Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83557 

1 12 U.S.C. 5365(d). 

2 12 CFR part 243 and 12 CFR part 381, as 

amended. 

FEDERAL RESERVE SYSTEM 

Change in Bank Control Notices; 

Acquisitions of Shares of a Bank or 

Bank Holding Company 

The notificants listed below have 

applied under the Change in Bank 

Control Act (Act) (12 U.S.C. 1817(j)) and 

§ 225.41 of the Board’s Regulation Y (12 

CFR 225.41) to acquire shares of a bank 

or bank holding company. The factors 

that are considered in acting on the 

applications are set forth in paragraph 7 

of the Act (12 U.S.C. 1817(j)(7)). 

The public portions of the 

applications listed below, as well as 

other related filings required by the 

Board, if any, are available for 

immediate inspection at the Federal 

Reserve Bank(s) indicated below and at 

the offices of the Board of Governors. 

This information may also be obtained 

on an expedited basis, upon request, by 

contacting the appropriate Federal 

Reserve Bank and from the Board’s 

Freedom of Information Office at 

https://www.federalreserve.gov/foia/ 

request.htm. Interested persons may 

express their views in writing on the 

standards enumerated in paragraph 7 of 

the Act. 

Comments regarding each of these 

applications must be received at the 

Reserve Bank indicated or the offices of 

the Board of Governors, Ann E. 

Misback, Secretary of the Board, 20th 

Street and Constitution Avenue NW, 

Washington, DC 20551–0001, not later 

than January 6, 2021. 

A. Federal Reserve Bank of St. Louis 

(David L. Hubbard, Senior Manager) 

P.O. Box 442, St. Louis, Missouri 

63166–2034. Comments can also be sent 

electronically to 

Comments.applications@stls.frb.org: 

1. Charles Taff Cross and John Fuller 

Cross, Jr., both of Eureka Springs, 

Arkansas; to acquire additional voting 

shares of Eureka Bancshares, Inc., and 

thereby indirectly acquire voting shares 

of CS Bank (fka Cornerstone Bank), all 

of Eureka Springs, Arkansas. 

Board of Governors of the Federal Reserve 

System, December 17, 2020. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

[FR Doc. 2020–28186 Filed 12–21–20; 8:45 am] 

BILLING CODE 6210–01–P 

FEDERAL RESERVE SYSTEM 

[Docket No. OP–1699] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

RIN 3064–ZA15 

Guidance for Resolution Plan 

Submissions of Certain Foreign-Based 

Covered Companies 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Federal Deposit Insurance Corporation 

(FDIC). 

ACTION: Final guidance. 

SUMMARY: The Board and the FDIC 

(together, the agencies) are adopting this 

final guidance for the 2021 and 

subsequent resolution plan submissions 

by certain foreign banking organizations 

(FBOs). The final guidance is meant to 

assist these firms in developing their 

resolution plans, which are required to 

be submitted pursuant to Section 165(d) 

of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act). The final guidance reflects 

a number of changes to the proposal in 

response to comments received by the 

agencies and further analysis by the 

agencies. The scope of application of the 

final guidance is FBOs that are Category 

II firms according to their combined 

U.S. operations under the Board’s 

tailoring ruleand are required to have a 

U.S. intermediate holding company 

(IHC) under the Board’s Regulation YY 

(the Specified FBOs) as published in 84 

FR 59032 (November 1, 2019). In 

addition to the three firms(Barclays 

PLC, Credit Suisse Group AG, and 

Deutsche Bank AG (the Proposed FBOs) 

that would have been within the scope 

of application under the methodology 

utilized in the proposal, one additional 

firm, Mitsubishi UFJ Financial Group, 

Inc. (MUFG), is within the scope for 

application of the final guidance at the 

time of its issuance. Consequently, 

MUFG will have a transition period to 

consider the application of the final 

guidance to its resolution plan 

submission, as further described below. 

The final guidance describes the 

agencies’ expectations regarding a 

number of key vulnerabilities in plans 

for an orderly resolution under the U.S. 

Bankruptcy Code (i.e., capital, liquidity, 

governance mechanisms, operational, 

branches, legal entity rationalization, 

and derivatives and trading activities). 

The final guidance modifies and 

clarifies certain aspects of the proposed 

guidance based on the agencies’ 

consideration of comments to the 

proposal, additional analysis, and 

further assessment of the business and 

risk profiles of the U.S. operations of 

large and complex FBOs. 

DATES: The final guidance is available 

on December 22, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Board: Mona Elliot, Deputy Associate 

Director, (202) 452–4688, Catherine 

Tilford, Deputy Associate Director, (202) 

452–5240, Division of Supervision and 

Regulation, Laurie Schaffer, Deputy 

General Counsel, (202) 452–2272, Jay 

Schwarz, Special Counsel, (202) 452– 

2970, Steve Bowne, Senior Counsel, 

(202) 452–3900, or Sarah Podrygula, 

Attorney, (202) 912–4658, Legal 

Division; Board of Governors of the 

Federal Reserve System, 20th and C 

Streets NW, Washington, DC 20551. 

FDIC: Alexandra Steinberg Barrage, 

Associate Director, Policy and Data 

Analytics, abarrage@fdic.gov; Yan 

Zhou, Acting Associate Director, Data 

Analytics, yazhou@fdic.gov; Catherine 

Needham, Advisor, cneedham@fdic.gov; 

Ronald W. Crawley, Jr., Senior 

Resolution Policy Specialist, rcrawley@

fdic.gov, Division of Complex 

Institution Supervision and Resolution; 

David N. Wall, Assistant General 

Counsel, dwall@fdic.gov; Celia Van 

Gorder, Senior Counsel, 202–898–6749, 

cvangorder@fdic.gov; or Esther Rabin, 

Counsel, erabin@fdic.gov, Legal 

Division, Federal Deposit Insurance 

Corporation, 550 17th Street NW, 

Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

a. Background 

b. Proposed Guidance 

II. Overview of Comments 

III. Final Guidance 

a. Scope of Application 

b. Transition Period 

c. Consolidation of Prior Guidance and 

Format and Structure of Plans 

d. Capital and Liquidity 

e. Governance Mechanisms 

f. Operational 

g. Branches 

h. Group Resolution Plan 

i. Legal Entity Rationalization and 

Separability 

j. Derivatives and Trading Activities 

k. Additional Comments 

IV. Paperwork Reduction Act 

V. Final Guidance 

I. Introduction 

a. Background 

Section 165(d) of the Dodd-Frank 

Act 1 and the jointly issued 

implementing regulation (the Rule) 2


jbell on DSKJLSW7X2PROD with NOTICES
83558 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

3The terms ‘‘covered company,’’ ‘‘material 

entities,’’ ‘‘identified critical operations,’’ ‘‘core 

business lines,’’ and similar terms used throughout 

this guidance all have the same meaning as in the 

Rule. See generally 12 CFR 243.2; 12 CFR 381.2. 

4 12 CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i). 

5Under the Rule, all filers must submit a full 

resolution plan, either every other time a resolution 

plan submission is required or as a firm’s initial 

resolution plan submission. See 12 CFR 243.4(a)(5)– 

(6), (b)(4)–(5), and (c)(4)–(5); 12 CFR 381.4(a)(5)–(6), 

(b)(4)–(5), and (c)(4)–(5). 

6The public sections of resolution plans 

submitted to the agencies are available at https:// 

www.federalreserve.gov/supervisionreg/resolutionplans.htm and www.fdic.gov/regulations/reform/ 

resplans/. 

7 12 CFR 243.4(h)(3); 12 CFR 381.4(h)(3). 

8Available at www.federalreserve.gov/ 

newsevents/pressreleases/files/ 

bcreg20170324a21.pdf and www.fdic.gov/ 

resauthority/2018subguidance.pdf. 

9Barclays PLC, Credit Suisse Group AG, Deutsche 

Bank AG, and UBS AG. 

10See infra Section III.c (Consolidation of Prior 

Guidance). 

11Available at www.federalreserve.gov/ 

newsevents/pressreleases/bcreg20181220c.htm. 

12Final Guidance for the 2019, 84 FR 1438 

(February 4, 2019). 

13Resolution Plans Required, 84 FR 59194 

(November 1, 2019). The amendments became 

effective on December 31, 2019. 

14 84 FR 59204. 

15 Guidance for Resolution Plan Submissions of 

Certain Foreign-Based Covered Companies, 85 FR 

15449 (March 18, 2020). 

require certain financial companies, 

including certain foreign-based firms, to 

report periodically to the agencies their 

plans for rapid and orderly resolution 

under the U.S. Bankruptcy Code (the 

Bankruptcy Code) in the event of 

material financial distress or failure. 

With respect to a covered company 3

that is organized or incorporated in a 

jurisdiction other than the United States 

(other than a bank holding company) or 

that is an FBO, the Rule requires that 

the firm’s U.S. resolution plan include 

specified information with respect to 

the subsidiaries, branches, and agencies, 

and identified critical operations and 

core business lines, as applicable, that 

are domiciled in the United States or 

conducted in whole or material part in 

the United States.4 The Rule also 

requires, among other things, each 

covered company’s full resolution plan 

to include a strategic analysis of the 

plan’s components, a description of the 

range of specific actions the covered 

company proposes to take in resolution, 

and a description of the covered 

company’s organizational structure, 

material entities, and interconnections 

and interdependencies.5 In addition, the 

Rule requires that all resolution plans 

include a confidential section that 

contains any confidential supervisory 

and proprietary information submitted 

to the agencies as part of the resolution 

plan and a separate section that the 

agencies make available to the public. 

Public sections of resolution plans can 

be found on the agencies’ websites.6

Objectives of the Resolution Planning 

Process 

The goal of the Dodd-Frank Act 

resolution planning process is to help 

ensure that a covered company’s failure 

would not have serious adverse effects 

on financial stability in the United 

States. Specifically, the resolution 

planning process requires covered 

companies to demonstrate that they 

have adequately assessed the challenges 

that their structures and business 

activities pose to an orderly resolution 

and that they have taken action to 

address those issues. For FBOs, the 

resolution planning process focuses on 

their U.S. subsidiaries and operations. 

The agencies recognize that the 

preferred resolution outcome for many 

FBOs is a successful home country 

resolution using a single point of entry 

(SPOE) resolution strategy where U.S. 

material entities are provided with 

sufficient capital and liquidity resources 

to allow them to stay out of resolution 

proceedings and maintain continuity of 

operations throughout the parent’s 

resolution. However, because support 

from the foreign parent in stress cannot 

be ensured, the Rule provides that the 

U.S. resolution plan for foreign-based 

covered companies should specifically 

address a scenario where the U.S. 

operations experience material financial 

distress, and the plan should not 

assume that the covered company takes 

resolution actions outside the United 

States that would eliminate the need for 

any U.S. subsidiaries to enter resolution 

proceedings.7 Nonetheless, the Rule also 

provides firms with appropriate 

flexibility to construct a U.S. resolution 

strategy in a way that is not inconsistent 

with a firm’s global resolution strategy, 

as long as assumptions consistent with 

the firm’s global strategy support the 

firm’s U.S. resolution strategy and 

adhere to the required and prohibited 

assumptions articulated in the Rule. 

Recent Developments 

Implementation of the Rule has been 

an iterative process aimed at 

strengthening the resolution planning 

capabilities of financial institutions 

subject to the Rule. The final guidance 

is based on the Guidance for 2018 

§ 165(d) Annual Resolution Plan 

Submissions By Foreign-based Covered 

Companies that Submitted Resolution 

Plans in July 2015 (2018 FBO 

guidance).8 The 2018 FBO guidance was 

provided to four FBOs.9 The agencies 

also have previously provided feedback 

on several occasions to the four FBOs 

that at present are in scope for the final 

guidance.10 In general, the guidance and 

feedback were intended to assist the 

recipients in their development of 

future resolution plan submissions and 

to provide additional clarity with 

respect to the agencies’ expectations for 

the filers’ future progress. The 2018 FBO 

guidance and the feedback letters were 

made available to the public. 

Several developments inform the final 

guidance: 

• The agencies’ consideration of 

comments to the proposed guidance (as 

defined below); 

• The agencies’ review of certain 

FBOs’ 2018 resolution plans and the 

issuance of individual letters 

communicating the agencies’ views on 

and shortcomings contained in the 2018 

resolution plans filed by the firms 

subject to the 2018 FBO guidance (2018 

feedback letters); 11

• Revisions to the content related to 

payment, clearing, and settlement (PCS) 

activities and derivatives and trading 

activities in the updated guidance for 

the resolution plan submissions by the 

eight largest, most complex U.S. 

banking organizations in February 2019 

(2019 domestic guidance); 12

• The 2019 amendments to the Rule 

(2019 Rule revisions), which included 

the clarification that FBOs should not 

assume that its foreign parent company 

takes resolution actions outside of the 

United States that would eliminate the 

need for any U.S. subsidiaries to enter 

into resolution proceedings; 13 and 

• An analysis of the current risk 

profiles of the large, complex FBOs 

subject to resolution planning 

requirements. 

The preamble to the 2019 Rule 

revisions indicated that the agencies 

would make any future resolution 

guidance available for comment,14 and 

in March 2020 the agencies invited 

comments on proposed guidance for the 

2021 and subsequent resolution plan 

submissions by certain FBOs (proposed 

guidance).15

Under the 2019 Rule revisions, each 

Specified FBO will be a triennial full 

filer and will be required to submit a 

resolution plan every three years, 

alternating between a full resolution 

plan and a targeted resolution plan. The 

2019 Rule revisions require all triennial 

full filers to submit a targeted resolution 

plan on or before July 1, 2021, followed 

by a full resolution plan in 2024. In 

addition, the agencies indicated in the 

2019 Rule revisions that they would 

strive to provide final general guidance 

at least a year before the next resolution 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83559 

16See https://www.federalreserve.gov/ 

newsevents/pressreleases/bcreg20200506a.htm and 

https://www.fdic.gov/news/news/press/2020/ 

pr20057.html. 

17Available at www.federalreserve.gov/ 

newsevents/pressreleases/bcreg20181220c.htm. 

18Summaries of those meetings and copies of the 

comments can be found on each agency’s website. 

plan submission date of firms to which 

the general guidance is directed. 

On May 6, 2020, the agencies 

extended the 2021 resolution plan 

submission date for Category II and III 

firms, including those firms who are 

currently Specified FBOs, from July 1 to 

September 29.16 In accordance with the 

expectation set out in the preamble to 

the 2019 Rule revisions, the agencies are 

further extending the 2021 resolution 

plan submission deadline for the firms 

that are currently Specified FBOs and 

were previously subject to the 2018 FBO 

guidance to December 17, 2021, to 

provide the firms with sufficient time to 

develop their targeted resolution plans 

in light of the final guidance. In 

addition, as discussed in more detail 

below, a Specified FBO that was not 

subject to the 2018 FBO guidance for its 

most recent resolution plan submission 

will not be expected to have taken the 

final guidance into consideration in 

developing its targeted plan submission 

due in 2021. Instead, such a firm should 

consider the final guidance in 

connection with developing its next full 

resolution plan submission due in 2024. 

International Cooperation on Resolution 

Planning 

The 2018 feedback letters also noted 

the importance of the agencies’ 

engagement with non-U.S. regulators. 

The Specified FBOs are subject to their 

home country resolvability frameworks, 

in addition to section 165(d) of the 

Dodd-Frank Act and the Rule. 

Resolution of the U.S. operations of a 

firm domiciled outside the United 

States with significant global activities 

(e.g., the Specified FBOs) will require 

substantial coordination between home 

and host country authorities, just as 

resolution of the foreign operations of a 

U.S. G–SIB would. The agencies 

identified three areas in the 2018 

feedback letters (legal entity 

rationalization, PCS, and derivatives 

booking practices) where enhanced 

cooperation between the agencies and 

each firm’s home country regulatory 

authorities would maximize 

resolvability under both the U.S. and 

home country resolution strategies.17

The agencies will continue to 

coordinate with non-U.S. authorities 

regarding these and other resolution 

matters (e.g., resources in resolution, 

communications), including 

developments in the U.S. and home 

country resolution capabilities of the 

Specified FBOs. 

b. Proposed Guidance 

In March 2020, the agencies invited 

public comment on the proposed 

guidance, which was proposed to apply 

beginning with the subject firms’ 2021 

resolution plan submissions. The 

proposed guidance began with a 

description of the proposed scoping 

methodology and was then organized 

into eight substantive areas, consistent 

with the 2018 FBO guidance. These 

areas were: Capital, liquidity, 

governance mechanisms, operational, 

branches, group resolution plan, legal 

entity rationalization and separability, 

and derivatives and trading activities. 

The proposed guidance described the 

agencies’ proposed expectations for 

each of these areas. 

The proposal was largely consistent 

with the 2018 FBO guidance and the 

2019 domestic guidance. Accordingly, 

the agencies expected that the Proposed 

FBOs had already incorporated 

significant aspects of the proposed 

guidance into their resolution planning. 

With respect to the 2019 domestic 

guidance, the proposed guidance 

differed in certain respects, given the 

circumstances under which a foreignbased covered company’s U.S. 

resolution plan is most likely to be 

relevant. The proposal was tailored for 

large, complex FBOs as compared to the 

U.S. global systemically important 

banks (G–SIBs) to account for 

differences between U.S. G–SIBs’ and 

FBOs’ U.S. footprints and operations. 

The proposal updated the PCS and 

derivatives and trading activities areas 

of the 2018 FBO guidance to reflect the 

agencies’ review of certain FBOs’ 2018 

resolution plans and revisions 

contained in the 2019 domestic 

guidance. It also made minor 

clarifications to certain areas of the 2018 

FBO guidance in light of the 2019 Rule 

revisions. In general, the proposed 

revisions to the guidance were intended 

to streamline the firms’ submissions and 

to provide additional clarity. In 

addition, the proposed guidance would 

have consolidated all guidance 

applicable to the Proposed FBOs into a 

single document, which would provide 

the industry and public with one source 

of applicable guidance to which to refer. 

The agencies invited comments on all 

aspects of the proposed guidance. The 

agencies also specifically requested 

comments on a number of issues, 

including whether the topics in the 

proposed guidance represented the key 

vulnerabilities of the covered companies 

in resolution, whether the proposed 

scope of applicability was appropriate, 

and whether the proposed guidance was 

sufficiently clear. 

II. Overview of Comments 

The agencies received and reviewed 

seven comment letters on the proposed 

guidance. Commenters included various 

financial services trade associations, a 

financial market utility, and two FBOs. 

In addition, the agencies met with 

industry representatives and FBOs at 

their request to discuss issues relating to 

the proposed guidance.18 This section 

provides an overview of the general 

themes raised by commenters. The 

comments received on the proposed 

guidance are further discussed below in 

the sections describing the final 

guidance, including any changes that 

the agencies have made to the proposed 

guidance in response to comments. 

Further Tailoring of Proposal Due to 

Reduced Size and Risk 

Most commenters suggested that the 

proposed guidance should be further 

tailored for the Proposed FBOs. They 

asserted that these firms have reduced 

the size and systemic risk profiles of 

their U.S. operations since resolution 

guidance was originally issued, and the 

guidance should be commensurately 

streamlined. Therefore, commenters 

questioned the appropriateness of 

issuing guidance to the Proposed 

FBOs—which they noted were Category 

III firms, as calculated using the assets 

and activities of each firm’s top tier U.S. 

intermediate holding company—that 

would be similar to the guidance 

provided to the U.S. G–SIBs, which are 

Category I covered companies. 

Commenters argued that, in some cases, 

the proposed guidance was even more 

expansive than the guidance issued to 

the U.S. G–SIBs. Certain commenters 

also stated that the proposal failed to 

articulate a clear distinction in the 

expectations applicable to Category I 

firms and to Category II/III firms. In 

addition, commenters asserted that the 

proposal, if finalized, would have 

resulted in disparate treatment among 

firms in Category II and Category III. 

Home Country Considerations 

Some commenters disagreed with the 

proposal’s view on resolution planning 

for the Proposed FBOs, which these 

commenters described as narrowly 

focused on the resolution of U.S. 

operations independent of home 

country measures or foreign parent 

support. The commenters noted that 

these firms have been subject to 

extensive home country frameworks, 


jbell on DSKJLSW7X2PROD with NOTICES
83560 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

which include global SPOE strategies. 

These commenters asserted that the 

resolution plans for the U.S. operations 

of these firms should be considered in 

this context and should not have 

requirements equivalent to the U.S. G– 

SIBs. 

Some commenters cited prior 

comments by the Vice Chair for 

Supervision of the Board in which he 

encouraged host regulators to recognize 

their interests in the success of the 

foreign parent company’s SPOE strategy 

and to provide further flexibility for the 

parent to move resources as necessary 

within the organization. The 

commenters offered resource preplacement requirements for FBOs, 

which exceed those required by 

similarly sized U.S. firms, as an 

example of how the proposed guidance 

would be inconsistent with these 

principles. 

Scoping Methodology 

The commenters generally opposed 

the proposed use of the second 

methodology (method 2) of the G–SIB 

surcharge framework as the scoping 

methodology for the proposal. The 

commenters made a number of 

assertions about the proposed scoping 

methodology, including: 

• Method 2 does not accurately 

reflect the reduced systemic risk of the 

Proposed FBOs due to shortcomings in 

the metric as applied to firms other than 

the U.S. G–SIBs. As a result, the method 

2 scores for the Proposed FBOs are 

inappropriately inflated. 

• Method 2 was not intended to be 

applied to FBOs as a scoping 

methodology, but rather was designed to 

calculate the G–SIB capital surcharge. 

• Using method 2 as the scoping 

methodology for the guidance would be 

inconsistent with the approach taken by 

the agencies to use the tailoring 

framework to determine resolution plan 

submission requirements, especially 

since the agencies previously rejected 

using the G–SIB surcharge framework 

for that purpose. 

Some commenters suggested a 

number of alternatives to method 2 as 

the scoping methodology. One 

suggestion was to use the tailoring 

categories established for enhanced 

prudential standards, specifically 

having the proposal only apply to 

Category II firms, as calculated using the 

assets and activities of each firm’s top 

tier U.S. intermediate holding company. 

Two commenters suggested, as an 

alternative, that the agencies use a 

modified version of method 2 or method 

1 G–SIBs’ surcharge scores. 

Payment, Clearing, and Settlement 

Services 

Several commenters asserted that the 

proposed guidance for PCS services 

raised issues of extraterritoriality. They 

argued that the PCS guidance regarding 

non-U.S. affiliates should be addressed 

as part of the group resolution planning 

process or supervision and any related 

information request would be outside 

the scope of the Title I resolution plan 

requirements. They also proposed that 

the agencies obtain this information 

through home-host supervisor 

cooperation. Commenters also argued 

that the proposed PCS expectations 

were even more extensive than the 

guidance provided to the U.S. G–SIBs 

on this topic. 

One commenter supported certain 

portions of the PCS services section, but 

also suggested changes, including 

aligning the guidance with certain 

expectations of the European Banking 

Union’s resolution authority, enhancing 

communication strategies, and 

clarifying terms used in the proposed 

guidance. 

Derivatives and Trading Activities 

A number of comments concerning 

the proposed derivatives guidance were 

similar to those made for the PCS 

section in asserting that the proposed 

information requests presented concerns 

of extraterritoriality and were outside 

the scope of the Title I resolution plan 

requirements. Commenters argued that 

the proposal called for strategies 

regarding and data on the activities of 

non-U.S. affiliates and non-U.S. 

transactions. They noted that these 

items are generally addressed in home 

country resolution plans or supervision 

and suggested that the related 

information could be requested from 

home country regulators. Some 

commenters maintained that the 

proposed guidance on derivatives was 

broader than the guidance issued to the 

U.S. G–SIBs and should be tailored for 

the Proposed FBOs. For example, the 

proposal would have established 

expectations for non-derivatives trading 

activities, such as securities financing 

transactions. 

Contractually Binding Mechanisms 

A few commenters provided views 

concerning contractually binding 

mechanisms (CBMs), which are 

intended to ensure that sufficient capital 

and liquidity are provided to material 

entity subsidiaries in a timely manner. 

These commenters generally agreed that 

the agencies should continue to allow 

firms flexibility to create support 

arrangements that work best for their 

structures and global and U.S. 

resolution plans. They asserted that, 

accordingly, the guidance should 

continue to focus on the need to 

mitigate the risks of creditor challenges 

and on how well the strategy selected by 

the firm satisfies the policy objectives of 

the agencies, rather than specifying a 

particular mechanism. 

Capital and Liquidity 

The agencies received a number of 

comments on the capital and liquidity 

sections of the proposed guidance. With 

regard to the capital section of the 

proposed guidance, commenters argued 

that the proposal included expectations 

that are duplicative of existing capital 

requirements and suggested removing 

the guidance on resolution capital 

adequacy and positioning (RCAP) from 

the final guidance. Most of these 

commenters asserted that streamlining 

the multiple capital measures would 

reduce burden on the firms. Further, 

two commenters asserted that the 

proposal would have reduced the 

flexibility for firms to position their 

capital most effectively in stress. With 

regard to the liquidity section of the 

proposed guidance, commenters 

suggested there is redundancy between 

the proposal and existing regulatory 

requirements and also recommended 

removing the guidance on resolution 

liquidity adequacy and positioning 

(RLAP) from the final guidance. 

III. Final Guidance 

After considering the comments, 

conducting additional analysis, and 

further assessing the business and risk 

profiles of the U.S. operations of large 

and complex FBOs, the agencies are 

issuing final guidance that includes 

certain modifications and clarifications. 

In particular, the scope, capital, 

liquidity, governance mechanisms, PCS, 

and derivatives and trading activities 

sections of the final guidance reflect 

changes from the proposed guidance. 

Other sections, such as group resolution 

plan, and sub-sections such as 

management information systems, 

qualified financial contracts (QFCs), and 

mapping of branch activities, were 

determined to be duplicative of existing 

regulatory requirements and 

accordingly, have been eliminated from 

the guidance. The intent of these 

changes is to clarify expectations, more 

closely align expectations with the 

current business and risk profiles of the 

Specified FBOs’ U.S. operations, and 

recognize that the preferred resolution 

strategy for the Specified FBOs is a 

successful home country resolution. The 

agencies are also eliminating 

expectations that relate to information 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83561 

19See 12 CFR 243.5 and 243.6; 12 CFR 381.5 and 

381.6. 

20See generally, Interagency Statement Clarifying 

the Role of Supervisory Guidance (Sept. 11, 2018), 

available at https://www.federalreserve.gov/ 

supervisionreg/srletters/sr1805a1.pdf. See also Role 

of Supervisory Guidance, 85 FR 70512 (Nov. 5, 

2020). 

21 12 CFR 217.405. 

22Prudential Standards for Large Bank Holding 

Companies, Savings and Loan Holding Companies, 

and Foreign Banking Organizations, 84 FR 59032 

(November 1, 2019). 

23Category II FBOs are defined as those with (1) 

≥$700 billion average combined U.S. assets or (2) 

≥$100 billion average combined U.S. assets with 

≥$75b in average cross-jurisdictional activity. 

24The formula defining Category II in the Board’s 

tailoring rule does not include formation of an IHC 

as a requirement. The final guidance diverges from 

the Board’s tailoring rule in this respect because an 

IHC formed pursuant to the Board’s Regulation YY 

indicates the materiality of the FBO’s U.S. 

operations that would go through bankruptcy under 

the Bankruptcy Code or other ordinary U.S. 

resolution regime. The agencies note that Category 

II is not limited to FBOs. The final guidance, 

however, is directed only to FBOs that meet the 

criteria noted above and not to domestic banking 

organizations. 

that, in the agencies’ experience, may be 

obtained through other existing and 

effective mechanisms, such as home/ 

host coordination and supervisory 

information sharing. In addition, the 

final guidance consolidates all prior 

resolution planning guidance for the 

firms in one document and clarifies that 

any prior guidance not included in the 

final guidance has been superseded. 

These changes are discussed in more 

detail below. 

The final guidance is not meant to 

limit firms’ consideration of additional 

vulnerabilities or obstacles that might 

arise based on a firm’s particular 

structure, operations, or resolution 

strategy and that should be factored into 

the firm’s submission. Moreover, the 

final guidance does not contain certain 

expectations in the proposed guidance 

and in the 2018 FBO guidance, 

including certain expectations relating 

to capital, liquidity, governance 

mechanisms, PCS, and derivatives and 

trading activities. The agencies do not 

expect that the Specified FBOs’ 

resolution plans will continue to 

address the elements that have been 

removed from the guidance. However, 

the agencies note that the Specified 

FBOs’ resolution plans, like the plans 

for all covered companies, are still 

required to meet all of the informational 

requirements of the Rule 

notwithstanding these changes to the 

guidance.19

The agencies note that commenters 

described certain expectations that are 

set forth in the guidance as 

‘‘requirements.’’ The agencies are 

clarifying that the final guidance does 

not have the force and effect of law. 

Rather, the final guidance outlines the 

agencies’ supervisory expectations 

regarding each subject area covered by 

the final guidance.20

a. Scope of Application. 

The agencies received numerous 

comments objecting to the scope of 

application of the proposed guidance, 

which proposed using the method 2 G– 

SIB surcharge framework 21 to 

determine the Proposed FBOs. 

Specifically, commenters argued that 

the proposed scope of application 

appeared to be inconsistent with the 

principles of tailoring established in the 

Board’s tailoring rule.22 In addition, 

commenters asserted that the method 2 

G–SIB framework was not designed to 

be a scoping mechanism outside of 

certain requirements for U.S. G–SIBs, 

has never been applicable to IHCs, and 

inappropriately weights the short-term 

wholesale funding (STWF) factor. 

Commenters also questioned the 

proposal’s justification for why a 

method 2 score of 250 was chosen as the 

threshold for purposes of scope of 

application. Furthermore, several 

commenters asserted that the proposed 

guidance did not adequately recognize 

that the Proposed FBOs have reduced 

risk at their U.S. operations, are smaller 

and less systemically important than the 

U.S. G–SIBs, and are subject to robust 

global resolution planning 

requirements, and so should not be 

subject to similar expectations as the 

U.S. G–SIBs. 

Commenters suggested that the 

agencies consider alternative scoping 

methodologies, including those that 

were discussed in the proposal’s 

preamble. Some commenters suggested 

that the agencies adopt a scope based on 

the Board’s tailoring categories, with 

some commenters recommending that 

the guidance apply only to firms subject 

to Category II standards while others 

recommended that the final guidance 

should be similar to expectations for 

domestic firms subject to Category II 

and III standards. Other commenters 

suggested different potential options to 

modify or replace the proposed method 

2 G–SIB surcharge framework, such as 

using method 1 G–SIB surcharge scores, 

that the commenters asserted would 

more appropriately balance the 

agencies’ guidance expectations with 

the actual risk profile of the Proposed 

FBOs. Even if an alternative scoping 

methodology were adopted, some 

commenters asked the agencies to 

consider tailoring the guidance to what 

they viewed as the Proposed FBOs’ 

reduced risk and stronger capital and 

liquidity positions, and recommended 

that the final guidance not introduce 

new expectations beyond those already 

in effect. 

In their consideration of the 

commenters’ feedback, the agencies 

have sought to align resolution plan 

supervisory expectations with the 

current business and risk profiles of the 

Specified FBOs’ U.S. operations through 

the simple, transparent, and predictable 

mechanism of the Board’s tailoring 

framework. The agencies also 

acknowledge that relevant resolution 

plan information can be obtained via 

other means, such as through 

engagement with home country 

regulators and supervisory information 

sharing. The agencies appreciate the 

analyses provided by the commenters 

that compared the operations of U.S. G– 

SIBs to the reduced U.S. footprint of 

Proposed FBOs with large U.S. 

operations. The agencies continue to 

believe that the scope of heightened 

resolution planning expectations 

applicable to FBOs should align with 

the Specified FBOs’ systemic risk 

profile and relevant resolution 

challenges, and the final guidance 

should be consistent with the principles 

of national treatment and equality of 

competitive opportunity. 

The agencies acknowledge 

commenters’ meaningful input on 

certain methodological traits in the 

method 2 G–SIB surcharge framework, 

in particular the STWF factor weight, 

which could distort the liquidity risk 

and systemic relevance of FBOs relative 

to U.S. G–SIBs. Liquidity risk is just one 

of several important factors in a 

resolution scenario, and the measure of 

liquidity risk should not solely 

determine scoping of the guidance; 

rather, scoping should be determined 

holistically. Therefore, the final 

guidance applies to FBOs that are 

subject to Category II standards 

according to their combined U.S. 

operations pursuant to the Board’s 

tailoring rule 23 and that are also 

required to form IHCs.24

Using the tailoring categories in this 

context also will promote uniform 

scoping between resolution expectations 

and regulatory requirements. As stated 

in the preamble to the Rule, the agencies 

believe that the risk-based indicators 

identified in the Board’s tailoring rule 

are an effective means of dividing firms 

into groups for the purposes of 

determining the frequency and 

informational content of resolution 

plans. The indicators-based approach 

for application of Category II, III, and IV 

standards provides a simple framework 


jbell on DSKJLSW7X2PROD with NOTICES
83562 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

25The plan type for that next submission remains 

as specified by the Rule, i.e., a full or targeted 

resolution plan. See 12 CFR 243.4; 12 CFR 381.4. 

26 In addition to the 2018 FBO guidance, the 

agencies have also issued and provided to certain 

FBOs: The Guidance for 2013 § 165(d) Annual 

Resolution Plan Submissions by Foreign-Based 

Covered Companies that Submitted Initial 

Resolution Plans in 2012; the February 2015 staff 

communication regarding the 2016 plan 

submissions; the July 2017 Resolution Plan 

Frequently Asked Questions; and feedback letters 

issued to Barclays PLC, Credit Suisse Group AG, 

Deutsche Bank AG, and UBS AG in December 2018 

and in August 2014 and feedback letters issued to 

Mitsubishi UFJ Financial Group in July 2019, 

January 2018, and July 2015. 

27Section II and Section III of the proposal. 

that supports the objectives of risk 

sensitivity and transparency and thus is 

an appropriate mechanism for scoping 

the application of the final guidance. 

Size and operational complexity are 

also factors in the decision to apply the 

guidance to FBOs subject to Category II 

standards. As indicated in the preamble 

to the Board’s tailoring rule, the failure 

or distress of the U.S. operations of a 

FBO that is subject to Category II 

standards could impose significant costs 

on the U.S. financial system and 

economy. In addition, increased levels 

of cross-jurisdictional activity, an 

indicator for Category II firms, could 

increase the operational complexity of a 

resolution, as it may be more difficult to 

resolve or unwind a firm’s positions due 

to the involvement of multiple 

jurisdictions and regulatory authorities. 

As such, FBOs subject to Category II 

standards merit the application of more 

detailed expectations than those FBOs 

that are smaller or that do not share the 

same indicators of operational risk. The 

agencies also believe this modification 

to the scope appropriately focuses on 

the largest and most complex FBOs with 

U.S. IHCs without losing the focus on 

cross-jurisdictional activities. 

While the proposal relied only to a 

limited extent on the Board’s tailoring 

rule for scoping the proposed 

guidance—noting that the tailoring 

categories were developed to determine 

application of a broad range of 

enhanced prudential standards and 

were not explicitly focused on 

determining which covered companies 

should be subject to more detailed 

resolution planning guidance—the 

agencies have concluded that the 

benefits of employing the tailoring 

categories—clear, predictable scoping 

based on publicly reported quantitative 

data—outweigh any concerns related to 

using them for this purpose. 

Consistent with the Rule, the final 

guidance takes into account a Specified 

FBO’s entire U.S operations, including 

branches and agencies (i.e., combined 

U.S. operations), when determining 

scope of applicability. As discussed in 

the preamble to the 2019 Rule revisions, 

reference to combined U.S. operations is 

appropriate as the resolution planning 

requirement applies to a firm’s entire 

U.S. operations. Moreover, U.S. 

branches, agencies, and offices 

constitute a significant share of these 

foreign banking organizations’ presence 

in the United States and the agencies’ 

experience reviewing resolution plans 

demonstrates that there are 

interconnections and dependencies 

between a foreign firm’s U.S. branches, 

agencies, and offices and its U.S. 

subsidiaries, core business lines, and 

critical operations. Thus, the inclusion 

of U.S. branches, agencies, and offices 

in determining the scope of application 

of the final guidance is not only 

consistent with the Rule, but it is also 

appropriate in order to measure the 

operational complexity and full scope of 

potential risks to U.S. financial stability 

that a FBO may pose. 

Finally, while the method 1 G–SIB 

surcharge score methodology could 

potentially address the concerns raised 

on STWF, the agencies believe the riskbased indicator approach in the Board’s 

tailoring rule further simplifies 

application of the guidance. 

b. Transition Period 

The proposed guidance did not 

describe how the guidance would be 

applied to FBOs that become covered by 

its scope, but it did request comment on 

the methodology and process for 

determining the FBOs to which the 

guidance should apply, including 

whether the agencies should specify an 

implementation period for any FBOs 

that are designated as Specified FBOs 

under the final guidance. Some 

commenters requested that the agencies 

provide clarity on a transition period for 

firms that may newly fall under the 

scope of the guidance, and, conversely, 

on an exit process for firms that may no 

longer be covered. 

To provide certainty to FBOs, the 

final guidance includes transition 

periods for Specified FBOs that were 

not previously within the scope of the 

2018 FBO guidance and for firms that 

become Specified FBOs after December 

22, 2020. A firm that is currently a 

Specified FBO, but was not previously 

the subject of guidance for its most 

recent resolution plan, will not be 

expected to have taken the final 

guidance into consideration in 

developing its targeted plan submission 

due in 2021. Rather, such a firm will be 

expected to consider the final guidance 

in developing its next full resolution 

plan submission, so long as the firm is 

a Specified FBO as of the submission 

date for that plan. 

The final guidance also states that 

when an FBO becomes a Specified FBO, 

the final guidance will apply to the 

firm’s next resolution plan submission 

with a submission date that is at least 

12 months after the time the firm 

becomes a Specified FBO.25 If a 

Specified FBO ceases to be subject to 

Category II standards or to the Board’s 

requirement to form an intermediate 

holding company, it will no longer be 

considered a Specified FBO, and the 

guidance will no longer be applicable to 

that firm as of the date the firm ceases 

to be subject to Category II standards. 

c. Consolidation of Prior Guidance and 

Format and Structure of Plans 

One commenter supported, and no 

commenters opposed, the agencies’ 

proposal to consolidate prior guidance. 

Accordingly, the final guidance 

includes, as proposed, a section 

regarding the format, assumptions, and 

structure of resolution plans, which 

includes the aspects of previous 

guidance that remain applicable to 

resolution planning. In light of the 

changes in the final guidance to the 

areas of capital, liquidity, governance 

mechanisms, and separability, the 

agencies have reviewed the Frequently 

Asked Questions (FAQs) contained in 

the proposed guidance. The FAQs 

appended to the final guidance contain 

those FAQs that continue to be 

applicable to resolution planning, with 

appropriate modifications to reflect the 

changes to the final guidance. 

Consistent with the proposal, to the 

extent not incorporated in or appended 

to the final guidance, prior guidance 26

is superseded. 

d. Capital and Liquidity 

While the proposed guidance would 

have maintained substantially all of the 

expectations in the capital and liquidity 

sections that were included in the 2018 

FBO guidance,27 the final guidance, in 

contrast to the proposal, does not 

include expectations for RCAP, RLAP, 

and certain liquidity capabilities. These 

changes were made to more closely 

align guidance expectations with the 

current business and risk profiles of the 

Specified FBOs’ U.S. operations and in 

recognition of the overlap between those 

concepts and certain other regulatory 

provisions, as discussed below. As 

noted in the proposed guidance, the 

agencies continue to evaluate the 

relationship between the capital and 

liquidity sections of the final guidance 

and other capital and liquidity 

regulatory provisions. The agencies 

expect that any further changes to the 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83563 

28See 12 CFR 243.5(c)(1)(iii); 12 CFR 

381.5(c)(1)(iii). 

remaining guidance in these areas 

would be adopted following notice and 

comment. 

i. Capital 

The final guidance does not include 

expectations for RCAP but retains 

proposed expectations for resolution 

capital execution need (RCEN). Several 

commenters requested that the agencies 

remove RCAP expectations from the 

guidance because of the reduced U.S. 

systemic risk of the Proposed FBOs and 

the potential redundancy with other 

regulatory provisions, such as the 

Board’s rule on total loss absorbing 

capacity (TLAC). Commenters also 

suggested that RCAP expectations are 

redundant with TLAC requirements for 

local, bail-in-able resources to 

recapitalize an FBO’s U.S. operations, 

and one commenter further asserted that 

RCAP constrains a firm’s ability to 

position capital within the U.S. IHC 

entities in a manner that allows for the 

most flexibility and efficiency in a stress 

scenario. One commenter expressed 

support for maintaining expectations for 

RCEN. Some commenters also suggested 

that the guidance should take into 

account the positioning of financial 

resources in the United States in light of 

the positioning of resources in the firm’s 

non-U.S. operations and that the 

agencies should reconsider expectations 

for resource preplacement within the 

United States to encourage more 

flexibility at the international level. 

The final guidance does not include 

RCAP expectations concerning the 

appropriate positioning of capital and 

other loss-absorbing instruments among 

the U.S. IHC and its subsidiaries 

because existing TLAC requirements 

applicable to the U.S. IHC provide a 

backstop of resources that is appropriate 

to the size and complexity of the 

Specified FBOs. The final guidance, 

consistent with one commenter’s 

recommendation, maintains the RCEN 

expectations regarding a methodology 

for periodically estimating the amount 

of capital that may be needed to support 

each U.S. IHC subsidiary after the U.S. 

IHC’s bankruptcy filing. RCEN helps the 

firm and the agencies determine when 

the U.S. IHC is approaching a situation 

where it will not have sufficient 

resources to conduct a successful 

resolution. 

Several commenters requested that 

the agencies reconsider requirements 

and expectations for resource 

preplacement within the United States, 

such as internal TLAC requirements 

applicable to the U.S. IHC, that are not 

set by the guidance. As these 

requirements and expectations are 

outside the scope of the guidance, the 

final guidance does not address these 

requests. 

ii. Liquidity 

The final guidance retains the 

proposed expectations for resolution 

liquidity execution need (RLEN) but 

does not include expectations for 

liquidity capabilities and RLAP. Several 

commenters requested that the agencies 

remove RLAP expectations from the 

guidance, in consideration of factors 

including the reduced U.S. systemic risk 

of the Proposed FBOs and potential 

redundancy with other regulatory 

provisions, such as the Net Stable 

Funding Ratio (NSFR) and internal 

liquidity stress testing. One commenter 

suggested that the agencies conduct an 

assessment of the cumulative effect of 

liquidity and capital expectations and 

requirements, specifically between 

RLEN and NSFR and between RLAP and 

TLAC. Another commenter suggested 

integrating the RLAP liquidity 

expectations in the proposal into 

regulatory liquidity requirements via the 

rulemaking process. This commenter 

also expressed concern about the 

potential additive requirements and 

expectations of RLAP relative to the 

NSFR. Finally, one commenter 

expressed support for maintaining 

RLEN expectations. 

Like the rationale for eliminating 

RCAP from the final guidance, because 

of the Specified FBOs’ relatively simple 

U.S. legal entity structures and reduced 

risk profiles, the final guidance does not 

include RLAP expectations concerning 

the appropriate positioning of liquidity 

among the U.S. IHC and its subsidiaries. 

However, a firm’s ability to reliably 

estimate and meet the liquidity needs of 

the U.S. IHC and its subsidiaries prior 

to, and in, resolution remains important 

to the execution of a Specified FBO’s 

U.S. resolution strategy, as reflected in 

the Rule.28 The final guidance therefore 

incorporates only expectations for 

RLEN. The final guidance also 

eliminates references to RLAP. 

The agencies do not believe there will 

be significant overlap between RLEN 

expectations and the NSFR rule because 

the regulation implicates long-term 

liquidity risks and stability of funding 

sources, while the guidance focuses on 

liquidity needs during a resolution 

scenario, which are shorter-term in 

nature. Further, liquidity needs in a 

resolution scenario may be driven by 

highly idiosyncratic factors. These 

factors can be incorporated into a firm’s 

RLEN framework, but would not 

necessarily be addressed in a 

standardized measure like the NSFR. 

The agencies’ decision not to include 

expectations for RLAP in the final 

guidance obviates the need to analyze 

interaction between RLAP and TLAC. 

Separately, the suggestion to incorporate 

liquidity expectations into existing 

regulatory requirements is outside the 

scope of the current guidance-making. 

e. Governance Mechanisms 

i. Playbooks 

The proposed guidance outlined an 

expectation for Proposed FBOs to 

develop governance playbooks that 

detail specific actions that the board of 

directors and senior management of U.S. 

non-branch material entities would take 

under the firm’s U.S. resolution strategy. 

The expectations related to 

communication and escalation protocols 

were contingent on triggers, which are 

firm-defined financial metrics reflecting 

the U.S. IHC’s financial condition. In 

addition, the proposed guidance called 

for playbooks to address, among other 

things, the fiduciary responsibilities of 

boards of directors, potential conflicts of 

interest, and employee retention 

policies. One commenter suggested that 

the agencies streamline playbook 

expectations to focus only on 

governance and escalation procedures 

as well as capabilities to produce key 

information and data that support 

timely and informed decision-making. 

The commenter argued that outlining 

details about specific decisions 

management would have to make would 

be of limited value given that 

resolution-related actions would be 

driven by the circumstances and market 

conditions present at the time of 

financial stress. The agencies are 

finalizing this aspect of the guidance as 

proposed as the agencies believe that 

the suggested additional information 

would have important value in a 

resolution scenario. 

ii. Triggers 

The agencies received no comments 

about the expectations in the proposed 

guidance regarding triggers. That said, 

recognizing that the preferred resolution 

outcome for the Specified FBOs is a 

successful home country resolution, the 

final guidance does not include 

expectations regarding triggers or 

escalation protocols based on the U.S. 

IHC’s financial condition. The final 

guidance, however, retains the broader 

expectation that firms have in place 

mechanisms to ensure that timely 

communication and coordination occurs 

between and among the boards of the 

U.S. IHC, U.S. IHC subsidiaries, and the 


jbell on DSKJLSW7X2PROD with NOTICES
83564 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

29See supra Section III.d (Capital and Liquidity). 

foreign parent to facilitate the provision 

of financial support. 

iii. Potential Mechanisms for Parent 

Support 

Having a structure in place that 

facilitates the transmission of resources 

to an FBO’s U.S. material entity 

subsidiaries and mitigates against 

potential legal challenges is an 

important component for resolution 

plans that contemplate the provision of 

such support. Neither the proposed 

guidance nor the Rule endorses a 

specific strategy for the provision of 

such support. Rather, under the 

proposal, firms would have been 

expected to (i) develop a mechanism for 

planned foreign parent support of U.S. 

non-branch material entities to meet 

those entities’ liquidity needs and (ii) 

include in their resolution plan 

submissions analysis of potential 

challenges to planned foreign parent 

support and associated mitigants. 

Further, the proposal provided that if a 

plan anticipates the provision of capital 

and liquidity by a U.S. material entity 

(e.g., the U.S. IHC) to its U.S. affiliates 

prior to the U.S. IHC’s bankruptcy filing, 

the plan should also include a detailed 

legal analysis of the potential state law 

and bankruptcy law challenges and 

mitigants to the provision of resources. 

To date, some Specified FBOs have 

relied on CBMs for the timely provision 

of capital and liquidity from a U.S. 

material entity (e.g., the U.S. IHC) to its 

U.S. affiliates prior to the U.S. IHC 

commencing a bankruptcy case and to 

mitigate potential legal challenges to the 

provision of such support. In addition, 

the agencies solicited comment on the 

benefits and costs and the relative 

advantages and disadvantages of two 

approaches currently used by FBOs to 

assist the agencies in deciding whether 

to endorse a specific approach in 

finalizing the guidance. 

Commenters urged against imposing 

specific requirements or expectations 

regarding CBMs and supported 

maintaining flexibility for firms to 

determine the particular form and 

structure of CBMs based on a firm’s 

structure, resolution strategy, and global 

capital and liquidity planning needs. 

Commenters further recommended that 

the agencies evaluate CBMs based on 

their effectiveness in mitigating creditor 

challenges. One commenter suggested 

that the agencies’ assessment of the 

effectiveness of various CBMs should 

take into consideration the nature of the 

Proposed FBOs, specifically that: (i) All 

of the Proposed FBOs in the proposed 

guidance have global SPOE strategies 

that do not contemplate the insolvency 

of the U.S. IHC or any other U.S. entity; 

(ii) internal TLAC requirements have 

been complied with and incentivize the 

firms to recapitalize their U.S. 

operations to avoid the costs, 

operational burdens, and other 

consequences associated with 

bankruptcy proceedings; and (iii) the 

Board has the authority to trigger the 

conversion of internal TLAC in the form 

of long-term debt into equity to 

recapitalize an IHC without the need for 

a U.S. bankruptcy proceeding. This 

commenter also argued that the agencies 

should provide a threshold for 

determining whether a CBM sufficiently 

mitigates the risk of creditor challenges 

that is materially lower than for U.S. 

BHCs for which a bankruptcy 

proceeding is a primary resolution 

strategy. This commenter also stated 

that the agencies had already been 

provided with substantial legal analyses 

supporting the workability of existing 

CBMs and urged the agencies to engage 

with the Proposed FBOs prior to 

providing specific requirements 

regarding CBMs. 

One commenter cautioned that the 

proposed CBM guidance may impede 

capital and liquidity placed in the U.S. 

IHC from being returned to the parent 

for efficient deployment globally, and 

that a CBM developed only to support 

a U.S. resolution may trap financial 

resources in the IHC. Separately, 

another commenter requested that the 

agencies engage with the Proposed 

FBOs and consider alternative 

approaches to ensure the timely 

availability of capital and liquidity 

support. Suggestions included reducing 

or amending internal TLAC 

requirements, allowing use of internal 

TLAC to satisfy the demands of 

Comprehensive Capital Analysis and 

Review, and eliminating the 

requirement in the Rule that firms must 

assume the bankruptcy of a U.S. entity. 

Consistent with the comments 

received, and to maintain flexibility for 

firms, the agencies are finalizing the 

guidance without including additional 

expectations regarding the use and 

structure of CBMs. This lack of specific, 

additional expectations related to CBMs 

should not be interpreted as an 

expression of the agencies’ view on the 

feasibility of current support 

mechanisms. Additionally, no revisions 

have been made in response to a 

comment that urged the agencies to 

describe, ex ante, a particular threshold 

for what constitutes an effective CBM. 

Furthermore, the agencies have not 

made changes in response to the 

comment recommending amendments 

to various rules, as revisions to 

regulatory requirements are outside the 

scope of the present guidance. The 

agencies refer to the above discussion 

about capital and liquidity in response 

to concerns about the placement and 

availability of capital and liquidity.29

In addition, the final guidance 

removes the expectation for the 

resolution plan to include an analysis of 

the potential challenges to the planned 

foreign parent support to U.S. nonbranch material entities, and the 

planned provision of capital and 

liquidity by a U.S. material entity to its 

U.S. affiliates prior to the U.S. IHC’s 

bankruptcy filing. This approach gives 

due consideration to the arguments put 

forth by commenters that the Specified 

FBOs should have flexibility to 

determine the particular form and 

structure of the framework developed to 

support its particular resolution strategy 

and needs, that the preferred resolution 

outcome for the Specified FBOs is a 

successful home country resolution, and 

that internal TLAC resources are 

available for conversion to support IHC 

recapitalization outside of bankruptcy. 

f. Operational 

i. Payment, Clearing and Settlement 

Activities 

Scope of PCS Activities: Most 

commenters requested that the scope of 

the guidance be limited to U.S. material 

entities, core business lines, and critical 

operations domiciled in the U.S. and 

resolved under the U.S. Bankruptcy 

Code, and that guidance should not 

include indirect PCS relationships 

through non-U.S. affiliates. Commenters 

contended that the proposal would 

subject the Proposed FBOs to 

expectations that are essentially the 

same as, and in some ways more 

extensive than, the expectations for PCS 

activities applicable to U.S. G–SIBs. 

Commenters also claimed that the 

proposal would be potentially 

extraterritorial in its coverage of nonU.S. branches and affiliates and contrary 

to the Rule and Title I of the DoddFrank Act. These commenters also 

asserted that because non-U.S. affiliate 

relationships were covered under home 

country regulatory frameworks, 

inclusion of information about these 

relationships in U.S. resolution 

planning would be duplicative and the 

information should be obtained via 

home-host supervisor cooperation. One 

commenter suggested that indirect 

access to PCS services through non-U.S. 

affiliates does not raise significant U.S. 

resolution concerns. Another 

commenter claimed that a U.S. material 

entity would not have the ability to 

distinguish activity specific to its clients 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83565 

30 12 CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i). 

31 12 CFR 243.5(e)(12); 12 CFR 381.5(e)(12). 

or counterparties with the indirect 

financial market utility (FMU), as this 

activity is typically subject to netting by 

the non-U.S. affiliate, and that a U.S. 

material entity of a Proposed FBO 

would not have the authority to make 

decisions on contingency actions 

involving an FMU that is accessed via 

a non-U.S. affiliate. These commenters 

suggested that the guidance be tailored 

to fit the Proposed FBOs’ reduced U.S. 

footprint and their limited role in this 

space, relative to U.S. G–SIBs. 

As a preliminary matter, the agencies 

note that the Rule requires full 

resolution plan submissions by foreignbased covered companies to include 

information on ‘‘the interconnections 

and interdependencies among the U.S. 

subsidiaries, branches, and agencies, 

and between those entities and . . . 

[a]ny foreign-based affiliate.’’ 30 In 

addition, each full resolution plan is 

required to ‘‘identify each trading, 

payment, clearing, or settlement system 

of which the covered company, directly 

or indirectly, is a member and on which 

the covered company conducts a 

material number or value amount of 

trades or transactions.’’ 31 These 

provisions, together, provide the 

agencies the authority to set forth the 

expectation that a firm’s PCS framework 

address its indirect access to PCS 

services through non-U.S. affiliates. The 

proposed guidance was therefore 

consistent with the Rule and Title I of 

the Dodd-Frank Act. The agencies 

reiterate that continuity of access 

arrangements provided indirectly by 

non-U.S. affiliates to support a Specified 

FBO’s U.S. operations and key clients 

are an important part of a Specified 

FBO’s U.S. resolution planning. 

The agencies acknowledge, however, 

that commenters’ feedback that a nonU.S. affiliate’s ability to maintain access 

to key FMUs and key agent banks to 

support indirect PCS relationships 

through non-U.S. affiliates may be 

addressed in the firm’s group resolution 

plan or in other information provided to 

home country regulators. As such, 

expectations that Specified FBOs submit 

detailed information related to non-U.S. 

affiliates’ support of their U.S. 

operations may be duplicative. In 

recognition of this feedback and in an 

effort to more closely align expectations 

with the business and risk profiles of 

the Specified FBOs’ U.S. operations, the 

final guidance does not include 

expectations that firms provide 

information regarding indirect access to 

key FMUs and agent banks provided by 

non-U.S. branches and affiliates. As 

further suggested by commenters and 

consistent with prior statements by the 

agencies, the agencies expect to engage 

with the Specified FBOs and their home 

country authorities. 

Providers of PCS Services: Two 

commenters recommended clarifying 

the term ‘‘provider of PCS services’’ to 

include other key roles in which a firm 

may act, and to provide further 

examples where a firm may act as 

provider (or recipient) of PCS services. 

One commenter also recommended that 

the term ‘‘agent bank’’ should be 

clarified to specifically include ‘‘nostro 

banks.’’ One commenter also suggested 

that firms be encouraged to amend their 

bilateral contracts with agent banks, 

including contracts with nostro agents, 

to facilitate continuity of access to PCS 

services. The final guidance does not 

include additional clarification or 

examples as the agencies do not intend 

the guidance to be prescriptive. Rather, 

the final guidance is intended to 

provide a firm with flexibility to define 

and identify PCS services, as well as the 

instances where the firm is a provider 

of such PCS services to its clients. 

Regarding the amendment of bilateral 

contracts, the agencies believe that the 

expectations regarding establishment of 

service-level agreements (SLAs) in the 

Shared and Outsourced Services section 

of the final guidance address the 

commenter’s suggestions. 

One commenter also recommended 

that the proposal recognize that many 

FMUs and agent banks do not 

implement bilateral SLAs for core 

clearing and custody services. The 

agencies have clarified the final 

guidance by adding ‘as applicable’ to 

the relevant capability in the guidance 

text. 

Playbooks for Continued Access to 

PCS Services: One commenter stated 

that FMU playbooks should be 

streamlined to include only critical 

information necessary to facilitate an 

orderly resolution (e.g., management 

information, liquidity considerations, 

key governance, and responsible parties) 

and that firms should not be expected 

to include information regarding FMU 

membership rules or expected behavior. 

Another commenter stated that to the 

extent such critical information had 

already been provided to the agencies 

through prior exam processes, firms 

should be able to reference such items 

instead of including them in playbooks. 

Separately, another commenter 

recommended that the final guidance 

direct firms to maintain lists of key 

resolution contacts for their key FMUs 

and key agent banks and provide 

equivalent contact information to key 

FMUs and key agent banks. This 

commenter also suggested that the 

guidance put additional emphasis on 

the importance of continued firm 

engagement with key external 

stakeholders and that the agencies 

consider adding expectations for firm 

communication with key FMUs and key 

agent banks during stress and 

resolution. The agencies also were 

encouraged by this commenter to 

develop their own communication 

strategies for key stakeholders and vet 

them with relevant firms and FMUs. 

The commenter further suggested that 

firms should identify, ex ante, services 

they would likely cease to provide in a 

resolution and plan for actions they 

would take to mitigate any resulting 

adverse systemic impact. Finally, a 

commenter stated that the guidance 

should recognize that there is specific, 

industry-wide default guidance already 

in place for certain FMUs (e.g., central 

counterparties) that would apply to a 

Proposed FBO’s activities in a 

resolution. 

The agencies are finalizing these 

elements of the guidance as proposed. 

The expectations in the final guidance 

call for playbooks that address 

specifically how firms would maintain 

access to PCS services but that do not 

necessarily include a discussion of FMU 

rules around a member firm’s default. 

The final guidance aims to provide 

firms flexibility in determining how 

they would best maintain access to PCS 

services in a stress scenario and to 

clarify that playbooks are not expected 

to include a scenario in which the firm 

loses access to an agent bank or FMU. 

The proposed guidance contained 

expectations for firms to engage with 

key external stakeholders and reflect 

any feedback received during such 

ongoing outreach, and the agencies are 

retaining those expectations in the final 

guidance. To the extent that certain 

playbook information may be addressed 

in other sections of the firm’s 

submission, the firm may include a 

specific cross-reference to that content 

in the appropriate playbook. While the 

agencies are not expecting firms to 

model expected FMU behaviors, firms 

are expected to consider operational and 

financial resources that would be 

needed to respond to adverse actions 

and execute any contingency 

arrangement. In addition, given the joint 

nature of the resolution plan process, 

the final guidance, like the Rule, 

provides for incorporation of previously 

submitted resolution plan information 

by reference. 

The comment suggesting that the 

agencies develop their own 

communication strategies for key 

stakeholders is not applicable to the 


jbell on DSKJLSW7X2PROD with NOTICES
83566 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

32See 12 CFR 243.5(f); 12 CFR 381.5(f). 

33 12 CFR part 47 (Office of the Comptroller of the 

Currency); 12 CFR part 252, subpart I (Board); and 

12 CFR part 382 (FDIC). 

34See 12 CFR 243.5(a)(2), (g); 12 CFR 381.5(a)(2), 

(g). 

35See 12 CFR 252. 

content in a firm’s resolution plan; 

therefore, no changes have been made to 

address the comment. The agencies 

already proactively engage with firms 

and key stakeholders through various 

fora, including direct engagement, crisis 

management groups, and international 

working groups focused on crisis 

management under the Financial 

Stability Board. The agencies also 

encourage firms and their agent banks to 

continue engaging and communicating 

with each other, key FMUs, agent banks, 

and clients, and other stakeholders to 

identify possible ways to support 

continued access to PCS services. 

While expressing general support for 

the expectations in the proposed 

guidance related to PCS-related 

Liquidity Sources and Uses, a 

commenter suggested that the sentence 

related to ‘‘PCS Liquidity Sources’’ be 

revised from ‘‘various currencies’’ to 

‘‘all currencies relevant to banks’ 

participation’’ in FMUs, to be consistent 

with international expectations. The 

agencies are adopting this suggestion in 

the final guidance. The commenter also 

suggested that the final guidance clarify 

that firms should assess their key FMU 

and key agent bank liquidity needs in 

the aggregate so that firms account for 

the availability of funds across more 

than one key FMU or agent bank. 

Regarding intraday liquidity, this 

commenter suggested that the final 

guidance be amended to include 

additional specific expectations for 

playbooks beyond describing 

capabilities to control intraday liquidity 

inflows and outflows, and to identify 

and prioritize time-specific payments. 

The agencies are not adopting these 

suggestions in the final guidance to 

allow the Specified FBOs flexibility to 

tailor and streamline playbook content 

based on the actual profile of their PCS 

activities relevant to their U.S. 

operations. 

Key Client Contingency 

Arrangements: Two commenters 

questioned the benefit of expectations 

related to the identification and 

mapping of PCS services to key clients 

and the description of contingency 

actions that the firm may take 

concerning provision of intraday credit 

to key clients since most clients have 

other relationships. Another commenter 

suggested that the final guidance 

contain examples of particular actions 

and arrangements that the agencies 

expect the firms to consider around the 

provision of intraday credit to affiliate 

and third-party clients. The agencies are 

not modifying the final guidance in 

response to these comments. The final 

guidance contains expectations that 

firms maintain continuity of access to 

PCS services for key clients in the 

Unites States. The final guidance is not 

prescriptive, and each firm is expected 

to determine the relevant contingency 

actions and arrangements that are 

specific to maintaining continuity of 

access to its PCS activities. Firms have 

the discretion to tailor the discussion to 

client impacts specific to the PCS 

services provided by such firms. The 

agencies are not modifying provisions 

related to the identification and 

mapping of PCS services to key clients 

as this information helps the agencies 

understand the ecosystem of provision 

of PCS services. 

Adverse Actions: A commenter 

expressed support for the expectation 

for playbooks to assess the range of 

adverse actions that may be taken by 

key FMUs or key agent banks but 

indicated that the term ‘‘adverse 

actions’’ may be incorrectly interpreted 

and suggested using ‘‘risk-mitigating 

actions,’’ which would be more 

consistent with a home country 

authority’s guidance. The agencies are 

not making any changes to the final 

guidance because ‘‘adverse actions’’ 

includes not only ‘‘risk mitigating 

actions,’’ but also a broader set of 

actions that could be taken by key FMUs 

or key agent banks. 

Loss of Access: One commenter 

suggested that there was a contradiction 

in the proposed guidance and requested 

clarification about whether there was an 

expectation for a firm to contemplate a 

scenario where it loses access to a key 

FMU or key agent bank. The agencies 

are finalizing the guidance as proposed. 

The final guidance specifies that a firm 

is not expected to incorporate a scenario 

in which it loses FMU or agent bank 

access into its U.S. resolution strategy. 

However, in support of maintaining 

continuity of access to PCS services, 

playbooks should provide analysis of 

the financial and operational impacts to 

the firm’s material entities and key 

clients due to adverse actions that may 

be taken by an FMU or agent bank, and 

the contingency actions that may be 

taken by the filer. 

ii. Management Information Systems 

The agencies received no comments 

regarding the management information 

systems (MIS) section of the proposed 

guidance. The expectations contained in 

the proposed guidance articulate general 

expectations for firms to have the 

requisite MIS capabilities to produce 

timely, accurate financial and risk data 

on a U.S. legal entity basis. The agencies 

determined that the expectations and 

capabilities are addressed in the Rule 32

and thus the final guidance does not 

include a section on MIS. 

iii. Managing, Identifying, and Valuing 

Collateral 

The agencies received no comments 

regarding the managing, identifying, and 

valuing collateral section of the 

proposed guidance and are finalizing 

the section as proposed. 

iv. Shared and Outsourced Services 

The agencies received no comments 

regarding the shared and outsourced 

services section of the proposed 

guidance and are finalizing the section 

as proposed. 

v. Qualified Financial Contracts 

The agencies received no comments 

regarding the QFC section of the 

proposed guidance, which sets forth 

expectations for firms to articulate their 

progress in implementing requirements 

regarding contractual stays in qualified 

financial contracts. However, the 

agencies are not including this subsection in the final guidance due to the 

progress made by the Specified FBOs in 

complying with the QFC stay rules of 

the Board, the Office of the Comptroller 

of the Currency, and the FDIC.33

g. Branches 

The agencies received no comments 

regarding the branches section of the 

proposed guidance. However, the 

agencies are removing expectations from 

the final guidance that are viewed as 

duplicative to existing rules or repeat, 

without elaboration, components of the 

Rule. Specifically, mapping 

expectations for U.S. branches that are 

material entities are specified in the 

Rule.34 In addition, expectations for a 

liquidity buffer are addressed in the 

Board’s Regulation YY.35 Neither 

subsection of the proposed guidance 

was intended to expand upon or clarify 

existing rules and thus it is appropriate 

to remove them from the final guidance. 

The remaining parts of the Branches 

section regarding expectations for 

supporting assumptions on continuity 

of operations and analyzing the impact 

of cessation of operations remain 

unchanged from the proposed guidance. 

h. Group Resolution Plan 

The agencies received no comments 

regarding the group resolution section of 

the proposed guidance, which set forth 

expectations for firms to address how 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83567 

36See 12 CFR 243.5(a)(2)(ii); 12 CFR 

381.5(a)(2)(ii). 

37The agencies note that based on the Specified 

FBOs’ most recent resolution plans, each of the 

Specified FBOs identifies certain U.S. derivatives 

and trading activities (including U.S. prime 

brokerage services) as an identified critical 

operation or core business line. 

38 12 CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i). See 

also 12 CFR 243.5(a)(2)(ii); 12 CFR 381.5(a)(2)(i) 

(requiring each full resolution plan to include a 

‘‘detailed explanation of how resolution planning 

for the subsidiaries, branches and agencies, and 

identified critical operations and core business 

lines of the foreign-based covered company that are 

domiciled in the United States or conducted in 

whole or material part in the United States is 

integrated into the foreign-based covered company’s 

overall resolution or other contingency planning 

process.’’). 

resolution planning in the U.S. is 

integrated into the group resolution 

plan. However, in recognition that the 

preferred resolution outcome for many 

Specified FBOs is a successful home 

country resolution using an SPOE 

resolution strategy, the agencies expect 

to supplement their understanding of 

the impact on U.S. operations of 

executing a firm’s group resolution plan 

through international collaboration with 

home country regulators and therefore 

such a section is unnecessary. The 

agencies determined that as this item is 

addressed by the Rule,36 the final 

guidance does not include a section on 

group resolution. 

i. Legal Entity Rationalization and 

Separability 

The agencies received no comments 

regarding the legal entity rationalization 

and separability section of the proposed 

guidance. However, consistent with 

agencies’ efforts to more closely align 

guidance expectations with the current 

business and risk profiles of the 

Specified FBOs’ U.S. operations, the 

final guidance does not include the 

separability expectations, which would 

have suggested that firms identify 

discrete U.S. operations that would be 

sold or transferred in a resolution 

scenario. Given that the U.S. operations 

of the Specified FBOs are a 

subcomponent of a larger FBO, for 

which the preferred resolution approach 

is a home-country SPOE resolution, the 

agencies have found that the 

separability options within the United 

States are few and that their inclusion 

in resolution plans has yielded limited 

new insights. Moreover, the agencies 

expect that such information is 

obtainable through international 

collaboration with home country 

regulators. As such, the agencies have 

eliminated these expectations from the 

final guidance. 

j. Derivatives and Trading Activities 

The agencies received a number of 

comments on the Derivatives and 

Trading Activities section of the 

proposed guidance. Overall, 

commenters supported the proposed 

elimination of the active and passive 

wind-down scenario analyses and rating 

agency playbooks, and recommended 

certain additional modifications and 

clarifications to streamline the 

resolution plan submissions and 

provide further clarity. 

After reviewing the comments, the 

agencies have adopted final guidance 

that includes several adjustments to 

address matters raised by the 

commenters. Specifically, the final 

guidance does not include elements 

from the proposal related to derivatives 

and trading activities originated in the 

U.S. and booked directly to non-U.S. 

affiliates. Commenters argued that the 

derivatives guidance should not include 

U.S. derivatives and trading activities or 

prime brokerage customer account 

balances booked directly to non-U.S. 

affiliates because they are beyond the 

scope of the Rule and the information is 

better gathered through collaboration 

with home country regulators. 

Commenters suggested that the 

derivatives guidance focus solely on 

derivatives and trading activities and 

prime brokerage customer account 

balances that are booked to U.S. 

material entities and related to core 

business lines and critical operations.37

Further, commenters suggested that the 

guidance should not include the 

identification, assessment, or reporting 

on risk transfer arrangements with nonU.S. affiliates and also argued that the 

proposed guidance would result in 

firms having to create reporting 

processes for activities booked in nonU.S. affiliates. Commenters also 

suggested that the proposed guidance 

would subject the Proposed FBOs to 

expectations greater than, or similar to, 

those imposed on U.S. G–SIBs and that 

transactions booked outside the U.S. fall 

under the purview of home country 

authorities, are best addressed in the 

global resolution plan, and are outside 

the scope of the Rule and Title I of the 

Dodd-Frank Act. 

As a preliminary matter, similar to the 

discussion in the PCS section of this 

preamble, the agencies note that the 

Rule requires full resolution plan 

submissions by foreign-based covered 

companies to include information ‘‘with 

respect to the subsidiaries, branches and 

agencies, and identified critical 

operations and core business lines, as 

applicable, that are domiciled in the 

United States or conducted in whole or 

material part in the United States.’’ 38

This provision provides the agencies the 

authority to set forth the expectation 

that a resolution plan include 

information about the firm’s derivatives 

and trading activities, including 

derivatives and trading activities 

originated from U.S. entities that are 

booked directly into a non-U.S. affiliate, 

because those activities occur in 

material part in the United States. 

Accordingly, the proposed guidance 

was consistent with the Rule and Title 

I of the Dodd-Frank Act. 

However, after considering 

commenters’ views, and in an effort to 

more closely align expectations with the 

current business and risk profiles of the 

Specified FBOs, the final guidance does 

not include expectations concerning 

derivatives and trading activities that 

originate from U.S. entities but are 

booked into non-U.S. affiliates. Because 

the booking of U.S. derivatives and 

trading activities regularly occurs across 

jurisdictions and creates 

interconnections and interdependencies 

among and between a firm’s U.S. 

entities and its non-U.S. affiliates, the 

agencies expect to coordinate with 

home country authorities to collect 

information about derivatives booking 

activities that occur across jurisdictions 

in order to understand any related risks 

to the execution of the firm’s U.S. 

resolution strategy. This approach is 

consistent with the 2018 Title I feedback 

letters to some Specified FBOs, in 

which the agencies indicated their 

intent to engage with the FBO and home 

authorities regarding derivatives 

booking practices. 

The agencies also have made several 

adjustments and clarifications in the 

final guidance to address other matters 

raised by the commenters. Commenters 

argued that the proposal inappropriately 

applied the derivatives guidance to nonderivatives trading activities (e.g., 

securities financing transactions). The 

agencies acknowledge that the Specified 

FBOs have drastically decreased their 

exposures to securities financing 

transactions, while the U.S. G–SIBs 

have increased their exposures. 

Therefore, the final guidance only 

covers derivatives and linked nonderivatives. 

Commenters also suggested that a 

Proposed FBO should be allowed to 

define linked non-derivatives trading 

positions based on its overall business 

and resolution strategy trading 

positions. The agencies agree with this 

comment, and the final guidance allows 

for linked non-derivatives trading 

positions to be defined based on the 

Specified FBO’s overall business and 

resolution strategy. Finally, some 

commenters suggested that the scope for 


jbell on DSKJLSW7X2PROD with NOTICES
83568 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

the prime brokerage subsection of the 

proposal was either unclear or overly 

broad. As suggested, the final guidance 

clarifies that a U.S. prime brokerage 

client should be a client who signs a 

prime brokerage agreement with a U.S. 

material entity. Further, the agencies are 

not finalizing aspects of the proposed 

guidance regarding requests for 

information and reporting related to 

prime brokerage activities that are 

booked to non-U.S. entities, as stated 

above. 

Some commenters recommended the 

agencies adjust certain expectations that 

are not specified in the proposed 

guidance. The agencies have determined 

not to modify the guidance in these 

instances. For example, commenters 

stated that development of a plan for 

resolution of positions of non-U.S. 

affiliates is beyond the scope of the 

Rule. The agencies note, as described 

above, that the proposed guidance did 

not set out expectations that the 

Proposed FBOs develop a plan for the 

resolution of derivatives and trading 

activities booked to non-U.S. entities. 

The scope of the stabilization and derisking strategy subsection applies only 

to U.S. derivatives portfolios booked to 

U.S. entities. 

The agencies received comments 

related to tailoring derivatives 

expectations. For example, commenters 

suggested the segmentation analysis and 

analysis of de-risking strategy 

provisions of the proposal were neither 

warranted nor sufficiently clear for 

Proposed FBOs because their 

derivatives exposures are significantly 

smaller than those of U.S. G–SIBs. After 

considering multiple relevant factors, 

the agencies have not modified the 

guidance in response to these 

comments. The ability to identify, 

quickly and reliably, problematic 

derivatives positions and portfolios is 

foundational to minimizing uncertainty 

and estimating resource needs for an 

orderly resolution of a firm’s U.S. 

entities. Further, in the event of material 

financial distress or failure, the 

resolvability risks related to a firm’s 

U.S. derivatives and trading activities 

could be a key obstacle to the firm’s 

orderly resolution of any U.S. IHC 

subsidiary with a derivatives portfolio. 

As a result, the final guidance confirms 

that a firm’s plan should provide a 

detailed analysis of its strategy to 

stabilize and de-risk any derivatives 

portfolio of any U.S. IHC subsidiary that 

continues to operate after the U.S. IHC 

enters into a U.S. bankruptcy 

proceeding. The agencies also note that 

the portfolio segmentation subsection 

applies only to U.S. derivatives 

positions that are booked to U.S. 

entities. 

Finally, commenters suggested 

tailoring the scope of applicability of the 

derivatives section using a threshold, 

such as the Volcker Rule’s proprietary 

trading categories. The agencies do not 

believe that the compliance thresholds 

and the associated calculation 

methodology (total trading assets and 

liabilities) established under the Volcker 

Rule accurately capture the size and 

complexity of a firm’s derivatives 

activities for resolution purposes and 

thus are an inappropriate scoping 

mechanism for the guidance. Therefore, 

the final guidance does not incorporate 

compliance thresholds, such as those 

established by the Volcker Rule. 

k. Additional Comments 

i. Comments About the Development of 

the Proposal 

The agencies received several general 

comments about the development of the 

proposed guidance. The agencies have 

considered these commenters’ input but 

have made no modifications to the final 

guidance. 

One commenter claimed that the 

agencies’ proposed guidance did not 

reflect internationally agreed upon 

approaches to home and host authority 

responsibility with regard to resolution 

planning, with the proposal’s continued 

emphasis on a separate U.S. strategy, 

which the commenter argued is largely 

duplicative of home country 

requirements. Other commenters 

criticized the proposed guidance for not 

reflecting any reliance on supervisory 

colleges and crisis management groups, 

or on the capital markets and resolution 

rules and requirements of the Securities 

and Exchange Commission, Financial 

Industry Regulatory Authority, or the 

Commodity Futures Trading 

Commission. 

The agencies do not agree with these 

comments. Since the enactment of 

section 165(d) of the Dodd-Frank Act, 

the agencies have worked bilaterally 

and multilaterally with relevant 

domestic and foreign authorities and in 

various international fora to understand 

risks to the firms’ orderly resolution 

under the U.S. Bankruptcy Code, as well 

as to share resolution planning 

expertise. In addition, the agencies have 

established resolution-related 

information-sharing arrangements with 

both domestic and foreign authorities in 

an effort to enhance the prospects for a 

successful cross-border resolution of the 

Specified FBOs. Moreover, the agencies 

note that both section 165(d) of the 

Dodd-Frank Act and the Rule require all 

large bank holding companies, 

including FBOs, to file resolution plans. 

Another commenter encouraged the 

agencies to consider aligning their 

guidance with the resolution-related 

guidance issued by the European Single 

Resolution Board. The agencies 

recognize that international 

coordination in resolution-related 

matters is important to ensuring that 

home and host country regulators have 

sufficient understanding of the 

resolvability of internationally active 

financial companies. The purpose and 

general subject matter of the final 

guidance are generally consistent with 

those of the Single Resolution Board’s 

Expectations for Banks. Both the final 

guidance and the Single Resolution 

Board document describe the respective 

authorities’ expectations regarding a 

number of key vulnerabilities in 

resolution (e.g., governance 

mechanisms, operational, capital, 

liquidity, and legal entity 

rationalization). The agencies will 

continue to work with international 

counterparts to build a shared 

understanding around resolution-related 

matters through participation in firmspecific, cross-border crisis management 

groups, as both home authorities and 

host authorities. 

Other commenters suggested that the 

proposed guidance did not adequately 

recognize foreign parents as sources of 

strength to the U.S. operations of 

Proposed FBOs, but instead appeared to 

treat the non-U.S. parent and affiliates 

only as sources of risk for U.S. material 

entities. The agencies understand that 

the preferred resolution outcome for 

many Specified FBOs is a successful 

home country resolution using a SPOE 

resolution strategy where U.S. material 

entities are provided with sufficient 

capital and liquidity resources to allow 

them to stay out of resolution 

proceedings and maintain continuity of 

operations throughout the parent’s 

resolution. The Rule balances this 

recognition with the concern that 

support from a foreign parent in stress 

cannot be ensured. The final guidance, 

in turn, lays out expectations that reflect 

a number of key vulnerabilities 

associated with an orderly resolution 

under the U.S. Bankruptcy Code. 

Certain commenters suggested that 

the agencies streamline plan 

submissions to make the documents 

more actionable and reduce the time the 

agencies may need to review and 

challenge the submissions. These 

commenters also encouraged the 

agencies to leverage information 

provided by firms through existing bank 

supervision and exam processes to 

collect information relevant to the 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83569 

39The agencies note that, on November 6, 2020, 

the Board announced that it is updating the list of 

firms supervised by the LISCC Program. See https:// 

www.federalreserve.gov/newsevents/pressreleases/ 

bcreg20201106a.htm. 

agencies’ review of resolution planning. 

The agencies note that the scope and 

informational content of resolution plan 

submissions are dictated by the Rule. 

That said, the agencies have endeavored 

in this final guidance to tailor 

expectations for the Specified FBOs’ 

resolution plans to be commensurate to 

and address risks posed by key 

vulnerabilities of the Specified FBOs in 

resolution. The agencies also have made 

a number of modifications to the final 

guidance with the express purpose of 

streamlining plan expectations and, 

where appropriate, leveraging existing 

supervisory relationships with home 

and host country authorities to 

collaboratively obtain information about 

the resolution planning and 

resolvability of the firms. 

ii. Comments About General Concerns 

With the Proposal 

Some commenters asserted that the 

proposed guidance exceeded the scope 

of the Rule or Title I of the Dodd-Frank 

Act, introduced definitions and 

expectations that were inconsistent with 

the Rule, and created issues of 

extraterritoriality and duplication of 

information that may already be covered 

under home country regulations. Some 

commenters also objected to 

expectations pertaining to the 

identification, assessment, or reporting 

of indirect relationships through nonU.S. affiliates, or risk transfer 

arrangements with non-U.S. affiliates. 

These comments are addressed in the 

individual sections of this preamble to 

which they relate. 

Another commenter recommended 

modifying resolution guidance and 

requirements to emphasize firms 

maintaining resolution capabilities that 

remain available during business as 

usual. This comment generally aligns 

with the agencies’ approach to 

resolution planning expectations, and 

the final guidance emphasizes that the 

Specified FBOs should have effective 

capabilities and well-developed plans. 

That said, the agencies do not believe 

that any specific revisions are necessary 

to respond to this comment; rather, the 

agencies will continue to deliberate how 

to ensure that resolution planning can 

be facilitated by and integrated into the 

firm’s business-as-usual practices. 

iii. Comments About Resolution 

Planning Generally 

The agencies received several 

comments about the broader 

supervisory landscape related to 

resolution planning. Certain 

commenters recommended that the 

agencies, in addition to deepening home 

and host country regulatory 

relationships, engage bilaterally with 

the Proposed FBOs to clarify 

outstanding concerns about the 

resolvability of the firms’ U.S. 

operations, as well as any concerns 

about the firms’ reliance on home 

country resolution strategies. 

These comments do not directly relate 

to the guidance and, as a result, the 

agencies are not making any changes to 

the final guidance. Relatedly, one 

commenter asked the agencies to clearly 

identify residual concerns with respect 

to each Proposed FBO and then tie 

resolution planning guidance to those 

concerns. The agencies expect that 

overall engagement and ongoing dialog 

and feedback with each of the Specified 

FBOs will continue to provide clarity on 

any outstanding concerns with respect 

to resolution capabilities. The agencies 

also note that the final guidance takes 

into consideration the agencies’ 

experience in reviewing prior resolution 

plan submissions. No specific changes 

have been made to the final guidance in 

response to this comment. 

iv. Comments Outside the Scope of 

Guidance-Making 

One commenter requested that the 

agencies also incorporate that 

commenter’s thoughts into future 

changes to guidance for U.S. G–SIBs, 

while another commenter argued for the 

removal of the Proposed FBOs from the 

Board’s Large Institution Supervision 

Coordinating Committee (LISCC) 

portfolio. The final guidance does not 

apply to U.S. G–SIBs, who remain 

subject to heightened resolution plan 

supervisory expectations given their 

size and risk profile, and the 

composition of the LISCC portfolio of 

firms is similarly outside the scope of 

this final guidance. Accordingly, the 

agencies have not made any changes to 

the guidance to address these 

comments.39

IV. Paperwork Reduction Act 

Certain provisions of the guidance 

contain ‘‘collection of information’’ 

provisions within the meaning of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501–3521) (PRA). In accordance 

with the requirements of the PRA, the 

agencies may not conduct or sponsor, 

and a respondent is not required to 

respond to, an information collection 

unless it displays a currently valid 

Office of Management and Budget 

(OMB) control number. The agencies 

reviewed the final guidance and 

determined that it would revise the 

reporting provisions that have been 

previously approved by OMB under the 

Board’s OMB control number 7100– 

0346 (Reporting Requirements 

Associated with Regulation QQ; FR QQ) 

and the FDIC’s control number 3064– 

0210 (Reporting Requirements 

Associated with Resolution Planning). 

The Board has reviewed the final 

guidance under the authority delegated 

to the Board by OMB. The agencies’ 

information collections will be extended 

for three years, with revision. 

Current Actions 

The proposed guidance stated that the 

proposed changes to the 2018 FBO 

guidance would not revise the reporting 

provisions that have been previously 

cleared by the OMB under the Board’s 

control number 7100–0346 and the 

FDIC’s control number 3064–0210. The 

agencies did not receive any comments 

on the PRA determination in the 

proposed guidance. 

However, as indicated above, the final 

guidance includes certain modifications 

and clarifications to the proposed 

guidance. In particular, the scope, 

capital, liquidity, governance 

mechanisms, PCS, and derivatives and 

trading activities sections of the final 

guidance reflect changes from the 

proposal. Other sections or sub-sections, 

such as group resolution plan, 

management information systems, 

QFCs, separability, and mapping of 

branch activities, were determined not 

to be necessary as they are duplicative 

of existing regulatory requirements or 

not reflective of the Specified FBOs’ 

current business models and 

accordingly have been eliminated from 

the guidance. The intent of these 

changes is to clarify expectations, more 

closely align expectations with the 

current business and risk profiles of the 

Specified FBOs’ U.S. operations, and 

recognize that the preferred resolution 

strategy for the Specified FBOs is a 

successful home country resolution. The 

final guidance also eliminates 

expectations for information that, in the 

agencies’ experience, may be obtained 

through other existing and effective 

mechanisms. 

As a result of these changes, the final 

guidance reduces the existing estimated 

burden for a triennial full complex filer 

from 13,135 hours to 9,916 hours per 

year. This reduction is driven mainly by 

significant reductions in the burdens 

related to capital, liquidity, separability, 

and governance mechanisms. These 

burden savings are borne by the 

Proposed FBOs. 

One FBO is no longer classified as a 

triennial full complex filer and thus 


jbell on DSKJLSW7X2PROD with NOTICES
83570 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

saves the total burden associated with 

filing a triennial full complex resolution 

plan. However, another FBO is newly 

classified as a triennial full complex 

filer and must bear the burden. The 

agencies estimate the annual burden for 

this new triennial full complex filer as 

9,767 hours per year. This estimate 

differs from the burden for the Proposed 

FBOs for primarily two reasons: (1) The 

agencies estimate that the new triennial 

full complex filer will incur some startup costs in preparing its first full 

resolution plan that is subject to the 

final guidance; and (2) the agencies 

estimate that the burden for the new 

triennial full complex filer’s 2021 

targeted resolution plan will be less 

than the burdens for the three Proposed 

FBOs because the new triennial 

complex filer will not be expected to 

consider the final guidance for its 2021 

targeted resolution plan (unlike the 

three other covered companies). 

Historically, the Board and the FDIC 

have split the respondents for purposes 

of PRA clearances. As such, the agencies 

will split the change in burden as well. 

The FDIC has agreed to take the burden 

of the new triennial full complex filer 

and one Proposed FBO whereas the 

Board will take the burden for the 

remaining two Proposed FBOs. 

Specially, as a result of this split and 

these revisions, there will be a net 

decrease in the overall estimated burden 

of 6,438 hours for the Board and 6,587 

hours for the FDIC. Therefore, the total 

Board estimated burden for its entire 

information collection (7100–0346) is 

209,168 hours and the total FDIC 

estimated burden for its entire 

information collection (3064–0210) is 

203,332 hours. 

Proposed Information Collection 

Title of Information Collection: 

Reporting Requirements Associated 

with Resolution Planning. 

Agency Form Number: FR QQ. 

Frequency of Response: Biennially, 

Triennially. 

Respondents: Bank holding 

companies (including any foreign bank 

or company that is, or is treated as, a 

bank holding company under section 

8(a) of the International Banking Act of 

1978, and meets the relevant total 

consolidated assets threshold) with total 

consolidated assets of $250 billion or 

more, bank holding companies with 

$100 billion or more in total 

consolidated assets with certain 

characteristics, and nonbank financial 

firms designated by the Financial 

Stability Oversight Council for 

supervision by the Board. 

The following table presents only the 

change in the estimated burden hours, 

as amended by this final guidance, 

broken out by agency. The table does 

not include a discussion of the 

remaining estimated burden hours, 

which remain unchanged. 

TABLE 1—BURDEN HOUR ESTIMATES UNDER CURRENT REGULATIONS AND UNDER THE FINAL GUIDANCE

FR QQ Number of 

respondents 

Annual 

frequency 

Estimated average 

hours per response * 

Estimated 

annual burden 

hours 

Board Burdens 

2019 Rule Revisions: 

Triennial Full Complex Foreign ...................................... 2 1 13,135 ...................................... 26,270 

Board Total .............................................................. ........................ ........................ .................................................. 26,270 

Final Guidance: 

Triennial Full Complex Foreign ...................................... 2 1 9,916 ........................................ 19,832 

Board Total .............................................................. ........................ ........................ .................................................. 19,832 

FDIC Burdens 

2019 Rule Revisions: 

Triennial Full Complex Foreign ...................................... 2 1 13,135 ...................................... 26,270 

FDIC Total ............................................................... ........................ ........................ .................................................. 26,270 

Final Guidance: 

Triennial Full Complex Foreign ...................................... 1 1 9,916 ........................................ 9,916 

Triennial Full Complex Foreign (new) ............................ 1 1 ** 9,767 .................................... 9,767 

FDIC Total ............................................................... ........................ ........................ .................................................. 19,683 

* Hours are calculated as the hours to prepare and submit one full resolution plan and one targeted resolution plan, annualized over 6 years. 

** Includes one-time start-up burdens for new triennial full complex foreign filers and excludes guidance-based burdens for the new triennial full 

complex filer’s 2021 targeted resolution plan, as the filer is not expected to consider the guidance for that plan. 

V. Final Guidance 

Guidance for Resolution Plan 

Submissions of Certain Foreign-Based 

Covered Companies 

I. Introduction 

II. Capital 

III. Liquidity 

IV. Governance Mechanisms 

a. Playbooks 

V. Operational 

a. Payment, Clearing and Settlement 

Activities 

b. Managing, Identifying, and Valuing 

Collateral 

c. Shared and Outsourced Services 

VI. Branches 

VII. Legal Entity Rationalization 

VIII. Derivatives and Trading Activities 

IX. Format and Structure of Plans 

X. Public Section 

Appendix: Frequently Asked Questions 

I. Introduction 

Section 165(d) of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (12 U.S.C. 5365(d)) 

requires certain financial companies to 

report periodically to the Board of 

Governors of the Federal Reserve 

System (the Federal Reserve or Board) 

and the Federal Deposit Insurance 

Corporation (the FDIC) (together the 

Agencies) their plans for rapid and 

orderly resolution in the event of 

material financial distress or failure. On 

November 1, 2011, the Agencies 

promulgated a joint rule implementing 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83571 

1 76 FR 67323 (November 1, 2011), codified at 12 

CFR parts 243 and 381. 

2Resolution Plans Required, 84 FR 59194 

(November 1, 2019). The amendments became 

effective December 31, 2019. ‘‘Rule’’ means the joint 

rule as amended in 2019. Capitalized terms not 

defined herein have the meanings set forth in the 

Rule. 

3Prudential Standards for Large Bank Holding 

Companies, Savings and Loan Holding Companies, 

and Foreign Banking Organizations, 84 FR 59032 

(Nov. 1, 2019). 

4See 12 CFR part 252. 

5See 12 CFR 252.5(c). 

6This guidance consolidates the Guidance for 

2018 § 165(d) Annual Resolution Plan Submissions 

by Foreign-Based Covered Companies that 

Submitted Resolution Plans in July 2015; the July 

2017 Resolution Plan Frequently Asked Questions; 

feedback letters issued to Barclays PLC, Credit 

Suisse Group AG, Deutsche Bank AG, and UBS AG 

in December 2018 and in August 2014 and feedback 

letters issued to Mitsubishi UFJ Financial Group in 

July 2019, January 2018, and July 2015; the 

communications the Agencies made to certain 

foreign-based Covered Companies in February 2015; 

and the Guidance for 2013 § 165(d) Annual 

Resolution Plan Submissions by Foreign-Based 

Covered Companies that Submitted Initial 

Resolution Plans in 2012 (taken together, prior 

guidance). To the extent not incorporated in or 

appended to this guidance, prior guidance is 

superseded. 

7The terms ‘‘material entities,’’ ‘‘identified 

critical operations,’’ and ‘‘core business lines’’ have 

the same meaning as in the Rule. The term ‘‘U.S. 

material entity’’ means any subsidiary, branch, or 

agency that is a material entity and is domiciled in 

the United States. The term ‘‘U.S. non-branch 

material entity’’ means a material entity organized 

or incorporated in the U.S. including, in all cases, 

the U.S. IHC. The term ‘‘U.S. IHC subsidiaries’’ 

means all U.S. non-branch material entities other 

than the U.S. IHC. 

8Total Loss-Absorbing Capacity, Long-Term Debt, 

and Clean Holding Company Requirements for 

Systemically Important U.S. Bank Holding 

Companies and Intermediate Holding Companies of 

Systemically Important Foreign Banking 

Organizations, 82 FR 8266 (January 24, 2017). 

9The resolution period begins immediately after 

the U.S. IHC bankruptcy filing and extends through 

the completion of the U.S. resolution strategy. 

10 82 FR 8266 (January 24, 2017). 

the provisions of Section 165(d).1

Subsequently, in November 2019, the 

Agencies finalized amendments to the 

joint rule addressing amendments to the 

Dodd-Frank Act made by the Economic 

Growth, Regulatory Relief, and 

Consumer Protection Act and improving 

certain aspects of the joint rule based on 

the Agencies’ experience implementing 

the joint rule since its adoption.2

Financial companies meeting criteria set 

out in the Rule must file a resolution 

plan (Plan) according to the schedule 

specified in the Rule. 

This document is intended to provide 

guidance to certain foreign banking 

organizations (FBOs) that are required to 

submit Plans regarding development of 

their respective U.S. resolution 

strategies (Specified FBOs or firms). 

Specifically, the guidance applies to any 

FBO that is subject to Category II 

standards according to its combined 

U.S. operations in accordance with the 

Board’s tailoring rule 3 and that is 

required to form an intermediate 

holding company.4

When an FBO first becomes a 

Specified FBO,5 this document will 

apply to the firm’s next resolution plan 

submission that is due at least 12 

months after the date the firm becomes 

a Specified FBO. If a Specified FBO 

ceases to be subject to Category II 

standards or to the Board’s requirement 

to form an intermediate holding 

company, it will no longer be a 

Specified FBO, and this document will 

no longer apply to that firm. 

The document is intended to assist 

these firms in further developing their 

U.S. resolution strategies. The document 

does not have the force and effect of 

law. Rather, it describes the Agencies’ 

expectations and priorities regarding 

these firms’ Plans and the Agencies’ 

general views regarding specific areas 

where additional detail should be 

provided and where certain capabilities 

or optionality should be developed and 

maintained to demonstrate that each 

firm has considered fully, and is able to 

mitigate, obstacles to the successful 

implementation of their U.S. resolution 

strategy.6

The Agencies are providing guidance 

to the Specified FBOs to assist their 

further development of a resolution plan 

for their U.S. operations for their 2021 

and subsequent resolution plan 

submissions. This guidance for 

Specified FBOs builds upon the 

guidance issued in December 2018 for 

certain U.S.-based covered companies, 

taking into account the circumstances 

under which a U.S. resolution plan is 

most likely to be relevant for an FBO. 

The U.S. resolution plan for a Specified 

FBO would address a scenario where 

the U.S. operations experience material 

financial distress and the foreign parent 

is unable or unwilling to provide 

sufficient financial support for the 

continuation of U.S. operations, and at 

least the top tier U.S. Intermediate 

Holding Company (U.S. IHC) files for 

bankruptcy under Title 11, United 

States Code. Under such a scenario, the 

Plan should provide for the orderly 

resolution of the Specified FBO’s U.S. 

material entities 7 and operations. 

In general, this document is organized 

around a number of key vulnerabilities 

in resolution (e.g., capital; liquidity; 

governance mechanisms; operational; 

legal entity rationalization; and 

derivatives and trading activities) that 

apply across resolution plans. 

Additional vulnerabilities or obstacles 

may arise based on a firm’s particular 

structure, operations, or resolution 

strategy. Each firm is expected to 

satisfactorily address these 

vulnerabilities in its Plan—e.g., by 

developing sensitivity analysis for 

certain underlying assumptions, 

enhancing capabilities, providing 

detailed analysis, or increasing 

optionality development, as indicated 

below. 

Under the Rule, the Agencies will 

review the Plan to determine if it 

satisfactorily addresses key potential 

vulnerabilities, including those 

specified below. If the Agencies jointly 

decide that these matters are not 

satisfactorily addressed in the Plan, the 

Agencies may determine jointly that the 

Plan is not credible or would not 

facilitate an orderly resolution under the 

U.S. Bankruptcy Code. 

II. Capital 

The firm should have the capital 

capabilities necessary to execute its U.S. 

resolution strategy, including the model 

and estimation process described below. 

To the extent required by the firm’s 

U.S. resolution strategy, U.S. nonbranch material entities need to be 

recapitalized to a level that allows for an 

orderly resolution. The firm should 

have a methodology for periodically 

estimating the amount of capital that 

may be needed to support each U.S. IHC 

subsidiary after the U.S. IHC bankruptcy 

filing (Resolution Capital Execution 

Need or RCEN). The firm’s positioning 

of IHC total loss absorbing capacity 

(TLAC) 8 should be able to support the 

RCEN estimates. 

The firm’s RCEN methodology should 

use conservative forecasts for losses and 

risk-weighted assets and incorporate 

estimates of potential additional capital 

needs through the resolution period,9

consistent with the firm’s resolution 

strategy for its U.S. operations. The 

methodology is not required to produce 

aggregate losses that are greater than the 

amount of IHC TLAC that would be 

required for the firm under the Board’s 

final rule.10 The RCEN methodology 

should be calibrated such that 

recapitalized U.S. IHC subsidiaries have 

sufficient capital to maintain market 

confidence as required under the U.S 

resolution strategy. Capital levels 

should meet or exceed all applicable 

regulatory capital requirements for 

‘‘well-capitalized’’ status and meet 

estimated additional capital needs 

throughout resolution. U.S. IHC 

subsidiaries that are not subject to 

capital requirements may be considered 


jbell on DSKJLSW7X2PROD with NOTICES
83572 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

11External communications include those with 

U.S. and foreign authorities and other external 

stakeholders. 

12A firm is a user of PCS services if it accesses 

PCS services through an agent bank or it uses the 

services of an FMU through its membership in that 

FMU or through an agent bank. A firm is a provider 

of PCS services if it provides PCS services to clients 

as an agent bank or it provides clients with access 

to an FMU or agent bank through the firm’s 

membership in or relationship with that service 

provider. A firm is also a provider if it provides 

clients with PCS services through the firm’s own 

operations in the United States (e.g., payment 

services or custody services). 

13For purposes of this section V, a client is an 

individual or entity, including affiliates of the firm, 

to whom the firm provides PCS services and, if 

credit or liquidity is offered, any related credit or 

liquidity offered in connection with those services. 

14 In identifying entities as key, examples of 

quantitative criteria may include: For a client, 

transaction volume/value, market value of 

exposures, assets under custody, usage of PCS 

services, and if credit or liquidity is offered, any 

extension of related intraday credit or liquidity; for 

an FMU, the aggregate volumes and values of all 

transactions processed through such FMU; and for 

an agent bank, assets under custody, the value of 

sufficiently recapitalized when they 

have achieved capital levels typically 

required to obtain an investment-grade 

credit rating or, if the entity is not rated, 

an equivalent level of financial 

soundness. Finally, the methodology 

should be independently reviewed, 

consistent with the firm’s corporate 

governance processes and controls for 

the use of models and methodologies. 

III. Liquidity 

The firm should have the liquidity 

capabilities necessary to execute its U.S. 

resolution strategy. In particular, the 

firm should have a methodology for 

estimating the liquidity needed after the 

U.S. IHC’s bankruptcy filing to stabilize 

any surviving U.S. IHC subsidiaries and 

to allow those entities to operate postfiling, in accordance with the U.S. 

strategy (Resolution Liquidity Execution 

Need or RLEN). 

The firm’s RLEN methodology should: 

(A) Estimate the minimum operating 

liquidity (MOL) needed at each U.S. IHC 

subsidiary to ensure those entities could 

continue to operate, to the extent relied 

upon in the U.S. resolution strategy, 

after implementation of the U.S. 

resolution strategy and/or to support a 

wind-down strategy; 

(B) Provide daily cash flow forecasts 

by U.S. IHC subsidiary to support 

estimation of peak funding needs to 

stabilize each entity under resolution; 

(C) Provide a comprehensive breakout 

of all inter-affiliate transactions and 

arrangements that could impact the 

MOL or peak funding needs estimates 

for the U.S. IHC subsidiaries; and 

(D) Estimate the minimum amount of 

liquidity required at each U.S. IHC 

subsidiary to meet the MOL and peak 

needs noted above, which would inform 

the provision of financial resources from 

the foreign parent to the U.S. IHC, or if 

the foreign parent is unable or unwilling 

to provide such financial support, any 

preparatory resolution-related actions. 

The MOL estimates should capture 

U.S. IHC subsidiaries’ intraday liquidity 

requirements, operating expenses, 

working capital needs, and inter-affiliate 

funding frictions to ensure that U.S. IHC 

subsidiaries could operate without 

disruption during the resolution. 

The peak funding needs estimates 

should be projected for each U.S. IHC 

subsidiary and cover the length of time 

the firm expects it would take to 

stabilize that U.S. IHC subsidiary. Interaffiliate funding frictions should be 

taken into account in the estimation 

process. 

The firm’s forecasts of MOL and peak 

funding needs should ensure that U.S. 

IHC subsidiaries could operate through 

resolution consistent with regulatory 

requirements, market expectations, and 

the firm’s post-failure strategy. These 

forecasts should inform the RLEN 

estimate, i.e., the minimum amount of 

high-quality liquid assets (HQLA) 

required to facilitate the execution of 

the firm’s strategy for the U.S. IHC 

subsidiaries. 

For non-surviving U.S. IHC 

subsidiaries, the firm should provide 

analysis and an explanation of how the 

material entity’s resolution could be 

accomplished within a reasonable 

period of time and in a manner that 

substantially mitigates the risk of 

serious adverse effects on U.S. financial 

stability. For example, if a U.S. IHC 

subsidiary that is a broker-dealer is 

assumed to fail and enter resolution 

under the Securities Investor Protection 

Act, the firm should provide an analysis 

of the potential impacts on funding and 

asset markets and on prime brokerage 

clients, bearing in mind the objective of 

an orderly resolution. 

IV. Governance Mechanisms 

A firm should identify the governance 

mechanisms that would ensure that 

communication and coordination occurs 

between the boards of the U.S. IHC or 

a U.S. IHC subsidiary and the foreign 

parent to facilitate the provision of 

financial support, or if not forthcoming, 

any preparatory resolution-related 

actions to facilitate an orderly 

resolution. 

Playbooks: Governance playbooks 

should detail the board and senior 

management actions of U.S. non-branch 

material entities that would be needed 

under the firm’s U.S. resolution strategy. 

The governance playbooks should also 

include a discussion of (A) the firm’s 

proposed U.S. communications strategy, 

both internal and external; 11 (B) the 

fiduciary responsibilities of the 

applicable board(s) of directors or other 

similar governing bodies and how 

planned actions would be consistent 

with such responsibilities applicable at 

the time actions are expected to be 

taken; (C) potential conflicts of interest, 

including interlocking boards of 

directors; (D) any employee retention 

policy; and (E) any other limitations on 

the authority of the U.S. IHC and the 

U.S. IHC subsidiary boards and senior 

management to implement the U.S. 

resolution strategy. All responsible 

parties and timeframes for action should 

be identified. Governance playbooks 

should be updated periodically for each 

entity whose governing body would 

need to act under the firm’s U.S. 

resolution strategy. 

In order to meet liquidity needs at the 

U.S. non-branch material entities, the 

firm may either fully pre-position 

liquidity in the U.S. non-branch 

material entities or develop a 

mechanism for planned foreign parent 

support, of any amount not prepositioned, for the successful execution 

of the U.S. strategy. Mechanisms to 

support readily available liquidity may 

include a term liquidity facility between 

the U.S. IHC and the foreign parent that 

can be drawn as needed and as 

informed by the firm’s RLEN estimates 

and liquidity positioning. The plan 

should include analysis of how the U.S. 

IHC/foreign parent facility is funded or 

buffered for by the foreign parent. The 

sufficiency of the liquidity should be 

informed by the firm’s RLEN estimate 

for the U.S. non-branch material 

entities. 

V. Operational 

Payment, Clearing, and Settlement 

Activities 

Framework. Maintaining continuity of 

payment, clearing, and settlement (PCS) 

services is critical for the orderly 

resolution of firms that are either users 

or providers,12 or both, of PCS services. 

A firm should demonstrate capabilities 

for continued access to PCS services 

essential to an orderly resolution under 

its U.S. resolution strategy through a 

framework to support such access by: 

• Identifying clients,13 financial 

market utilities (FMUs), and agent banks 

as key from the firm’s perspective for 

the firm’s U.S. material entities, 

identified critical operations, and core 

business lines, using both quantitative 

(volume and value) 14 and qualitative 

criteria; 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83573 

cash and securities settled, and extensions of 

intraday credit. 

15Examples of potential adverse actions may 

include increased collateral and margin 

requirements and enhanced reporting and 

monitoring. 

16Where a firm is a provider of PCS services 

through the firm’s own operations in the United 

States, the firm is expected to produce a playbook 

for the U.S. material entities that provide those 

services, addressing each of the items described 

under ‘‘Content Related to Providers of PCS 

Services,’’ which include contingency arrangements 

to permit the firm’s key clients of the firm’s U.S. 

operations to maintain continued access to PCS 

services. 

• Mapping U.S. material entities, 

identified critical operations, core 

business lines, and key clients of the 

firm’s U.S. operations to both key FMUs 

and key agent banks; and 

• Developing a playbook for each key 

FMU and key agent bank essential to an 

orderly resolution under its U.S. 

resolution strategy that reflects the 

firm’s role(s) as a user and/or provider 

of PCS services. 

The framework should address direct 

relationships (e.g., a firm’s direct 

membership in an FMU, a firm’s 

provision of clients with PCS services 

through its own operations in the 

United States, or a firm’s contractual 

relationship with an agent bank) and 

indirect relationships (e.g., a firm’s 

provision of clients with access to the 

relevant FMU or agent bank through the 

firm’s membership in or relationship 

with that FMU or agent bank, or a firm’s 

U.S. affiliate and branch provision of 

U.S. material entities and key clients of 

the firm’s U.S. operations with access to 

an FMU or agent bank). The framework 

also should address the potential impact 

of any disruption to, curtailment of, or 

termination of such direct and indirect 

relationships on the firm’s U.S. material 

entities, identified critical operations, 

and core business lines, as well as any 

corresponding impact on key clients of 

the firm’s U.S. operations. 

Playbooks for Continued Access to 

PCS Services. The firm is expected to 

provide a playbook for each key FMU 

and key agent bank that addresses 

considerations that would assist the 

firm and key clients of the firm’s U.S. 

operations in maintaining continued 

access to PCS services in the period 

leading up to and including the firm’s 

resolution under its U.S. resolution 

strategy. Each playbook should provide 

analysis of the financial and operational 

impact of adverse actions that may be 

taken by a key FMU or a key agent bank 

and contingency actions that may be 

taken by the firm. Each playbook also 

should discuss any possible alternative 

arrangements that would allow 

continued access to PCS services for the 

firm’s U.S. material entities, identified 

critical operations and core business 

lines, and key clients of the firm’s U.S. 

operations, while the firm is in 

resolution under its U.S. resolution 

strategy. The firm is not expected to 

incorporate a scenario in which it loses 

key FMU or key agent bank access into 

its U.S. resolution strategy or its RLEN 

and RCEN estimates. The firm should 

continue to engage with key FMUs, key 

agent banks, and key clients of the 

firm’s U.S. operations, and playbooks 

should reflect any feedback received 

during such ongoing outreach. 

Content Related to Users of PCS 

Services. Individual key FMU and key 

agent bank playbooks should include: 

• Descriptions of the firm’s 

relationship as a user, including through 

indirect access, with the key FMU or 

key agent bank and the identification 

and mapping of PCS services to the 

firm’s U.S. material entities, identified 

critical operations, and core business 

lines that use those PCS services; 

• Discussion of the potential range of 

adverse actions that may be taken by 

that key FMU or key agent bank when 

the firm is in resolution under its U.S. 

resolution strategy,15 the operational 

and financial impact of such actions on 

the firm’s U.S. material entities, 

identified critical operations, and core 

business lines, and contingency 

arrangements that may be initiated by 

the firm in response to potential adverse 

actions by the key FMU or key agent 

bank; and 

• Discussion of PCS-related liquidity 

sources and uses in business-as-usual 

(BAU), in stress, and in the resolution 

period, presented by currency type 

(with U.S. dollar equivalent) and by 

U.S. material entity. 

Æ PCS Liquidity Sources: These may 

include the amounts of intraday 

extensions of credit, liquidity buffer, 

inflows from FMU participants, and 

prefunded amounts of key clients of the 

firm’s U.S. operations in BAU, in stress, 

and in the resolution period. The 

playbook also should describe intraday 

credit arrangements (e.g., facilities of the 

key FMU, key agent bank, or a central 

bank) and any similar custodial 

arrangements that allow ready access to 

a firm’s funds for PCS-related key FMU 

and key agent bank obligations 

(including margin requirements) in all 

currencies relevant to the firm’s 

participation, including placements of 

firm liquidity at central banks, key 

FMUs, and key agent banks. 

Æ PCS Liquidity Uses: These may 

include margin and prefunding by the 

firm and key clients of the firm’s U.S. 

operations, and intraday extensions of 

credit, including incremental amounts 

required during resolution. 

Æ Intraday Liquidity Inflows and 

Outflows: The playbook should describe 

the firm’s ability to control intraday 

liquidity inflows and outflows and to 

identify and prioritize time-specific 

payments. The playbook also should 

describe any account features that might 

restrict the firm’s ready access to its 

liquidity sources. 

Content Related to Providers of PCS 

Services.16 Individual key FMU and key 

agent bank playbooks should include: 

• Identification and mapping of PCS 

services to the firm’s U.S. material 

entities, identified critical operations, 

and core business lines that provide 

those PCS services, and a description of 

the scale and the way in which each 

provides PCS services; 

• Identification and mapping of PCS 

services to key clients of the firm’s U.S. 

operations to whom the firm’s U.S. 

material entities, identified critical 

operations, and core business lines 

provide such PCS services and any 

related credit or liquidity offered in 

connection with such services; 

• Discussion of the potential range of 

firm contingency arrangements available 

to minimize disruption to the provision 

of PCS services to key clients of the 

firm’s U.S. operations, including the 

viability of transferring activity and any 

related assets of key clients of the firm’s 

U.S. operations, as well as any 

alternative arrangements that would 

allow the key clients of the firm’s U.S. 

operations continued access to PCS 

services if the firm could no longer 

provide such access (e.g., due to the 

firm’s loss of key FMU or key agent 

bank access), and the financial and 

operational impacts of such 

arrangements from the firm’s 

perspective; 

• Descriptions of the range of 

contingency actions that the firm may 

take concerning its provision of intraday 

credit to key clients of the firm’s U.S. 

operations, including analysis 

quantifying the potential liquidity the 

firm could generate by taking such 

actions in stress and in the resolution 

period, such as (i) requiring key clients 

of the firm’s U.S. operations to designate 

or appropriately pre-position liquidity, 

including through prefunding of 

settlement activity, for PCS-related key 

FMU and key agent bank obligations at 

specific material entities of the firm 

(e.g., direct members of key FMUs) or 

any similar custodial arrangements that 

allow ready access to funds for such 

obligations in all relevant currencies of 

key clients of the firm’s U.S. operations; 

(ii) delaying or restricting PCS activity 


jbell on DSKJLSW7X2PROD with NOTICES
83574 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

17 12 CFR 243.5(e)(12); 12 CFR 381.5(e)(12). 

18 Id. 

19 12 CFR 252.156(g). 

20 12 CFR 243.5(f)(l)(i); 12 CFR 381.5(f)(1)(i). 

21 12 CFR 252.156(e). 

22 Id. 

23The policy may reference subsidiary or related 

policies already in place, as implementation may 

differ based on business line or other factors. 

24 ‘‘Shared services that support identified critical 

operations’’ or ‘‘critical shared services’’ are those 

that support identified critical operations 

conducted in whole or in material part in the 

United States. 

25This should be interpreted to include data 

access and intellectual property rights. 

of key clients of the firm’s U.S. 

operations; and (iii) restricting, 

imposing conditions upon (e.g., 

requiring collateral), or eliminating the 

provision of intraday credit or liquidity 

to key clients of the firm’s U.S. 

operations; and 

• Descriptions of how the firm will 

communicate to key clients of the firm’s 

U.S. operations the potential impacts of 

implementation of any identified 

contingency arrangements or 

alternatives, including a description of 

the firm’s methodology for determining 

whether any additional communication 

should be provided to some or all key 

clients of the firm’s U.S. operations (e.g., 

due to BAU usage of that access and/or 

related intraday credit or liquidity of the 

key client of the firm’s U.S. operations), 

and the expected timing and form of 

such communication. 

Capabilities. Firms are expected to 

have and describe capabilities to 

understand, for each U.S. material 

entity, its obligations and exposures 

associated with PCS activities, 

including contractual obligations and 

commitments. For example, firms 

should be able to: 

• Track the following items by U.S. 

material entity and, with respect to 

customers, counterparties, and agents 

and service providers, by location/ 

jurisdiction: 

Æ PCS activities, with each activity 

mapped to the relevant material entities 

and core business lines; 17

Æ Customers and counterparties for 

PCS activities, including values and 

volumes of various transaction types, as 

well as used and unused capacity for all 

lines of credit; 18

Æ Exposures to and volumes 

transacted with FMUs, nostro agents, 

and custodians; and 19

Æ Services provided and service level 

agreements, as applicable, for other 

current agents and service providers 

(internal and external).20

• Assess the potential effects of 

adverse actions by FMUs, nostro agents, 

custodians, and other agents and service 

providers, including suspension or 

termination of membership or services, 

on the firm’s U.S. operations and 

customers and counterparties of those 

U.S. operations; 21

• Develop contingency arrangements 

in the event of such adverse actions; 22

and 

• Quantify the liquidity needs and 

operational capacity required to meet all 

PCS obligations, including any change 

in demand for and sources of liquidity 

needed to meet such obligations. 

Managing, Identifying, and Valuing 

Collateral: The firm is expected to have 

and describe its capabilities to manage, 

identify, and value the collateral that 

the U.S. non-branch material entities 

receive from and post to external parties 

and affiliates. Specifically, the firm 

should: 

• Be able to query and provide 

aggregate statistics for all qualified 

financial contracts concerning crossdefault clauses, downgrade triggers, and 

other key collateral-related contract 

terms—not just those terms that may be 

impacted in an adverse economic 

environment—across contract types, 

business lines, legal entities, and 

jurisdictions; 

• Be able to track both firm collateral 

sources (i.e., counterparties that have 

pledged collateral) and uses (i.e., 

counterparties to whom collateral has 

been pledged) at the CUSIP level on at 

least a t+1 basis; 

• Have robust risk measurements for 

cross-entity and cross-contract netting, 

including consideration of where 

collateral is held and pledged; 

• Be able to identify CUSIP and asset 

class level information on collateral 

pledged to specific central 

counterparties by legal entity on at least 

a t+1 basis; 

• Be able to track and report on interbranch collateral pledged and received 

on at least a t+1 basis and have clear 

policies explaining the rationale for 

such inter-branch pledges, including 

any regulatory considerations; and 

• Have a comprehensive collateral 

management policy that outlines how 

the firm as a whole approaches 

collateral and serves as a single source 

for governance.23

In addition, as of the conclusion of 

any business day, the firm should be 

able to: 

• Identify the legal entity and 

geographic jurisdiction where 

counterparty collateral is held; 

• Document all netting and rehypothecation arrangements with 

affiliates and external parties, by legal 

entity; and 

• Track and manage collateral 

requirements associated with 

counterparty credit risk exposures 

between affiliates, including foreign 

branches. 

At least on a quarterly basis, the firm 

should be able to: 

• Review the material terms and 

provisions of International Swaps and 

Derivatives Association Master 

Agreements and the Credit Support 

Annexes, such as termination events, for 

triggers that may be breached as a result 

of changes in market conditions; 

• Identify legal and operational 

differences and potential challenges in 

managing collateral within specific 

jurisdictions, agreement types, 

counterparty types, collateral forms, or 

other distinguishing characteristics; and 

• Forecast changes in collateral 

requirements and cash and non-cash 

collateral flows under a variety of stress 

scenarios. 

Shared and Outsourced Services: The 

firm should maintain a fully actionable 

implementation plan to ensure the 

continuity of shared services that 

support identified critical operations 24

and robust arrangements to support the 

continuity of shared and outsourced 

services, including, without limitation, 

appropriate plans to retain key 

personnel relevant to the execution of 

the firm’s strategy. If a material entity 

provides shared services that support 

identified critical operations,25 and the 

continuity of these shared services relies 

on the assumed cooperation, 

forbearance, or other non-intervention 

of regulator(s) in any jurisdiction, the 

Plan should discuss the extent to which 

the resolution or insolvency of any other 

group entities operating in that same 

jurisdiction may adversely affect the 

assumed cooperation, forbearance, or 

other regulatory non-intervention. If a 

material entity providing shared 

services that support identified critical 

operations is located outside of the 

United States, the Plan should discuss 

how the firm will ensure the operational 

continuity of such shared services 

through resolution. 

The firm should (A) maintain an 

identification of all shared services that 

support identified critical operations; 

(B) maintain a mapping of how/where 

these services support U.S. core 

business lines and identified critical 

operations; (C) incorporate such 

mapping into legal entity rationalization 

criteria and implementation efforts; and 

(D) mitigate identified continuity risks 

through establishment of service-level 

agreements (SLAs) for all critical shared 

services. 

SLAs should fully describe the 

services provided, reflect pricing 

considerations on an arm’s-length basis 

where appropriate, and incorporate 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83575 

26The firm should consider whether these SLAs 

should be governed by the laws of a U.S. state and 

expressly subject to the jurisdiction of a court in the 

U.S. 

27 12 CFR 243.5(g); 12 CFR 381.5(g). 

28Firms should take into consideration historical 

practice, by applicable regulators, regarding asset 

maintenance requirements imposed during stress. 

29 ‘‘U.S. derivatives and trading activities’’, means 

all derivatives and linked non-derivatives trading 

Continued 

appropriate terms and conditions to (A) 

prevent automatic termination upon 

certain resolution-related events and (B) 

achieve continued provision of such 

services during resolution.26 The firm 

should also store SLAs in a central 

repository or repositories located in or 

immediately accessible from the U.S. at 

all times, including in resolution (and 

subject to enforceable access 

arrangements) in a searchable format. In 

addition, the firm should ensure the 

financial resilience of internal shared 

service providers by maintaining 

working capital for six months (or 

through the period of stabilization as 

required in the firm’s U.S. resolution 

strategy) in such entities sufficient to 

cover contract costs, consistent with the 

U.S. resolution strategy. The firm 

should demonstrate that such working 

capital is held in a manner that ensures 

its availability for its intended purpose. 

The firm should identify all service 

providers and critical outsourced 

services that support identified critical 

operations and identify any that could 

not be promptly substituted. The firm 

should (A) evaluate the agreements 

governing these services to determine 

whether there are any that could be 

terminated upon commencement of any 

resolution despite continued 

performance; and (B) update contracts 

to incorporate appropriate terms and 

conditions to prevent automatic 

termination upon commencement of 

any resolution proceeding and facilitate 

continued provision of such services. 

Relying on entities projected to survive 

during resolution to avoid contract 

termination is insufficient to ensure 

continuity. In the Plan, the firm should 

document the amendment of any such 

agreements governing these services. 

The Plan must also discuss 

arrangements to ensure the operational 

continuity of shared services that 

support identified critical operations in 

resolution in the event of the disruption 

of those shared services. 

A firm is expected to have robust 

arrangements in place for the continued 

provision of shared or outsourced 

services needed to maintain identified 

critical operations. For example, firms 

should: 

• Evaluate internal and external 

dependencies and develop documented 

strategies and contingency arrangements 

for the continuity or replacement of the 

shared and outsourced services that are 

necessary to maintain identified critical 

operations.27 Examples may include 

personnel, facilities, systems, data 

warehouses, and intellectual property; 

and 

• Maintain current cost estimates for 

implementing such strategies and 

contingency arrangements. 

VI. Branches 

Continuity of Operations: If the Plan 

assumes that federal or state regulators, 

as applicable, do not take possession of 

any U.S. branch that is a material entity, 

the Plan must support that assumption. 

For any U.S. branch that is significant 

to the activities of an identified critical 

operation, the Plan should describe and 

demonstrate how the branch would 

continue to facilitate FMU access for 

identified critical operations and meet 

funding needs. Such a U.S. branch 

would also be required to describe how 

it would meet supervisory requirements 

imposed by state regulators or the 

appropriate Federal banking agency, as 

appropriate, including maintaining a net 

due to position and complying with 

heightened asset maintenance 

requirements.28 In addition, the plan 

should describe how such a U.S. 

branch’s third-party creditors would be 

protected such that the state regulator or 

appropriate Federal banking agency 

would allow the branch to continue 

operations. 

Impact of the Cessation of Operations: 

The firm must provide an analysis of the 

impact of the cessation of operations of 

any U.S. branch that is significant to the 

activities of an identified critical 

operation on the firm’s FMU access and 

identified critical operations, even if 

such scenario is not contemplated as 

part of the U.S. resolution strategy. The 

analysis should include a description of 

how identified critical operations could 

be transferred to a U.S. IHC subsidiary 

or sold in resolution, the obstacles 

presented by the cessation of shared 

services that support identified critical 

operations provided by any U.S. branch 

that is a material entity, and mitigants 

that could address such obstacles in a 

timely manner. 

VII. Legal Entity Rationalization 

Legal Entity Rationalization Criteria 

(LER Criteria): A firm should develop 

and implement legal entity 

rationalization criteria that support the 

firm’s U.S. resolution strategy and 

minimize risk to U.S. financial stability 

in the event of resolution. LER Criteria 

should consider the best alignment of 

legal entities and business lines to 

improve the resolvability of U.S. 

operations under different market 

conditions. LER Criteria should govern 

the corporate structure and 

arrangements between the U.S. 

subsidiaries and U.S. branches in a way 

that facilitates resolvability of the firm’s 

U.S. operations as the firm’s U.S. 

activities, technology, business models, 

or geographic footprint change over 

time. 

Specifically, application of the criteria 

should: 

(A) Ensure that the allocation of 

activities across the firm’s U.S. branches 

and U.S. non-branch material entities 

support the firm’s U.S. resolution 

strategy and minimize risk to U.S. 

financial stability in the event of 

resolution; 

(B) Facilitate the recapitalization and 

liquidity support of U.S. IHC 

subsidiaries, as required by the firm’s 

U.S. resolution strategy. Such criteria 

should include clean lines of ownership 

and clean funding pathways between 

the foreign parent, the U.S. IHC, and 

U.S. IHC subsidiaries; 

(C) Facilitate the sale, transfer, or 

wind-down of certain discrete 

operations within a timeframe that 

would meaningfully increase the 

likelihood of an orderly resolution in 

the United States, including provisions 

for the continuity of associated services 

and mitigation of financial, operational, 

and legal challenges to separation and 

disposition; 

(D) Adequately protect U.S. 

subsidiary insured depository 

institutions from risks arising from the 

activities of any nonbank U.S. 

subsidiaries (other than those that are 

subsidiaries of an insured depository 

institution); and 

(E) Minimize complexity that could 

impede an orderly resolution in the 

United States and minimize redundant 

and dormant entities. 

These criteria should be built into the 

firm’s ongoing process for creating, 

maintaining, and optimizing the firm’s 

U.S. structure and operations on a 

continuous basis. 

VIII. Derivatives and Trading Activities 

A Specified FBO’s plan should 

address the following areas. 

Booking Practices 

A firm should have booking practices 

commensurate with the size, scope, and 

complexity of its U.S. derivatives and 

trading activities.29 The following 


jbell on DSKJLSW7X2PROD with NOTICES
83576 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

activities conducted on behalf of the firm, its 

clients, or its counterparties that are booked into the 

firm’s U.S. IHC subsidiaries and material entity 

branches (U.S. entities). The firm may define linked 

non-derivatives trading activities based on its 

overall business and resolution strategy. 

30The description of controls should include any 

components of any market, credit, or liquidity risk 

management framework that is material to the 

management of the firm’s U.S. derivatives and 

trading activities. 

31The booking models should represent the vast 

majority (e.g., 95 percent) of a firm’s U.S. 

derivatives and trading activities, measured by, for 

example, trade notional and gross market value (for 

derivatives) and client positions and balances (for 

prime brokerage client accounts). 

32Effective preventative (up-front) and detective 

(post-booking) controls embedded in a firm’s 

booking processes can help avoid and/or timely 

remediate trades that do not align with a 

documented booking model or related risk limit. 

Firms typically use a combination of manual and 

automated control functions. Although automation 

may not be best suited for all control functions, as 

compared to manual methods, it can improve 

consistency and traceability with respect to booking 

practices. However, non-automated methods also 

can be effective when supported by other internal 

controls (e.g., robust detective monitoring, 

escalation protocols). 

33The firm should leverage any existing methods 

and criteria it uses for other entity assessments (e.g., 

legal entity rationalization or the prepositioning of 

internal loss-absorbing resources). The firm’s 

method for determining the significance of 

derivatives or trading entities may diverge from the 

parameters for material entity designation under the 

Rule (i.e., entities significant to the activities of an 

identified critical operation or core business line); 

however, any differences should be adequately 

supported and explained. 

34For example, risk transfer arrangements might 

include transfer pricing, profit sharing, loss 

limiting, or intragroup hedging arrangements. 

35 ‘‘U.S. prime brokerage account’’ or ‘‘U.S. prime 

brokerage account balances’’ should include the 

account positions and balances of a client of the 

firm’s U.S. prime brokerage business who signs a 

prime brokerage agreement with a U.S. material 

entity. 

booking practices-related capabilities 

should be addressed in a firm’s 

resolution plan: 

Derivatives and trading booking 

framework. A firm should have a 

comprehensive booking model 

framework that articulates the 

principles, rationales, and approach to 

implementing its booking practices for 

all of its U.S. derivatives and trading 

activities. The framework and its 

underlying components should be 

documented and adequately supported 

by internal controls (e.g., procedures, 

systems, processes). Taken together, the 

booking framework and its components 

should provide transparency with 

respect to (i) what is being booked (e.g., 

product, counterparty), (ii) where it is 

being originated and booked (e.g., legal 

entity), (iii) by whom it is booked (e.g., 

business or trading desk), (iv) why it is 

booked that way (e.g., drivers or 

rationales for that arrangement), and (v) 

what controls the firm has in place to 

monitor and manage those practices 

(e.g., governance or information 

systems).30

The firm’s resolution plan should 

include detailed descriptions of the 

framework and each of its material 

components. In particular, a firm’s 

resolution plan should include 

descriptions of documented booking 

models covering its U.S. derivatives and 

trading activities.31 These descriptions 

should provide clarity with respect to 

the underlying booking flows (e.g., the 

mapping of trade flows based on 

multiple trade characteristics as 

decision points that determine on which 

entity a trade is directly booked and the 

applicability of any risk transfer 

arrangements). Furthermore, a firm’s 

resolution plan should describe its endto-end booking and reporting processes, 

including a description of the current 

scope of automation (e.g., automated 

trade flows, detective monitoring) of the 

systems controls applied to the firm’s 

documented booking models. The plan 

should also discuss why the firm 

believes its current (or planned) scope 

of automation is sufficient for managing 

its U.S. derivatives and trading activities 

during the execution of its U.S. 

resolution strategy.32

Derivatives and trading entity analysis 

and reporting. A firm should have the 

ability to identify, assess, and report on 

each U.S. entity that originates or 

otherwise conducts (in whole or in 

material part) any significant aspect of 

the firm’s U.S. derivatives and trading 

activities (a derivatives or trading 

entity). First, the firm’s resolution plan 

should describe its method (which may 

include both qualitative and 

quantitative criteria) for evaluating the 

significance of each derivatives or 

trading entity both with respect to the 

firm’s current U.S. derivatives and 

trading activities and its U.S. resolution 

strategy.33 Second, a firm’s resolution 

plan should demonstrate (including 

through use of illustrative samples) the 

firm’s ability to readily generate current 

derivatives or trading entity profiles that 

(i) cover all derivatives or trading 

entities, (ii) are reportable in a 

consistent manner, and (iii) include 

information regarding current legal 

ownership structure, business activities 

and volume, and risk profile of the 

entity (including relevant risk transfer 

arrangements). 

U.S. Activities Monitoring 

A firm should be able to assess how 

the management of U.S. derivatives and 

trading activities could be affected in 

the period leading up to and during the 

execution of its U.S. resolution strategy, 

including disruptions that could affect 

materially the funding or operations of 

the U.S. entities that conduct the U.S. 

derivatives and trading activities or 

their clients and counterparties. 

Therefore, a firm should have 

capabilities to provide timely 

transparency into the management of its 

U.S. derivatives and trading activities, 

in the period leading up to and during 

the execution of its U.S. resolution 

strategy by maintaining a monitoring 

framework for U.S. derivatives and 

trading activities, which consists of at 

least the following two components: 

1. A method for identifying U.S. 

derivatives and trading activities, and 

measuring, monitoring, and reporting on 

those activities on a business line and 

legal entity basis; and 

2. A method for identifying, assessing, 

and reporting the potential impact on (i) 

clients and counterparties of U.S. 

entities that conduct the U.S. 

derivatives and trading activities and (ii) 

any related risk transfer arrangements 34

among and between U.S. entities and 

their non-U.S. affiliates. 

Prime Brokerage Customer Account 

Transfers 

A firm should have the operational 

capacity to facilitate the orderly transfer 

of U.S. prime brokerage accounts,35 to 

peer prime brokers in periods of 

material financial distress and during 

the execution of its U.S. resolution 

strategy. The firm’s plan should include 

an assessment of how it would transfer 

such accounts. This assessment should 

be informed by clients’ relationships 

with other prime brokers, the use of 

automated and manual transaction 

processes, clients’ overall long and short 

positions as facilitated by the firm, and 

the liquidity of clients’ portfolios. The 

assessment should also analyze the risks 

and loss mitigants of customer-tocustomer internalization (e.g., the 

inability to fund customer longs with 

customer shorts) and operational 

challenges (including insufficient 

staffing) that the firm may experience in 

effecting the scale and speed of prime 

brokerage account transfers envisioned 

under the firm’s U.S. resolution strategy. 

In addition, a firm should describe 

and demonstrate its ability to segment 

and analyze the quality and 

composition of U.S. prime brokerage 

account balances based on a set of welldefined and consistently applied 

segmentation criteria (e.g., size, singleprime, platform, use of leverage, nonrehypothecatable securities, liquidity of 

underlying assets). The capabilities 

should cover U.S. prime brokerage 

account balances and the resulting 

segments should represent a range in 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83577 

36For example, relevant characteristics might 

include product, size, clearability, currency, 

maturity, level of collateralization, and other risk 

characteristics. 

37A firm’s derivatives portfolios include its 

derivatives positions and linked non-derivatives 

trading positions. 

38The enumerated segmentation dimensions are 

not intended as an exhaustive list of relevant 

dimensions. With respect to any product or asset 

class, a firm may have reasons for not capturing 

data on (or not using) one or more of the 

enumerated segmentation dimensions. In that case, 

however, the firm should explain those reasons. 

39Subject to the relevant constraints, a firm’s U.S. 

derivatives strategy may take the form of a goingconcern strategy, an accelerated de-risking strategy 

(e.g., active wind-down) or an alternative, third 

strategy so long as the firm’s resolution plan 

adequately supports the execution of the chosen 

strategy. For example, a firm may choose a goingconcern scenario (e.g., surviving derivatives 

subsidiary reestablishes investment grade status 

and does not enter any wind-down) as its 

derivatives strategy. Likewise, a firm may choose to 

adopt a combination of going-concern and 

accelerated de-risking scenarios as its U.S. 

derivatives strategy. For example, the U.S. 

derivatives strategy could be a stabilization scenario 

for the U.S. bank entity and an accelerated derisking scenario for U.S. broker-dealer entities. 

40A firm may engage in bilateral OTC derivatives 

trades with, for example, (i) external counterparties, 

to effect the novation of the firm’s side of a 

derivatives contract to a new, acquiring 

counterparty; and (ii) inter-affiliate counterparties, 

where the trades with inter-affiliate counterparties 

do not materially increase either the credit exposure 

of any participating counterparty or the market risk 

of any such counterparty on a standalone basis, 

after taking into account any hedging with 

exchange-traded and centrally-cleared instruments. 

The firm should provide analysis to support the risk 

of the trade on the basis of information that would 

be known to the firm at the time of the transaction. 

41See 12 CFR part 47 (OCC); part 252, subpart I 

(Board); part 382 (FDIC). 

42The firm may consider a resolution period of 

less than 12 months as long as the length of the 

resolution period is adequately supported by the 

firm’s analysis of the size, composition, complexity, 

and maturity profile of the derivatives portfolios in 

its U.S. IHC subsidiaries. 

43A firm may choose not to isolate and separately 

model the operational costs solely related to 

executing its derivatives strategy. However, the firm 

should provide transparency around operational 

cost estimation at a more granular level than 

material entity (e.g., business line level within a 

material entity, subject to wind-down). 

potential transfer speed (e.g., from 

fastest to longest to transfer, from most 

liquid to least liquid). The selected 

segmentation criteria should reflect 

characteristics 36 that the firm believes 

could affect the speed at which the U.S. 

prime brokerage account would be 

transferred to an alternate prime broker. 

Portfolio Segmentation 

A firm should have the capabilities to 

produce analysis that reflects 

derivatives portfolio 37 segmentation 

and differentiation of assumptions, 

taking into account trade-level 

characteristics. More specifically, a firm 

should have systems capabilities that 

would allow it to produce a spectrum of 

derivatives portfolio segmentation 

analysis using multiple segmentation 

dimensions for each U.S. entity with a 

derivatives portfolio—namely, (1) 

trading desk or product, (2) cleared vs. 

clearable vs. non-clearable trades, (3) 

counterparty type, (4) currency, (5) 

maturity, (6) level of collateralization, 

and (7) netting set.38 A firm should also 

have the capabilities to segment and 

analyze the full contractual maturity 

(run-off) profile of the derivatives 

portfolios in its U.S. entities. The firm’s 

resolution plan should describe and 

demonstrate the firm’s ability to 

segment and analyze the derivatives 

portfolios booked into its U.S. entities 

using the relevant segmentation 

dimensions and to report the results of 

such segmentation and analysis. 

Derivatives Stabilization and De-Risking 

Strategy 

To the extent the U.S. resolution 

strategy assumes the continuation of a 

U.S. IHC subsidiary with a derivatives 

portfolio after the entry of the U.S. IHC 

into a U.S. bankruptcy proceeding 

(surviving derivatives subsidiary), the 

firm’s plan should provide a detailed 

analysis of the strategy to stabilize and 

de-risk any derivatives portfolio of the 

surviving derivatives subsidiary (U.S. 

derivatives strategy) that has been 

incorporated into its U.S. resolution 

strategy.39 In developing its U.S. 

derivatives strategy, a firm should apply 

the following assumption constraints: 

• OTC derivatives market access: At 

or before the start of the resolution 

period, each surviving derivatives 

subsidiary should be assumed to lack an 

investment grade credit rating (e.g., 

unrated or downgraded below 

investment grade). Each surviving 

derivatives subsidiary also should be 

assumed to have failed to establish or 

reestablish investment grade status for 

the duration of the resolution period, 

unless the plan provides well-supported 

analysis to the contrary. As the 

subsidiary is not investment grade, it 

further should be assumed that each 

surviving derivatives subsidiary has no 

access to bilateral OTC derivatives 

markets and must use exchange-traded 

or centrally cleared instruments for any 

new hedging needs that arise during the 

resolution period. Nevertheless, a firm 

may assume the ability to engage in 

certain risk-reducing derivatives trades 

with bilateral OTC derivatives 

counterparties during the resolution 

period to facilitate novations with third 

parties and to close out inter-affiliate 

trades.40

• Early exits (break clauses): A firm 

should assume that counterparties (both 

external and affiliates) will exercise any 

contractual termination or other right, 

including any rights stayed by contract 

(including amendments) or in 

compliance with the rules establishing 

restrictions on qualified financial 

contracts of the Board, the FDIC, or the 

Office of the Comptroller of the 

Currency 41 or any other regulatory 

requirements, (i) that is available to the 

counterparty at or following the start of 

the resolution period; and (ii) if 

exercising such right would 

economically benefit the counterparty 

(counterparty-initiated termination). 

• Time horizon: The duration of the 

resolution period should be between 12 

and 24 months. The resolution period 

begins immediately after the U.S. IHC 

bankruptcy filing and extends through 

the completion of the U.S. resolution 

strategy.42

A firm’s analysis of its U.S. 

derivatives strategy should take into 

account (i) the starting profile of any 

derivatives portfolio of each surviving 

derivatives subsidiary (e.g., nature, 

concentration, maturity, clearability, 

liquidity of positions); (ii) the profile 

and function of any surviving 

derivatives subsidiary during the 

resolution period; (iii) the means, 

challenges, and capacity of the 

surviving derivatives subsidiary to 

manage and de-risk its derivatives 

portfolios (e.g., method for timely 

segmenting, packaging, and selling the 

derivatives positions; challenges with 

novating less liquid positions; rehedging strategy); (iv) the financial and 

operational resources required to effect 

the derivatives strategy; and (v) any 

potential residual portfolio (further 

discussed below). In addition, the firm’s 

resolution plan should address the 

following areas in the analysis of its 

derivatives strategy: 

Forecasts of resource needs. The 

forecasts of capital and liquidity 

resource needs of U.S. IHC subsidiaries 

required to support adequately the 

firm’s U.S. derivatives strategy should 

be incorporated into the firm’s RCEN 

and RLEN estimates for its overall U.S. 

resolution strategy. These include, for 

example, the costs and liquidity flows 

resulting from (i) the close-out of OTC 

derivatives, (ii) the hedging of 

derivatives portfolios, (iii) the 

quantified losses that could be incurred 

due to basis and other risks that would 

result from hedging with only exchangetraded and centrally cleared instruments 

in a severely adverse stress 

environment, and (iv) operational 

costs.43

Sensitivity analysis. A firm should 

have a method to apply sensitivity 


jbell on DSKJLSW7X2PROD with NOTICES
83578 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

44For example, key drivers of derivatives-related 

costs and liquidity flows might include the timing 

of derivatives unwind, cost of capital-related 

assumptions (e.g., target return on equity, discount 

rate, weighted average life, capital constraints, tax 

rate), operational cost reduction rate, and 

operational capacity for novations. Other examples 

of key drivers likely also include central 

counterparty margin flow assumptions and riskweighted asset forecast assumptions. 

45 If, under the firm’s U.S. resolution strategy, any 

derivatives portfolios are transferred during the 

resolution period by way of a line of business sale 

(or similar transaction), then those portfolios 

nonetheless should be included within the firm’s 

potential residual portfolio analysis. 

analyses to the key drivers of the 

derivatives-related costs and liquidity 

flows under its U.S. resolution strategy. 

A firm’s resolution plan should describe 

its method for (i) evaluating the 

materiality of assumptions and (ii) 

identifying those assumptions (or 

combinations of assumptions) that 

constitute the key drivers for its 

forecasts of derivatives-related 

operational and financial resource needs 

under the U.S. resolution strategy. In 

addition, using its U.S. resolution 

strategy as a baseline, the firm’s 

resolution plan should describe and 

demonstrate its approach to testing the 

sensitivities of the identified key drivers 

and the potential impact on its forecasts 

of resource needs.44

Potential residual derivatives 

portfolio. A firm’s resolution plan 

should include a method for estimating 

the composition of any potential 

residual derivatives portfolio 

transactions booked in a U.S. IHC 

subsidiary remaining at the end of the 

resolution period under its U.S. 

resolution strategy. The firm’s plan also 

should provide detailed descriptions of 

the trade characteristics used to identify 

such potential residual portfolio and of 

the resulting trades (or categories of 

trades).45 A firm should assess the risk 

profile of such potential residual 

portfolio (including its anticipated size, 

composition, complexity, and 

counterparties), and the potential 

counterparty and market impacts of 

non-performance by the firm on the 

stability of U.S. financial markets (e.g., 

on funding markets, on underlying asset 

markets, on clients and counterparties). 

Non-surviving entity analysis. To the 

extent the U.S. resolution strategy 

assumes a U.S. IHC subsidiary with a 

derivatives portfolio enters its own 

resolution proceeding after the entry of 

the U.S. IHC into a U.S. bankruptcy 

proceeding (a non-surviving derivatives 

subsidiary), the firm should provide a 

detailed analysis of how the nonsurviving derivatives subsidiary’s 

resolution can be accomplished within 

a reasonable period of time and in a 

manner that substantially mitigates the 

risk of serious adverse effects on U.S. 

financial stability and on the orderly 

execution of the firm’s U.S. resolution 

strategy. In particular, the firm should 

provide an analysis of the potential 

impacts on funding markets, on 

underlying asset markets, on clients and 

counterparties (including affiliates), and 

on the firm’s U.S. resolution strategy. 

IX. Format and Structure of Plans 

Format of Plan 

Executive Summary. The Plan should 

contain an executive summary 

consistent with the Rule, which must 

include, among other things, a concise 

description of the key elements of the 

firm’s U.S. strategy for an orderly 

resolution. In addition, the executive 

summary should include a discussion of 

the firm’s assessment of any 

impediments to the firm’s U.S. 

resolution strategy and its execution, as 

well as the steps it has taken to address 

any identified impediments. 

Narrative. The Plan should include a 

strategic analysis consistent with the 

Rule. This analysis should take the form 

of a concise narrative that enhances the 

readability and understanding of the 

firm’s discussion of its U.S. strategy for 

orderly resolution in bankruptcy or 

other applicable insolvency regimes 

(Narrative). The Narrative also should 

include a high-level discussion of how 

the firm is addressing key 

vulnerabilities jointly identified by the 

Agencies. This is not an exhaustive list 

and does not preclude identification of 

further vulnerabilities or impediments. 

Appendices. The Plan should contain 

a sufficient level of detail and analysis 

to substantiate and support the strategy 

described in the Narrative. Such detail 

and analysis should be included in 

appendices that are distinct from and 

clearly referenced in the related parts of 

the Narrative (Appendices). 

Public Section. The Plan must be 

divided into a public section and a 

confidential section consistent with the 

requirements of the Rule. 

Other Informational Requirements. 

The Plan must comply with all other 

informational requirements of the Rule. 

The firm may incorporate by reference 

previously submitted information as 

provided in the Rule. 

Guidance Regarding Assumptions 

1. The Plan should be based on the 

current state of the applicable legal and 

policy frameworks. Pending legislation 

or regulatory actions may be discussed 

as additional considerations. 

2. The firm must submit a plan that 

does not rely on the provision of 

extraordinary support by the United 

States or any other government to the 

firm or its subsidiaries to prevent the 

failure of the firm. 

3. The firm should not assume that it 

will be able to sell identified critical 

operations or core business lines, or that 

unsecured funding will be available 

immediately prior to filing for 

bankruptcy. 

4. The Plan should assume the DoddFrank Act Stress Test (DFAST) severely 

adverse scenario for the first quarter of 

the calendar year in which the Plan is 

submitted is the domestic and 

international economic environment at 

the time of the firm’s failure and 

throughout the resolution process. 

5. The resolution strategy may be 

based on an idiosyncratic event or 

action. The firm should justify use of 

that assumption, consistent with the 

conditions of the economic scenario. 

6. Within the context of the applicable 

idiosyncratic scenario, markets are 

functioning and competitors are in a 

position to take on business. If a firm’s 

Plan assumes the sale of assets, the firm 

should take into account all issues 

surrounding its ability to sell in market 

conditions present in the applicable 

economic condition at the time of sale 

(i.e., the firm should take into 

consideration the size and scale of its 

operations as well as issues of 

separation and transfer.) 

7. The firm should not assume any 

waivers of section 23A or 23B of the 

Federal Reserve Act in connection with 

the actions proposed to be taken prior 

to or in resolution. 

8. The firm may assume that its 

depository institutions will have access 

to the Discount Window only for a few 

days after the point of failure to 

facilitate orderly resolution. However, 

the firm should not assume its 

subsidiary depository institutions will 

have access to the Discount Window 

while critically undercapitalized, in 

FDIC receivership, or operating as a 

bridge bank, nor should it assume any 

lending from a Federal Reserve credit 

facility to a non-bank affiliate. 

Financial Statements and Projections 

The Plan should include the actual 

balance sheet for each material entity 

and the consolidating balance sheet 

adjustments between material entities as 

well as pro forma balance sheets for 

each material entity at the point of 

failure and at key junctures in the 

execution of the resolution strategy. It 

should also include projected 

statements of sources and uses of funds 

for the interim periods. The pro forma 

financial statements and accompanying 

notes in the Plan must clearly evidence 

the failure trigger event; the Plan’s 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83579 

46The FAQs represent the views of staff of the 

Board of Governors of the Federal Reserve System 

and the Federal Deposit Insurance Corporation and 

do not bind the Board or the FDIC. 

assumptions; and any transactions that 

are critical to the execution of the Plan’s 

preferred strategy, such as 

recapitalizations, the creation of new 

legal entities, transfers of assets, and 

asset sales and unwinds. 

Material Entities 

Material entities should encompass 

those entities, including subsidiaries, 

branches and agencies (collectively, 

Offices), which are significant to the 

activities of an identified critical 

operation or core business line. If the 

abrupt disruption or cessation of a core 

business line might have systemic 

consequences to U.S. financial stability, 

the entities essential to the continuation 

of such core business line should be 

considered for material entity 

designation. Material entities should 

include the following types of entities: 

a. Any Office, wherever located, that 

is significant to the activities of an 

identified critical operation. 

b. Any Office, wherever located, 

whose provision or support of global 

treasury operations, funding, or 

liquidity activities (inclusive of 

intercompany transactions) is 

significant to the activities of an 

identified critical operation. 

c. Any Office, wherever located, that 

would provide material operational 

support in resolution (key personnel, 

information technology, data centers, 

real estate or other shared services) to 

the activities of an identified critical 

operation. 

d. Any Office, wherever located, that 

is engaged in derivatives booking 

activity that is significant to the 

activities of an identified critical 

operation, including those that conduct 

either the internal hedge side or the 

client-facing side of a transaction. 

e. Any Office, wherever located, 

engaged in asset custody or asset 

management that are significant to the 

activities of an identified critical 

operation. 

f. Any Office, wherever located, 

holding licenses or memberships in 

clearinghouses, exchanges, or other 

FMUs that are significant to the 

activities of an identified critical 

operation. 

For each material entity (including a 

branch), the Plan should enumerate, on 

a jurisdiction-by-jurisdiction basis, the 

specific mandatory and discretionary 

actions or forbearances that regulatory 

and resolution authorities would take 

during resolution, including any 

regulatory filings and notifications that 

would be required as part of the U.S. 

resolution strategy, and explain how the 

Plan addresses the actions and 

forbearances. The Plan should describe 

the consequences for the firm’s U.S. 

resolution strategy if specific actions in 

each jurisdiction were not taken, 

delayed, or forgone, as relevant. 

X. Public Section 

The purpose of the public section is 

to inform the public’s understanding of 

the firm’s resolution strategy and how it 

works. 

The public section should discuss the 

steps that the firm is taking to improve 

resolvability under the U.S. Bankruptcy 

Code. The public section should 

provide background information on 

each material entity and should be 

enhanced by including the firm’s 

rationale for designating material 

entities. The public section should also 

discuss, at a high level, the firm’s intragroup financial and operational 

interconnectedness (including the types 

of guarantees or support obligations in 

place that could impact the execution of 

the firm’s strategy). There should also be 

a high-level discussion of the liquidity 

resources and loss-absorbing capacity of 

the U.S. IHC. 

The discussion of strategy in the 

public section should broadly explain 

how the firm has addressed any 

deficiencies, shortcomings, and other 

key vulnerabilities that the Agencies 

have identified in prior Plan 

submissions. For each material entity, it 

should be clear how the strategy 

provides for continuity, transfer, or 

orderly wind-down of the entity and its 

operations. There should also be a 

description of the resulting organization 

upon completion of the resolution 

process. 

The public section may note that the 

resolution plan is not binding on a 

bankruptcy court or other resolution 

authority and that the proposed failure 

scenario and associated assumptions are 

hypothetical and do not necessarily 

reflect an event or events to which the 

firm is or may become subject. 

Appendix: Frequently Asked Questions 

In March 2017, the Agencies issued 

guidance for use in developing the 2018 

resolution plan submissions by certain 

foreign banking organizations. 

In response to frequently asked 

questions regarding that guidance from 

the recipients of that guidance, Board 

and FDIC staff jointly developed 

answers and provided those answers to 

the guidance recipients in 2017 so that 

they could take this information into 

account in developing their next 

resolution plan submissions.46

The questions in this Appendix: 

• Comprise common questions asked 

by different covered companies. Not 

every question is applicable to every 

firm; not every aspect of the guidance 

applies to each firm’s preferred strategy/ 

structure; and 

• Reflect updated references to 

correspond to this final guidance for the 

Specified FBOs (Final Guidance). 

As indicated below, those questions 

and answers that are deemed to be no 

longer meaningful or relevant have not 

been consolidated in this Appendix and 

are superseded. 

Capital 

CAP 1. Not consolidated 

CAP 2. Definition of ‘‘Well-Capitalized’’ 

Status 

Q. How should firms apply the term 

‘‘well-capitalized’’? 

A. U.S. non-branch material entities 

must comply with the capital 

requirements and expectations of their 

primary regulator. U.S. non-branch 

material entities should be recapitalized 

to meet jurisdictional requirements and 

to maintain market confidence as 

required under the U.S. resolution 

strategy. 

CAP 3. RCEN Relationship to DFAST 

Severely Adverse Scenario 

Q. How should the firm’s RCEN and 

RLEN estimates relate to the DFAST 

Severely Adverse scenario? Can those 

estimates be recalibrated in actual stress 

conditions? 

A. For resolution plan submission 

purposes, the estimation of RLEN and 

RCEN should assume macroeconomic 

conditions consistent with the DFAST 

Severely Adverse scenario. However, 

the RLEN and RCEN methodologies 

should have the flexibility to 

incorporate macroeconomic conditions 

that may deviate from the DFAST 

Severely Adverse scenario in order to 

facilitate execution of the U.S. 

resolution strategy. 

CAP 4. Not Consolidated 

Liquidity 

LIQ 1. Inter-Company ‘‘Frictions’’ 

Q. Can the Agencies clarify what 

kinds of frictions might occur between 

affiliates beyond regulatory ringfencing? 

A. Frictions are any impediments to 

the free flow of funds, collateral and 

other transactions between material 

entities. Examples include regulatory, 

legal, financial (i.e., tax consequences), 

market, or operational constraints or 

requirements. 

LIQ 2. Distinction between Liquidity 

Forecasting Periods 


jbell on DSKJLSW7X2PROD with NOTICES
83580 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

Q1. How long is the stabilization 

period? 

A1. The stabilization period begins 

immediately after the U.S. IHC 

bankruptcy filing and extends until each 

material entity reestablishes market 

confidence. The stabilization period 

may not be less than 30 days. The 

reestablishment of market confidence 

may be reflected by the maintaining, 

reestablishing, or establishing of 

investment grade ratings or the 

equivalent financial condition for each 

entity. The stabilization period may 

vary by material entity, given 

differences in regulatory, counterparty, 

and other stakeholder interests in each 

entity. 

Q2. Not Consolidated. 

Q3. What is the resolution period? 

A3. The resolution period begins 

immediately after the U.S. IHC’s 

bankruptcy filing and extends through 

the completion of the U.S. strategy. 

After the stabilization period (see ‘‘LIQ 

2. Distinction between Liquidity 

Forecasting Periods,’’ Question 1, 

regarding ‘‘stabilization period’’), 

financial statements and projections 

may be provided at quarterly intervals 

through the remainder of the resolution 

period. 

LIQ 3. Inter-Affiliate Transaction 

Assumptions 

Q. Does inter-affiliate funding refer to 

all kinds of intercompany transactions, 

including both unsecured and secured? 

A. Yes. 

LIQ 4. RLEN and Minimum Operating 

Liquidity (MOL) 

Q1. How should firms distinguish 

between the minimum operating 

liquidity (MOL) and peak funding needs 

during the RLEN period? 

A1. The peak funding needs represent 

the peak cumulative net out-flows 

during the stabilization period. The 

components of peak funding needs, 

including the monetization of assets and 

other management actions, should be 

transparent in the RLEN projections. 

The peak funding needs should be 

supported by projections of daily 

sources and uses of cash for each U.S. 

IHC subsidiary, incorporating interaffiliate and third-party exposures. In 

mathematical terms, RLEN = MOL + 

peak funding needs during the 

stabilization period. RLEN should also 

incorporate liquidity execution needs of 

the U.S. resolution strategy for 

derivatives (see Derivatives and Trading 

Activities section). 

Q2. Should the MOL per entity make 

explicit the allocation for intraday 

liquidity requirements, inter-affiliate 

and other funding frictions, operating 

expenses, and working capital needs? 

A2. Yes, the components of the MOL 

estimates for each surviving U.S. IHC 

subsidiary should be transparent and 

supported. 

Q3. Can MOLs decrease as surviving 

U.S. IHC subsidiaries wind down? 

A3. MOL estimates can decline as 

long as they are sufficiently supported 

by the firm’s methodology and 

assumptions. 

LIQ 5. Not Consolidated 

LIQ 6. Inter-Affiliate Transactions with 

Optionality 

Q. How should firms treat an interaffiliate transaction with an embedded 

option that may affect the contractual 

maturity date? 

A. For the purpose of calculating a 

firm’s net liquidity position at a material 

entity, the RLEN model should assume 

that these transactions mature at the 

earliest possible exercise date; this 

adjusted maturity should be applied 

symmetrically to both material entities 

involved in the transaction. 

LIQ 7. Stabilization and Regulatory 

Liquidity Requirements 

Q. As it relates to the RLEN model 

and actions necessary to re-establish 

market confidence, what assumptions 

should firms make regarding 

compliance with regulatory liquidity 

requirements? 

A. Firms should consider the 

applicable regulatory expectations for 

each U.S. IHC subsidiary to achieve the 

stabilization needed to execute the U.S. 

resolution strategy. Firms’ assumptions 

in the RLEN model regarding the actions 

necessary to reestablish market 

confidence during the stabilization 

period may vary by U.S. IHC subsidiary, 

for example, based on differences in 

regulatory, counterparty, other 

stakeholder interests, and based on the 

U.S. resolution strategy for each U.S. 

IHC subsidiary. See also ‘‘LIQ 2. 

Distinction between Liquidity 

Forecasting Periods.’’ 

LIQ 8. HQLA and Assets Not Eligible as 

HQLA in the RLEN Model 

Q. The Final Guidance states the 

RLEN estimate should be based on the 

minimum amount of HQLA required to 

facilitate the execution of the firm’s U.S. 

resolution strategy. How should firms 

incorporate any expected liquidity value 

of assets that are not eligible as HQLA 

(non-HQLA) into the RLEN model? 

A. For a firm’s RLEN model, firms 

may incorporate conservative estimates 

of potential liquidity that may be 

generated through the monetization of 

non-HQLA. The estimated liquidity 

value of non-HQLA should be 

supported by thorough analysis of the 

potential market constraints and asset 

value haircuts that may be required. 

Assumptions for the monetization of 

non-HQLA should be consistent with 

the U.S. resolution strategy for each U.S. 

IHC subsidiary. 

LIQ 9. Components of Minimum 

Operating Liquidity 

Q. Do the agencies have particular 

definitions of the ‘‘intraday liquidity 

requirements,’’ ‘‘operating expenses,’’ 

and ‘‘working capital needs’’ 

components of minimum operating 

liquidity (MOL) estimates? 

A. No. A firm may use its internal 

definitions of the components of MOL 

estimates. The components of MOL 

estimates should be well-supported by a 

firm’s internal methodologies and 

calibrated to the specifics of each U.S. 

IHC subsidiary. 

LIQ 10. RLEN Model and Net Revenue 

Recognition 

Q. Can firms assume in the RLEN 

model that cash-based net revenue 

generated by U.S. IHC subsidiaries after 

the U.S. IHC’s bankruptcy filing is 

available to offset estimated liquidity 

needs? 

A. Yes. Firms may incorporate cash 

revenue generated by U.S. IHC 

subsidiaries in the RLEN model. Cash 

revenue projections should be 

conservatively estimated and consistent 

with the operating environment and the 

U.S. strategy for each U.S. IHC 

subsidiary. 

LIQ 11. RLEN Model and Inter-Affiliate 

Frictions 

Q. Can a firm modify its assumptions 

regarding one or more inter-affiliate 

frictions during the stabilization or poststabilization period in the RLEN model? 

A. Once a U.S. IHC subsidiary has 

achieved market confidence necessary 

for stabilization consistent with the U.S. 

resolution strategy, a firm may modify 

one or more inter-affiliate frictions, 

provided the firm provides sufficient 

analysis to support this assumption. 

LIQ 12. RLEN Relationship to DFAST 

Severely Adverse scenario 

(See ‘‘CAP 3. RCEN Relationship to 

DFAST Severely Adverse Scenario’’ in 

the Capital section.) 

LIQ 13. Liquidity Positioning and 

Foreign Parent Support 

Q1. May firms consider available 

liquidity at the foreign parent for 

meeting RLEN estimates for U.S. nonbranch material entities? 

A1. To meet the liquidity needs 

informed by the RLEN methodology, 

firms may either fully pre-position 

liquidity in the U.S. non-branch 

material entities or develop a 

mechanism for planned foreign parent 

support of any amount not preVerDate Sep<11>2014 17:30 Dec 21, 2020 Jkt 253001 PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 E:\FR\FM\22DEN1.SGM 22DEN1

jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 83581 

positioned for the successful execution 

of the U.S. strategy. Mechanisms to 

support readily available liquidity may 

include a term liquidity facility between 

the U.S. IHC and the foreign parent that 

can be drawn as needed. If a firm’s plan 

relies on foreign parent support, the 

plan should include analysis of how the 

U.S. IHC/foreign parent facility is 

funded or buffered for by the foreign 

parent. 

LIQ 14. Not consolidated 

LIQ 15. Not consolidated 

LIQ 16. Not consolidated 

Operational: Shared Services 

OPS SS 1. Not Consolidated 

OPS SS 2. Working Capital 

Q1. Must working capital be 

maintained for third party and internal 

shared service costs? 

A1. Where a firm maintains shared 

service companies to provide services to 

affiliates, working capital should be 

maintained in those entities sufficient to 

permit those entities to continue to 

provide services for six months or 

through the period of stabilization as 

required in the firm’s U.S. resolution 

strategy. 

Costs related to third-party vendors 

and inter-affiliate services should be 

captured through the working capital 

element of the MOL estimate (RLEN). 

Q2. When does the six month working 

capital requirement period begin? 

A2. The measurement of the six 

month working capital expectation 

begins upon the bankruptcy filing of the 

U.S. IHC. The expectation for 

maintaining the working capital is 

effective upon the July 2018 submission. 

OPS SS 3. Not Consolidated 

OPS SS 4. Not Consolidated 

Operations: Payments, Clearing and 

Settlement 

To the extent relevant, the PCS FAQs 

have been consolidated into the updated 

section of the Final Guidance. 

Legal Entity Rationalization 

LER 1. Not consolidated 

LER 2. Legal Entity Rationalization 

Criteria 

Q. Is it acceptable to take into account 

business-related criteria, in addition to 

the resolution requirements, so that the 

LER Criteria can be used for both 

resolution planning and business 

operations purposes? 

A. Yes, LER criteria may incorporate 

both business and resolution 

considerations. In determining the best 

alignment of legal entities and business 

lines to improve the firm’s resolvability 

under different market conditions, 

business considerations should not be 

prioritized over resolution needs. 

LER 3. Creation of Additional Legal 

Entities 

Q. Is the addition of legal entities 

acceptable, so long as it is consistent 

with the LER criteria? 

A. Yes. 

LER 4. Clean Funding Pathways 

Q1. Can you provide additional 

context around what is meant by clean 

lines of ownership and clean funding 

pathways in the legal entity 

rationalization criteria? Additionally, 

what types of funding are covered by the 

requirements? 

A1. The funding pathways between 

the foreign parent, U.S. IHC, and U.S. 

IHC subsidiaries should minimize 

uncertainty in the provision of funds 

and facilitate recapitalization. Also, the 

complexity of ownership should not 

impede the flow of funding to a U.S. 

non-branch material entity under the 

firm’s U.S. resolution strategy. Potential 

sources of additional complexity could 

include, for example, multiple 

intermediate holding companies, tenor 

mismatches, or complicated ownership 

structures (including those involving 

multiple jurisdictions or fractional 

ownerships). Ownership should be as 

clean and simple as practicable, 

supporting the U.S. strategy and 

actionable sales, transfers, or winddowns under varying market conditions. 

The clean funding pathways expectation 

applies to all funding provided to a U.S. 

non-branch material entity regardless of 

type and should not be viewed solely to 

apply to internal TLAC. 

Q2. The Final Guidance regarding 

legal entity rationalization criteria 

discusses ‘‘clean lines of ownership’’ 

and ‘‘clean funding pathways.’’ Does 

this statement mean that firms’ legal 

entity rationalization criteria should 

require funding pathways and 

recapitalization to always follow lines of 

ownership? 

A2. No. However, the firm should 

identify and address or mitigate any 

legal, regulatory, financial, operational, 

and other factors that could complicate 

the recapitalization and/or liquidity 

support of U.S. non-branch material 

entities. 

LER 5. Not consolidated 

LER 6. Not consolidated 

LER 7. Application of Legal Entity 

Rationalization Criteria 

Q1. Which legal entities should be 

covered under the LER framework? 

A1. The scope of a firm’s LER criteria 

should apply to the entire U.S. 

operations. 

Q2. To the extent a firm has a large 

number of similar U.S. non-material 

entities (such as single-purpose entities 

formed for Community Reinvestment 

Act purposes), may a firm apply its legal 

entity rationalization criteria to these 

entities as a group, rather than at the 

individual entity level? 

A2. Yes. 

LER 8. Application of LER Criteria. 

Q. Under the Final Guidance, is there 

an expectation that the LER criteria be 

applied to the legal structure outside of 

the U.S. operations (e.g., outside of the 

U.S. IHC or U.S. branch)? 

A. The LER criteria serve to govern 

the corporate structure and 

arrangements between U.S. subsidiaries 

and U.S. branches in a manner that 

facilitates the resolvability of U.S. 

operations. The Final Guidance is not 

intended to govern the corporate 

structure in jurisdictions outside the 

U.S. The application of the LER criteria 

should, among other things, ensure that 

the allocation of activities across the 

firm’s U.S. branches and U.S. nonbranch material entities support the 

firm’s US resolution strategy and 

minimize risk to US financial stability 

in the event of resolution. 

Moreover, LER works with other 

components to improve resolvability. 

For example, with regard to shared 

services the firm should identify all 

shared services that support identified 

critical operations, maintain a mapping 

of how/where these services support 

core business lines and identified 

critical operations, and include this 

mapping into the legal rationalization 

criteria and implementation efforts. 

Derivatives and Trading Activities 

To the extent relevant, the derivatives 

and trading FAQs have been 

consolidated into the updated section of 

the Final Guidance. 

Legal 

LEG 1. Not consolidated. 

LEG 2. Contractually Binding 

Mechanisms 

The Final Guidance does not 

specifically reference consideration of a 

contractually binding mechanism. 

However, the following questions and 

answers may be useful to a firm that 

chooses to consider a contractually 

binding mechanism as a mitigant to the 

potential challenges to the planned 

Support. 

Q1. Do the Agencies have any 

preference as to whether capital is 

down-streamed to key subsidiaries 

(including an IDI subsidiary) in the form 

of capital contributions vs. forgiveness 

of debt? 

A1. No. The Agencies do not have a 

preference as to the form of capital 

contribution or liquidity support. 


jbell on DSKJLSW7X2PROD with NOTICES
83582 Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices 

Q2. Should a contractually binding 

mechanism relate to the provision of 

capital or liquidity? What classes of 

assets would be deemed to provide 

capital vs. liquidity? 

A2. Contractually binding mechanism 

is a generic term and includes the 

down-streaming of capital and/or 

liquidity as contemplated by the U.S. 

resolution strategy. Furthermore, it is up 

to the firm, as informed by any relevant 

guidance of the Agencies, to identify 

what assets would satisfy a U.S. 

affiliate’s need for capital and/or 

liquidity. 

Q3. Is there a minimum acceptable 

duration for a contractually binding 

mechanism? Would an ‘‘evergreen’’ 

arrangement, renewable on a periodic 

basis (and with notice to the Agencies), 

be acceptable? 

A3. To the extent a firm utilizes a 

contractually binding mechanism, such 

mechanism, including its duration, 

should be appropriate for the firm’s U.S. 

resolution strategy, including 

adequately addressing relevant 

financial, operational, and legal 

requirements and challenges. 

Q4. Not consolidated. 

Q5. Not consolidated. 

Q6. The firm may need to amend its 

contractually binding mechanism from 

time to time resulting potentially from 

changes in relevant law, new or different 

regulatory expectations, etc. Is a firm 

able to do this as long as there is no 

undue risk to the enforceability (e.g., no 

signs of financial stress sufficient to 

unduly threaten the agreement’s 

enforceability as a result of fraudulent 

transfer)? 

A6. Yes, however the Agencies should 

be informed of the proposed duration of 

the agreement, as well as any terms and 

conditions on renewal and/or 

amendment. Any amendments should 

be identified and discussed as part of 

the firm’s next U.S. resolution plan 

submission. 

Q7. Not consolidated. 

Q8. Should firms include a formal 

regulatory trigger by which the Agencies 

can directly trigger a contractually 

binding mechanism? 

A8. No 

General 

None of the general FAQs were 

consolidated. 

By order of the Board of Governors of the 

Federal Reserve System. 

Ann Misback, 

Secretary of the Board. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on or about 

December 7, 2020. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2020–28155 Filed 12–21–20; 8:45 am] 

BILLING CODE 6210–01– 6714–01–P 

FEDERAL RESERVE SYSTEM 

Change in Bank Control Notices; 

Acquisitions of Shares of a Bank or 

Bank Holding Company 

The notificants listed below have 

applied under the Change in Bank 

Control Act (Act) (12 U.S.C. 1817(j)) and 

§ 225.41 of the Board’s Regulation Y (12 

CFR 225.41) to acquire shares of a bank 

or bank holding company. The factors 

that are considered in acting on the 

applications are set forth in paragraph 7 

of the Act (12 U.S.C. 1817(j)(7)). 

The public portions of the 

applications listed below, as well as 

other related filings required by the 

Board, if any, are available for 

immediate inspection at the Federal 

Reserve Bank(s) indicated below and at 

the offices of the Board of Governors. 

This information may also be obtained 

on an expedited basis, upon request, by 

contacting the appropriate Federal 

Reserve Bank and from the Board’s 

Freedom of Information Office at 

https://www.federalreserve.gov/foia/ 

request.htm. Interested persons may 

express their views in writing on the 

standards enumerated in paragraph 7 of 

the Act. 

Comments regarding each of these 

applications must be received at the 

Reserve Bank indicated or the offices of 

the Board of Governors, Ann E. 

Misback, Secretary of the Board, 20th 

Street and Constitution Avenue NW, 

Washington, DC 20551–0001, not later 

than January 6, 2021. 

A. Federal Reserve Bank of 

Minneapolis (Chris P. Wangen, 

Assistant Vice President) 90 Hennepin 

Avenue, Minneapolis, Minnesota 

55480–0291: 

1. Steven and Laurel Klefstad, 

Forman, North Dakota; to join the 

McLaen family shareholder group, a 

group acting in concert, to retain voting 

shares of Napoleon Bancorporation, 

Inc., Napoleon, North Dakota, and 

thereby indirectly retain voting shares of 

Stock Growers Bank, Forman, North 

Dakota. 

Board of Governors of the Federal Reserve 

System, December 17, 2020. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

[FR Doc. 2020–28199 Filed 12–21–20; 8:45 am] 

BILLING CODE 6210–01–P 

GENERAL SERVICES 

ADMINISTRATION 

[Notice-PBS–2020–11; Docket No. 2020– 

0002; Sequence No. 41] 

Notice of Intent To Prepare an 

Environmental Impact Statement for 

the Proposed Master Plan for the U.S. 

Food and Drug Administration Muirkirk 

Road Campus (Prince George’s 

County, Laurel, MD) 

AGENCY: National Capital Region, 

General Services Administration (GSA). 

ACTION: Notice of Intent to prepare an 

Environmental Impact Statement (EIS). 

SUMMARY: Pursuant to the requirements 

of the National Environmental Policy 

Act of 1969 (NEPA), the Council on 

Environmental Quality Regulations, 

GSA Order, ADM 1095.1F, 

Environmental Considerations in 

Decision Making, dated October 19, 

1999, and the GSA Public Buildings 

Service NEPA Desk Guide, GSA plans to 

prepare an EIS for a proposed Master 

Plan for the U.S. Food and Drug 

Administration’s (FDA) Muirkirk Road 

Campus (MRC), in Laurel, Maryland, 

located in Prince George’s County. The 

Master Plan will provide FDA with a 

structured framework for developing the 

MRC over the next 20 years. 

DATES: Applicable: December 22, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Marshall Popkin, Office of Planning and 

Design Quality, Public Buildings 

Service, GSA, National Capital Region, 

at 202–919–0026. 

SUPPLEMENTARY INFORMATION: The GSA 

intends to prepare an EIS to analyze the 

potential impacts resulting from the 

proposed Master Plan to support the 

FDA MRC, in Laurel, Maryland, located 

in Prince George’s County. GSA will 

analyze four alternatives for the 

proposed MRC Master Plan: (1) No 

Action Alternative; (2) Development at 

the Mod 1/Mod 2 site; (3) Hybrid of 

Alternatives 2 and 4; and (4) 

Development at the Beltsville Research 

Facility site. The proposed action is 

anticipated to impact soils and 

topography; traffic and transit; water 

resources; vegetation; wildlife; air 

quality; greenhouse gases and climate; 

utilities; and waste management. No 

permits are required to adopt the Master 

Plan. Implementation of the Master Plan 

in the future could require the following 

permits and authorizations: 

• Dredge or fill permit under Section 

404 of the Clean Water Act 

• Coastal Zone Management 

Consistency Determination 

• State and local permits, including 

water and wastewater permits, 


jbell on DSKJLSW7X2PROD with NOTICES