12 CFR 217.3 - Operational requirements for counterparty credit risk.

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§ 217.3 Operational requirements for counterparty credit risk.
For purposes of calculating risk-weighted assets under subparts D and E of this part:
(a) Cleared transaction. In order to recognize certain exposures as cleared transactions pursuant to paragraphs (1)(ii), (iii) or (iv) of the definition of “cleared transaction” in § 217.2, the exposures must meet the applicable requirements set forth in this paragraph (a).
(1) The offsetting transaction must be identified by the CCP as a transaction for the clearing member client.
(2) The collateral supporting the transaction must be held in a manner that prevents the Board-regulated institution from facing any loss due to an event of default, including from a liquidation, receivership, insolvency, or similar proceeding of either the clearing member or the clearing member's other clients. Omnibus accounts established under 17 CFR parts 190 and 300 satisfy the requirements of this paragraph (a).
(3) The Board-regulated institution must conduct sufficient legal review to conclude with a well-founded basis (and maintain sufficient written documentation of that legal review) that in the event of a legal challenge (including one resulting from a default or receivership, insolvency, liquidation, or similar proceeding) the relevant court and administrative authorities would find the arrangements of paragraph (a)(2) of this section to be legal, valid, binding and enforceable under the law of the relevant jurisdictions.
(4) The offsetting transaction with a clearing member must be transferable under the transaction documents and applicable laws in the relevant jurisdiction(s) to another clearing member should the clearing member default, become insolvent, or enter receivership, insolvency, liquidation, or similar proceedings.
(b) Eligible margin loan. In order to recognize an exposure as an eligible margin loan as defined in § 217.2, a Board-regulated institution must conduct sufficient legal review to conclude with a well-founded basis (and maintain sufficient written documentation of that legal review) that the agreement underlying the exposure:
(1) Meets the requirements of paragraph (1)(iii) of the definition of eligible margin loan in § 217.2, and
(2) Is legal, valid, binding, and enforceable under applicable law in the relevant jurisdictions.
(c) Qualifying cross-product master netting agreement. In order to recognize an agreement as a qualifying cross-product master netting agreement as defined in § 217.101, a Board-regulated institution must obtain a written legal opinion verifying the validity and enforceability of the agreement under applicable law of the relevant jurisdictions if the counterparty fails to perform upon an event of default, including upon receivership, insolvency, liquidation, or similar proceeding.
(d) Qualifying master netting agreement. In order to recognize an agreement as a qualifying master netting agreement as defined in § 217.2, a Board-regulated institution must:
(1) Conduct sufficient legal review to conclude with a well-founded basis (and maintain sufficient written documentation of that legal review) that:
(i) The agreement meets the requirements of paragraph (2) of the definition of qualifying master netting agreement in § 217.2; and
(ii) In the event of a legal challenge (including one resulting from default or from receivership, insolvency, liquidation, or similar proceeding) the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions; and
(2) Establish and maintain written procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of the definition of qualifying master netting agreement in § 217.2.
(e) Repo-style transaction. In order to recognize an exposure as a repo-style transaction as defined in § 217.2, a Board-regulated institution must conduct sufficient legal review to conclude with a well-founded basis (and maintain sufficient written documentation of that legal review) that the agreement underlying the exposure:
(1) Meets the requirements of paragraph (3) of the definition of repo-style transaction in § 217.2, and
(2) Is legal, valid, binding, and enforceable under applicable law in the relevant jurisdictions.
(f) Failure of a QCCP to satisfy the rule's requirements. If a Board-regulated institution determines that a CCP ceases to be a QCCP due to the failure of the CCP to satisfy one or more of the requirements set forth in paragraphs (2)(i) through (2)(iii) of the definition of a QCCP in § 217.2, the Board-regulated institution may continue to treat the CCP as a QCCP for up to three months following the determination. If the CCP fails to remedy the relevant deficiency within three months after the initial determination, or the CCP fails to satisfy the requirements set forth in paragraphs (2)(i) through (2)(iii) of the definition of a QCCP continuously for a three-month period after remedying the relevant deficiency, a Board-regulated institution may not treat the CCP as a QCCP for the purposes of this part until after the Board-regulated institution has determined that the CCP has satisfied the requirements in paragraphs (2)(i) through (2)(iii) of the definition of a QCCP for three continuous months.

Title 12 published on 2014-01-01

The following are only the Rules published in the Federal Register after the published date of Title 12.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-07-30; vol. 79 # 146 - Wednesday, July 30, 2014
    1. 79 FR 44120 - Regulatory Capital Rules: Advanced Approaches Risk-Based Capital Rule, Revisions to the Definition of Eligible Guarantee
      GPO FDSys XML | Text
      FEDERAL RESERVE SYSTEM, FEDERAL DEPOSIT INSURANCE CORPORATION, DEPARTMENT OF TREASURY, Office of the Comptroller of the Currency
      Final rule.
      This rule is effective on October 1, 2014. Any company subject to the rule may elect to adopt it before this date.
      12 CFR Part 3

This is a list of United States Code sections, Statutes at Large, Public Laws, and Presidential Documents, which provide rulemaking authority for this CFR Part.

This list is taken from the Parallel Table of Authorities and Rules provided by GPO [Government Printing Office].

It is not guaranteed to be accurate or up-to-date, though we do refresh the database weekly. More limitations on accuracy are described at the GPO site.


United States Code
U.S. Code: Title 12 - BANKS AND BANKING

§ 248 - Enumerated powers

§ 321 - Application for membership

§ 322 - Determination on application

§ 323 - Stock in Federal reserve banks; method of payment

§ 324 - Laws applicable on becoming members

§ 325 - Examinations

§ 326 - Acceptance of examinations and reports by State authorities; special examinations

§ 327 - Surrender of stock and cancellation of memberships

§ 328 - Withdrawals from membership

§ 329 - Capital stock required as condition precedent to membership

§ 329a - Omitted

§ 330 - Laws applicable on becoming members; discounts for State banks

§ 331 - Certifying checks on State banks admitted as members

§ 332 - Depositaries of public money; financial agents; security required

§ 333 - Mutual savings banks; application and admission to membership in Federal Reserve System

§ 334 - Reports from affiliates; penalty for failure to furnish

§ 335 - Dealing in investment securities; limitations and conditions

§ 336 - Certificates of stock; representation of stock of other corporations

§ 337 - Repealed.

§ 338 - Examination of affiliates; forfeiture of membership on refusal of affiliate to give information or pay expense

§ 338a - Investments to promote public welfare and community development; limitation on investments

§ 481 - Appointment of examiners; examination of member banks, State banks, and trust companies; reports

§ 482 - Employees of Office of Comptroller of the Currency; appointment; compensation and benefits

§ 483 - Special examination of member banks; information of condition furnished to Board of Governors of the Federal Reserve System

§ 484 - Limitation on visitorial powers

§ 485 - Examination of Federal reserve banks

§ 486 - Waiver of requirements as to reports from or examinations of affiliates

§ 1462a - Administrative provisions

§ 1467a - Regulation of holding companies

§ 1818 - Termination of status as insured depository institution

§ 1828 - Regulations governing insured depository institutions

§ 1831n - Accounting objectives, standards, and requirements

12 U.S. Code § -

§ 1831p - Transferred

§ 1831w - Safety and soundness firewalls applicable to financial subsidiaries of banks

§ 1835 - Insured depository institution capital requirements for transfers of small business obligations

§ 1844 - Administration

§ 1851 - Prohibitions on proprietary trading and certain relationships with hedge funds and private equity funds

§ 3904 - Reserves

§ 3906 - Collection and disclosure of international lending data

§ 3907 - Capital adequacy

§ 3908 - Foreign loan evaluations

§ 3909 - General authorities

§ 4808 - Revising regulatory requirements for transfers of all types of assets with recourse

§ 5365 - Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies

§ 5371 - Leverage and risk-based capital requirements

Title 12 published on 2014-01-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 12 CFR 217 after this date.

  • 2014-07-30; vol. 79 # 146 - Wednesday, July 30, 2014
    1. 79 FR 44120 - Regulatory Capital Rules: Advanced Approaches Risk-Based Capital Rule, Revisions to the Definition of Eligible Guarantee
      GPO FDSys XML | Text
      FEDERAL RESERVE SYSTEM, FEDERAL DEPOSIT INSURANCE CORPORATION, DEPARTMENT OF TREASURY, Office of the Comptroller of the Currency
      Final rule.
      This rule is effective on October 1, 2014. Any company subject to the rule may elect to adopt it before this date.
      12 CFR Part 3