BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, DC 20551

December 26, 2019

Ms. Rebecca J. Simmons
Sullivan & Cromwell LLP
125 Broad Street

New York, New York 10004

Dear Ms. Simmons:

This responds to the letter dated November 27, 2019, submitted on behalf of State
Street Corporation, Boston, Massachusetts, addressed to the Office of the Comptroller of the
Currency (“OCC”), the Board of Governors of the Federal Reserve System (“Board”), and the
Federal Deposit Insurance Corporation (“FDIC”) (collectively, the “Agencies”) regarding your
request for an exemption under each of the Agencies’ respective qualified financial contract stay
rules (collectively, the “QFC Stay Rules”) for certain contracts.' Specifically, you have
requested an exemption from the requirements of 12 CFR 252.83 and 252.84 for any covered
QFC that is a custody services contract subject to the requirements of the Board’s QFC Stay Rule
solely due to the exercise of any settlement advances permitted under such contract and for
which each party to the covered QFC (other than the covered entity) is a counterparty that is not
a covered entity or excluded bank (the “Relief Request QFCs”).? Your letter also requested an
extension of time to conform the Relief Request QFCs to the requirements of the QFC Stay
Rules until the Agencies determine whether the requested relief is appropriate under the
standards set forth in the QFC Stay Rules.

Acting pursuant to authority delegated by the Board and having considered all
relevant facts, I grant an extension of time until July 1, 2020. Under this extension of time, the
Relief Request QFCs entered into by any covered entity that would otherwise be subject to the
January 1, 2020, compliance date set forth in 12 CFR 252.82(f)(1)(iii) temporarily will not be
subject to the requirements of the Board’s QFC Stay Rule. Additionally, the previously granted
extension of time with respect to the Relief Request QFCs entered into by any covered entity that
would have been subject to the July 1, 2019, compliance date is extended until July 1, 2020. The
Board is taking no action on your request for an exemption at this time. Should the Board deny

' 12 CER part 47 (OCC); 12 CFR part 252, subpart I (Board); and 12 CFR part 382 (FDIC).
? Definitions related to the scope of the Relief Request QFCs are set out in the Appendix.


in whole or in part the requested exemptions for the Relief Request QFCs, staff would
recommend that you be permitted some period from the date of any such denial to conform all
affected QFCs to the requirements of the Board’s QFC Stay Rule.

Board staff has consulted with staff of the OCC and FDIC with respect to this
extension of time, and OCC and FDIC staff have advised Board staff that they do not object to
this extension.

This action may be revised or revoked, based on changes to applicable regulations
or other relevant factors. This action is based on all the facts of record, including the information
discussed above, and the representations in your submissions and supplemental information.

Any material change in those facts or representations could affect this approval and should be
communicated promptly to Board staff.

Please contact Lucy Chang at (202) 475-6331 or Evan Hechtman at (202) 263-
4810, both of the Board’s Legal Division, or Felton Booker at (202) 912-4651 or Lesley Chao at
(202) 974-7063, of the Board’s Division of Supervision and Regulation, if you have any
questions.

Very truly yours,

Wan 6 —_

Ann E, Misback
Secretary of the Board

Ten Office of the Comptroller of the Currency
Federal Deposit Insurance Corporation
Lauren A. Anderson, The Bank Policy Institute


1.

Appendix

For purposes of this extension of time, the following definitions apply:
“Affiliate” has the same meaning as in 12 CFR 252.2.

a.
b.

Cc.

“Custody services contract” is defined as a contract that meets all of the

following:

1.

iii.

The contract is an agreement under which an applicant or its affiliate
provides custodial services that include safekeeping, settlement, asset
servicing, and reporting and income services, to clients, and any
associated short-term settlement advances in connection with the
processing of client securities or payment transactions;

The contract does not include any default right that can be exercised
against a covered entity serving as a custodian or any affiliate of a covered
entity;

The contract is a qualified financial contract subject to the requirements of
the Board’s QFC Stay Rule solely due to the exercise of any settlement
advances permitted under the contract; and

If not for the contract’s provisions prohibiting its assignment without the
consent of the client, the contract otherwise would meet the requirements
of 12 CFR 252.84(a).

“Default right” has the same meaning as in 12 CFR 252.81.