Highlights:
The final rule:
-
Applies only to state
nonmember banks subject to the Market Risk Capital Rule, 12 CFR Part
325, Appendix C.
-
Replaces the "Interim
Rule on Securities Borrowing Transactions," published
in the Federal Register on December 5, 2000 (see
FIL-90-2000,
dated December 22, 2000).
-
Maintains the
requirements that the borrowed securities are liquid and marketable;
the transaction is marked-to-market daily and is subject to daily
margin maintenance to minimize possible losses.
-
Retains the
requirement that transactions involving borrowed securities with
counterparties that are subject to U.S. bankruptcy or FDIC
receivership action not be subject to an automatic stay in
bankruptcy.
-
Expands the scope of
the capital relief to cover securities borrowing transactions with
counterparties that are not subject to U.S. bankruptcy or FDIC
receivership action, provided these transactions are unconditionally
cancelable or overnight, or may be netted and closed out in the
event of default, including counterparty insolvency.
-
More closely aligns
the capital requirement with the risk associated with securities
borrowings, a long-established financial activity where losses have
been minimal given the structure of these transactions.
Distribution:
FDIC-Supervised Banks (Commercial and Savings)
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Related Topics:
Securities Borrowings
Risk-Based Capital Rules – Part 325, Appendix C
Attachment:
Risk-Based Capital Guidelines; Market Risk Measure; Securities
Borrowing Transactions
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(PDF Help)
Contact:
Jason C. Cave, Associate Director, Capital Markets Branch, at jcave@fdic.gov or (202) 898-3548
John Feid, Senior Capital
Markets Specialist, Capital Market Branch, at jfeid@fdic.gov or (202) 898-8649
Michael Phillips,
Counsel, at mphillips@fdic.gov
or (202) 898-3581
Note:
FDIC Financial Institution Letters (FILs) may be
accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2006/index.html.
To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters may be obtained
through the
FDIC's Public Information Center(1-877-275-3342 or 703-562-2200).
