4-058.84
SECTION 225.180—Definitions
For purposes of this subpart:
(a) Banking entity means—
(1) Any insured depository institution;
(2) Any company that
controls an insured depository institution;
(3) Any company that is treated as a bank
holding company for purposes of section 8 of the International Banking
Act of 1978; and
(4)
Any affiliate or subsidiary of any of the foregoing entities.
(b) Hedge fund and private equity fund mean an issuer that would be an investment company, as defined in
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but
for section 3(c)(1) or 3(c)(7) of that Act, or such similar funds
as the appropriate Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission may, by rule,
as provided in section 13(b)(2) of the Bank Holding Company Act (12
U.S.C. 1851(b)(2)), determine.
(c) Insured depository
institution has the same meaning as given that term in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), except that
for purposes of this subpart the term shall not include an institution
that functions solely in a trust or fiduciary capacity if—
(1) All or substantially all of the deposits of such institution
are in trust funds and are received in a bona fide fiduciary capacity;
(2) No deposits of such
institution which are insured by the Federal Deposit Insurance Corporation
are offered or marketed by or through an affiliate of such institution;
(3) Such institution does
not accept demand deposits or deposits that the depositor may withdraw
by check or similar means for payment to third parties or others or
make commercial loans; and
(4) Such institution does not—
(i) Obtain
payment or payment related services from any Federal Reserve bank,
including any service referred to in section 11A of the Federal Reserve
Act (12 U.S.C. 248a); or
(ii) Exercise discount or borrowing
privileges pursuant to section 19(b)(7) of the Federal Reserve Act
(12 U.S.C. 416(b)(7)).
(d) Nonbank financial company supervised by the Board means
a nonbank financial company supervised by the Board of Governors,
as defined in section 102 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (12 U.S.C. 5311).
(e) Board means the Board of Governors of the Federal Reserve
System.
(f) Illiquid fund means a hedge
fund or private equity fund that:
(1) As of May 1, 2010—
(i) Was
principally invested in illiquid assets; or
(ii) Was invested in, and contractually
committed to principally invest in, illiquid assets; and
(2) Makes all investments
pursuant to, and consistent with, an investment strategy to principally
invest in illiquid assets.
(g) Illiquid
assets means any real property, security, obligation, or other
asset that—
(1) Is not a liquid asset;
(2) Because of statutory
or regulatory restrictions applicable to the hedge fund, private equity
fund or asset, cannot be offered, sold, or otherwise transferred by
the hedge fund or private equity fund to a person that is unaffiliated
with the relevant banking entity; or
(3) Because of contractual restrictions
applicable to the hedge fund, private equity fund or asset, cannot
be offered, sold, or otherwise transferred by the hedge fund or private
equity fund for a period of 3 years or more to a person that is unaffiliated
with the relevant banking entity.
(h) Liquid asset means:
(1) Cash or cash equivalents;
(2) An asset that is traded
on a recognized, established exchange, trading facility or other market
on which there exist independent, bona fide offers to buy and sell
so that a price reasonably related to the last sales price or current
bona fide competitive bid and offer quotations can be determined for
the particular asset almost instantaneously;
(3) An asset for which there are bona fide,
competitive bid and offer quotations in a recognized inter-dealer
quotation system or similar system or for which multiple dealers furnish
bona fide, competitive bid and offer quotations to other brokers and
dealers on request;
(4) An asset the price of which is quoted routinely in a widely disseminated
publication that is readily available to the general public or through
an electronic service that provides indicative data from real-time
financial networks;
(5) An asset with an initial term of one year or less and the payments
on which at maturity may be settled, closed-out, or paid in cash or
one or more other liquid assets described in paragraphs (h)(1), (2),
(3), or (4); and
(6)
Any other asset that the Board determines, based on all the facts
and circumstances, is a liquid asset.
(i) Principally invested and related definitions. A hedge
fund or private equity fund:
(1) Is principally invested in illiquid
assets if at least 75 percent of the fund’s consolidated total assets
are—
(i) Illiquid assets; or
(ii) Risk-mitigating hedges
entered into in connection with and related to individual or aggregated
positions in, or holdings of, illiquid assets;
(2) Is contractually committed
to principally invest in illiquid assets if the fund’s organizational
documents, other documents that constitute a contractual obligation
of the fund, or written representations contained in the fund’s offering
materials distributed to potential investors provide for the fund
to be principally invested in assets described in paragraph (i)(1)
at all times other than during temporary periods, such as the period
prior to the initial receipt of capital contributions from investors
or the period during which the fund’s investments are being liquidated
and capital and profits are being returned to investors; and
(3) Has an investment strategy
to principally invest in illiquid assets if the fund—
(i) Markets
or holds itself out to investors as intending to principally invest
in assets described in paragraph (i)(1) of this section; or
(ii) Has a documented investment
policy of principally investing in assets described in paragraph (i)(1)
of this section.
