(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 252.74(b) through
(d) and (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 the Board’s Regulation Q (12 CFR 217.3(d)) 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 or U.S.
financial stability), 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).
(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 transactions are necessary
or appropriate to preserve the safety and soundness of the covered
company or U.S. financial stability. 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.
