

Memorandum – September 24, 2014

MECHANICS OF THE LCR REQUIREMENT
The final rule requires covered institutions to calculate their LCR as of a consistent time of day
for each calculation date, daily or monthly, as applicable. The time of day at which a company
will calculate its LCR must be selected by the company prior to the final rule’s effective date,and must be communicated in writing to the company’s primary federal banking regulator.
Upon making this election, any change in the time of day at which a covered institution
calculates its LCR will require the prior written approval of its primary federal banking
regulator.
In addition to requiring that covered firms hold a minimum stock of HQLA, the final rule
imposes certain operational requirements to ensure that a firm’s stock of HQLA could be
efficiently liquidated in times of stress. To this end, covered institutions must demonstrate thefollowing capabilities:•

Determining the Composition of HQLA—As part of its ongoing monitoring of
HQLA, a covered firm must exhibit a command over the location anddiversification of its HQLA, while ensuring that the assets included in its
HQLA stock continue to qualify as HQLA. The final rule adds a requirementthat covered firms maintain a documented methodology for consistently
determining whether firm assets qualify as eligible HQLA.

•

Monetizing HQLA If and When Necessary—A covered firm must implement
appropriate systems allowing it to monetize its HQLA at any time, and must
periodically monetize a sample of its HQLA that reflects the composition of thefirm’s broader HQLA portfolio to confirm access to relevant markets.

•

Controlling HQLA Under the Firm’s Liquidity Risk Management Function—A
covered firm’s liquidity risk management function must have full authority toliquidate HQLA when necessary, as well as full access to funds resulting frommonetized HQLA, without conflicting with another business or risk
management strategy.

The final rule requires covered firms to notify their primary federal banking regulator
on any business day that their LCR is below the required minimum LCR, but allows fora flexible supervisory response to the inadequate LCR. This flexibility is largely inrecognition that a covered firm may occasionally need to access its HQLA to fundunanticipated liquidity needs. However, if a covered firm’s LCR were to remain below
the minimum requirement for three consecutive business days during a period in which
the firm is required to calculate its LCR on a daily basis, the covered firm would be
required to submit a plan for remediation to its primary federal banking regulator. The
federal banking agencies will have discretionary authority under the final rule to takesupervisory or enforcement actions to address noncompliance with the LCR andnotification requirements.

Page 8

Memorandum – September 24, 2014

GENERAL TIMINGThe final rule contemplates full compliance with the LCR by January 1, 2017 for all covered
institutions, but adopts a phase-in transition period to mitigate the burden of compliance on
covered institutions and financial markets. Covered institutions subject to the unmodified LCR
requirement must achieve an LCR of at least 80% by January 1, 2015. The final rule delays theinitial compliance date for covered institutions subject to the Modified LCR until January 1,
2016, by which date all covered institutions must achieve an LCR of at least 90%. Beginning
January 1, 2017, all covered institutions must maintain an LCR of at least 100% on an ongoingbasis.
By contrast, as illustrated in the table below, the BCBS LCR includes an extended transition
period and would not require full compliance until January 1, 2019. Under the BCBS phase-inplan, the minimum LCR for covered institutions will be set at 60% beginning January 1, 2015,
and will thereafter increase by 10% annually until January 1, 2019.
COMPARISON OF LCR TRANSITION PERIODS
January 1,
2015

January 1,
2016

January 1,
2017

January 1,
2018

January 1,
2019

Minimum LCR(U.S. – Full)

80%

90%

100%

100%

100%

Minimum LCR(U.S. – Modified)

N/A

90%

100%

100%

100%

Minimum LCR(BCBS)

60%

70%

80%

90%

100%

In response to concerns regarding the operational challenges of developing the infrastructurenecessary for daily LCR calculations, the final rule provides an additional transition period forcompliance with the daily calculation requirement. A covered depository institution holding
company with $700 billion or more in total consolidated assets or $10 trillion or more in assets
under custody, and any depository institution subsidiary of such an organization with at least$10 billion in total consolidated assets, must calculate its LCR on a monthly basis beginning
January 1, 2015, and on a daily basis beginning July 1, 2015. All other covered institutions
subject to the unmodified LCR must likewise perform monthly LCR calculations beginning
January 1, 2015, but are not required to begin daily LCR calculations until July 1, 2016.
Meanwhile, institutions subject to the Modified LCR must perform monthly LCR calculations
beginning January 1, 2016, and are exempt from any daily LCR calculation requirement.
ADDITIONAL REGULATORY INITIATIVES AROUND THE CORNER
In a prepared statement, Governor Daniel K. Tarullo cautioned that the LCR alone is not
sufficient to address all risks associated with short-term wholesale funding. In particular,
Governor Tarullo noted that the LCR does not address liquidity needs beyond the 30-day stressperiod, or the interconnectedness resulting from widespread matched-book financing.
Governor Tarullo pointed to the forthcoming minimum net stable funding ratio (NSFR), which
Page 9Memorandum – September 24, 2014

will require firms to have a stable funding structure over a one-year horizon, as another pillar in
the federal banking agencies’ oversight of liquidity risk management. Moreover, Governor
Tarullo indicated that the Federal Reserve intends to incorporate reliance on short-term
wholesale funding as a factor in setting the amounts of capital surcharges applicable to the most
systemically important banking organizations, and that the Federal Reserve is working todevelop international proposals for minimum collateral haircuts to be applied in securities
financing transactions.

Page 10Memorandum – September 24, 2014

ANNEX ASIMPLIFIED COMPARISON OF TOTAL NET CASH OUTFLOW CALCULATIONS(5 DAY STRESS PERIOD)
Day
1

Day
2

Day
3

Day
4

Day
5

A

Daily Cash Outflow

100

100

100

25

25

B

Cumulative Cash Outflow

100

200

300

325

350

C

Daily Cash Inflow

25

25

25

100

100

D

Cumulative Cash Inflow

25

50

75

175

275

E

Net Cumulative Outflow Amount

75

150

225

150

75

F

Net Cumulative Peak Day Amount

225

G

Final Day Net Cumulative Outflow Amount75

H

Maturity Mismatch Add-On

I

Non-Maturity Cash Outflows

50

J

Non-Maturity Cash Inflows

50

K

Final Day Cumulative Cash Outflows

350

L

Final Day Cumulative Cash Inflows

275

M

Total Net Cash Outflow Amount

[B-D]

150

[F-G]

250

[I+K – MIN(J+L, (I+K)*.75)+H]**

Page 11*

Memorandum – September 24, 2014

For more information, please contact a member of Simpson Thacher’s Financial Institutions
Group.
Lee Meyerson(212) 455-3675
lmeyerson@stblaw.com

Mark Chorazak(212) 455-7613
mchorazak@stblaw.com

Maripat Alpuche(212) 455-3971
malpuche@stblaw.com

Spencer Sloan(212) 455-7821
spencer.sloan@stblaw.com

This memorandum is for general information purposes and should not be regarded as legal advice. Pleasecontact your relationship partner if we can be of assistance regarding these important developments. The
names and office locations of all of our partners, as well as our recent memoranda, can be obtained fromour website, www.simpsonthacher.com.
The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who authored it are
rendering legal or other professional advice or opinions on specific facts or matters, nor does the distribution of this publication to
any person constitute the establishment of an attorney-client relationship. Simpson Thacher & Bartlett LLP assumes no liability inconnection with the use of this publication.

Page 12

Memorandum – September 24, 2014

UNITED STATESASIANew York

Beijing

425 Lexington Avenue

3919 China World Tower

New York, NY 10017+1-212-455-2000

1 Jian Guo Men Wai Avenue
Beijing 100004
China+86-10-5965-2999

Houston2 Houston Center
909 Fannin Street
Houston, TX 77010+1-713-821-5650

Hong Kong
ICBC Tower
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Los Angeles

Hong Kong+852-2514-7600

1999 Avenue of the Stars
Los Angeles, CA 90067

Seoul+1-310-407-7500

Palo Alto
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Palo Alto, CA 94304+1-650-251-5000

Washington, D.C.
1155 F Street, N.W.
Washington, D.C. 20004+1-202-636-5500

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LondonCityPoint
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West Tower, Mirae Asset Center 1
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Tokyo
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