82 FR 61505 - Qualified Financial Contracts Recordkeeping Related to Orderly Liquidation Authority

DEPARTMENT OF THE TREASURY

Federal Register Volume 82, Issue 248 (December 28, 2017)

The Secretary of the Treasury (the ``Secretary''), as Chairperson of the Financial Stability Oversight Council, is proposing, in consultation with the Federal Deposit Insurance Corporation (the ``FDIC''), an amendment to the regulation implementing the qualified financial contract (``QFC'') recordkeeping requirements of the Dodd- Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act'' or the ``Act'') that would extend the compliance dates of the regulation.

[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Proposed Rules]
[Pages 61505-61507]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-28073]


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DEPARTMENT OF THE TREASURY

31 CFR Part 148

RIN 1505-AC57


Qualified Financial Contracts Recordkeeping Related to Orderly 
Liquidation Authority

AGENCY: Department of the Treasury.

ACTION: Proposed rule.

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SUMMARY: The Secretary of the Treasury (the ``Secretary''), as 
Chairperson of the Financial Stability Oversight Council, is proposing, 
in consultation with the Federal Deposit Insurance Corporation (the 
``FDIC''), an amendment to the regulation implementing the qualified 
financial contract (``QFC'') recordkeeping requirements of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank 
Act'' or the ``Act'') that would extend the compliance dates of the 
regulation.

DATES: Written comments must be received by January 29, 2018.

ADDRESSES: Submit comments electronically through the Federal 
eRulemaking Portal: http://www.regulations.gov, or by mail (if hard 
copy, preferably an original and two copies) to: The Treasury 
Department, Attn: Qualified Financial Contracts Recordkeeping Comments, 
1500 Pennsylvania Avenue NW, Washington, DC 20220. Because paper mail 
in the Washington, DC area may be subject to delay, it is recommended 
that comments be submitted electronically. Please include your name, 
affiliation, address, email address, and telephone number in your 
comment. Comments will be

[[Page 61506]]

available for public inspection on www.regulations.gov. In general, 
comments received, including attachments and other supporting 
materials, are part of the public record and are available to the 
public. Do not submit any information in your comment or supporting 
materials that you consider confidential or inappropriate for public 
disclosure.

FOR FURTHER INFORMATION CONTACT: Brian Smith, Director, Office of 
Capital Markets, (202) 622-0157; Peter Nickoloff, Financial Economist, 
Office of Capital Markets, (202) 622-1692; Steven D. Laughton, 
Assistant General Counsel (Banking & Finance), (202) 622-8413; or 
Stephen T. Milligan, Attorney-Advisor, (202) 622-4051.

SUPPLEMENTARY INFORMATION: On October 31, 2016, the Secretary published 
a final regulation pursuant to section 210(c)(8)(H) of the Dodd-Frank 
Act requiring certain financial companies to maintain records with 
respect to their QFC positions, counterparties, legal documentation, 
and collateral that would assist the FDIC as receiver in exercising its 
rights and fulfilling its obligations under Title II of the Act.\1\
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    \1\ 81 FR 75624 (Oct. 31, 2016).
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    The regulation provides for staggered compliance dates for the bulk 
of the recordkeeping requirements as follows. The regulation generally 
provides that records entities with $1 trillion or more in total 
consolidated assets have 540 days (approximately 18 months) after the 
effective date to comply with the regulation; that records entities 
with total assets equal to or greater than $500 billion (but less than 
$1 trillion) have two years from the effective date to comply with the 
regulation; that records entities with total assets equal to or greater 
than $250 billion (but less than $500 billion) have three years from 
the effective date to comply with the regulation; and that all other 
records entities have four years from the effective date to comply with 
the regulation.\2\ Given that the effective date is December 30, 2016, 
the first of these compliance dates is currently June 23, 2018.
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    \2\ 31 CFR 148.1(d)(1)(i).
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    Separately, the regulation provides that the Secretary may grant 
conditional or unconditional exemptions from the regulation's 
requirements after receiving a recommendation from the FDIC, prepared 
in consultation with the relevant primary financial regulatory agencies 
(as defined in the regulation).\3\ Since the regulation became 
effective, the Secretary, the FDIC, and the primary financial 
regulatory agencies have received requests for exemptions from the 
requirements of the regulation for certain types of records entities 
within a corporate group and certain types of QFCs. These exemption 
requests are currently subject to review by the Secretary, the FDIC, 
and the primary financial regulatory agencies.
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    \3\ 31 CFR 148.3(c)(4).
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    In light of the pending exemption requests and the Administration's 
general policy of alleviating unnecessary regulatory burdens,\4\ the 
Secretary, in consultation with the FDIC, is proposing a six month 
extension of the compliance dates in the regulation. Although the 
Secretary recognizes the importance of the QFC recordkeeping 
requirements, the Secretary has concluded that it would impose an 
unnecessary burden on records entities to require their compliance with 
the regulation before the scope of their recordkeeping responsibilities 
is determined. A short extension of the compliance dates is appropriate 
pending the Secretary's decisions whether to grant, in whole or in 
part, conditional or unconditional exemptions based on the exemption 
requests received to date, and to allow adequate time for records 
entities to prepare for compliance once the exemption requests are 
resolved.
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    \4\ See Executive Order No. 13771, Reducing Regulation and 
Controlling Regulatory Costs Sec.  1, 82 FR 9339 (Feb. 3, 2017); 
Executive Order No. 13777, Enforcing the Regulatory Reform Agenda, 
Sec.  1, 82 FR 12285 (Mar. 1, 2017).
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    Specifically, the Secretary is proposing that all records entities 
be given approximately an additional six months to comply with the 
regulation. The Secretary estimates that this will allow sufficient 
time for the FDIC, in consultation with the primary financial 
regulatory agencies, to formulate recommendations to the Secretary and 
for the Secretary to make a determination as to the exemption requests. 
The Secretary requests comment on whether the compliance date should be 
extended and, if so, whether six months is the proper length for the 
extension and whether the compliance date should only be extended with 
respect to records entities in the first tier, i.e., those records 
entities with a June 23, 2018 compliance date.

Administrative Law Matters

1. Regulatory Flexibility Act

    This proposed rule would not impose any additional burden on any 
records entities; rather, it would reduce the existing regulatory 
burden by extending the periods in which records entities have to 
comply with the regulation's requirements. For these reasons and as 
discussed further in the release of the 2016 final regulation, the 
Secretary certifies, pursuant to 5 U.S.C. 605(b), that this proposed 
rule will not have a significant economic impact on a substantial 
number of small entities under the Small Business Administration's most 
recently revised standards for small entities, which went into effect 
on October 1, 2017.

2. Executive Order 12866

    This proposed rule is not a significant regulatory action as 
defined in section 3.f of Executive Order 12866.

List of Subjects in 31 CFR Part 148

    Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set forth in the preamble, the Department of the 
Treasury proposes to revise part 148 to 31 CFR to read as follows:

PART 148--QUALIFIED FINANCIAL CONTRACTS RECORDKEEPING RELATED TO 
THE FDIC ORDERLY LIQUIDATION AUTHORITY

0
1. The authority citation for part 148 continues to read as follows:

    Authority: 31 U.S.C. 321(b) and 12 U.S.C 5390(c)(8)(H).

0
2. Amend 31 CFR 148.1(d) by revising the introductory text to 
paragraphs (d)(1)(i), (d)(1)(i)(A), (d)(1)(i)(B), (d)(1)(i)(C), and 
(d)(1)(i)(D) as follows:


Sec.  148.1  Scope, purpose, effective date, and compliance dates.

* * * * *
    (d) Compliance. (1) Initial compliance dates. (i) A records entity 
subject to this part on the effective date must comply with Sec.  
148.3(a)(2) on the date that is 90 days after the effective date and 
with all other applicable requirements of this part on:
    (A) December 31, 2018 for a records entity that:
* * * * *
    (B) June 30, 2019 for any records entity that is not subject to the 
compliance date set forth in paragraph (d)(1)(i)(A) of this section 
and:
* * * * *
    (C) June 30, 2020 for any records entity that is not subject to the 
compliance date set forth in paragraphs (d)(1)(i)(A) or (B) of this 
section and:
* * * * *
    (D) June 30, 2021 for any records entity that is not subject to the

[[Page 61507]]

compliance dates set forth in paragraphs (d)(1)(i)(A), (B), or (C) of 
this section.
* * * * *

    Dated: December 21, 2017.
Clay Berry,
Deputy Assistant Secretary for Capital Markets.
[FR Doc. 2017-28073 Filed 12-27-17; 8:45 am]
BILLING CODE 4810-25-P