(a) General requirement. A covered entity must ensure that each
covered QFC conforms to the requirements of sections 252.83 and 252.84.
(b) Covered entities. For purposes of this subpart, a covered entity is:
(1) A bank holding company that is identified
as a global systemically important BHC pursuant to 12 CFR 217.402;
(2) A subsidiary of a
company identified in paragraph (b)(1) of this section other than
a subsidiary that is:
(i) A national bank, a Federal savings
association, a Federal branch, a Federal agency, an FSI;
(ii) A company owned pursuant
to section 3(a)(A)(ii), 4(c)(2), 4(k)(4)(H), or 4(k)(4)(I) of the
Bank Holding Company Act (12 U.S.C. 1842(a)(A)(ii), 1843(c)(2), 1843(k)(4)(H),
1843(k)(4)(I));
(iii) A company owned by a depository institution in satisfaction
of debt previously contracted in good faith;
(iv) A portfolio concern, as defined
under 13 CFR 107.50, that is controlled by a small business investment
company, as defined in section 103(3) of the Small Business Investment
Act of 1958 (15 U.S.C. 662); or
(v) A company the business of which
is to make investments that are designed primarily to promote the
public welfare, of the type permitted under paragraph (11) of section
5136 of the Revised Statutes of the United States (12 U.S.C. 24),
including the welfare of low- and moderate-income communities or families
(such as providing housing, services, or jobs)); or
(3) A U.S. subsidiary,
U.S. branch, or U.S. agency of a global systemically important foreign
banking organization other than a U.S. subsidiary, U.S. branch, or
U.S. agency that is:
(i) A national bank, a Federal savings
association, a Federal branch, a Federal agency, an FSI;
(ii) A company owned pursuant
to section 3(a)(A)(ii), 4(c)(2), 4(k)(4)(H), or 4(k)(4)(I) of the
Bank Holding Company Act (12 U.S.C. 1842(a)(A)(ii), 1843(c)(2), 1843(k)(4)(H),
1843(k)(4)(I));
(iii) A company owned by a depository institution in satisfaction
of debt previously contracted in good faith;
(iv) A portfolio concern, as defined
under 13 CFR 107.50, that is controlled by a small business investment
company, as defined in section 103(3) of the Small Business Investment
Act of 1958 (15 U.S.C. 662);
(v) A company the business of which
is to make investments that are designed primarily to promote the
public welfare, of the type permitted under paragraph (11) of section
5136 of the Revised Statutes of the United States (12 U.S.C. 24),
including the welfare of low- and moderate-income communities or families
(such as providing housing, services, or jobs);
(vi) A section 2(h)(2) company; or
(vii) A DPC branch
subsidiary.
(c) Covered QFCs. For purposes of this subpart,
a covered QFC is:
(1) With respect to a covered entity that
is a covered entity on November 13, 2017, an in-scope QFC that the
covered entity:
(i) Enters, executes, or otherwise becomes
a party to on or after January 1, 2019; or
(ii) Entered, executed, or otherwise
became a party to before January 1, 2019, if the covered entity or
any affiliate that is a covered entity or excluded bank also enters,
executes, or otherwise becomes a party to a QFC with the same person
or a consolidated affiliate of the same person on or after January
1, 2019.
(2) With respect to a covered entity that becomes a covered entity
after November 13, 2017, an in-scope QFC that the covered entity:
(i) Enters, executes or otherwise becomes a party to on or after
the later of the date the covered entity first becomes a covered entity
and January 1, 2019; or
(ii) Entered, executed, or otherwise became a party to before the
date identified in paragraph (c)(2)(i) of this section with respect
to the covered entity, if the covered entity or any affiliate that
is a covered entity or excluded bank also enters, executes, or otherwise
becomes a party to a QFC with the same person or consolidated affiliate
of the same person on or after the date identified in paragraph (c)(2)(i)
with respect to the covered entity.
(d) In-scope QFCs. An in-scope
QFC is a QFC that explicitly:
(1) Restricts the transfer of a QFC (or
any interest or obligation in or under, or any property securing,
the QFC) from a covered entity; or
(2) Provides one or more default rights
with respect to a QFC that may be exercised against a covered entity.
(e) Rules of
construction. For purposes of this subpart:
(1) A covered entity does not become a
party to a QFC solely by acting as agent with respect to the QFC;
and
(2) The exercise
of a default right with respect to a covered QFC includes the automatic
or deemed exercise of the default right pursuant to the terms of the
QFC or other arrangement.
(f) Initial applicability of requirements for covered
QFCs.
(1) With respect to each
of its covered QFCs, a covered entity that is a covered entity on
November 13, 2017 must conform the covered QFC to the requirements
of this subpart by:
(i) January 1, 2019, if each party to
the covered QFC is a covered entity or an excluded bank;
(ii) July 1, 2019, if each
party to the covered QFC (other than the covered entity) is a financial
counterparty that is not a covered entity or excluded bank; or
(iii) January 1, 2020,
if a party to the covered QFC (other than the covered entity) is not
described in paragraph (f)(1)(i) or (f)(1)(ii) of this section or
if, notwithstanding paragraph (f)(1)(ii), a party to the covered QFC
(other than the covered entity) is a small financial institution.
(2) With
respect to each of its covered QFCs, a covered entity that is not
a covered entity on November 13, 2017 must conform the covered QFC
to the requirements of this subpart by:
(i) The first day of
the calendar quarter immediately following 1 year after the date
the covered entity first becomes a covered entity, if each party to
the covered QFC is a covered entity or an excluded bank;
(ii) The first day of the
calendar quarter immediately following 18 months from the date the
covered entity first becomes a covered entity if each party to the
covered QFC (other than the covered entity) is a financial counterparty
that is not a covered entity or excluded bank; or
(iii) The first day of the calendar
quarter immediately following 2 years from the date the covered entity
first becomes a covered entity if a party to the covered QFC (other
than the covered entity) is not described in paragraph (f)(2)(i) or
(f)(2)(ii) of this section or if, notwithstanding paragraph (f)(2)(ii),
a party to the covered QFC (other than the covered entity) is a small
financial institution.
