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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551

DIVISION OF SUPERVISION

AND REGULATION

SR 23-10 

December 15, 2023 

TO THE OFFICER IN CHARGE OF SUPERVISION 

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Status of Certain Investment Funds and their Portfolio Investments for 

Purposes of Regulation O and Reporting Requirements under Part 363 of 

FDIC Regulations

Applicability: This guidance applies to banks that are members of the Federal Reserve System 

and principal shareholders of such banks. 

The Federal Reserve Board (Board), the Federal Deposit Insurance Corporation (FDIC), 

and the Office of the Comptroller of the Currency (OCC) (together, “federal banking agencies”) 

are issuing the attached interagency statement (Statement), which states that the federal banking 

agencies will continue to exercise discretion to not take enforcement action against either an 

asset manager that is a principal shareholder of a bank, or a bank for which an asset manager is a 

principal shareholder, with respect to extensions of credit by the bank to the related interests of 

such asset manager that otherwise would violate Regulation O. 

Regulation O places quantitative limits and qualitative restrictions on extensions of credit 

by banks to their executive officers, directors, and principal shareholders, and to the related 

interests of such persons.1

 The popularity of mutual funds, exchange-traded funds, and similar 

index-based investment products has resulted in several large asset management companies 

becoming principal shareholders of a number of banks. As a principal shareholder, an asset 

manager can trigger a Regulation O presumption of control, resulting in companies in the asset 

manager’s portfolios becoming related interests subject to limits and restrictions under 

Regulation O. Market participants have expressed concern about possible unintended 

consequences of the application of Regulation O to these relationships. 

The federal banking agencies are extending this no-action position while the Board, in 

consultation with the other federal banking agencies, continues to consider whether to amend 

Regulation O to address this issue. As detailed in the Statement, the federal banking agencies 

will exercise discretion in not bringing an enforcement action against asset managers2 and banks 

for extensions of credit to related interests that would otherwise violate Regulation O, provided 

the asset managers and banks satisfy certain conditions that evidence that there is a lack of 

control by the asset manager over the bank. In addition, the federal banking agencies would not 

1

 See 12 CFR part 215. 2

 The no action statement does not extend to asset managers that are, or are affiliated with, a bank holding company 

or savings and loan holding company. 
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take action against banks for failure to report, for purposes of section 363.2 of the FDIC’s 

regulations,3 extensions of credit that would otherwise violate Regulation O but are covered by 

the Statement. 

Unless amended, extended, or superseded in writing, the Statement will cease to be 

effective on the sooner of January 1, 2025, or the effective date of a final Board rule having a 

revision to Regulation O that addresses the treatment of extensions of credit by a bank to fund 

complex-controlled portfolio companies that are insiders of the bank. 

Reserve Banks should distribute this SR letter to supervised institutions in their districts 

and to appropriate supervisory staff. Questions regarding this SR letter may be sent via the 

Board’s public website.4

Michael S. Gibson 

Director

Division of Supervision and Regulation 

Attachment

• Extension of the Revised Statement Regarding Status of Certain Investment Funds and 

their Portfolio Investments for Purposes of Regulation O and Reporting Requirements 

under Part 363 of FDIC Regulations 

Supersedes: 

• SR 22-11, “Status of Certain Investment Funds and their Portfolio Investments for 

Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC 

Regulations” 

3

 12 CFR 363.2. 4

 See http://www.federalreserve.gov/apps/contactus/feedback.aspx. 
1 

Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Office of the Comptroller of the Currency

December 15, 2023 

Extension of the Revised Statement Regarding Status of Certain Investment Funds and 

their Portfolio Investments for Purposes of Regulation O and

Reporting Requirements under Part 363 of FDIC Regulations 

The Board of Governors of the Federal Reserve System (“Board”), the Office of the 

Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (“FDIC”) 

(collectively, the “federal banking agencies”) are issuing this Statement to extend the Extension 

of the Revised Statement Regarding Status of Certain Investment Funds and their Portfolio 

Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC 

Regulations, which they issued on December 22, 2022, and is set to expire on January 1, 2024.1 

This Statement extends the expiration of the no-action position previously provided.

Pursuant to section 22(h) of the Federal Reserve Act,

2

 extensions of credit by banks3 to 

executive officers, directors, and principal shareholders (and related interests of such persons) 

(collectively, “insiders”)4 must comply with certain individual and aggregate lending limits, and 

1

 SR 22-11 (Board), OCC Bulletin 2022-27 (OCC), and FIL-55-2022 (FDIC). The statement 

issued on December 22, 2022, superseded a similar statement issued by the federal banking 

agencies on December 17, 2021. See SR 21-20 (Board), OCC Bulletin 2021-64 (OCC), and FIL80-2021 (FDIC); see also SR 20-31 (Board), OCC Bulletin 2020-110 (OCC), and FIL-115-2020 

(FDIC).

2

 12 U.S.C. 375b. 

3

 Section 22(h) applies to both state and federally chartered insured commercial banks, savings 

associations, and savings banks. See 12 U.S.C. 1828(j)(2); 12 U.S.C. 1468. See also 12 CFR 

part 31 (applying 12 CFR part 215 to national banks and federal savings associations); 12 CFR 

337.3 (applying, with some exceptions, 12 CFR part 215 to entities supervised by the FDIC 

pursuant to 12 U.S.C. 1813(q)). 

4

 Unless otherwise defined, terms used in this Statement have the same meaning as under 

section 22(h) and the Board’s Regulation O (12 CFR part 215), which implements the provisions 

of section 22(h). 
2

large extensions of credit by banks to insiders must be approved in advance by a majority of their 

boards of directors in a vote in which interested directors may not participate.

5

Certain banking firms have raised concerns about the application of Regulation O to 

companies that sponsor, manage, or advise investment funds and institutional accounts that 

invest in voting securities of banking firms (such investment vehicles, collectively “funds,” and,

together with the company that sponsors, manages, or advises them, “fund complexes”).

6

 Over 

the past few years, fund complexes have acquired, or have approached acquiring, more than 

10 percent of a class of voting securities of a wide range of public companies, including banks 

and non-bank companies. Upon acquiring more than 10 percent of a class of voting securities of 

a banking firm, a fund complex would be a “principal shareholder” of the bank for purposes of 

Regulation O (a “principal shareholder fund complex”). Likewise, under Regulation O, any 

company in which a principal shareholder fund complex owns more than 10 percent of a class of 

voting securities could, in some instances, be presumed to be a “related interest” of the fund 

complex (“fund complex-controlled portfolio company”). In that event, the principal 

shareholder fund complex and its controlled portfolio companies would be considered insiders of 

the bank under Regulation O. Accordingly, the bank’s lending to the principal shareholder fund 

complex and its fund-complex controlled portfolio companies would be subject to the strict 

lending limits and other restrictions and standards of Regulation O.

Banks have indicated that the treatment of fund complex-controlled portfolio companies

as “related interests” under Regulation O could require the sudden and disruptive unwinding of 

substantial pre-existing lending relationships and reduce credit availability to a wide swath of 

financial and non-financial companies. 

The Board, in consultation with the OCC and the FDIC, continues to actively consider 

whether to amend Regulation O to address the treatment of extensions of credit to fund complexcontrolled portfolio companies under Regulation O. In the interim, the federal banking 

5 Extensions of credit to insiders also must be made on substantially the same terms as those 

prevailing at the time for comparable transactions and not involve more than normal risk of 

repayment or present other unfavorable features. 12 U.S.C. 375b(2)(A)(i)-(iii); 

12 CFR 215.4(a)(1)(i)-(ii). Regulation O also sets forth reporting and disclosure requirements

for transactions between banks and their insiders. 12 CFR 215.8-.10.

6

 Such fund complexes are not, and are not affiliated with, a bank holding company or savings 

and loan holding company. 
3

agencies believe it is appropriate to articulate supervisory expectations with respect to the 

application of Regulation O in this specific context in order to provide banks flexibility to lend to 

certain fund complex-controlled portfolio companies, subject to the following eligibility criteria:

(1) With regard to the fund complex:

a. The fund complex does not directly or indirectly control:

i. 15 percent or more of any class of voting securities of the bank;

7 or

ii. 20 percent or more of any class of voting securities of the bank if it has 

received applicable agency correspondence referencing at least such a 

percentage,

8 if:

1. No individual fund in the fund complex owns more than 10 

percent of any class of voting securities of the bank. For this 

purpose, two or more funds that share the same or substantially 

the same investment objective and asset composition are 

treated as an individual fund; and

2. Non-index funds in the fund complex do not collectively own 

more than 10 percent of any class of voting securities of the 

bank;

9

7

 For purposes of this Statement only, the federal banking agencies will presume that a fund 

complex meets the eligibility criteria with respect to its investment in the bank if the fund 

complex (1) has provided passivity commitments to the Board in connection with a legal opinion

issued by the Board’s General Counsel, (2) has provided a rebuttal of control to the OCC, or (3) 

has entered into a passivity agreement with the FDIC, in each case permitting the fund complex 

to directly or indirectly acquire up to 15 percent of the shares of a bank without making a filing 

under the Change in Bank Control Act, Bank Holding Company Act, or Home Owners’ Loan 

Act.

8

 Applicable agency correspondence means that a fund complex (1) has provided passivity 

commitments to the Board in connection with a legal opinion issued by the Board’s General 

Counsel, (2) has provided a rebuttal of control to the OCC, or (3) has entered into a passivity 

agreement with the FDIC, in each case permitting the fund complex to directly or indirectly 

acquire up to 20 percent or more of the shares of a bank without making a filing under the 

Change in Bank Control Act, Bank Holding Company Act, or Home Owners’ Loan Act.

9

 For purposes of this Statement only, an index fund is a fund that seeks to track the performance 

of a third-party reference index by buying and holding all or a representative sample of the 

securities in the index in approximately the same proportions as their representation in the index. 

A third-party reference index is an index not controlled by the principal shareholder fund 

complex.
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b. The fund complex does not have or seek to have any representative serve as 

an officer, agent, or employee of the bank; and

c. The fund complex does not exercise or attempt to exercise a controlling 

influence over the management or policies of the bank, including attempting

to influence the dividend polices, loan, credit, or investment decisions or 

policies, pricing of services, personnel decisions, operations activities, or any 

other similar activities or decisions of the bank.

(2) With regard to the bank, the bank does not knowingly make an extension of credit to 

a fund complex-controlled portfolio company, unless the terms of such extension of 

credit are on substantially the same terms as those prevailing for comparable 

transactions with unaffiliated third parties and do not involve more than normal risk 

of repayment or present other unfavorable features.

The federal banking agencies would not take action against banks or principal 

shareholder fund complexes with respect to extensions of credit by the banks to fund complexcontrolled portfolio companies that otherwise would violate Regulation O, provided the fund 

complexes and banks satisfy the foregoing criteria.

10 The no-action position provided herein 

covers extensions of credit to fund complex-controlled portfolio companies only, and does not 

extend to any extension of credit to principal shareholder fund complexes.

11

This Statement supersedes previous statements issued by the federal banking agencies 

that established a no-action position for banks and principal shareholder fund complexes 

concerning extensions of credit by banks to fund complex-controlled portfolio companies that 

otherwise would have violated Regulation O. Unless amended, extended, or superseded in 

writing, this Statement will cease to be effective on the sooner of January 1, 2025, or the 

effective date of a final Board rule having a revision to Regulation O that addresses the treatment 

of extensions of credit by a bank to fund complex-controlled portfolio companies that are 

insiders of the bank. 

Principal shareholder fund complexes and banks that satisfy the eligibility criteria of this 

Statement and rely on it for purposes of Regulation O continue to be subject to all other 

applicable laws and regulations not addressed in this Statement. This Statement does not 

10 This Statement does not cover a fund complex-controlled portfolio company that may be an 

insider of a bank for a reason other than its status as a related interest of a principal shareholder 

fund complex, such as by virtue of the portfolio company’s status as a principal shareholder of 

the bank. In addition, this Statement does not preclude a person from seeking rebuttal of the 

presumption of control pursuant to 12 CFR 215.2(c)(4).

11 The federal banking agencies will not take action against an insured depository institution 

(“IDI”) for failure to report, for purposes of section 363.2 of the FDIC’s Regulations (12 CFR 

363.2), extensions of credit by IDIs to fund complex-controlled portfolio companies that 

otherwise would violate Regulation O but are covered by this Regulation O no-action position.
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insulate a principal shareholder fund complex or bank from actions the federal banking agencies 

may take with respect to any other violations of law or regulation or from safety and soundness 

criticisms related to loans made or actions taken pursuant to this Statement.

The federal banking agencies remind fund complexes that federal securities laws require 

the public disclosure of beneficial ownership stakes under various conditions. These disclosure 

obligations may change based on several factors, including whether the investing fund complex

is acquiring the securities with the purpose or effect of “changing or influencing the control of 

the issuer.”12 Fund complexes should consult the rules and guidance of the Securities and 

Exchange Commission (“SEC”) to determine their disclosure obligations given the facts and 

circumstances around whether an investor or group would be viewed as acquiring or holding the 

securities with the purpose or effect of changing or influencing the control of an issuer under the 

SEC’s rules.

12 This includes whether investors (including legally distinct investors acting as a “group”) are 

required to file on Schedule 13D or the short-form Schedule 13G and the timing for doing so. 

See 17 CFR 240.13d-1(a), 240.13d-1(b), and 240.13d-1(c). Other factors include whether (1) in 

the case of qualified institutional investors, the investor “acquired such securities in the ordinary 

course of [] business;” and (2) in the case of passive investors, the investor “is not directly or 

indirectly the beneficial owner of 20 percent or more of the class” of securities. Id.