On April 1, 2021, the revisions to the brokered deposits regulation (see FIL-113-2020) take effect. The rule establishes a new framework for analyzing the primary purpose exception (“PPE”) that includes a notice process for certain designated exceptions and an application process for entities that wish to invoke the PPE but do not meet one of the designated exceptions. To facilitate the implementation of the new regulations, the FDIC will add a Brokered Deposits webpage to the Banker Resource Center to provide information about the regulation, including filing instructions for the notice and application process. This new webpage will be available at 8:00 AM ET on April 1, 2021. The full compliance date with respect to the brokered deposit revisions is January 1, 2022.
Statement of Applicability: This Financial Institution Letter applies to all FDIC-Insured Institutions and other parties that may place or facilitate the placement of deposits at FDIC-insured institutions.
- The revised brokered deposits regulation, Section 337.6 of the FDIC’s Rules and Regulations, includes an interpretation of the PPE, one of nine statutory exceptions to the deposit broker definition.
- Along with the new interpretation, the rule identifies several, specific business relationships as meeting the PPE, described as “designated exceptions.”
- For two of the “designated exceptions,” referred to as the “25 percent test” and the “enabling transactions test,” the rule establishes a notice process in Section 303.243(b) of the FDIC’s Rules and Regulations.
- The revisions also establish a new PPE application process in Section 303.243(b) of the FDIC’s Rules and Regulations for entities that wish to be excluded from the deposit broker definition but do not meet one of the designated exceptions.
- The FDIC is updating its Banker Resource Center with a Brokered Deposit webpage, which will become available at 8:00 AM ET on April 1, to provide information and instructions about the new notice and application procedures, as well as general information relating to brokered deposits and the revised rule.
- Entities interested in filing a notice or application for a PPE should review the instructions posted on the webpage.
- The FDIC is also posting the Small Entity Compliance Guide (Community Bank Information) on the webpage to promote understanding of the regulations.
- Additionally, the FDIC will post answers to a collection of questions about the regulation and filing process, and intends to periodically update these questions and answers.
- The FDIC also plans to make available a listing of entities that have submitted notices.
- The webpage will also include an e-mail address for general questions about brokered deposits and the new PPE notice and application process: Brokered_Dep@fdic.gov.
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