US Treasury on Exemption from QFC Recordkeeping Requirements
The US Treasury, after a consultation with FDIC, is issuing a determination regarding a request for an exemption from certain requirements of the rule implementing the qualified financial contracts, or QFCs, recordkeeping requirements related to the Orderly Liquidation Authority under the Dodd-Frank Act. The exemption extends only to Wells Fargo Clearing Services, LLC (WFCS) and Wells Fargo Advisors Financial Network, LLC (FiNet) and to no other entities. The granted exemption becomes effective January 02, 2020.
On October 31, 2016, a final rule was published under the Dodd-Frank Act, requiring certain financial companies to maintain records with respect to their qualified financial contract positions and the associated counterparties, including legal documentation and collateral. On August 14, 2018, Wells Fargo & Company submitted, to the US Treasury, FDIC, SEC, and CFTC, a request for an exemption from sections 148.3 and 148.4 of the rule, on behalf of its subsidiaries WFCS and FiNet. The requested exemption related to the compliance with regarding the current and future qualified financial contract portfolio consisting of qualified financial contracts entered into by WFCS or FiNet, with or on behalf of clients (client activity qualified financial contracts) and QFCs entered into by WFCS or FiNet in connection with or in support of client activity qualified financial contracts. Wells Fargo also asked for an exemption from certain guarantees WFCS enters into for the benefit of a futures commission merchant in connection with WFCS' introduction of customer trades to such futures commission merchant.
The US Treasury has determined to exempt WFCS and FiNet from the recordkeeping requirements of the rule with respect to any qualified financial contract with clients that are their respective customers under the Securities Investor Protection Act, with respect to any transactions or accounts such customers have with WFCS and FiNet, respectively, subject to certain conditions. The US Treasury does not expect that granting this exemption will unduly interfere with the FDIC's ability to avoid or mitigate serious adverse effects on financial stability or economic conditions in the United States. Treasury has determined to exempt any guarantees of such qualified financial contracts by a third party if the guarantor is an affiliate of the customer, is itself a customer of WFCS or FiNet, as applicable, or does not have any other qualified financial contract with WFCS or FiNet, as applicable. In addition, Treasury has determined to exempt WFCS from recordkeeping requirements of the rule with respect to any qualified financial contract entered into by WFCS with a clearing organization for the purpose of facilitating the clearance or settlement of any qualified financial contract subject to the exemption.
Related Link: Federal Register Notice
Keywords: Americas, US, Banking, Securities, QFC, Recordkeeping, Dodd Frank Act, FDIC, US Treasury
Previous Article
FED Updates Draft Form and Guidance for Reporting Under Volcker RuleRelated Articles
EC Adopts Financial Reporting Changes Arising from Benchmark Reforms
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HMT Updates List of Post-Brexit Equivalence Decisions in UK
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.
EBA Issues Erratum for Technical Package on Reporting Framework 3.0
EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.
APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets
APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.
EBA Publishes Risk Dashboard for Third Quarter of 2020
EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.
ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro
ECB concluded the public consultation on the introduction of a digital euro in EU.
ECB Finalizes Guide on Supervisory Approach to Bank Consolidation
ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.
SRB Chair Outlines Work Priorities for 2021
The SRB Chair Elke König published an article setting out work priorities for 2021.
FDIC Selects Companies to Compete in Final Phase of Tech Sprint
FDIC has selected 11 technology companies—including BearingPoint, Fed Reporter, Inc, and S&P Global Market Intelligence, LLC—for inclusion in the third and final phase of the rapid prototyping competition.
