Banking and Finance Law Daily Treasury determines exemptions from qualified financial contracts recordkeeping requirements
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Thursday, December 20, 2018

Treasury determines exemptions from qualified financial contracts recordkeeping requirements

By J. Preston Carter, J.D., LL.M.

Treasury Secretary Steven Mnuchin, as Chairperson of the Financial Stability Oversight Council, after consultation with the Federal Deposit Insurance Corporation, is issuing a determination regarding requests for exemption from certain requirements of the rule implementing the qualified financial contracts (QFC) recordkeeping requirements of Title II of the Dodd-Frank Act. The exemptions granted are effective Dec. 21, 2018.

On Aug. 23, 2017, The Clearing House Association (TCH) and the Securities Industry and Financial Markets Association (SIFMA) jointly submitted a written request for seven separate exemptions from certain recordkeeping requirements of the rule. The associations’ request was submitted on behalf of 33 corporate groups that are members of a working group organized by TCH-SIFMA. The associations requested an exemption: (1) for cash market transactions; (2) for transactions that mature overnight; (3) for seeded funds; (4) for subsidiaries of excluded entities; (5) for corporate groups for which the preponderance of assets and derivatives exposures in the group are in an insured depository institution; (6) for entities that are not identified as material entities in a corporate group’s resolution plan; and (7) from the requirement to report, in the corporate organization master table, excluded entities and non-financial companies of a corporate group.

In its notification of exemptions, Treasury said that any records entity subject to the rule may avail itself of the exemptions that it granted. Treasury reserves the right to rescind or modify the exemption at any time. It also intends to reassess the exemptions in five years. At that time, Treasury, in consultation with the FDIC and the primary financial regulatory agencies, would evaluate any relevant changes to market structure or applicable law or other relevant factors that might affect the reasons for granting the exemptions. Treasury expects that it would provide notice to records entities prior to any modification or rescission of any of the exemptions and that, in the event of a rescission or modification, Treasury would grant records entities a limited period of time in which to come into compliance with the applicable recordkeeping requirements of the rule.

Companies: The Clearing House Association. Securities Industry and Financial Markets Association

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