83_FR_26457 83 FR 26347 - Securities Transaction Settlement Cycle

83 FR 26347 - Securities Transaction Settlement Cycle

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL DEPOSIT INSURANCE CORPORATION

Federal Register Volume 83, Issue 110 (June 7, 2018)

Page Range26347-26349
FR Document2018-12267

The OCC and the FDIC (``Agencies'') are adopting a final rule to shorten the standard settlement cycle for securities purchased or sold by national banks, federal savings associations, and FDIC- supervised institutions. The Agencies' final rule is consistent with an industry-wide transition to a two business-day settlement cycle, which is designed to reduce settlement exposure and align settlement practices across all market participants.

Federal Register, Volume 83 Issue 110 (Thursday, June 7, 2018) 
[Federal Register Volume 83, Number 110 (Thursday, June 7, 2018)]
[Rules and Regulations]
[Pages 26347-26349]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-12267]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

========================================================================


Federal Register / Vol. 83 , No. 110 / Thursday, June 7, 2018 / Rules 
and Regulations

[[Page 26347]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 12 and 151

[Docket ID OCC-2017-0013]
RIN 1557-AE24

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 344

RIN 3064-AE64


Securities Transaction Settlement Cycle

AGENCY: Office of the Comptroller of the Currency, Treasury (``OCC''); 
and Federal Deposit Insurance Corporation (``FDIC'').

ACTION: Final rule.

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SUMMARY: The OCC and the FDIC (``Agencies'') are adopting a final rule 
to shorten the standard settlement cycle for securities purchased or 
sold by national banks, federal savings associations, and FDIC-
supervised institutions. The Agencies' final rule is consistent with an 
industry-wide transition to a two business-day settlement cycle, which 
is designed to reduce settlement exposure and align settlement 
practices across all market participants.

DATES: This final rule is effective October 1, 2018.

FOR FURTHER INFORMATION CONTACT: 
    OCC: David Stankiewicz, Special Counsel, Securities and Corporate 
Practices Division, (202) 649-5510; Daniel Perez, Attorney, Legislative 
and Regulatory Activities Division, (202) 649-5490 or, for persons who 
are deaf or hearing-impaired, TTY, (202) 649-5597; or Patricia Dalton, 
Technical Expert, Asset Management Group, Market Risk, at (202) 649-
6360.
    FDIC: Thomas F. Lyons, Chief, (202) 898-6850; Michael W. Orange, 
Senior Trust Examination Specialist, (678) 916-2289, Policy & Program 
Development, Risk Management Policy Branch, Division of Risk Management 
Supervision; Annmarie H. Boyd, Counsel, (202) 898-3714; Benjamin J. 
Klein, Counsel, (202) 898-7027, Bank Activities Unit, Supervision and 
Legislation Branch, Legal Division.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 5, 2017, the securities industry in the United States 
transitioned from a standard securities settlement cycle of three 
business days after the date of the contract, commonly known as 
``T+3,'' to a two-business day standard, or ``T+2.'' The transition was 
the culmination of a multi-year securities industry initiative and rule 
changes implemented by the U.S. Securities and Exchange Commission and 
securities self-regulatory organizations (such as the Financial 
Industry Regulatory Authority and the Municipal Securities Rulemaking 
Board). In connection with the transition to T+2, on June 9, 2017, the 
OCC issued Bulletin 2017-22, which notified national banks, federal 
savings associations (``FSAs''), federal branches, and federal agencies 
(together, ``OCC-supervised institutions'') that they should be in 
compliance with T+2 as of September 5, 2017. The FDIC issued similar 
guidance applicable to FDIC-supervised institutions \1\ through 
Financial Institution Letter 32-2017 on July 26, 2017.
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    \1\ ``FDIC-supervised institution'' means any insured depository 
institution for which the FDIC is the appropriate Federal banking 
agency pursuant to section 3(q) of the Federal Deposit Insurance 
Act, 12 U.S.C. 1813(q). 12 CFR 344.3(h). Pursuant to section 3(q), 
the FDIC is the appropriate Federal banking agency with respect to: 
(1) Any State nonmember insured bank; (2) any foreign bank having an 
insured branch; and (3) any State savings association. 12 U.S.C. 
1813(q)(2).
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    Regulations governing recordkeeping and confirmation requirements 
for the securities transactions of national banks and FSAs, both for 
the bank's own account and for customers, are set out in parts 12 and 
151 of the OCC's regulations, respectively. Regulations governing the 
same for FDIC-supervised institutions are set out in part 344 of the 
FDIC's regulations. These regulations require that banks generally not 
effect or enter into a contract for the purchase or sale of a security 
that provides for payment of funds and delivery of securities later 
than the third business day after the date of the contract, unless 
otherwise expressly agreed to by the parties at the time of the 
transaction.

II. Notice of Proposed Rulemaking

    On September 11, 2017, the Agencies published in the Federal 
Register a notice of proposed rulemaking that would amend regulations 
applicable to OCC-supervised institutions and FDIC-supervised 
institutions (together, ``banks'') by aligning those regulations with 
T+2.\2\ In the notice of proposed rulemaking, the Agencies proposed to 
amend their respective regulations by directly changing the settlement 
period applicable to banks from three business days to two. The 
Agencies also proposed an alternative approach, which would achieve the 
same immediate result but operate by tying the settlement period 
applicable to banks to the ``standard settlement cycle followed by 
registered broker dealers in the United States.''
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    \2\ 82 FR 42619 (Sep. 11, 2017).
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    The Agencies received three responses to their request for comment. 
The Investment Company Institute (``ICI'') and the Securities Industry 
and Financial Markets Association (``SIFMA'') both ``strongly'' 
supported the proposal as a path to aligning the Agencies' regulations 
with those applicable to other market participants in the United 
States. A third commenter, an individual, also expressed support for 
the final rule. Both ICI and SIFMA expressed a preference for the 
alternative approach. After considering these comments, the Agencies 
decided to adopt the alternative approach in order to maintain 
alignment more readily between the settlement period applicable to 
banks and the standard settlement cycle followed by registered broker 
dealers in the United States.

III. Description of the Final Rule

    The final rule will require banks to settle most securities 
transactions within the number of business days in the ``standard 
settlement cycle followed by registered broker dealers in the United 
States'' unless otherwise agreed to by the parties at the time of the 
transaction. Banks will be able to determine the number of business 
days in the standard settlement cycle

[[Page 26348]]

followed by registered broker dealers in the United States by 
referencing SEC Rule 15c6-1, 17 CFR 240.15c6-1(a). Effective September 
5, 2017, and as of the date of publication of this final rule, the 
standard settlement cycle followed by registered broker dealers in the 
United States is two business days after the date of the contract.
    The final rule amends the OCC and FDIC regulations at parts 12, 
151, and 344, which govern the recordkeeping and confirmation 
requirements for bank securities transactions. In order to accommodate 
the change described above, the Agencies made certain additional, 
purely editorial changes to the language of these parts. The additional 
changes were intended to make the regulations easier to follow and 
understand in light of the revisions necessary to implement the 
alternative approach.
    The effective date for this final rule is October 1, 2018. The 
Agencies understand that, consistent with the industry's transition to 
T+2, banks are already in compliance with a two-day settlement standard 
as a practical matter.

IV. Regulatory Analysis

Paperwork Reduction Act

    Under the Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501-3520, 
the Agencies may not conduct or sponsor, and a person is not required 
to respond to, an information collection unless the information 
collection displays a valid Office of Management and Budget (``OMB'') 
control number. This final rule does not introduce or change any 
collections of information; therefore, it does not require a submission 
to OMB. The Agencies invited comment on their PRA determination when 
issuing the proposed rule, and no responsive comments were received.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (``RFA''), 
requires an agency, in connection with a final rule, to prepare a Final 
Regulatory Flexibility Analysis describing the impact of the rule on 
small entities (defined by the Small Business Administration (``SBA'') 
for purposes of the RFA to include banking entities with total assets 
of $550 million or less) or to certify that the rule would not have a 
significant economic impact on a substantial number of small entities.
    FDIC: For the reasons described below and pursuant to section 
605(b) of the RFA, the FDIC certifies that the final rule will not have 
a significant economic impact on a substantial number of small 
entities.
    As of December 31, 2017, the FDIC supervises 3,643 depository 
institutions, of which 2,924 are defined as small banking entities by 
the terms of the RFA. The transition of the standard settlement cycle 
to two days will reduce by one day the settlement time of transactions 
for equities, corporate bonds, municipal bonds, unit investment trusts, 
mutual funds, exchange-traded funds, exchange-traded products, American 
depository receipts, options, rights, and warrants. According to recent 
Call Report data, 2,565 FDIC-supervised small entities reported holding 
some volume of equities that are likely to be affected by the new 
securities settlement cycle, provide custodial banking services, or 
possess a subsidiary classified as a securities dealer.
    The effects on small entities will vary according to the degree of 
participation in securities transactions. According to recent Call 
Report data one small entity identified itself as providing custodial 
banking services, while seven small entities have a subsidiary 
classified as a securities dealer according to data from the Federal 
Reserve's National Information Center.
    As discussed above, because the industry has already implemented 
the practice of a standard settlement cycle, currently consisting of 
two days, and because the final rule does not contain any new 
recordkeeping, reporting, or compliance requirements, the FDIC 
anticipates that it will not impose any significant additional costs on 
FDIC-supervised institutions. Thus, the final rule will not have a 
substantial impact on any FDIC-supervised small entities. Therefore, 
the FDIC certifies that the final rule would not have a significant 
economic impact on a substantial number of FDIC-supervised small 
entities.
    OCC: As of December 31, 2017, the OCC supervised approximately 886 
small entities.\3\ Because the final rule does not contain any new 
recordkeeping, reporting, or compliance requirements, the OCC 
anticipates that it will not impose costs on any OCC-supervised 
institutions. Further, OCC-supervised institutions were required to 
comply with the substance of the rule before the proposed rule was 
published in the Federal Register. Thus, the final rule will not have a 
substantial impact on any OCC-supervised small entities. Therefore, the 
OCC certifies that the final rule would not have a significant economic 
impact on a substantial number of OCC-supervised small entities.
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    \3\ The OCC calculated the number of small entities using the 
SBA's size thresholds for commercial banks and savings institutions, 
and trust companies, which are $550 million and $38.5 million, 
respectively. Consistent with the General Principles of Affiliation, 
13 CFR 121.103(a), the OCC counted the assets of affiliated 
financial institutions when determining whether to classify a 
national bank or federal savings association as a small entity. The 
OCC used December 31, 2017, to determine size because a ``financial 
institution's assets are determined by averaging the assets reported 
on its four quarterly financial statements for the preceding year.'' 
See footnote 8 of the SBA's Table of Size Standards.
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Unfunded Mandates Reform Act of 1995 Determination

    The OCC analyzed the final rule under the factors set forth in the 
Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532). Under this 
analysis, the OCC considered whether the final rule includes a federal 
mandate that may result in the expenditure by state, local, and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year (adjusted annually for inflation).
    The rule does not impose new mandates. Therefore, the OCC concludes 
that implementation of the rule will not result in an expenditure of 
$100 million or more annually by state, local, and tribal governments, 
or by the private sector.

Riegle Community Development and Regulatory Improvement Act

    The Riegle Community Development and Regulatory Improvement Act 
(``RCDRIA'') requires that the Agencies, in determining the effective 
date and administrative compliance requirements of new regulations that 
impose additional reporting, disclosure, or other requirements on 
insured depository institutions (``IDIs''), consider, consistent with 
principles of safety and soundness and the public interest, any 
administrative burdens that such regulations would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions, as well as the benefits of such regulations. 
12 U.S.C. 4802. In addition, in order to provide an adequate transition 
period, new regulations that impose additional reporting, disclosures, 
or other new requirements on IDIs generally 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.
    The final rule includes no additional reporting, disclosure, or 
other requirements on IDIs, including small depository institutions, 
nor on the customers of depository institutions. Therefore, the 
requirements of RCDRIA

[[Page 26349]]

do not apply. Nonetheless, the Agencies invited comment on any 
administrative burdens that the final rule would place on depository 
institutions, including small depository institutions, and customers of 
depository institutions. The Agencies did not receive any comments 
responsive to this issue.

Plain Language

    Section 722 of the Gramm-Leach-Bliley Act requires the Agencies to 
use plain language in all proposed and final rules published after 
January 1, 2000. When issuing a proposed rule, the Agencies invited 
comment on how to make this rule easier to understand. No comments 
responsive to this issue were received.

List of Subjects

12 CFR Parts 12 and 151

    Banks, Banking, Federal savings associations, National banks, 
Reporting and recordkeeping requirements, Securities.

12 CFR Part 344

    Banks, Banking, Reporting and recordkeeping requirements, Savings 
associations.

    OCC amends 12 CFR parts 12 and 151 and FDIC amends 12 CFR part 344 
as follows:

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

PART 12--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR SECURITIES 
TRANSACTIONS

0
1. The authority citation for part 12 continues to read as follows:

    Authority: 12 U.S.C. 24, 92a, and 93a.


0
2. Section 12.9 is amended by revising paragraph (a) to read as 
follows:


Sec.  12.9  Settlement of securities transactions.

    (a) All contracts effected or entered into by a national bank for 
the purchase or sale of a security (other than an exempted security as 
defined in 15 U.S.C. 78c(a)(12), government security, municipal 
security, commercial paper, bankers' acceptances, or commercial bills) 
shall provide for completion of the transaction within the number of 
business days in the standard settlement cycle followed by registered 
broker dealers in the United States, unless otherwise agreed to by the 
parties at the time of the transaction. The number of business days in 
the standard settlement cycle shall be determined by reference to 
paragraph (a) of SEC Rule 15c6-1, 17 CFR 240.15c6-1(a).
* * * * *

PART 151--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS

0
3. The authority citation for part 151 continues to read as follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 5412(b)(2)(B).


0
4. Section 151.130 is amended by:
0
a. Republishing paragraph (a) introductory text.
0
b. Revising paragraphs (a)(1) and (a)(2);
0
c. Redesignating paragraph (a)(3) as (a)(4); and
0
d. Adding a new paragraph (a)(3).
    The revisions and addition are set forth below.


Sec.  151.130  When must I settle a securities transaction?

    (a) You may not effect or enter into a contract for the purchase or 
sale of a security that provides for payment of funds and delivery of 
securities later than the latest of:
    (1) The number of business days in the standard settlement cycle 
followed by registered broker dealers in the United States after the 
date of the contract. The number of business days in the standard 
settlement cycle shall be determined by reference to paragraph (a) of 
SEC Rule 15c6-1, 17 CFR 240.15c6-1(a);
    (2) The fourth business day after the contract, if the contract 
involves the sale for cash of securities that are priced after 4:30 
p.m. Eastern Standard Time on the date the securities are priced and 
are sold by an issuer to an underwriter under a firm commitment 
underwritten offering registered under the Securities Act of 1933, 15 
U.S.C. 77a, et seq., or are sold by you to an initial purchaser 
participating in the offering;
    (3) Such time as the SEC may specify pursuant to an order of 
exemption in accordance with paragraph (b)(2) of SEC Rule 15c6-1; or
* * * * *

FEDERAL DEPOSIT INSURANCE CORPORATION

PART 344--RECORDKEEPING AND CONFIRMATION REQUIREMENTS FOR 
SECURITIES TRANSACTIONS

0
5. The authority citation for part 344 continues to read as follows:

    Authority: 12 U.S.C. 1817, 1818, 1819, and 5412.


0
6. Section 344.7 is amended by revising paragraph (a) to read as 
follows:


Sec.  344.7  Settlement of securities transactions.

    (a) All contracts effected or entered into by an FDIC-supervised 
institution that provide for the purchase or sale of a security (other 
than an exempted security as defined in 15 U.S.C. 78c(a)(12), 
government security, municipal security, commercial paper, bankers' 
acceptances, or commercial bills) shall provide for completion of the 
transaction within the number of business days in the standard 
settlement cycle followed by registered broker dealers in the United 
States, unless otherwise agreed to by the parties at the time of the 
transaction. The number of business days in the standard settlement 
cycle shall be determined by reference to paragraph (a) of SEC Rule 
15c6-1, 17 CFR 240.15c6-1(a).
* * * * *

    Dated: May 29, 2018.
Joseph M. Otting,
Comptroller of the Currency.
    Dated at Washington, DC, this 31st of May 2018.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-12267 Filed 6-6-18; 8:45 am]
BILLING CODE 4810-33-P; 6714-01-P

26347 Rules and Regulations Federal Register Vol. 83, No. 110 Thursday, June 7, 2018 This section of the FEDERAL REGISTER Trust Examination Specialist, (678) payment of funds and delivery of contains regulatory documents having general 916–2289, Policy & Program securities later than the third business applicability and legal effect, most of which Development, Risk Management Policy day after the date of the contract, unless are keyed to and codified in the Code of Branch, Division of Risk Management otherwise expressly agreed to by the Federal Regulations, which is published under Supervision; Annmarie H. Boyd, parties at the time of the transaction. 50 titles pursuant to 44 U.S.C. 1510. Counsel, (202) 898–3714; Benjamin J. II. Notice of Proposed Rulemaking The Code of Federal Regulations is sold by Klein, Counsel, (202) 898–7027, Bank the Superintendent of Documents. Activities Unit, Supervision and On September 11, 2017, the Agencies Legislation Branch, Legal Division. published in the Federal Register a SUPPLEMENTARY INFORMATION: notice of proposed rulemaking that DEPARTMENT OF THE TREASURY would amend regulations applicable to I. Background OCC-supervised institutions and FDIC- Office of the Comptroller of the On September 5, 2017, the securities supervised institutions (together, Currency industry in the United States ‘‘banks’’) by aligning those regulations transitioned from a standard securities with T+2.2 In the notice of proposed 12 CFR Parts 12 and 151 settlement cycle of three business days rulemaking, the Agencies proposed to [Docket ID OCC–2017–0013] after the date of the contract, commonly amend their respective regulations by known as ‘‘T+3,’’ to a two-business day directly changing the settlement period RIN 1557–AE24 applicable to banks from three business standard, or ‘‘T+2.’’ The transition was the culmination of a multi-year days to two. The Agencies also FEDERAL DEPOSIT INSURANCE proposed an alternative approach, CORPORATION securities industry initiative and rule changes implemented by the U.S. which would achieve the same Securities and Exchange Commission immediate result but operate by tying 12 CFR Part 344 the settlement period applicable to and securities self-regulatory RIN 3064–AE64 organizations (such as the Financial banks to the ‘‘standard settlement cycle Industry Regulatory Authority and the followed by registered broker dealers in Securities Transaction Settlement the United States.’’ Municipal Securities Rulemaking Cycle The Agencies received three Board). In connection with the transition to T+2, on June 9, 2017, the responses to their request for comment. AGENCY: Office of the Comptroller of the The Investment Company Institute Currency, Treasury (‘‘OCC’’); and OCC issued Bulletin 2017–22, which (‘‘ICI’’) and the Securities Industry and Federal Deposit Insurance Corporation notified national banks, federal savings Financial Markets Association (‘‘FDIC’’). associations (‘‘FSAs’’), federal branches, (‘‘SIFMA’’) both ‘‘strongly’’ supported ACTION: Final rule. and federal agencies (together, ‘‘OCC- the proposal as a path to aligning the supervised institutions’’) that they SUMMARY: The OCC and the FDIC Agencies’ regulations with those should be in compliance with T+2 as of (‘‘Agencies’’) are adopting a final rule to applicable to other market participants September 5, 2017. The FDIC issued shorten the standard settlement cycle in the United States. A third similar guidance applicable to FDIC- for securities purchased or sold by commenter, an individual, also supervised institutions 1 through national banks, federal savings expressed support for the final rule. Financial Institution Letter 32–2017 on Both ICI and SIFMA expressed a associations, and FDIC-supervised July 26, 2017. institutions. The Agencies’ final rule is preference for the alternative approach. Regulations governing recordkeeping consistent with an industry-wide After considering these comments, the and confirmation requirements for the transition to a two business-day Agencies decided to adopt the securities transactions of national banks settlement cycle, which is designed to alternative approach in order to and FSAs, both for the bank’s own reduce settlement exposure and align maintain alignment more readily account and for customers, are set out settlement practices across all market between the settlement period in parts 12 and 151 of the OCC’s participants. applicable to banks and the standard regulations, respectively. Regulations settlement cycle followed by registered DATES: This final rule is effective governing the same for FDIC-supervised broker dealers in the United States. October 1, 2018. institutions are set out in part 344 of the FOR FURTHER INFORMATION CONTACT: FDIC’s regulations. These regulations III. Description of the Final Rule OCC: David Stankiewicz, Special require that banks generally not effect or The final rule will require banks to Counsel, Securities and Corporate enter into a contract for the purchase or settle most securities transactions Practices Division, (202) 649–5510; sale of a security that provides for within the number of business days in Daniel Perez, Attorney, Legislative and the ‘‘standard settlement cycle followed 1 ‘‘FDIC-supervised institution’’ means any Regulatory Activities Division, (202) by registered broker dealers in the sradovich on DSK3GMQ082PROD with RULES insured depository institution for which the FDIC 649–5490 or, for persons who are deaf is the appropriate Federal banking agency pursuant United States’’ unless otherwise agreed or hearing-impaired, TTY, (202) 649– to section 3(q) of the Federal Deposit Insurance Act, to by the parties at the time of the 5597; or Patricia Dalton, Technical 12 U.S.C. 1813(q). 12 CFR 344.3(h). Pursuant to transaction. Banks will be able to Expert, Asset Management Group, section 3(q), the FDIC is the appropriate Federal determine the number of business days banking agency with respect to: (1) Any State Market Risk, at (202) 649–6360. nonmember insured bank; (2) any foreign bank in the standard settlement cycle FDIC: Thomas F. Lyons, Chief, (202) having an insured branch; and (3) any State savings 898–6850; Michael W. Orange, Senior association. 12 U.S.C. 1813(q)(2). 2 82 FR 42619 (Sep. 11, 2017). VerDate Sep<11>2014 15:41 Jun 06, 2018 Jkt 244001 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\07JNR1.SGM 07JNR1

26348 Federal Register / Vol. 83, No. 110 / Thursday, June 7, 2018 / Rules and Regulations followed by registered broker dealers in economic impact on a substantial it will not impose costs on any OCC- the United States by referencing SEC number of small entities. supervised institutions. Further, OCC- Rule 15c6–1, 17 CFR 240.15c6–1(a). As of December 31, 2017, the FDIC supervised institutions were required to Effective September 5, 2017, and as of supervises 3,643 depository institutions, comply with the substance of the rule the date of publication of this final rule, of which 2,924 are defined as small before the proposed rule was published the standard settlement cycle followed banking entities by the terms of the in the Federal Register. Thus, the final by registered broker dealers in the RFA. The transition of the standard rule will not have a substantial impact United States is two business days after settlement cycle to two days will reduce on any OCC-supervised small entities. the date of the contract. by one day the settlement time of Therefore, the OCC certifies that the The final rule amends the OCC and transactions for equities, corporate final rule would not have a significant FDIC regulations at parts 12, 151, and bonds, municipal bonds, unit economic impact on a substantial 344, which govern the recordkeeping investment trusts, mutual funds, number of OCC-supervised small and confirmation requirements for bank exchange-traded funds, exchange-traded entities. securities transactions. In order to products, American depository receipts, options, rights, and warrants. According Unfunded Mandates Reform Act of 1995 accommodate the change described Determination above, the Agencies made certain to recent Call Report data, 2,565 FDIC- supervised small entities reported The OCC analyzed the final rule additional, purely editorial changes to holding some volume of equities that under the factors set forth in the the language of these parts. The are likely to be affected by the new Unfunded Mandates Reform Act of 1995 additional changes were intended to securities settlement cycle, provide (2 U.S.C. 1532). Under this analysis, the make the regulations easier to follow custodial banking services, or possess a OCC considered whether the final rule and understand in light of the revisions includes a federal mandate that may subsidiary classified as a securities necessary to implement the alternative result in the expenditure by state, local, dealer. approach. The effects on small entities will vary and Tribal governments, in the The effective date for this final rule is according to the degree of participation aggregate, or by the private sector, of October 1, 2018. The Agencies in securities transactions. According to $100 million or more in any one year understand that, consistent with the recent Call Report data one small entity (adjusted annually for inflation). industry’s transition to T+2, banks are identified itself as providing custodial The rule does not impose new already in compliance with a two-day banking services, while seven small mandates. Therefore, the OCC settlement standard as a practical entities have a subsidiary classified as a concludes that implementation of the matter. securities dealer according to data from rule will not result in an expenditure of IV. Regulatory Analysis the Federal Reserve’s National $100 million or more annually by state, Information Center. local, and tribal governments, or by the Paperwork Reduction Act As discussed above, because the private sector. industry has already implemented the Under the Paperwork Reduction Act Riegle Community Development and practice of a standard settlement cycle, (‘‘PRA’’), 44 U.S.C. 3501–3520, the Regulatory Improvement Act currently consisting of two days, and Agencies may not conduct or sponsor, The Riegle Community Development because the final rule does not contain and a person is not required to respond and Regulatory Improvement Act any new recordkeeping, reporting, or to, an information collection unless the (‘‘RCDRIA’’) requires that the Agencies, compliance requirements, the FDIC information collection displays a valid anticipates that it will not impose any in determining the effective date and Office of Management and Budget significant additional costs on FDIC- administrative compliance requirements (‘‘OMB’’) control number. This final rule supervised institutions. Thus, the final of new regulations that impose does not introduce or change any rule will not have a substantial impact additional reporting, disclosure, or other collections of information; therefore, it on any FDIC-supervised small entities. requirements on insured depository does not require a submission to OMB. Therefore, the FDIC certifies that the institutions (‘‘IDIs’’), consider, The Agencies invited comment on their final rule would not have a significant consistent with principles of safety and PRA determination when issuing the economic impact on a substantial soundness and the public interest, any proposed rule, and no responsive number of FDIC-supervised small administrative burdens that such comments were received. entities. regulations would place on depository Regulatory Flexibility Act OCC: As of December 31, 2017, the institutions, including small depository OCC supervised approximately 886 institutions, and customers of The Regulatory Flexibility Act, 5 small entities.3 Because the final rule depository institutions, as well as the U.S.C. 601 et seq. (‘‘RFA’’), requires an does not contain any new benefits of such regulations. 12 U.S.C. agency, in connection with a final rule, recordkeeping, reporting, or compliance 4802. In addition, in order to provide an to prepare a Final Regulatory Flexibility requirements, the OCC anticipates that adequate transition period, new Analysis describing the impact of the regulations that impose additional rule on small entities (defined by the 3 The OCC calculated the number of small entities reporting, disclosures, or other new Small Business Administration (‘‘SBA’’) using the SBA’s size thresholds for commercial requirements on IDIs generally must for purposes of the RFA to include banks and savings institutions, and trust companies, which are $550 million and $38.5 take effect on the first day of a calendar banking entities with total assets of $550 million, respectively. Consistent with the General quarter that begins on or after the date million or less) or to certify that the rule Principles of Affiliation, 13 CFR 121.103(a), the on which the regulations are published sradovich on DSK3GMQ082PROD with RULES would not have a significant economic OCC counted the assets of affiliated financial institutions when determining whether to classify in final form. impact on a substantial number of small a national bank or federal savings association as a The final rule includes no additional entities. small entity. The OCC used December 31, 2017, to reporting, disclosure, or other FDIC: For the reasons described below determine size because a ‘‘financial institution’s requirements on IDIs, including small assets are determined by averaging the assets and pursuant to section 605(b) of the reported on its four quarterly financial statements depository institutions, nor on the RFA, the FDIC certifies that the final for the preceding year.’’ See footnote 8 of the SBA’s customers of depository institutions. rule will not have a significant Table of Size Standards. Therefore, the requirements of RCDRIA VerDate Sep<11>2014 15:41 Jun 06, 2018 Jkt 244001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\07JNR1.SGM 07JNR1

Federal Register / Vol. 83, No. 110 / Thursday, June 7, 2018 / Rules and Regulations 26349 do not apply. Nonetheless, the Agencies to paragraph (a) of SEC Rule 15c6–1, 17 § 344.7 Settlement of securities invited comment on any administrative CFR 240.15c6–1(a). transactions. burdens that the final rule would place * * * * * (a) All contracts effected or entered on depository institutions, including into by an FDIC-supervised institution small depository institutions, and PART 151—RECORDKEEPING AND that provide for the purchase or sale of customers of depository institutions. CONFIRMATION REQUIREMENTS FOR a security (other than an exempted The Agencies did not receive any SECURITIES TRANSACTIONS security as defined in 15 U.S.C. comments responsive to this issue. 78c(a)(12), government security, ■ 3. The authority citation for part 151 municipal security, commercial paper, Plain Language continues to read as follows: bankers’ acceptances, or commercial Section 722 of the Gramm-Leach- Authority: 12 U.S.C. 1462a, 1463, 1464, bills) shall provide for completion of the Bliley Act requires the Agencies to use 5412(b)(2)(B). transaction within the number of plain language in all proposed and final business days in the standard settlement rules published after January 1, 2000. ■ 4. Section 151.130 is amended by: cycle followed by registered broker When issuing a proposed rule, the ■ a. Republishing paragraph (a) dealers in the United States, unless Agencies invited comment on how to introductory text. otherwise agreed to by the parties at the ■ b. Revising paragraphs (a)(1) and time of the transaction. The number of make this rule easier to understand. No (a)(2); business days in the standard settlement comments responsive to this issue were ■ c. Redesignating paragraph (a)(3) as cycle shall be determined by reference received. (a)(4); and to paragraph (a) of SEC Rule 15c6–1, 17 List of Subjects ■ d. Adding a new paragraph (a)(3). CFR 240.15c6–1(a). The revisions and addition are set 12 CFR Parts 12 and 151 forth below. * * * * * Banks, Banking, Federal savings Dated: May 29, 2018. § 151.130 When must I settle a securities associations, National banks, Reporting Joseph M. Otting, transaction? and recordkeeping requirements, Comptroller of the Currency. (a) You may not effect or enter into a Securities. contract for the purchase or sale of a Dated at Washington, DC, this 31st of May 2018. 12 CFR Part 344 security that provides for payment of By order of the Board of Directors. funds and delivery of securities later Banks, Banking, Reporting and than the latest of: Federal Deposit Insurance Corporation. recordkeeping requirements, Savings (1) The number of business days in Robert E. Feldman, associations. the standard settlement cycle followed Executive Secretary. OCC amends 12 CFR parts 12 and 151 by registered broker dealers in the [FR Doc. 2018–12267 Filed 6–6–18; 8:45 am] and FDIC amends 12 CFR part 344 as United States after the date of the BILLING CODE 4810–33–P; 6714–01–P follows: contract. The number of business days in the standard settlement cycle shall be DEPARTMENT OF THE TREASURY determined by reference to paragraph (a) DEPARTMENT OF TRANSPORTATION Office of the Comptroller of the of SEC Rule 15c6–1, 17 CFR 240.15c6– Currency 1(a); Federal Aviation Administration (2) The fourth business day after the PART 12—RECORDKEEPING AND contract, if the contract involves the sale 14 CFR Part 39 CONFIRMATION REQUIREMENTS FOR for cash of securities that are priced [Docket No. FAA–2018–0462; Product SECURITIES TRANSACTIONS after 4:30 p.m. Eastern Standard Time Identifier 2018–CE–017–AD; Amendment on the date the securities are priced and 39–19292; AD 2018–11–04] ■ 1. The authority citation for part 12 are sold by an issuer to an underwriter continues to read as follows: under a firm commitment underwritten RIN 2120–AA64 Authority: 12 U.S.C. 24, 92a, and 93a. offering registered under the Securities Act of 1933, 15 U.S.C. 77a, et seq., or are Airworthiness Directives; Aircraft ■ 2. Section 12.9 is amended by revising sold by you to an initial purchaser Industries a.s. Airplanes paragraph (a) to read as follows: participating in the offering; AGENCY: Federal Aviation (3) Such time as the SEC may specify Administration (FAA), DOT. § 12.9 Settlement of securities pursuant to an order of exemption in transactions. ACTION: Final rule; request for accordance with paragraph (b)(2) of SEC comments. (a) All contracts effected or entered Rule 15c6–1; or into by a national bank for the purchase * * * * * SUMMARY: We are adopting a new or sale of a security (other than an airworthiness directive (AD) for Aircraft exempted security as defined in 15 FEDERAL DEPOSIT INSURANCE Industries a.s. Models L 410 UVP–E20 U.S.C. 78c(a)(12), government security, CORPORATION and L 410 UVP–E20 CARGO airplanes. municipal security, commercial paper, This AD results from mandatory bankers’ acceptances, or commercial PART 344—RECORDKEEPING AND continuing airworthiness information bills) shall provide for completion of the CONFIRMATION REQUIREMENTS FOR (MCAI) issued by the aviation authority transaction within the number of SECURITIES TRANSACTIONS of another country to identify and sradovich on DSK3GMQ082PROD with RULES business days in the standard settlement ■ 5. The authority citation for part 344 correct an unsafe condition on an cycle followed by registered broker continues to read as follows: aviation product. The MCAI describes dealers in the United States, unless the unsafe condition as un-commanded otherwise agreed to by the parties at the Authority: 12 U.S.C. 1817, 1818, 1819, and negative thrust mode activated on an 5412. time of the transaction. The number of engine. We are issuing this AD to business days in the standard settlement ■ 6. Section 344.7 is amended by require actions to address the unsafe cycle shall be determined by reference revising paragraph (a) to read as follows: condition on these products. VerDate Sep<11>2014 15:41 Jun 06, 2018 Jkt 244001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\07JNR1.SGM 07JNR1


Document Created: 2018-06-07 00:50:33
Document Modified: 2018-06-07 00:50:33
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesThis final rule is effective October 1, 2018.
ContactOCC: David Stankiewicz, Special Counsel, Securities and Corporate Practices Division, (202) 649-5510; Daniel Perez, Attorney, Legislative and Regulatory Activities Division, (202) 649-5490 or, for persons who are deaf or hearing-impaired, TTY, (202) 649-5597; or Patricia Dalton, Technical Expert, Asset Management Group, Market Risk, at (202) 649- 6360.
FR Citation83 FR 26347 
RIN Number1557-AE24 and 3064-AE64
CFR Citation12 CFR 12
12 CFR 151
12 CFR 344
CFR AssociatedBanks; Banking; Federal Savings Associations; National Banks; Reporting and Recordkeeping Requirements; Securities and Savings Associations
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