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.
FDIC-Supervised Banks (Commercial and Savings)
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
Risk-Based Capital Rules – Part 325, Appendix C
Risk-Based Capital Guidelines; Market Risk Measure; Securities Borrowing Transactions 73k
Jason C. Cave, Associate Director, Capital Markets Branch, at firstname.lastname@example.org or (202) 898-3548
John Feid, Senior Capital Markets Specialist, Capital Market Branch, at email@example.com or (202) 898-8649
Michael Phillips, Counsel, at firstname.lastname@example.org or (202) 898-3581
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).