(a) Scope of compliance.
(1) Using all available
data, including any data required to be maintained or reported to
the Federal Reserve under this subpart, a covered company must comply
with the requirements of this subpart on a daily basis at the end
of each business day.
(2) A covered
company must report its compliance to the Federal Reserve as of the
end of the quarter, unless the Board determines and notifies that
company in writing that more frequent reporting is required.
(3) In reporting its compliance, a covered
company must calculate and include in its gross credit exposure to
an issuer of eligible collateral or eligible guarantor the amounts
of eligible collateral, eligible guarantees, eligible equity derivatives,
and eligible credit derivatives that were provided to the covered
company in connection with credit transactions with exempt counterparties,
valued in accordance with and as required by section 238.154(b) through
(d) and section 238.154 (g).
(b) Qualifying master netting agreement. With
respect to any qualifying master netting agreement, a covered company
must establish and maintain procedures that meet or exceed the requirements
of section 217.3(d) of this chapter to monitor possible changes in
relevant law and to ensure that the agreement continues to satisfy
these requirements.
(c) Noncompliance.
(1) Except as otherwise
provided in this section, if a covered company is not in compliance
with this subpart with respect to a counterparty solely due to the
circumstances listed in paragraphs (c)(2)(i) through (v) of this section,
the covered company will not be subject to enforcement actions for
a period of 90 days (or, with prior notice to the company, such shorter
or longer period determined by the Board, in its sole discretion,
to be appropriate to preserve the safety and soundness of the covered
company), if the covered company uses reasonable efforts to return
to compliance with this subpart during this period. The covered company
may not engage in any additional credit transactions with such a counterparty
in contravention of this rule during the period of noncompliance,
except as provided in paragraph (c)(2) of this section.
(2) A covered company may request a special
temporary credit exposure limit exemption from the Board. The Board
may grant approval for such exemption in cases where the Board determines
that such credit trans actions are necessary or appropriate to preserve
the safety and soundness of the covered company. In acting on a request
for an exemption, the Board will consider the following:
(i) A decrease in the covered company’s
capital stock and surplus;
(ii)
The merger of the covered company with another covered company;
(iii) A merger of two counterparties;
or
(iv) An unforeseen and abrupt
change in the status of a counterparty as a result of which the covered
company’s credit exposure to the counterparty becomes limited by the
requirements of this section; or
(v) Any other factor(s) the Board determines, in its discretion,
is appropriate.
(d) Other measures. The Board may impose supervisory
oversight and additional reporting measures that it determines are
appropriate to monitor compliance with this subpart. Covered companies
must furnish, in the manner and form prescribed by the Board, such
information to monitor compliance with this subpart and the limits
therein as the Board may require.
