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2000 - Rules and Regulations
{{12-31-08 p.3249}}
PART 371—RECORDKEEPING REQUIREMENTS FOR QUALIFIED FINANCIAL
CONTRACTS
Sec.
371.1
Scope, purpose, and applicability.
371.2
Definitions.
371.3
Form, availability and maintenance of records.
371.4
Content of records.
371.5
Enforcement actions.
Appendix A to Part
371—File Structure for Qualified Financial Contract Records
Authority: 12 U.S.C. 1819(a)(Tenth); 1820(g);
1821(e)(8)(D) and (H); 1831g; 1831i, and 1831s.
Source: The provisions of this Part 371 appear at 73 Fed. Reg.
78170, December 22, 2008, effective January 21, 2009, unless otherwise
noted.
§ 371.1 Scope, purpose, and applicability.
(a) Scope. This part applies to insured depository
institutions that are in a troubled condition as defined in
§ 371.2(f).
(b) Purpose. This part establishes recordkeeping
requirements with respect to qualified financial contracts for insured
depository institutions that are in a troubled condition.
(c) Applicability. An insured depository institution
shall comply with this part within 60 days after written notification
by the institution's appropriate Federal banking agency or the FDIC
that it is in a troubled condition under § 371.2(f). The FDIC may, at
its discretion, grant one or more extensions of time for compliance
with this part. No single extension shall be for a period of more than
30 days. An insured depository institution may request an extension of
time by submitting a written request to the FDIC at least 15 days prior
to the deadline for its compliance with the requirements of this part.
The written request for an extension must contain a statement of the
reasons why the institution cannot comply by the deadline for
compliance.
[Codified to 12 C.F.R. § 371.1]
§ 371.2 Definitions.
For purposes of this part:
(a) Affiliate means any company that controls, is
controlled by, or is under common control with another company.
(b) Appropriate Federal banking agency means the agency
or agencies designated under 12 U.S.C. 1813(q).
(c) Insured depository institution means any bank or
savings association, as defined in 12 U.S.C. 1813, the deposits of
which are insured by the FDIC.
(d) Position means the rights and obligations of a
person or entity as a party to an individual transaction under a QFC.
(e) Qualified financial contracts (QFCs) mean those
qualified financial contracts that are defined in 12 U.S.C.
1821(e)(8)(D) to include securities contracts, commodity contracts,
forward contracts, repurchase agreements, and swap agreements and any
other contract determined by the FDIC to be a QFC as defined in that
section.
(f) Troubled condition means for purposes of this part,
any insured depository institution that:
(1) Has a composite rating, as determined by its appropriate
Federal banking agency in its most recent report of examination, of 3
(only for insured depository institutions with total consolidated
assets of ten billion dollars or greater), 4, or 5 under the Uniform
Financial Institution Rating System, or in the case of an insured
branch of a foreign bank, an equivalent rating;
(2) Is subject to a proceeding initiated by the FDIC for
termination or suspension of deposit insurance;
{{12-31-08 p.3250}}
(3) Is subject to a cease-and-desist order or written agreement
issued by the appropriate Federal banking agency, as defined in 12
U.S.C. 1813(q), that requires action to improve the financial condition
of the insured depository institution or is subject to a proceeding
initiated by the appropriate Federal banking agency which contemplates
the issuance of an order that requires action to improve the financial
condition of the insured depository institution, unless otherwise
informed in writing by the appropriate Federal banking agency;
(4) Is informed in writing by the insured depository
institution's appropriate Federal banking agency that it is in
troubled condition for purposes of 12 U.S.C. 1831i on the basis of the
institution's most recent report of condition or report of
examination, or other information available to the institution's
appropriate Federal banking agency; or
(5) Is determined by the appropriate Federal banking agency or
the FDIC in consultation with the appropriate Federal banking agency to
be experiencing a significant deterioration of capital or significant
funding difficulties or liquidity stress, notwithstanding the composite
rating of the institution by its appropriate Federal banking agency in
its most recent report of examination.
[Codified to 12 C.F.R. § 371.2]
§ 371.3 Form, availability and maintenance of records.
(a) Form and availability. The records required to be
maintained by an insured depository institution for QFCs under this
part--
(1) Except for records that must be maintained through electronic
files under Appendix A of this part, may be maintained in any form,
including in an electronic file, provided that the records are updated
at least daily;
(2) If the records are not maintained in written form, they will
be capable of being reproduced or printed in written form; and
(3) Will be made available upon written request by the FDIC
immediately at the close of processing of the institution's business
day, for a period provided in that written request.
(b) Maintenance of records after the institution is no longer
in a troubled condition. Insured depository institutions that are
in a troubled condition as defined in § 371.2(f) shall continue to
maintain the capacity to produce records required under this part on a
daily basis for a period of one year after the date that the
appropriate Federal banking agency notifies the institution that it is
no longer in a troubled condition as defined in § 371.2(f).
(c) Maintenance of records after an acquisition of an
institution that is in a troubled condition. If an insured
depository institution that has been determined by the appropriate
Federal banking agency to be in a troubled condition ceases to exist as
an insured depository institution as a result of a merger or a similar
transaction into an insured depository institution that is not in a
troubled condition immediately following the acquisition, the
obligation to maintain records under this part on a daily basis will
terminate when the institution in a troubled condition ceases to exist
as a separately insured depository institution.
[Codified to 12 C.F.R. § 371.3]
§ 371.4 Content of records.
For each QFC for which an insured depository institution is a party
or is subject to a master netting agreement involving the QFC, that
institution must maintain records as listed under Appendix A of this
part.
[Codified to 12 C.F.R. § 371.4]
{{12-31-08 p.3251}}
§ 371.5 Enforcement actions.
Violating the terms or requirements of the recordkeeping
requirements set forth in this part constitutes a violation of a
regulation and subjects the participating entity to enforcement actions
under Section 8 of the FDI Act (12 U.S.C. 1818).
[Codified to 12 C.F.R. § 371.5]
Appendix A to Part 371—File Structure for Qualified Financial
Contract (QFC) Records
QFC Recordkeeping Requirements
A. Electronic Files To Be Maintained for QFCs
Any insured depository institution that is subject to this part
("institution") must produce and maintain, in an electronic file
in a format acceptable to the FDIC, the position level data found in
Table A1 for all open positions in QFCs entered into by that
institution or for which the institution is subject. To fulfill this
requirement, not later than three business days after the
institution's receipt of the written notification from the FDIC under
§ 371.1(c) of this part, the institution must provide the FDIC with
(i) a directory of the electronic files that will be used by the
institution to maintain the position level data found in Table A1 and
(ii) a point of contact at the institution should the FDIC have
follow-up questions concerning this information. In addition, for such
data, the institution must produce at the close of processing of the
institution's business day a report in a format acceptable to the FDIC
that aggregates the current market value and the amount of QFCs by each
of the fields in Table A1. The institution must produce the report
within 60 days of a written notification by the FDIC for the period
specified in the notification. Notwithstanding the above requirements,
for institutions in a troubled condition with less than twenty open QFC
positions upon receipt of the written notification from the FDIC, or
the institution's appropriate Federal banking agency under part 371
and this Appendix, the data required in Table A1 are not required to be
recorded and maintained in electronic form as would otherwise be
required by this part, so long as all required information is capable
of being updated on a daily basis. If at any time after receiving such
notification an institution has twenty or more open QFC positions at
any point in time, it must within 60 days after that first occurs,
comply with all provisions of part 371.
Table A1—Position-Level
Data
| Field |
Example |
Data
application |
|---|
| Unique position
identifier and CUSIP, if
available |
999999999AU |
information
needed to readily track and distinguish positions; unique trade
confirmation number if available. |
| Portfolio location identifier (to
identify the headquarters or branch where the position is
booked). |
XY12Z |
Information needed to determine the
headquarters or branch where the position is booked (see section B.1 of
this Appendix). |
| Type of position (including the general nature of
the reference asset or interest rate). |
Interest rate swap, credit
default swap, equity swap, foreign exchange forward, securities
repurchase agreement, loan repurchase agreement. |
Information needed
to determine the extent to which the institution is involved in any
particular QFC market.
|
{{12-31-08 p.3252}}
Table A1—Position-Level Data
(Continued)
| Field |
Example |
Data
application |
|---|
| Purpose of the position (if the purpose consists of
hedging strategies, include the general category of the item(s)
hedged). |
Trading, hedging mortgage servicing, hedging certificates
of deposit. |
Information needed to determine the role of the QFC in
the institution's business strategy. |
| Termination date (date the
position terminates or is expected to terminate, expire, mature, or
when final performance is required). |
3/31/2010 |
Information
needed to determine when the institution's rights and obligations
regarding the position are expected to end. |
| Next call, put, or
cancellation date |
9/30/08 |
Information needed to
determine when a call, put, or cancellation may occur with respect to a
position. |
| Next payment date |
9/30/08 |
Information
needed to anticipate potential upcoming obligations. |
| Current market
value of the position (as of the date of the
file). |
$995,000 |
Information needed to determine if the
institution is in or out-of-the money with the counterparty. |
| Unique
counterparty identifier |
AB999C |
Information needed to
aggregate positions by counterparty. |
| Notional or principal amount of
the position (this is the notional amount, where
applicable). |
$1,000,000 |
Information needed to help evaluate
the position. |
| Documentation status of position |
Affirmed,
confirmed, or neither affirmed nor confirmed. |
Information needed to
determine reliability of a booked position and its legal
status.
|
Also, the institution must maintain, in an electronic file in a
format acceptable to the FDIC, the counterparty-level data found in
Table A2 for all open positions in QFCs entered into by that
institution. In addition, the institution must, at the FDIC's written
request, produce immediately at the close of processing of the
institution's business day, for a period provided in that written
request, a report in a format acceptable to the FDIC that (i) itemizes,
by each counterparty and by each of its affiliates, the data required
in each field in Table A2, and (ii) aggregates by field, for each
counterparty and its affiliates, the data required in each field in
Table A2. Notwithstanding the above requirements, for institutions in a
troubled condition with less than twenty open QFC positions upon
receipt of the written notification from the FDIC or the institution's
appropriate Federal banking agency under part 371 and this Appendix,
the data required in Table A2 is not required to be recorded in
electronic form as would otherwise be required by this part, so long as
all required information is maintained and is capable of being updated
on a daily basis. If at any time after receiving such notification an
institution has twenty or more open QFC positions at any point in time,
it must within 60 days after that first occurs, comply with all
provisions of part 371.
{{12-31-08 p.3253}}
Table A2—Counterparty-Level
Data
| Field |
Example |
Data
Application |
|---|
| Unique counterparty
identifier |
AB999C |
Information
needed to aggregate positions by counterparty. |
| Current market value
of all positions, as aggregated and, to the extent permitted under each
applicable agreement, netted1 (as of the date of the
file). |
($1,000,000) |
Information needed to help evaluate the
positions. |
| Current market value of all collateral and the type of
collateral, if any, that the institution has posted against all
positions with each counterparty. |
$950,000; U.S.
treasuries |
Information needed to determine the extent to which
the institution has provided collateral. |
| Current market value of all
collateral and the type of collateral, if any, that the counterparty
has posted against all positions. |
$50,000; U.S.
treasuries |
Information needed to determine the extent to which
the counterparty has provided collateral. |
| Institution's collateral
excess or deficiency with respect to all of the institution's
positions, as determined under each applicable agreement including
thresholds and haircuts where
applicable2 |
($25,000) |
Information needed to determine
the extent to which the institution has satisfied collateral
requirements under each applicable agreement. |
| Counterparty's
collateral excess or deficiency with respect to all of the
institution's positions with each counterparty, as determined under
each applicable agreement including thresholds and haircuts where
applicable. |
$50,000 |
Information needed to determine the
extent to which the counterparty has satisfied collateral requirements
under each applicable agreement. |
| The institution's collateral
excess or deficiency with respect to all the positions, based on the
aggregate market value of the positions (after netting to the extent
permitted under each applicable agreement) and the aggregate market
value of all collateral posted by the institution against the
positions, in whole or in part. |
($50,000) |
Information
needed to determine the extent to which the institution's obligations
regarding the positions may be unsecured.
|
1If one or more positions cannot be netted against
others, they should be maintained as separate entries.
2If all positions are not secured by the same collateral, then
separate entries should be maintained for each position or set of
positions secured by the same collateral.
B. Other Files (in Written or Electronic Form) To be
Maintained for QFCs
Within 60 days after the written notification by the FDIC, the
institution must, produce the following files at the close of
processing of the institution's business day, for a period provided in
that written notification.
1. Each institution must maintain the following files in written or
electronic form:
{{12-31-08 p.3254}}
• A list of counterparty identifiers, with the associated
counterparties and contact information;
• A list of the affiliates of the counterparties that are also
counterparties to QFC transactions with the institution or its
affiliates, and the specific master netting agreements, if any, under
which they are counterparties;
• A list of affiliates of the institution that are counterparties
to QFC transactions where such transactions are subject to a master
agreement that also governs QFC transactions entered into by the
institution. Such list must specify (i) which affiliates are direct or
indirect subsidiaries of the institution and (ii) the specific master
agreements under which those affiliates are counterparties to QFC
transactions; and
• A list of portfolio identifiers (see Table A1), with the
associated booking locations.
2. For each QFC, the institution must maintain in a
readily-accessible format all of the following documents:
• Agreements (including master agreements and annexes,
supplements or other modifications with respect to the agreements)
between the institution and its counterparties that govern the QFC
transactions;
• Documents related to and affirming the position;
• Active or "open" confirmations, if the position has been
confirmed;
• Credit support documents; and
• Assignment documents, if applicable, including documents that
confirm that all required consents, approvals, or other conditions
precedent for such assignment(s) have been obtained or satisfied.
3. The institution must maintain:
• A legal-entity organizational chart, showing the institution,
its corporate parent and all other affiliates, if any; and
• An organizational chart, including names and position titles,
of all personnel significantly involved in QFC-related activities at
the institution, its parent and its affiliates.
• Contact information for the primary contact person for purposes
of compliance with this part by the institution.
4. The institution must maintain a list of vendors supporting the
QFC-related activities and their contact information.
[Codified to 12 C.F.R. Part 371, Appendix A]
[End FDIC Rules and Regulations]
[The tab card "FDIC Statements of Policy" follow
this.]
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