Source: https://www.jdsupra.com/legalnews/certain-companies-that-may-be-subject-55291/
Timestamp: 2018-01-20 12:37:59
Document Index: 228504702

Matched Legal Cases: ['§ 5390', '§ 5381', '§ 1843', 'art 217', 'art 2', '§148', '§ 5383', 'art 371', '§ 148', '§ 5385']

Certain Companies that May be Subject to FDIC Orderly Liquidation Authority under Dodd-Frank are Now Subject to Qualified Financial Contract Recordkeeping Requirements | Dechert LLP - JDSupra
Equal to or greater than $500 billion and
less than $1 trillion 2 years
Equal to or greater than $250 billion and
less than $500 billion 3 years
1) A QFC is a generally a transaction that meets the definitions of securities contract, commodities contract, forward contract, repurchase agreement or swap agreement contained in Title II. 12 U.S.C. § 5390(c)(8)(D)(ii)-(vi).
2) Qualified Financial Contracts Recordkeeping Related to Orderly Liquidation Authority, Final Rule, 81 Fed. Reg. 75624 (Oct. 31, 2016).
3) 12 U.S.C. § 5381(a)(11) (citing 12 U.S.C. § 1843(k)(4)).
4) 12 C.F.R. Part 217. The FRB, the Office of the Comptroller of the Currency and the FDIC have proposed regulations that would impact parties to a QFC with a global systemically important banking organization or an affiliate thereof. See Dechert OnPoint, Proposed U.S. Federal Reserve Board Rule’s Impact on Buy-Side Remedies in QFCs with Global Systemically Important Banking Organizations and their Affiliates, June 2016.
5) If no financial statements are required to be submitted to the entity’s primary financial regulator, then the total assets are as shown on the consolidated balance sheet of the entity for the most recently completed fiscal year prepared in accordance with U.S. generally accepted accounting principles (GAAP) or other applicable accounting standards.
6) 81 Fed. Reg. at 75631.
8) Note that certain investment advisers must include their audited balance sheet for the most recent fiscal year in their brochure as required by Part 2A Item 18 of Form ADV. However, this requirement only affects a small minority of investment advisers. Generally, most investment advisers are not required to maintain audited financials under the Investment Advisers Act of 1940.
9) Gross notional derivatives outstanding refers to the total value of all money associated with the derivatives transactions at their respective spot price. Derivatives liabilities are defined in the Rule as “the fair value of derivative instruments in a negative position that are outstanding as of the end of the most recent fiscal year as recognized and measured in accordance with GAAP or other applicable accounting standards, taking into account the effects of master netting agreements and cash collateral held with the same counterparty on a net basis to the extent reflected on the financial company's financial statements.” See 31 C.F.R. §148.1(e) and (s).
10) Although an insurance company may be resolved under Title II, such a resolution will be conducted under state law. 12 U.S.C. § 5383(e).
11) Since 2008, the FDIC has had a QFC recordkeeping requirement that applies to IDIs that are deemed to be in a troubled condition. 12 C.F.R. Part 371. The FDIC has proposed to update its regulation to coordinate with the FSOC’s QFC Rule. See Recordkeeping Requirements for Qualified Financial Contracts; Notice of Proposed Rulemaking, 81 Fed. Reg. 95496 (Dec. 28, 2016).
12) These entities are not included under the definition of “financial company.”
13) “Top-tier financial company” means a financial company that is a member of a corporate group consisting of multiple records entities and that is not itself controlled by another financial company. 31 C.F.R. § 148.2(q).
14) Where a broker-dealer is placed in a Title II receivership, that receivership would be conducted by Securities Investor Protection Corporation generally under the terms of the Securities Investor Protection Act of 1970, but subject to Title II QFC provisions. 12 U.S.C. § 5385(b)(4). See Dechert OnPoint, SEC and FDIC Propose Dodd-Frank Broker-Dealer Resolution Rules, April 2016.
15) If the FDIC transfers the QFCs to another institution, then the counterparty to the transferred QFCs will not be able to exercise any rights available to such counterparty under the QFC governing documents solely based on or incidental to: (i) the appointment of the FDIC as receiver; or (ii) the insolvency or financial condition of the institution for which the FDIC is appointed receiver.
16) 81 Fed. Reg. at 75624-5.
17) Id. at 75625.