24226 Federal Register / Vol. 66, No. 92 / Friday, May 11, 2001 / Rules and Regulations

1 12 U.S.C. 371c. Although section 23A originally

applied only to member banks, Congress has since

applied the section to insured nonmember banks

and insured savings associations in the same

manner as it applies to member banks. See 12

U.S.C. 1828(j); 12 U.S.C. 1468.

2 ‘‘Capital and surplus’’ has been defined by the

Board as tier 1 and tier 2 capital plus the balance

of an institution’s allowance for loan and lease

losses not included in tier 2 capital. 12 CFR

250.242.

3 12 U.S.C. 371c(c).

4 12 U.S.C. 371c(a)(2). Section 23A defines an

affiliate to include, among other things, ‘‘any

company that controls the member bank and any

other company that is controlled by the company

that controls the member bank.’’ 12 U.S.C.

371c(b)(1).

5See A Discussion of Amendments to Section

23A of the Federal Reserve Act Proposed by the

Board of Governors of the Federal Reserve System

36 n.1 (September 1981).

6See, e.g., Letter from General Counsel of the

Board to Ms. Charla Jackson (August 26, 1996)

(crop-production loan to farmer who leases farm

land from a bank’s affiliate is covered by section

23A).

7 12 U.S.C. 371c(f)(2).

8 12 CFR 225.200.

9 63 FR 32,766 (1998).

10 ‘‘Riskless principal’’ is the term used in the

securities business to refer to a transaction in which

FEDERAL RESERVE SYSTEM

12 CFR Part 250

[Miscellaneous Interpretations; Docket R–

1016]

Applicability of Section 23A of the

Federal Reserve Act to Loans and

Extensions of Credit Made by a

Member Bank to a Third Party

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: Section 23A of the Federal

Reserve Act restricts the ability of a

member bank to fund its affiliates

through investments, loans, asset

acquisitions, or certain other

transactions (‘‘covered transactions’’).

Section 23A deems transactions

between a member bank and a

nonaffiliated third party as covered

transactions between the bank and its

affiliate to the extent that proceeds of

the transactions are used for the benefit

of or transferred to the affiliate. The

Board is adopting an interpretation and

exemptions from section 23A for certain

loans made by an insured depository

institution (‘‘depository institution’’) to

customers who use the loan proceeds to

purchase a security or other asset

through an affiliate of the depository

institution acting exclusively as a broker

or riskless principal in the transaction.

First, the Board is adopting an

interpretation confirming that section

23A does not apply to extensions of

credit by an insured depository

institution to customers that use the

loan proceeds to purchase a security or

other asset through an affiliate of the

depository institution, so long as the

affiliate is acting exclusively as a broker

in the transaction, and the affiliate

retains no portion of the loan proceeds.

The Board also is exempting from

section 23A that portion of a loan to a

third party that an affiliate retains as a

market-rate brokerage commission or

agency fee.

In addition, the Board is adopting an

exemption from section 23A for

extensions of credit by an insured

depository institution to customers that

use the loan proceeds to purchase a

security issued by third parties through

a broker-dealer affiliate of the institution

that is acting as riskless principal in the

securities transaction. Finally, the Board

is adopting an exemption for extensions

of credit by an insured depository

institution to customers that use the

credit to purchase securities from a

broker-dealer affiliate of the institution

when that extension of credit was made

pursuant to a preexisting line of credit

not entered into in contemplation of the

purchase of securities from an affiliate

of the depository institution.

EFFECTIVE DATE: June 11, 2001.

FOR FURTHER INFORMATION CONTACT:

Pamela G. Nardolilli, Senior Counsel

(202/452–3289), or Mark E. Van Der

Weide, Counsel (202/452–2263), Legal

Division; or Molly S. Wassom, Associate

Director (202/452–2305), Division of

Banking Supervision and Regulation,

Board of Governors of the Federal

Reserve System, 20th and C Streets,

NW., Washington, DC 20051.

SUPPLEMENTARY INFORMATION:

Background

Section 23A of the Federal Reserve

Act, originally enacted as part of the

Banking Act of 1933, is designed to

prevent the misuse of a member bank’s

resources through ‘‘non-arm’s length’’

transactions with its affiliates.1 To

achieve this purpose, section 23A

establishes both quantitative limits and

qualitative restrictions on transactions

by a member bank with its affiliates.

The statute limits ‘‘covered

transactions’’ between a member bank

and any single affiliate to no more than

10 percent of the bank’s capital and

surplus and limits aggregate covered

transactions with all affiliates to no

more than 20 percent of the bank’s

capital and surplus.2 Covered

transactions include extensions of

credit, investments, and certain other

transactions that expose the member

bank to the credit risk of an affiliate.

Section 23A also requires that credit

exposures to an affiliate be secured by

collateral, the amount of which is

statutorily defined.3

In addition to regulating direct

transactions between a bank and its

affiliates, section 23A deems any

transaction by a member bank with any

person to be a transaction with an

affiliate to the extent that the proceeds

of the transaction are ‘‘used for the

benefit of, or transferred to,’’ that

affiliate.4 This provision of the statute,

commonly referred to as the ‘‘attribution

rule,’’ is designed to prevent an evasion

of the quantitative limits and collateral

requirements of section 23A through the

use of a third party that serves as a

conduit for the flow of funds from the

bank to its affiliates.5 The Board and its

staff have taken the position that section

23A applies to loans made by a bank to

a third party, where the proceeds of the

loans are used to purchase various types

of assets from the bank’s affiliate.6

Section 23A also gives the Board

authority to grant exemptions from the

statute’s restrictions. Specifically, the

statute permits the Board to exempt

transactions or relationships, by

regulation or by order, if such

exemptions are ‘‘in the public interest

and consistent with the purposes of this

section.’’ 7

In August 1997, the Board adopted

Operating Standards governing the

activities of section 20 subsidiaries.8

Operating Standard #6 allows a bank to

extend credit to a customer to purchase

securities from a section 20 affiliate

during the underwriting period for the

securities, pursuant to a preexisting line

of credit not entered into in

contemplation of the purchase of

affiliate-underwritten securities. In

adopting Operating Standard #6, the

Board stated that it would consider

whether an exemption from section 23A

for transactions permitted under the

Operating Standard would be

appropriate.

Proposal

On June 10, 1998, the Board proposed

two exemptions from the quantitative

limitations and collateral restrictions of

section 23A for loans made by an

insured depository institution, the

proceeds of which are used to buy

securities from a registered brokerdealer affiliate of the depository

institution.9 The first exemption

proposed by the Board applied to loans

made by a depository institution to its

customers for the purpose of purchasing

third-party securities through a

registered broker-dealer affiliate of the

institution that is acting as broker or

riskless principal 10 in the securities

Federal Register / Vol. 66, No. 92 / Friday, May 11, 2001 / Rules and Regulations 24227

a broker-dealer, after receiving an order to buy (or

sell) a security for a customer, purchases (or sells)

the security for its own account to offset a

contemporaneous sale to (or purchase from) the

customer. See, e.g., 12 CFR 225.28(b)(7)(ii); The

Bank of New York Company, Inc., 82 Federal

Reserve Bulletin 748 (1996).

11For example, if the customer had a preexisting

line of credit limited to purchases of rated

securities, then the bank would continue to be

prohibited from lending to purchase unrated

securities underwritten by an affiliate.

transaction (‘‘Broker/Riskless Principal

Exemption’’). As proposed, the

exemption was applicable even if the

broker-dealer affiliate of the depository

institution retained part of the loan

proceeds as a brokerage commission or,

in the case of a riskless principal

transaction, a mark-up for effecting the

securities transaction.

The second proposed exemption

applied to extensions of credit by a

depository institution to a customer

made pursuant to a preexisting line of

credit, the proceeds of which were used

to purchase securities underwritten or

sold as principal by a registered brokerdealer affiliate of the institution

(‘‘Preexisting Line of Credit

Exemption’’). The proposal also

required that the line of credit not have

been entered into in contemplation of

the purchase of securities from an

affiliate and that either the line of credit

be unrestricted or the extension of credit

be clearly consistent with any

restrictions imposed under the line.11

Summary of Comments and Final Rule

The Board received approximately 14

comments on the proposed exemptions.

The commenters included ten banks or

bank holding companies, and four trade

associations that represent the banking

industry. The Board also received seven

comments from the Federal Reserve

Banks. The commenters

overwhelmingly supported the goals of

the Board’s proposals, which they

believed would provide benefits to both

consumers and depository institutions

without raising the types of concerns

that section 23A was intended to

address, but many commenters argued

that the Board should achieve its goals

through alternative means.

Broker/Riskless Principal Exemption

Commenters generally agreed with the

position taken in the Board’s proposal

that loans by an insured depository

institution to a third party to purchase

securities through a broker-dealer

affiliate of the depository institution

that is acting exclusively in a brokerage

or riskless principal capacity should not

be within the ambit of section 23A.

Many commenters, however, argued

that the Board should not adopt an

exemption to section 23A that applies

only to broker-dealers and securities.

These commenters contended that a

better course of action would be for the

Board to issue an interpretation broader

in scope than the proposed exemption.

The interpretation suggested by the

commenters would confirm that in no

case is a loan from a depository

institution to a third party subject to

section 23A when the third party

purchases assets through a bank affiliate

acting exclusively as broker or agent for

the third party (regardless of the

affiliate’s retention of brokerage or

agency fees).

The commenters argued that adoption

of a specific exemption for securities

brokerage transactions involving brokerdealer affiliates implies that, absent a

grant of exemption, the Board considers

brokerage or agency transactions

involving other types of affiliates and

assets to be covered by section 23A. The

commenters contended that, if an

affiliate is acting only as broker or agent

in a transaction, the affiliate does not

receive a ‘‘benefit’’ from the transaction,

and the transaction cannot be viewed as

fitting within section 23A. One

commenter, however, found support for

the Board’s decision to issue an

exemption for riskless principal

transactions, noting that there could be

disagreement as to whether riskless

principal transactions should be viewed

as within the scope of section 23A.

The exemption from section 23A

proposed by the Board would have

applied when an insured depository

institution lends to its customers for the

purpose of purchasing third-party

securities through a registered brokerdealer affiliate acting solely as broker or

riskless principal in a securities

transaction with the customer. The

Board believed that the exemption

would be consistent with the purposes

of section 23A because of the negligible

risk that loans made pursuant to the

exemption would be used as a source of

funding from an insured depository

institution to its broker-dealer affiliate.

As proposed, the exemption only would

have been available when the securities

being sold were not in the inventory of

the broker-dealer. Accordingly, the loan

proceeds, although initially transferred

to the affiliate to purchase the securities,

would be transferred in turn (minus a

brokerage fee or riskless principal markup) to the seller of the securities, which

would not be an affiliate of the

depository institution.

The Board concurs with the

commenters that extensions of credit by

a depository institution to customers to

purchase third-party securities and

assets through an affiliate of the

depository institution that is acting

exclusively in a brokerage or agency

capacity fall outside of the reach of

section 23A to the extent that the

affiliate retains no part of the loan

proceeds. Accordingly, rather than

issuing the proposed exemption from

section 23A to cover certain types of

brokerage transactions, the Board is

issuing a broader interpretation, as

requested by the commenters. The

interpretation confirms that section 23A

does not apply when a depository

institution’s borrower uses loan

proceeds to enter into agency

transactions with an affiliate of the

depository institution so long as the

securities or other assets being

purchased by the borrower are not

issued by, or sold from the inventory of,

any affiliate of the depository institution

and to the extent that no affiliate retains

any portion of the loan proceeds.

A somewhat different analysis under

section 23A is required, however, when

an affiliate retains a portion of a

depository institution’s loan to a third

party as a brokerage commission or

agency fee. The portion of the loan used

by the borrower to pay the affiliate’s

commission or fee would be subject to

section 23A because that transaction fee

represents the proceeds of a loan

retained and used for the benefit of an

affiliate under the attribution rule.

In accordance with its original

proposal, the Board has determined to

exempt from section 23A that portion of

a loan from a depository institution to

an unaffiliated customer that is retained

by an affiliate of the institution as a

market-rate brokerage fee or agency

commission; that is, a fee or commission

no greater than that prevailing at the

same time for comparable agency

transactions entered into by the affiliate

with persons who are neither affiliates

nor borrowers from an affiliated

depository institution, as required by

section 23B of the Federal Reserve Act

(12 U.S.C. 371c–1). The Board expects

that such transaction fees will be

nominal amounts and will represent a

small percentage of the overall agency

transaction and, accordingly, believes

that these fees present little opportunity

for a depository institution to benefit its

broker-dealer affiliate.

Finally, a loan from a depository

institution to a customer who engages in

a riskless principal trade through a

broker-dealer affiliate of the depository

institution would be covered

transactions under section 23A. Riskless

principal trades—although the

functional equivalent of securities

brokerage transactions—involve the

purchase of a security by the depository

institution’s broker-dealer affiliate.

24228 Federal Register / Vol. 66, No. 92 / Friday, May 11, 2001 / Rules and Regulations

12For this reason, riskless principal trades

involve risks that are different from securities

brokerage transactions. See, e.g., Exchange Act Rel.

No. 33,743, reprinted in [1993–1994] Fed. Sec. L.

Rep. (CCH) 85,326 (March 9, 1984).

13As in the proposed rule, the final rule would

make clear that the exemption for riskless principal

transactions would not apply if the broker-dealer

affiliate sold securities to the third-party borrower

out of its own inventory or out of the inventory of

another affiliate of the depository institution. This

condition is not intended to make the exemption

unavailable when the broker-dealer affiliate sells as

principal to the third-party borrower a security that

it purchased immediately prior to the sale in order

to effect the riskless principal transaction requested

by the borrower, so long as the broker-dealer

affiliate did not purchase the security from another

affiliate of the depository institution.

Accordingly, the broker-dealer retains

the loan proceeds at least for some

moment in time.12 As noted in the

proposing release, there is negligible

risk that loans made by a depository

institution to borrowers to engage in

riskless principal trades through a

broker-dealer affiliate of the depository

institution would be used to fund the

broker-dealer. For this reason, the Board

believes that it is appropriate to adopt

the proposed exemption from section

23A to cover riskless principal

securities transactions engaged in by

depository institution borrowers

through broker-dealer affiliates of the

depository institution.13 This grant of

exemption is applicable even if the

broker-dealer retains a portion of the

loan proceeds as a market-rate mark-up

for executing the riskless principal

securities trade.

Preexisting Line of Credit Exemption

Approximately a dozen commenters

offered specific comments on the

proposed preexisting line of credit

exemption. A majority of these

commenters supported the Board’s

proposed exemption and concurred

with the Board’s view that exempting an

extension of credit pursuant to a

preexisting credit line from section 23A

would not raise safety and soundness

concerns.

Several commenters expressed

concern about the requirement that the

credit line be ‘‘preexisting.’’ The

commenters urged the Board to adopt

other safeguards in lieu of the

‘‘preexisting’’ requirement. For example,

one commenter argued that the Board

should only require that banks conduct

independent credit analyses before

granting credit. Other commenters

offered alternative standards.

The Board is adopting the exemption

for preexisting lines of credit

substantially as proposed. As noted

above, the exemption applies to

extensions of credit by a depository

institution made pursuant to a

preexisting line of credit, the proceeds

of which are used to buy securities

underwritten or held as principal by a

registered broker-dealer affiliate of the

depository institution. Under the

exemption, extensions of credit must be

made by a depository institution

pursuant to a preexisting line of credit

that was not entered into in

contemplation of the purchase of

securities by the borrower from an

affiliate of the institution, and the

extension of credit must be consistent

with any restrictions imposed by the

line. The Board believes that the

‘‘preexisting’’ and other requirements

for such lines of credit are important

safeguards to ensure that the credit was

not extended by the depository

institution for the purpose of inducing

a borrower to purchase securities from

or issued by an affiliate.

Several of the commenters that

opposed the requirement that the line of

credit be ‘‘preexisting’’ argued that, if,

despite their objections, the Board

decided to use a ‘‘preexisting’’

requirement as part of this exemption,

the Board should adopt a safe harbor.

These commenters urged the adoption

of a five-day safe harbor, in which the

credit line would meet the ‘‘preexisting’’

requirement if the line were established

at least five days prior to the customer’s

securities transaction with the bank’s

broker-dealer affiliate.

The Board does not regard as

necessary or appropriate a five-day safe

harbor for determining whether a line of

credit is truly ‘‘preexisting.’’ The Board

intends that this exemption be used in

good faith by depository institutions. As

noted in the proposing release, in

determining whether the exemption is

being used in good faith, examiners will

consider the timing of the line of credit.

In addition, examiners will consider the

conditions imposed on the credit line

and whether the line of credit has been

used for purposes other than the

purchase of securities from an affiliate.

The Board will issue additional

examiner guidance regarding the

‘‘preexisting’’ requirement should such

guidance prove necessary.

Some commenters objected that the

proposed Preexisting Line of Credit

Exemption was not necessary to cover a

borrower’s purchases of bank-eligible

securities from an affiliate, which the

commenters apparently believed fall

outside the purview of section 23A. The

attribution rule of section 23A does not,

however, distinguish between bankeligible and bank-ineligible securities: A

loan from a depository institution, the

proceeds of which are used by the

borrower to buy securities underwritten

or held as principal by an affiliate of the

depository institution, would be

covered by section 23A regardless of

whether the securities purchased are

bank-eligible or bank-ineligible. To

avoid having the loan covered by the

quantitative limits of section 23A, the

loan would need to qualify for an

exemption under the statute—either the

Preexisting Line of Credit Exemption

being adopted by the Board today or

some other exemption (e.g., the

exemption in section 23A(d)(4) for

obligations fully secured by deposit

accounts or U.S. government

obligations).

At the request of one commenter, the

Board also is clarifying that the

Preexisting Line of Credit Exemption

may not be used in circumstances in

which the line has been merely preapproved. Accordingly, for an extension

of credit to qualify for this exemption,

the credit line must be, in fact,

‘‘preexisting’’ and not merely

‘‘preapproved.’’

Regulatory Flexibility Act

The Board certifies that adoption of

these rules is not expected to have a

significant economic impact on a

substantial number of small business

entities within the meaning of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.) because the Board’s action

creates exemptions and clarifies certain

interpretations under section 23A of the

Federal Reserve Act. Accordingly, the

Board’s action does not impose more

burdensome requirements on depository

institutions, their holding companies, or

their affiliates than are currently

applicable.

Administrative Procedure Act

Subject to certain exceptions, 12

U.S.C. 4801(b)(1) provides that new

regulations and amendments to

regulations prescribed by a Federal

banking agency that impose additional

reporting, disclosure, or other new

requirements on an insured depository

institution must take effect on the first

day of a calendar quarter that begins on

or after the date on which the

regulations are published in final form.

These rules are not subject to this

delayed effective date requirement

because the rules impose no new

requirements on existing operations of

depository institutions. The rules only

exempt transactions that were

previously subject to the restrictions of

section 23A.

Paperwork Reduction Act

The Board has determined that the

rules do not involve the collection of

information pursuant to the provisions

Federal Register / Vol. 66, No. 92 / Friday, May 11, 2001 / Rules and Regulations 24229

1 12 U.S.C. 371c(a)(2). 2 12 U.S.C. 371c–1(a)(2)(D).

of the Paperwork Reduction Act of 1995,

44 U.S.C. 3501 et seq.

List of Subjects in 12 CFR Part 250

Banks, banking, Federal Reserve

System.

For the reasons set forth in the

preamble, the Board amends 12 CFR

part 250 as follows:

PART 50—MISCELLANEOUS

INTERPRETATIONS

1. The authority citation for part 250

continues to read as follows:

Authority: 12 U.S.C. 78, 248(i) and 371c(f).

2. Section 250.243 is added to read as

follows:

§ 250.243 Applicability of section 23A of

the Federal Reserve Act to loans and

extensions of credit by an insured

depository institution to a nonaffiliate to

enable the nonaffiliate to purchase an asset

through an affiliate of the institution that is

acting exclusively in an agency or

brokerage capacity in the transaction.

(a) The attribution rule of section 23A

of the Federal Reserve Act (12 U.S.C.

371c) provides that ‘‘a transaction by a

member bank with any person shall be

deemed to be a transaction with an

affiliate to the extent that the proceeds

of the transaction are used for the

benefit of, or transferred to, that

affiliate.’’ 1 The Board has considered

the question of whether a loan or

extension of credit by an insured

depository institution (‘‘depository

institution’’) to an unaffiliated borrower

who uses the proceeds of the transaction

to purchase an asset through an affiliate

of the institution that is acting

exclusively as an agent or broker in the

transaction should be subject to the

attribution rule because of the limited

benefit that the affiliate receives when it

acts only as an agent or broker in the

transaction. The Board believes that a

loan by a depository institution to an

unaffiliated borrower who uses the

proceeds of the loan to purchase an

asset through an affiliate of the

institution that is acting exclusively in

an agency or brokerage capacity is not

covered by section 23A if the affiliate

retains no portion of the loan proceeds

as a fee or commission for its services.

(b) A somewhat different analysis is

required when the affiliate acting as

agent or broker in the transaction retains

a portion of the loan proceeds as a fee

or commission. In such a case, the

portion of the loan not retained by the

affiliate as a fee or commission still

would be outside the coverage of section

23A. On the other hand, the portion of

the loan retained by the affiliate as a fee

or commission would be subject to

section 23A because it represents

proceeds of a loan by a depository

institution to a third party that are

transferred to, and used for the benefit

of, an affiliate of the institution. The

Board hereby grants an exemption from

section 23A for such fees and

commissions.

(c) The Board notes that this

interpretation would not apply if the

securities or other assets purchased by

the third-party borrower through the

affiliate of the depository institution

were issued or underwritten by, or sold

out of the inventory of, another affiliate

of the depository institution. In such a

case, proceeds of the loan from the

depository institution would be

transferred to, and used for the benefit

of, the affiliate that issued, underwrote,

or sold the asset on a principal basis to

the third party.

(d) The Board also notes that the

transactions described above (including

the loan to the third-party borrower and

any fee or commission paid to the

affiliate of the depository institution out

of the loan proceeds) would be subject

to the market terms requirement of

section 23B, which applies to ‘‘any

transaction in which an affiliate acts as

an agent or broker or receives a fee for

its services to the bank or any other

person.’’ 2

3. Section 250.244 is added to read as

follows:

§ 250.244 Exemption from section 23A of

the Federal Reserve Act for certain loans

and extensions of credit by an insured

depository institution to a nonaffiliate to

enable the nonaffiliate to purchase

securities through a registered brokerdealer affiliate of the institution that is

acting exclusively as riskless principal in

the securities transaction.

(a) A loan or extension of credit by an

insured depository institution

(‘‘depository institution’’) to any person

other than an affiliate of such depository

institution is exempted from section

23A of the Federal Reserve Act (12

U.S.C. 371c) if—

(1) The loan or extension of credit is

on terms that are consistent with safe

and sound banking practices; and

(2) The proceeds of the loan or

extension of credit are used to purchase

a security through an affiliate of the

depository institution that is a brokerdealer registered with the Securities and

Exchange Commission, where

(i) The affiliate is acting exclusively as

a riskless principal in the securities

transaction; and

(ii) The security is not issued or

underwritten by, or sold out of the

inventory of, any affiliate of the

depository institution.

(b) This grant of exemption is

applicable to a loan or extension of

credit covered by paragraph (a) of this

section even if a portion of the proceeds

of the loan or extension of credit is used

by the borrower to pay a riskless

principal mark-up to the affiliate,

provided that the mark-up is

substantially the same as, or lower than,

those prevailing at the same time for

comparable transactions with or

involving other nonaffiliated

companies, in accordance with section

23B of the Federal Reserve Act (12

U.S.C. 371c–1).

4. Section 250.245 is added to read as

follows:

§ 250.245 Exemption from section 23A of

the Federal Reserve Act for certain loans

and extensions of credit by an insured

depository institution to a nonaffiliate made

pursuant to a preexisting line of credit.

Section 23A of the Federal Reserve

Act (12 U.S.C. 371c) shall not apply to

an extension of credit by an insured

depository institution (‘‘depository

institution’’) to any person other than an

affiliate of such depository institution

if—

(a) The proceeds of the loan or

extension of credit are used to purchase

a security from or through an affiliate of

the depository institution that is a

broker-dealer registered with the

Securities and Exchange Commission;

and

(b) The loan or extension of credit is

made pursuant to, and consistent with

any conditions imposed in, a

preexisting line of credit that was not

established in contemplation of the

purchase of securities from or through

an affiliate of the depository institution.

By order of the Board of Governors of the

Federal Reserve System, May 3, 2001.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 01–11607 Filed 5–10–01; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL RESERVE SYSTEM

12 CFR Part 250

[Miscellaneous Interpretations; Docket No.

R–1104]

Application of Sections 23A and 23B of

the Federal Reserve Act to Derivative

Transactions With Affiliates and

Intraday Extensions of Credit to

Affiliates

AGENCY: Board of Governors of the

Federal Reserve System.