# FDIC FIL-52-2013: Liquidity Coverage Ratio: Proposed Rule

> Federal · Agency guidance · Superseded

URL: https://www.frixlaw.com/law-library/statutes/FDIC_FIL13052

## Section

- **Citation:** FDIC FIL-52-2013
- **Heading:** Liquidity Coverage Ratio: Proposed Rule
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** Superseded
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** FDIC Financial Institution Letters / Liquidity Coverage Ratio: Proposed Rule

## Text

Vol. 78
Friday,
No. 230
November 29, 2013
Part IV
Department of the Treasury
Office of the Comptroller of the Currency
12 CFR Part 50
Federal Reserve System
12 CFR Part 249
Federal Deposit Insurance Corporation
12 CFR Part 329
Liquidity Coverage Ratio: Liquidity Risk Measurement, Standards, and
Monitoring; Proposed Rule
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71818
Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 50
[Docket ID OCC–2013–0016]
RIN 1557 AD 74
FEDERAL RESERVE SYSTEM
12 CFR Part 249
[Regulation WW; Docket No. R–1466]
RIN 7100 AE–03
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 329
RIN 3064–AE04
Liquidity Coverage Ratio: Liquidity
Risk Measurement, Standards, and
Monitoring
AGENCIES: Office of the Comptroller of
the Currency, Department of the
Treasury; Board of Governors of the
Federal Reserve System; and Federal
Deposit Insurance Corporation.
ACTION: Notice of proposed rulemaking
with request for public comment.
SUMMARY: The Office of the Comptroller
of the Currency (OCC), the Board of
Governors of the Federal Reserve
System (Board), and the Federal Deposit
Insurance Corporation (FDIC) are
requesting comment on a proposed rule
(proposed rule) that would implement a
quantitative liquidity requirement
consistent with the liquidity coverage
ratio standard established by the Basel
Committee on Banking Supervision. The
requirement is designed to promote the
short-term resilience of the liquidity risk
profile of internationally active banking
organizations, thereby improving the
banking sector’s ability to absorb shocks
arising from financial and economic
stress, as well as improvements in the
measurement and management of
liquidity risk
ard established by the Basel
Committee on Banking Supervision. The
requirement is designed to promote the
short-term resilience of the liquidity risk
profile of internationally active banking
organizations, thereby improving the
banking sector’s ability to absorb shocks
arising from financial and economic
stress, as well as improvements in the
measurement and management of
liquidity risk. The proposed rule would
apply to all internationally active
banking organizations, generally, bank
holding companies, certain savings and
loan holding companies, and depository
institutions with more than $250 billion
in total assets or more than $10 billion
in on-balance sheet foreign exposure,
and to their consolidated subsidiaries
that are depository institutions with $10
billion or more in total consolidated
assets. The proposed rule would also
apply to companies designated for
supervision by the Board by the
Financial Stability Oversight Council
under section 113 of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act that do not have
significant insurance operations and to
their consolidated subsidiaries that are
depository institutions with $10 billion
or more in total consolidated assets. The
Board also is proposing on its own a
modified liquidity coverage ratio
standard that is based on a 21-calendar
day stress scenario rather than a 30
calendar-day stress scenario for bank
holding companies and savings and
loan holding companies without
significant insurance or commercial
operations that, in each case, have $50
billion or more in total consolidated
assets.
DATES: Comments on this notice of
proposed rulemaking must be received
by January 31, 2014.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area is subject to delay,
commenters are encouraged to submit
comments by the Federal eRulemaking
Portal or email, if possible
tions that, in each case, have $50
billion or more in total consolidated
assets.
DATES: Comments on this notice of
proposed rulemaking must be received
by January 31, 2014.
ADDRESSES: Comments should be
directed to:
OCC: Because paper mail in the
Washington, DC area is subject to delay,
commenters are encouraged to submit
comments by the Federal eRulemaking
Portal or email, if possible. Please use
the title ‘‘Liquidity Coverage Ratio:
Liquidity Risk Measurement, Standards,
and Monitoring’’ to facilitate the
organization and distribution of the
comments. You may submit comments
by any of the following methods:
• Federal eRulemaking Portal—
‘‘regulations.gov’’: Go to http://
www.regulations.gov. Enter ‘‘Docket ID
OCC–2013–0016’’ in the Search Box and
click ‘‘Search’’. Results can be filtered
using the filtering tools on the left side
of the screen. Click on ‘‘Comment Now’’
to submit public comments. Click on the
‘‘Help’’ tab on the Regulations.gov home
page to get information on using
Regulations.gov, including instructions
for submitting public comments.
• Email: regs.comments@
occ.treas.gov.
• Mail: Legislative and Regulatory
Activities Division, Office of the
Comptroller of the Currency, 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Hand Delivery/Courier: 400 7th
Street SW., Suite 3E–218, Mail Stop
9W–11, Washington, DC 20219.
• Fax: (571) 465–4326.
Instructions: You must include
‘‘OCC’’ as the agency name and ‘‘Docket
ID OCC–2013–0016’’ in your comment.
In general, OCC will enter all comments
received into the docket and publish
them on the Regulations.gov Web site
without change, including any business
or personal information that you
provide, such as name and address
information, email addresses, or phone
numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure
CC will enter all comments
received into the docket and publish
them on the Regulations.gov Web site
without change, including any business
or personal information that you
provide, such as name and address
information, email addresses, or phone
numbers. Comments received, including
attachments and other supporting
materials, are part of the public record
and subject to public disclosure. Do not
enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
You may review comments and other
related materials that pertain to this
rulemaking action by any of the
following methods:
• Viewing Comments Electronically:
Go to http://www.regulations.gov. Enter
‘‘Docket ID OCC–2013–0016’’ in the
Search box and click ‘‘Search’’.
Comments can be filtered by Agency
using the filtering tools on the left side
of the screen. Click on the ‘‘Help’’ tab
on the Regulations.gov home page to get
information on using Regulations.gov,
including instructions for viewing
public comments, viewing other
supporting and related materials, and
viewing the docket after the close of the
comment period.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 400 7th Street
SW., Washington, DC. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
s for viewing
public comments, viewing other
supporting and related materials, and
viewing the docket after the close of the
comment period.
• Viewing Comments Personally: You
may personally inspect and photocopy
comments at the OCC, 400 7th Street
SW., Washington, DC. For security
reasons, the OCC requires that visitors
make an appointment to inspect
comments. You may do so by calling
(202) 649–6700. Upon arrival, visitors
will be required to present valid
government-issued photo identification
and to submit to security screening in
order to inspect and photocopy
comments.
• Docket: You may also view or
request available background
documents and project summaries using
the methods described above.
Board: You may submit comments,
identified by Docket No. R–1466, by any
of the following methods:
• Agency Web site: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: regs.comments@
federalreserve.gov. Include docket
number in the subject line of the
message.
• FAX: (202) 452–3819 or (202) 452–
3102.
• Mail: Robert deV. Frierson,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
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eet and
Constitution Avenue NW., Washington,
DC 20551.
All public comments are available
from the Board’s Web site at http://
www.federalreserve.gov/generalinfo/
foia/ProposedRegs.cfm as submitted,
unless modified for technical reasons.
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71819
Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
1 The BCBS is a committee of banking supervisory
authorities that was established by the central bank
governors of the G10 countries in 1975. It currently
consists of senior representatives of bank
supervisory authorities and central banks from
Argentina, Australia, Belgium, Brazil, Canada,
China, France, Germany, Hong Kong SAR, India,
Indonesia, Italy, Japan, Korea, Luxembourg, Mexico,
the Netherlands, Russia, Saudi Arabia, Singapore,
South Africa, Sweden, Switzerland, Turkey, the
United Kingdom, and the United States. Documents
issued by the BCBS are available through the Bank
for International Settlements Web site at http://
www.bis.org.
2 ‘‘Basel III: International framework for liquidity
risk measurement, standards and monitoring’’
(December 2010), available at http://www.bis.org/
publ/bcbs188.pdf (Basel III Liquidity Framework).
3 ‘‘Basel III: The Liquidity Coverage Ratio and
liquidity risk monitoring tools’’ (January 2013),
available at http://www.bis.org/publ/bcbs238.htm.
Accordingly, your comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Street NW) between 9:00 a.m. and 5:00
p.m. on weekdays.
FDIC: You may submit comments by
any of the following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html
ronically or in
paper form in Room MP–500 of the
Board’s Martin Building (20th and C
Street NW) between 9:00 a.m. and 5:00
p.m. on weekdays.
FDIC: You may submit comments by
any of the following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Agency Web site: http://
www.FDIC.gov/regulations/laws/
federal/propose.html.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments/Legal
ESS, Federal Deposit Insurance
Corporation, 550 17th Street NW.,
Washington, DC 20429.
• Hand Delivered/Courier: The guard
station at the rear of the 550 17th Street
Building (located on F Street), on
business days between 7:00 a.m. and
5:00 p.m.
• Email: comments@FDIC.gov.
Instructions: Comments submitted
must include ‘‘FDIC’’ and ‘‘RIN 3064–
AE04.’’ Comments received will be
posted without change to http://
www.FDIC.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
OCC: Kerri Corn, Director, Credit and
Market Risk Division, (202) 649–6398;
Linda M. Jennings, National Bank
Examiner, (980) 387–0619; Patrick T.
Tierney, Special Counsel, or Tiffany
Eng, Law Clerk, Legislative and
Regulatory Activities Division, (202)
649–5490; or Adam S. Trost, Senior
Attorney, Securities and Corporate
Practices Division, (202) 649–5510
Office of the Comptroller of the
Currency, 400 7th Street SW.,
Washington, DC 20219.
Board: Anna Lee Hewko, Deputy
Associate Director, (202) 530–6260;
David Emmel, Manager, (202) 912–4612,
Credit, Market and Liquidity Risk
Policy; Ann McKeehan, Senior
Supervisory Financial Analyst, (202)
972–6903; Andrew Willis, Senior
Financial Analyst, (202) 912–4323,
Capital and Regulatory Policy; April C.
Snyder, Senior Counsel, (202) 452–
3099; or Dafina Stewart, Senior
Attorney, (202) 452–3876, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551
quidity Risk
Policy; Ann McKeehan, Senior
Supervisory Financial Analyst, (202)
972–6903; Andrew Willis, Senior
Financial Analyst, (202) 912–4323,
Capital and Regulatory Policy; April C.
Snyder, Senior Counsel, (202) 452–
3099; or Dafina Stewart, Senior
Attorney, (202) 452–3876, Legal
Division, Board of Governors of the
Federal Reserve System, 20th and C
Streets NW., Washington, DC 20551. For
the hearing impaired only,
Telecommunication Device for the Deaf
(TDD), (202) 263–4869.
FDIC: Kyle Hadley, Chief,
Examination Support Section, (202)
898–6532; Rebecca Berryman, Senior
Capital Markets Policy Specialist, (202)
898–6901; Eric Schatten, Capital
Markets Policy Analyst, (202) 898–7063,
Capital Markets Branch Division of Risk
Management Supervision, (202) 898–
6888; Gregory Feder, Counsel, (202)
898–8724; or Sue Dawley, Senior
Attorney, (202) 898–6509, Supervision
Branch, Legal Division, Federal Deposit
Insurance Corporation, 550 17th Street
NW., Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
A. Summary of the Proposed Rule
B. Background
C. Overview of the Proposed Rule
II. Minimum Liquidity Coverage Ratio
A. High-Quality Liquid Assets
1. Liquidity Characteristics of HQLA
a. Risk Profile
b. Market-based Characteristics
c. Central Bank Eligibility
2. Qualifying Criteria for Categories of
HQLA
a. Level 1 Liquid Assets
b. Level 2A Liquid Assets
c. Level 2B Liquid Assets
3. Operational Requirements for HQLA
4. Generally Applicable Criteria for HQLA
a. Unencumbered
b. Client Pool Security
c. Treatment of HQLA held by U.S.
Consolidated Subsidiaries
e. Exclusion of Rehypothecated Assets
f. Exclusion of Assets Designated as
Operational
5. Calculation of the HQLA Amount
a. Calculation of Unadjusted Excess HQLA
Amount
b. Calculation of Adjusted Excess HQLA
Amount
c. Example HQLA Calculation
B. Total Net Cash Outflow
1. Determining the Maturity of Instruments
and Transactions
2. Cash Outflow Categories
a
.
Consolidated Subsidiaries
e. Exclusion of Rehypothecated Assets
f. Exclusion of Assets Designated as
Operational
5. Calculation of the HQLA Amount
a. Calculation of Unadjusted Excess HQLA
Amount
b. Calculation of Adjusted Excess HQLA
Amount
c. Example HQLA Calculation
B. Total Net Cash Outflow
1. Determining the Maturity of Instruments
and Transactions
2. Cash Outflow Categories
a. Unsecured Retail Funding Outflow
Amount
b. Structured Transaction Outflow Amount
c. Net Derivative Cash Outflow Amount
d. Mortgage Commitment Outflow Amount
e. Commitment Outflow Amount
f. Collateral Outflow Amount
g. Brokered Deposit Outflow Amount for
Retail Customers or Counterparties
h. Unsecured Wholesale Funding Outflow
Amount
i. Debt Security Outflow Amount
j. Secured Funding and Asset Exchange
Outflow Amount
k. Foreign Central Bank Borrowings
l. Other Contractual Outflow Amounts
m. Excluded Amounts for Intragroup
Transactions
3. Total Cash Inflow Amount
a. Items not included as inflows
b. Net Derivatives Cash Inflow Amount
c. Retail Cash Inflow Amount
d. Unsecured Wholesale Cash Inflow
Amount
e. Securities Cash Inflow Amount
f. Secured Lending and Asset Exchange
Cash Inflow Amount
III. Liquidity Coverage Ratio Shortfall
IV. Transition and Timing
V. Modified Liquidity Coverage Ratio
Applicable to Bank and Savings and
Loan Holding Companies
A. Overview and Applicability
B. High-Quality Liquid Assets
C. Total Net Cash Outflow
VI. Solicitation of Comments on Use of Plain
Language
VII. Regulatory Flexibility Act
VIII. Paperwork Reduction Act
IX. OCC Unfunded Mandates Reform Act of
1995 Determination
I. Introduction
A
n and Timing
V. Modified Liquidity Coverage Ratio
Applicable to Bank and Savings and
Loan Holding Companies
A. Overview and Applicability
B. High-Quality Liquid Assets
C. Total Net Cash Outflow
VI. Solicitation of Comments on Use of Plain
Language
VII. Regulatory Flexibility Act
VIII. Paperwork Reduction Act
IX. OCC Unfunded Mandates Reform Act of
1995 Determination
I. Introduction
A. Summary of the Proposed Rule
The Office of the Comptroller of the
Currency (OCC), the Board of Governors
of the Federal Reserve System (Board),
and the Federal Deposit Insurance
Corporation (FDIC) (collectively, the
agencies) are requesting comment on a
proposed rule (proposed rule) that
would implement a liquidity coverage
ratio requirement, consistent with the
international liquidity standards
published by the Basel Committee on
Banking Supervision (BCBS),1 for large,
internationally active banking
organizations, nonbank financial
companies designated by the Financial
Stability Oversight Council for Board
supervision that do not have substantial
insurance activities (covered nonbank
companies), and their consolidated
subsidiary depository institutions with
total assets greater than $10 billion. The
BCBS published the international
liquidity standards in December 2010 as
a part of the Basel III reform package 2
and revised the standards in January
2013 (as revised, the Basel III Revised
Liquidity Framework).3 The Board also
is proposing on its own to implement a
modified version of the liquidity
coverage ratio requirement as an
enhanced prudential standard for bank
holding companies and savings and
loan holding companies with at least
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rk).3 The Board also
is proposing on its own to implement a
modified version of the liquidity
coverage ratio requirement as an
enhanced prudential standard for bank
holding companies and savings and
loan holding companies with at least
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Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
4 See ‘‘Enhanced Prudential Standards and Early
Remediation Requirements for Covered
Companies,’’ 77 FR 594 (Jan. 5, 2010); ‘‘Enhanced
Prudential Standards and Early Remediation
Requirements for Foreign Banking Organizations
and Foreign Nonbank Financial Companies,’’ 77 FR
76628 (Dec. 28, 2012).
5 Principles for Sound Liquidity Risk
Management and Supervision (September 2008),
available at http://www.bis.org/publ/bcbs144.htm.
6 Basel III Liquidity Framework, supra note 2.
7 Basel III Revised Liquidity Framework, supra
note 3.
8 Key provisions of the 2010 LCR that were
updated by the BCBS in 2013 include expanding
the definition of high-quality liquid assets,
technical changes to the calculation of various
inflow and outflow rates, introducing a phase-in
period for implementation, and a variety of rules
text clarifications. See http://www.bis.org/press/
p130106b.pdf for a complete list of revisions to the
2010 LCR.
9 For instance, the Uniform Financial Rating
System adopted by the Federal Financial
Institutions Examination Council (FFIEC) requires
examiners to assign a supervisory rating that
assesses a banking organization’s liquidity position
and liquidity risk management.
10 75 FR 13656 (March 22, 2010).
11 See 12 U.S.C. 5365.
$50 billion in total consolidated assets
that are not internationally active and
do not have substantial insurance
activities. This modified approach is
described in section V of this preamble
C) requires
examiners to assign a supervisory rating that
assesses a banking organization’s liquidity position
and liquidity risk management.
10 75 FR 13656 (March 22, 2010).
11 See 12 U.S.C. 5365.
$50 billion in total consolidated assets
that are not internationally active and
do not have substantial insurance
activities. This modified approach is
described in section V of this preamble.
As described in more detail below,
the proposed rule would establish a
quantitative minimum liquidity
coverage ratio that builds upon the
liquidity coverage methodologies
traditionally used by banking
organizations to assess exposures to
contingent liquidity events. The
proposed rule would complement
existing supervisory guidance and the
more qualitative liquidity requirements
that the Board proposed, in consultation
with the OCC and the FDIC, pursuant to
section 165 of the Dodd-Frank Wall
Street Reform and Consumer Protection
Act of 2010 (Dodd-Frank Act) 4 and
would establish transition periods for
conformance with the new
requirements.
B. Background
The recent financial crisis
demonstrated significant weaknesses in
the liquidity positions of banking
organizations, many of which
experienced difficulty meeting their
obligations due to a breakdown of the
funding markets. As a result, many
governments and central banks across
the world provided unprecedented
levels of liquidity support to companies
in the financial sector in an effort to
sustain the global financial system. In
the United States, the Board and the
FDIC established various temporary
liquidity facilities to provide sources of
funding for a range of asset classes.
These events came in the wake of a
period characterized by ample liquidity
in the financial system
ded unprecedented
levels of liquidity support to companies
in the financial sector in an effort to
sustain the global financial system. In
the United States, the Board and the
FDIC established various temporary
liquidity facilities to provide sources of
funding for a range of asset classes.
These events came in the wake of a
period characterized by ample liquidity
in the financial system. The rapid
reversal in market conditions and the
declining availability of liquidity during
the financial crisis illustrated both the
speed with which liquidity can
evaporate and the potential for
protracted illiquidity during and
following these types of market events.
In addition, the recent financial crisis
highlighted the pervasive detrimental
effect of a liquidity crisis on the banking
sector, the financial system, and the
economy as a whole.
Banking organizations’ failure to
adequately address these challenges was
in part due to lapses in basic liquidity
risk management practices. Recognizing
the need for banking organizations to
improve their liquidity risk management
and to control their liquidity risk
exposures, the agencies worked with
regulators from foreign jurisdictions to
establish international liquidity
standards. These standards include the
principles based on supervisory
expectations for liquidity risk
management in the ‘‘Principles for
Sound Liquidity Management and
Supervision’’ (Basel Liquidity
Principles).5 In addition to these
principles, the BCBS established
quantitative standards for liquidity in
the ‘‘Basel III: International framework
for liquidity risk measurement,
standards and monitoring’’ 6 in
December 2010, which introduced a
liquidity coverage ratio (2010 LCR) and
a net stable funding ratio (NSFR), as
well as a set of liquidity monitoring
tools. These reforms were intended to
strengthen liquidity and promote a more
resilient financial sector by improving
the banking sector’s ability to absorb
shocks arising from financial and
economic stress
standards and monitoring’’ 6 in
December 2010, which introduced a
liquidity coverage ratio (2010 LCR) and
a net stable funding ratio (NSFR), as
well as a set of liquidity monitoring
tools. These reforms were intended to
strengthen liquidity and promote a more
resilient financial sector by improving
the banking sector’s ability to absorb
shocks arising from financial and
economic stress. Subsequently, in
January 2013, the BCBS issued ‘‘Basel
III: The Liquidity Coverage Ratio and
liquidity risk monitoring tools’’ (Basel
III LCR),7 which updated key
components of the 2010 LCR as part of
the Basel III liquidity framework.8 The
agencies acknowledge that there is
ongoing international study of the
interaction between the Basel III LCR
and central bank operations. The
agencies are working with the BCBS on
these matters and would consider
amending the proposal if the BCBS
proposes modifications to the Basel III
LCR.
The Basel III LCR establishes for the
first time an internationally harmonized
quantitative liquidity standard that has
the primary objective of promoting the
short-term resilience of the liquidity risk
profile of internationally active banking
organizations. The Basel III LCR is
designed to improve the banking
sector’s ability to absorb, without
reliance on government support, shocks
arising from financial and economic
stress, whatever the source, thus
reducing the risk of spillover from the
financial sector to the broader economy.
Beginning in January 2015, under the
Basel III LCR, internationally active
banking organizations would be
required to hold sufficient high-quality
liquid assets (HQLA) to meet their
obligations and other liquidity needs
that are forecasted to occur during a 30
calendar-day stress scenario. To meet
the Basel III LCR standard, the HQLA
must be unencumbered by liens and
other restrictions on transferability and
must be convertible into cash easily and
immediately in deep, active private
markets.
Current U.S
ld sufficient high-quality
liquid assets (HQLA) to meet their
obligations and other liquidity needs
that are forecasted to occur during a 30
calendar-day stress scenario. To meet
the Basel III LCR standard, the HQLA
must be unencumbered by liens and
other restrictions on transferability and
must be convertible into cash easily and
immediately in deep, active private
markets.
Current U.S. regulations do not
require banking organizations to meet a
quantitative liquidity standard. Rather,
the agencies evaluate a banking
organization’s methods for measuring,
monitoring, and managing liquidity risk
on a case-by-case basis in conjunction
with their supervisory processes.9 Since
the financial crisis, the agencies have
worked to establish a more rigorous
supervisory and regulatory framework
for U.S. banking organizations that
would incorporate and build upon the
BCBS standards. First, the agencies,
together with the National Credit Union
Administration and the Conference of
State Bank Supervisors, issued guidance
titled the ‘‘Interagency Policy Statement
on Funding and Liquidity Risk
Management’’ (Liquidity Risk Policy
Statement) in March 2010.10 The
Liquidity Risk Policy Statement
incorporates elements of the Basel
Liquidity Principles and is
supplemented by other liquidity risk
management principles previously
issued by the agencies. The Liquidity
Risk Policy Statement specifies
supervisory expectations for
fundamental liquidity risk management
practices, including a comprehensive
management process for identifying,
measuring, monitoring, and controlling
liquidity risk. The Liquidity Risk Policy
Statement also emphasizes the central
role of corporate governance, cash-flow
projections, stress testing, ample
liquidity resources, and formal
contingency funding plans as necessary
tools for effectively measuring and
managing liquidity risk
es, including a comprehensive
management process for identifying,
measuring, monitoring, and controlling
liquidity risk. The Liquidity Risk Policy
Statement also emphasizes the central
role of corporate governance, cash-flow
projections, stress testing, ample
liquidity resources, and formal
contingency funding plans as necessary
tools for effectively measuring and
managing liquidity risk.
Additionally, in 2012, pursuant to
section 165 of the Dodd-Frank Act,11 the
Board proposed enhanced liquidity
standards for large U.S. banking firms,
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12 See 77 FR 594 (Jan. 5, 2012); 77 FR 76628 (Dec.
28, 2012).
13 See 12 U.S.C. 5365.
14 See 12 CFR part 3 (OCC), 12 CFR part 217
(Federal Reserve), and 12 CFR part 324 (FDIC).
15 See 12 U.S.C. 1813(i) and 12 U.S.C. 5381(a)(3).
16 Pursuant to the International Banking Act
(IBA), 12 U.S.C. 3101 et seq., and OCC regulation,
12 CFR 28.13(a)(1), a Federal branch or agency
regulated and supervised by the OCC has the same
rights and responsibilities as a national bank
operating at the same location. Thus, as a general
matter, Federal branches and agencies are subject to
the same laws as national banks. The IBA and the
OCC regulation state, however, that this general
standard does not apply when the IBA or other
applicable law provides other specific standards for
Federal branches or agencies, or when the OCC
determines that the general standard should not
apply. This proposal would not apply to Federal
branches and agencies of foreign banks operating in
the United States. At this time, these entities have
assets that are substantially below the proposed
$250 billion asset threshold for applying the
proposed liquidity standard to an internationally
active banking organization
s, or when the OCC
determines that the general standard should not
apply. This proposal would not apply to Federal
branches and agencies of foreign banks operating in
the United States. At this time, these entities have
assets that are substantially below the proposed
$250 billion asset threshold for applying the
proposed liquidity standard to an internationally
active banking organization. As part of its
supervisory program for Federal branches and
agencies of foreign banks, the OCC reviews liquidity
risks and takes appropriate action to limit such
risks in those entities. In addition, the OCC is
monitoring other emerging initiatives in the U.S.
that may impact liquidity risk supervision of
Federal branches and agencies of foreign banks
before considering applying a liquidity coverage
ratio requirement to them.
17 Total consolidated assets for the purposes of
the proposed rule would be as reported on a
covered banking organization’s most recent year-
end Consolidated Reports of Condition and Income
or Consolidated Financial Statements for Bank
Holding Companies, Federal Reserve Form FR Y–
9C. Foreign exposure data would be calculated in
accordance with the Federal Financial Institution
Examination Council 009 Country Exposure Report.
certain foreign banking organizations,
and nonbank financial companies
designated by the Financial Stability
Oversight Council for Board
supervision.12 These enhanced liquidity
standards include corporate governance
provisions, senior management
responsibilities, independent review, a
requirement to hold highly liquidity
assets to cover stressed liquidity needs
based on internally developed stress
models, a contingency funding plan,
and specific limits on potential sources
of liquidity risk.13
The proposed rule would further
enhance the supervisory efforts
described above, which are aimed at
measuring and managing liquidity risk,
by implementing a minimum
quantitative liquidity requirement in the
form of a liquidity coverage ratio
uidity needs
based on internally developed stress
models, a contingency funding plan,
and specific limits on potential sources
of liquidity risk.13
The proposed rule would further
enhance the supervisory efforts
described above, which are aimed at
measuring and managing liquidity risk,
by implementing a minimum
quantitative liquidity requirement in the
form of a liquidity coverage ratio. This
quantitative requirement would focus
on short-term liquidity risks and would
benefit the financial system as a whole
by improving the ability of companies
subject to the proposal to absorb
potential market and liquidity shocks in
a severe stress scenario over a short
term. The agencies are proposing to
establish a minimum liquidity coverage
ratio that would be consistent with the
Basel III LCR, with some modifications
to reflect characteristics and risks of
specific aspects of the U.S. market and
U.S. regulatory framework, as described
in this preamble. For instance, in
recognition of the strong liquidity
positions many U.S. banking
organizations and other companies that
would be subject to the proposal have
achieved since the recent financial
crisis, the proposed rule includes
transition periods that are similar to, but
shorter than, those set forth in the Basel
III LCR. These proposed transition
periods are designed to give companies
subject to the proposal sufficient time to
adjust to the proposed rule while
minimizing any potential adverse
impact that implementation could have
on the U.S. banking system.
The agencies note that the BCBS is in
the process of reviewing the NSFR that
was included in the BCBS liquidity
framework when it was first published
in 2010
posed transition
periods are designed to give companies
subject to the proposal sufficient time to
adjust to the proposed rule while
minimizing any potential adverse
impact that implementation could have
on the U.S. banking system.
The agencies note that the BCBS is in
the process of reviewing the NSFR that
was included in the BCBS liquidity
framework when it was first published
in 2010. While the Basel III LCR is
focused on measuring liquidity
resilience over a short-term period of
severe stress, the NSFR is designed to
promote resilience over a one-year time
horizon by creating additional
incentives for banking organizations and
other financial companies that would be
subject to the standard to fund their
activities with more stable sources and
encouraging a sustainable maturity
structure of assets and liabilities.
Currently, the NSFR is in an
international observation period as the
agencies work with other BCBS
members and the banking industry to
gather data and study the impact of the
proposed NSFR standard on the banking
system. The agencies are carefully
considering what changes to the NSFR
they may recommend to the BCBS based
on the results of this assessment. The
agencies anticipate that they would
issue a proposed rulemaking
implementing the NSFR in advance of
its scheduled global implementation in
2018.
C. Overview of the Proposed Rule
The proposed rule would establish a
minimum liquidity coverage ratio
applicable to all internationally active
banking organizations, that is, banking
organizations with $250 billion or more
in total assets or $10 billion or more in
on-balance sheet foreign exposure, and
to consolidated subsidiary depository
institutions of internationally active
banking organizations with $10 billion
or more in total consolidated assets
(collectively, covered banking
organizations)
to all internationally active
banking organizations, that is, banking
organizations with $250 billion or more
in total assets or $10 billion or more in
on-balance sheet foreign exposure, and
to consolidated subsidiary depository
institutions of internationally active
banking organizations with $10 billion
or more in total consolidated assets
(collectively, covered banking
organizations). Thus, the rule would not
apply to institutions that have opted in
to the advanced approaches capital
rule; 14 the agencies are seeking
comment on whether to apply the rule
to opt-in banking organizations. The
proposed rule would also apply to
covered nonbank companies, and to
consolidated subsidiary depository
institutions of covered nonbank
companies with $10 billion or more in
total consolidated assets (together with
covered banking organizations and
covered nonbank companies, covered
companies). The proposed rule would
not apply to a bridge financial company
or a subsidiary of a bridge financial
company, a new depository institution
or a bridge depository institution, as
those terms are used in the resolution
context.15 The agencies believe that
requiring the FDIC to maintain a
minimum liquidity coverage ratio in
these entities would inappropriately
constrain the FDIC’s ability to resolve a
depository institution or its affiliated
companies in an orderly manner.16
The Board also is proposing on its
own to implement a modified version of
the liquidity coverage ratio as an
enhanced prudential standard for bank
holding companies and savings and
loan holding companies without
significant insurance or commercial
operations that, in each case, have $50
billion or more in total consolidated
assets, but are not covered companies
for the purposes of the proposed rule.17
The agencies are reserving the
authority to apply the proposed rule to
a company not meeting the asset
thresholds described above if it is
determined that the application of the
proposed liquidity coverage ratio woul
ce or commercial
operations that, in each case, have $50
billion or more in total consolidated
assets, but are not covered companies
for the purposes of the proposed rule.17
The agencies are reserving the
authority to apply the proposed rule to
a company not meeting the asset
thresholds described above if it is
determined that the application of the
proposed liquidity coverage ratio would
be appropriate in light of a company’s
asset size, level of complexity, risk
profile, scope of operations, affiliation
with foreign or domestic covered
companies, or risk to the financial
system. A covered company would
remain subject to the proposed rule
until its primary Federal supervisor
determines in writing that application of
the proposed rule to the company is not
appropriate in light of these same
factors. Moreover, nothing in the
proposed rule would limit the authority
of the agencies under any other
provision of law or regulation to take
supervisory or enforcement actions,
including actions to address unsafe or
unsound practices or conditions,
deficient liquidity levels, or violations
of law. The agencies also are reserving
the authority to require a covered
company to hold an amount of HQLA
greater than otherwise required under
the proposed rule, or to take any other
measure to improve the covered
company’s liquidity risk profile, if the
relevant agency determines that the
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quire a covered
company to hold an amount of HQLA
greater than otherwise required under
the proposed rule, or to take any other
measure to improve the covered
company’s liquidity risk profile, if the
relevant agency determines that the
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covered company’s liquidity
requirements as calculated under the
proposed rule are not commensurate
with its liquidity risks. In making such
determinations, the agencies will apply
notice and response procedures as set
forth in their respective regulations.
The proposed liquidity coverage ratio
would require a covered company to
maintain an amount of HQLA meeting
the criteria set forth in the proposed rule
(the numerator of the ratio) that is no
less than 100 percent of its total net cash
outflows over a prospective 30 calendar-
day period, as calculated in accordance
with the proposed rule (the
denominator of the ratio). Under the
proposed rule, certain categories of
assets may qualify as HQLA if they are
unencumbered by liens and other
restrictions on transfer so that they can
be converted into cash quickly with
little to no loss in value. Access to
HQLA would enhance the ability of a
covered company to meet its liquidity
needs during an acute short-term
liquidity stress scenario. A covered
company’s total net cash outflow
amount would be determined by
applying outflow and inflow rates,
which reflect certain stressed
assumptions, against the balances of a
covered company’s funding sources,
obligations, and assets over a
prospective 30 calendar-day period
ability of a
covered company to meet its liquidity
needs during an acute short-term
liquidity stress scenario. A covered
company’s total net cash outflow
amount would be determined by
applying outflow and inflow rates,
which reflect certain stressed
assumptions, against the balances of a
covered company’s funding sources,
obligations, and assets over a
prospective 30 calendar-day period.
As further described below, the
measures of total cash outflow and total
cash inflow, and the outflow and inflow
rates used in their determination, are
meant to reflect aspects of the stress
events experienced during the recent
financial crisis. Consistent with the
Basel III LCR, these components of the
proposed rule take into account the
potential impact of idiosyncratic and
market-wide shocks, including those
that would result in: (1) A partial loss
of retail deposits and brokered deposits
for retail customers; (2) a partial loss of
unsecured wholesale funding capacity;
(3) a partial loss of secured, short-term
financing with certain collateral and
counterparties; (4) losses from
derivative positions and the collateral
supporting those positions; (5)
unscheduled draws on committed credit
and liquidity facilities that a covered
company has provided to its clients; (6)
the potential need for a covered
company to buy back debt or to honor
non-contractual obligations in order to
mitigate reputational and other risks;
and (7) other shocks which affect
outflows linked to structured financing
transactions, mortgages, central bank
borrowings, and customer short
positions.
As noted above, covered companies
generally would be required to
maintain, on a consolidated basis, a
liquidity coverage ratio equal to or
greater than 100 percent. However, the
agencies recognize that under certain
circumstances, it may be necessary for
a covered company’s liquidity coverage
ratio to briefly fall below 100 percent to
fund unanticipated liquidity needs
short
positions.
As noted above, covered companies
generally would be required to
maintain, on a consolidated basis, a
liquidity coverage ratio equal to or
greater than 100 percent. However, the
agencies recognize that under certain
circumstances, it may be necessary for
a covered company’s liquidity coverage
ratio to briefly fall below 100 percent to
fund unanticipated liquidity needs.
However, a liquidity coverage ratio
below 100 percent may also reflect a
significant deficiency in a covered
company’s management of liquidity
risk. Therefore, the proposed rule would
establish a framework for flexible
supervisory response when a covered
company’s liquidity coverage ratio falls
below 100 percent. Under the proposed
rule, a covered company would be
required to notify its primary Federal
supervisor on any business day that its
liquidity coverage ratio is less than 100
percent. In addition, if the liquidity
coverage ratio is below 100 percent for
three consecutive business days, a
covered company would be required to
submit to its primary Federal supervisor
a plan for remediation of the shortfall.
These procedures, which are described
in further detail in this preamble, are
intended to enable supervisors to
monitor and respond appropriately to
the unique circumstances that are giving
rise to a covered company’s liquidity
coverage ratio shortfall.
Consistent with the BCBS liquidity
framework, the proposed rule, once
finalized, would be effective as of
January 1, 2015, subject to a transition
period. Under the proposed rule’s
transition provisions, covered
companies would be required to comply
with a minimum liquidity coverage ratio
of 80 percent as of January 1, 2015.
From January 1, 2016, through
December 31, 2016, the minimum
liquidity coverage ratio would be 90
percent. Beginning on January 1, 2017
and thereafter, all covered companies
would be required to maintain a
liquidity coverage ratio of 100 percent
ransition provisions, covered
companies would be required to comply
with a minimum liquidity coverage ratio
of 80 percent as of January 1, 2015.
From January 1, 2016, through
December 31, 2016, the minimum
liquidity coverage ratio would be 90
percent. Beginning on January 1, 2017
and thereafter, all covered companies
would be required to maintain a
liquidity coverage ratio of 100 percent.
The proposed rule’s liquidity
coverage ratio is based on a
standardized supervisory stress
scenario. While the liquidity coverage
ratio would establish one scenario for
stress testing, supervisors expect
companies that would be subject to the
proposed rule to maintain robust stress
testing frameworks that incorporate
additional scenarios that are more
tailored to the risks within their firms.
Companies should use these additional
scenarios in conjunction with the
proposed rule’s liquidity coverage ratio
to appropriately determine their
liquidity buffers. The agencies note that
the liquidity coverage ratio is a
minimum requirement and
organizations that pose more systemic
risk to the U.S. banking system or whose
liquidity stress testing indicates a need
for higher liquidity buffers may need to
take additional steps beyond meeting
the minimum ratio in order to meet
supervisory expectations.
The BCBS liquidity framework also
establishes liquidity risk monitoring
mechanisms designed to strengthen and
promote global consistency in liquidity
risk supervision. These mechanisms
include information on contractual
maturity mismatch, concentration of
funding, available unencumbered assets,
liquidity coverage ratio reporting by
significant currency, and market-related
monitoring tools. At this time, the
agencies are not proposing to implement
these monitoring mechanisms as
regulatory standards or requirements
sistency in liquidity
risk supervision. These mechanisms
include information on contractual
maturity mismatch, concentration of
funding, available unencumbered assets,
liquidity coverage ratio reporting by
significant currency, and market-related
monitoring tools. At this time, the
agencies are not proposing to implement
these monitoring mechanisms as
regulatory standards or requirements.
However, the agencies intend to obtain
information from covered companies to
enable the monitoring of liquidity risk
exposure through reporting forms and
from information the agencies collect
through other supervisory processes.
The proposed rule would provide
enhanced information about the short-
term liquidity profile of a covered
company to managers and supervisors.
With this information, the covered
company’s management and supervisors
would be better able to assess the
company’s ability to meet its projected
liquidity needs during periods of
liquidity stress; take appropriate actions
to address liquidity needs; and, in
situations of failure, to implement an
orderly resolution of the covered
company. The agencies anticipate that
they will separately seek comment upon
proposed regulatory reporting
requirements and instructions
pertaining to a covered company’s
disclosure of the proposed rule’s
liquidity coverage ratio in a subsequent
notice.
The agencies request comment on all
aspects of the proposed rule, including
comment on the specific issues raised
throughout this preamble. The agencies
request that commenters provide
detailed qualitative or quantitative
analysis, as appropriate, as well as any
relevant data and impact analysis to
support their positions.
II. Minimum Liquidity Coverage Ratio
Under the proposed rule, a covered
company would be required to calculate
its liquidity coverage ratio as of a
particular date, which is defined in the
proposed rule as the calculation date
that commenters provide
detailed qualitative or quantitative
analysis, as appropriate, as well as any
relevant data and impact analysis to
support their positions.
II. Minimum Liquidity Coverage Ratio
Under the proposed rule, a covered
company would be required to calculate
its liquidity coverage ratio as of a
particular date, which is defined in the
proposed rule as the calculation date.
The proposed rule would require a
covered company to calculate its
liquidity coverage ratio daily as of a set
time selected by the covered company
prior to the effective date of the rule and
communicated in writing to its primary
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18 See infra section II.A.2.c.
19 Identification of companies with high potential
for wrong-way risk under the proposal is discussed
below in section II.A.2.
Federal supervisor. Subsequent to this
election, a covered company could only
change the time as of which it calculates
its liquidity coverage ratio daily with
the written approval of its Federal
supervisor.
A covered company would calculate
its liquidity coverage ratio by dividing
its amount of HQLA by total net cash
outflows, which would be equal to the
highest daily amount of cumulative net
cash outflows within the 30 calendar
days following a calculation date (30
calendar-day stress period). A covered
company would not be permitted to
double count items in this computation.
For example, if an asset is included as
a part of the stock of HQLA, such asset
may not also be counted as cash inflows
in the denominator.
The following discussion addresses
the proposed criteria for HQLA, which
are meant to reflect the characteristics
the agencies believe are associated with
the most liquid assets banking
organizations typically hold
le count items in this computation.
For example, if an asset is included as
a part of the stock of HQLA, such asset
may not also be counted as cash inflows
in the denominator.
The following discussion addresses
the proposed criteria for HQLA, which
are meant to reflect the characteristics
the agencies believe are associated with
the most liquid assets banking
organizations typically hold. The
discussion also explains how HQLA
would be calculated under the proposed
rule, including its constituent
components, and the proposed caps and
haircuts applied to those components.
Next, the discussion describes total
net cash outflows, the denominator of
the liquidity coverage ratio. This
discussion explains the items that
would be included in total cash
outflows and total cash inflows, as well
as rules for determining whether
instruments mature or transactions
occur within a 30 calendar-day stress
period for the purposes of the liquidity
coverage ratio’s calculation. The
discussion concludes by describing the
regulatory framework for supervisory
response if a covered company’s
liquidity coverage ratio falls below 100
percent.
1. What operational or other issues
arise from requiring the calculation of
the liquidity coverage ratio as of a set
time selected by a covered company
prior to the effective date of the rule?
What significant operational costs, such
as technological improvements, or other
operational difficulties, if any, may arise
from the requirement to calculate the
liquidity coverage ratio on a daily basis?
What alternatives to daily calculation
should the agencies consider and why?
2. The proposed rule would require a
covered company to calculate its HQLA
on a daily basis
te of the rule?
What significant operational costs, such
as technological improvements, or other
operational difficulties, if any, may arise
from the requirement to calculate the
liquidity coverage ratio on a daily basis?
What alternatives to daily calculation
should the agencies consider and why?
2. The proposed rule would require a
covered company to calculate its HQLA
on a daily basis. Should the agencies
impose any limits with regard to
covered companies’ ability to transfer
HQLA on an intraday basis between
entities? Why or why not? In particular,
what appropriate limits should the
agencies consider with regard to
intraday movements of HQLA between
domestic and foreign entities, including
foreign branches?
A. High-Quality Liquid Assets
The numerator of the proposed
liquidity coverage ratio would be
comprised of a covered company’s
HQLA, subject to the qualifying criteria
and compositional limitations described
below (HQLA amount). These proposed
criteria and limitations are meant to
ensure that a covered company’s HQLA
amount only includes assets with a high
potential to generate liquidity through
sale or secured borrowing during a
stress scenario.
Consistent with the Basel III LCR, the
agencies are proposing to divide HQLA
into three categories of assets: level 1,
level 2A and level 2B liquid assets.
Specifically and as described in greater
detail below, the agencies are proposing
that level 1 liquid assets, which are the
highest quality and most liquid assets,
be included in a covered company’s
HQLA amount without a limit. Level 2A
and 2B liquid assets have characteristics
that are associated with being relatively
stable and significant sources of
liquidity, but not to the same degree as
level 1 liquid assets. Accordingly, level
2A liquid assets would be subject to a
15 percent haircut and, when combined
with level 2B liquid assets, could not
exceed 40 percent of the total stock of
HQLA
nt without a limit. Level 2A
and 2B liquid assets have characteristics
that are associated with being relatively
stable and significant sources of
liquidity, but not to the same degree as
level 1 liquid assets. Accordingly, level
2A liquid assets would be subject to a
15 percent haircut and, when combined
with level 2B liquid assets, could not
exceed 40 percent of the total stock of
HQLA. Level 2B liquid assets, which are
associated with a lesser degree of
liquidity and more volatility than level
2A liquid assets, would be subject to a
50 percent haircut and could not exceed
15 percent of the total stock of HQLA.
These haircuts and caps are set forth in
section 21 of the proposed rule.
A covered company would include
assets in each HQLA category as
required by the proposed rule as of a
calculation date, irrespective of an
asset’s residual maturity. A description
of the methodology for calculating the
HQLA amount, including the caps on
level 2A and level 2B liquid assets and
the requirement to calculate adjusted
and unadjusted amounts of HQLA, is
described in section II.A.5 below.
1. Liquidity Characteristics of HQLA
Assets that would qualify as HQLA
should be easily and immediately
convertible into cash with little or no
loss of value during a period of liquidity
stress. In identifying the types of assets
that would qualify as HQLA, the
agencies considered the following
categories of liquidity characteristics,
which are generally consistent with
those of the Basel III LCR: (a) Risk
profile; (b) market-based characteristics;
and (c) central bank eligibility.
a. Risk Profile
Assets that are appropriate for
consideration as HQLA tend to be lower
risk. There are various forms of risk that
can be associated with an asset,
including liquidity risk, market risk,
credit risk, inflation risk, foreign
exchange risk, and the risk of
subordination in a bankruptcy or
insolvency
rofile; (b) market-based characteristics;
and (c) central bank eligibility.
a. Risk Profile
Assets that are appropriate for
consideration as HQLA tend to be lower
risk. There are various forms of risk that
can be associated with an asset,
including liquidity risk, market risk,
credit risk, inflation risk, foreign
exchange risk, and the risk of
subordination in a bankruptcy or
insolvency. Assets appropriate for
consideration as HQLA would be
expected to remain liquid across various
stress scenarios and should not
suddenly lose their liquidity upon the
occurrence of a certain type of risk.
Also, these assets generally experience
‘‘flight to quality’’ during a crisis,
wherein investors sell their other
holdings to buy more of these assets in
order to reduce the risk of loss and
increase the ability to monetize assets as
necessary to meet their own obligations.
Assets that may be highly liquid
under normal conditions but experience
wrong-way risk and could become less
liquid during a period of stress would
not be appropriate for consideration as
HQLA. For example, securities issued or
guaranteed by many companies in the
financial sector 18 have been more prone
to lose value and, as a result, become
less liquid and lose value in times of
liquidity stress due to the high
correlation between the health of these
companies and the health of the
financial markets generally. This
correlation was evident during the
recent financial crisis, as most debt
issued by such companies traded at
significant discounts for a prolonged
period. Because of this high potential
for wrong-way risk, consistent with the
Basel III LCR standard, the proposed
rule would exclude assets issued by
companies that are primary actors in the
financial sector from HQLA.19
b. Market-Based Characteristics
The agencies also have found that
assets appropriate for consideration as
HQLA generally exhibit characteristics
that are market-based in nature
ecause of this high potential
for wrong-way risk, consistent with the
Basel III LCR standard, the proposed
rule would exclude assets issued by
companies that are primary actors in the
financial sector from HQLA.19
b. Market-Based Characteristics
The agencies also have found that
assets appropriate for consideration as
HQLA generally exhibit characteristics
that are market-based in nature. First,
these assets tend to have active outright
sale or repurchase markets at all times
with significant diversity in market
participants as well as high volume.
This market-based liquidity
characteristic may be demonstrated by
historical evidence, including evidence
during recent periods of market
liquidity stress, of low bid-ask spreads,
high trading volumes, a large and
diverse number of market participants,
and other factors. Diversity of market
participants, on both the buy and sell
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20 12 U.S.C. 1850a(a)(4).
21 7 U.S.C. 1a(28) and (49).
22 15 U.S.C. 78c(a)(71).
23 12 U.S.C. 5462(4).
24 Under paragraph (8) of the proposed rule’s
definition of ‘‘regulated financial company,’’ the
following would not be considered regulated
financial companies: U.S. government-sponsored
enterprises; small business investment companies,
as defined in section 102 of the Small Business
Investment Act of 1958 (15 U.S.C. 661 et seq.);
entities designated as Community Development
Financial Institutions (CDFIs) under 12 U.S.C. 4701
et seq. and 12 CFR part 1805; and central banks, the
Bank for International Settlements, the International
Monetary Fund, or a multilateral development
bank.
25 See http://www.ffiec.gov/nicpubweb/nicweb/
nichome.aspx
tion 102 of the Small Business
Investment Act of 1958 (15 U.S.C. 661 et seq.);
entities designated as Community Development
Financial Institutions (CDFIs) under 12 U.S.C. 4701
et seq. and 12 CFR part 1805; and central banks, the
Bank for International Settlements, the International
Monetary Fund, or a multilateral development
bank.
25 See http://www.ffiec.gov/nicpubweb/nicweb/
nichome.aspx.
sides, is particularly important because
it tends to reduce market concentration
and is a key indicator that a market will
remain liquid. Also, the presence of
multiple committed market makers is
another sign that a market is liquid.
Second, assets that are appropriate for
consideration as HQLA generally tend
to have prices that do not incur sharp
price declines, even during times of
stress. Volatility of traded prices and
bid-ask spreads during normal times are
simple proxy measures of market
volatility; however, there should be
historical evidence of relative stability
of market terms (such as prices and
haircuts) and volumes during stressed
periods. To the extent that an asset
exhibits price or volume fluctuation
during times of stress, assets appropriate
for consideration as HQLA tend to
increase in value and experience a flight
to quality during such times, as
historically, the market moves into more
liquid assets in times of systemic crisis.
Third, assets that can serve as HQLA
tend to be easily and readily valued.
The agencies generally have found that
an asset’s liquidity is typically higher if
market participants agree on its
valuation. Assets with more
standardized, homogenous, and simple
structures tend to be more fungible,
thereby promoting liquidity. The pricing
formula of more liquid assets generally
is easy to calculate when it is based
upon sound assumptions and publicly
available inputs. Whether an asset is
listed on an active and developed
exchange can serve as a key indicator of
an asset’s price transparency and
liquidity.
c
standardized, homogenous, and simple
structures tend to be more fungible,
thereby promoting liquidity. The pricing
formula of more liquid assets generally
is easy to calculate when it is based
upon sound assumptions and publicly
available inputs. Whether an asset is
listed on an active and developed
exchange can serve as a key indicator of
an asset’s price transparency and
liquidity.
c. Central Bank Eligibility
Assets that a covered company can
pledge at a central bank as collateral for
intraday liquidity needs and overnight
liquidity facilities in a jurisdiction and
in a currency where the bank has access
to the central bank generally tend to be
liquid and, as such, are appropriate for
consideration as HQLA. In the past,
central banks have provided a backstop
to the supply of banking system
liquidity under conditions of severe
stress. Central bank eligibility should,
therefore, provide additional assurance
that assets could be used in acute
liquidity stress events without adversely
affecting the broader financial system
and economy. However, central bank
eligibility is not itself sufficient to
categorize an asset as HQLA; all of the
proposed rule’s requirements for HQLA
would need to be met if central bank
eligible assets are to qualify as HQLA.
3. What, if any, other characteristics
should be considered by the agencies in
analyzing the liquidity of an asset?
2. Qualifying Criteria for Categories of
HQLA
The characteristics of HQLA
discussed above are reflected in the
proposed rule’s qualifying criteria for
HQLA. The criteria, set forth in section
20 of the proposed rule, are designed to
identify assets that exhibit low risk and
limited price volatility, are traded in
high-volume, deep markets with
transparent pricing, and that are eligible
to be pledged at a central bank.
Consistent with these characteristics
and the BCBS LCR framework, the
proposed rule would establish general
criteria for all HQLA and specific
requirements for each category of
HQLA
e, are designed to
identify assets that exhibit low risk and
limited price volatility, are traded in
high-volume, deep markets with
transparent pricing, and that are eligible
to be pledged at a central bank.
Consistent with these characteristics
and the BCBS LCR framework, the
proposed rule would establish general
criteria for all HQLA and specific
requirements for each category of
HQLA. For example, most of the assets
in these categories would need to meet
the proposed rule’s definition of ‘‘liquid
and readily-marketable’’ in order to be
included in HQLA. Under the proposed
rule, an asset would be liquid and
readily-marketable if it is traded in an
active secondary market with more than
two committed market makers, a large
number of committed non-market maker
participants on both the buying and
selling sides of transactions, timely and
observable market prices, and high
trading volumes. The ‘‘liquid and
readily-marketable’’ requirement is
meant to ensure that assets included in
HQLA exhibit a level of liquidity that
would allow a covered company to
convert them into cash during times of
stress and, therefore, to meet its
obligations when other sources of
funding may be reduced or unavailable.
Timely and observable market prices
make it likely that a buyer could be
found and that a price could be obtained
within a short period of time such that
a covered company could convert the
assets to cash, as needed.
As noted above, assets that are
included in HQLA should not be issued
by financial sector entities since they
would then be correlated with covered
companies (or wrong-way risk assets). In
the proposed rule, financial sector
entities are defined as regulated
financial companies, investment
companies, non-regulated funds,
pension funds, investment advisers, or a
consolidated subsidiary of any of the
foregoing
that are
included in HQLA should not be issued
by financial sector entities since they
would then be correlated with covered
companies (or wrong-way risk assets). In
the proposed rule, financial sector
entities are defined as regulated
financial companies, investment
companies, non-regulated funds,
pension funds, investment advisers, or a
consolidated subsidiary of any of the
foregoing. HQLA also could not be
issued by any company (or any of its
consolidated subsidiaries) that an
agency has determined should be
treated the same for the purposes of this
proposed rule as a regulated financial
company, investment company, non-
regulated fund, pension fund, or
investment adviser, based on activities
similar in scope, nature, or operations to
those entities (identified company).
The term ‘‘regulated financial
company’’ under the proposal would
include bank holding companies and
savings and loan holding companies
(depository institution holding
companies); nonbank financial
companies supervised by the Board
under Title I of the Dodd-Frank Act;
depository institutions; foreign banks;
credit unions; industrial loan
companies, industrial banks, or other
similar institutions described in section
2 of the Bank Holding Company Act;
national banks, state member banks, or
state nonmember banks that are not
depository institutions; insurance
companies; securities holding
companies (as defined in section 618 of
the Dodd-Frank Act);20 broker-dealers or
dealers registered with the SEC; futures
commission merchants and swap
dealers, each as defined in the
Commodity Exchange Act;21 or security-
based swap dealers defined in section 3
of the Securities Exchange Act.22 It
would also include any designated
financial market utility, as defined in
section 803 of the Dodd-Frank Act.23
The definition also includes foreign
companies if they are supervised and
regulated in a manner similar to the
institutions listed above.24
In addition, a ‘‘regulated financial
company’’ would include a
based swap dealers defined in section 3
of the Securities Exchange Act.22 It
would also include any designated
financial market utility, as defined in
section 803 of the Dodd-Frank Act.23
The definition also includes foreign
companies if they are supervised and
regulated in a manner similar to the
institutions listed above.24
In addition, a ‘‘regulated financial
company’’ would include a company
that is included in the organization
chart of a depository institution holding
company on the Form FR Y–6, as listed
in the hierarchy report of the depository
institution holding company produced
by the National Information Center
(NIC) Web site, provided that the top
tier depository institution holding
company is subject to the proposed rule
(FR Y–6 companies).25
FR Y–6 companies are typically
controlled by the filing depository
institution holding company under the
Bank Holding Company Act. Although
many such companies are not
consolidated on the financial statements
of a depository institution holding
company, the links between the
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Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
26 15 U.S.C. 80a–1 et seq.
27 15 U.S.C. 80b–1 et seq.
28 See paragraph (7) of § __.3 of the proposed
rule’s definition of ‘‘regulated financial company.’’
29 See 12 U.S.C. 342.
companies are sufficiently significant
that the agencies believe it would be
appropriate to exclude securities issued
by FR Y–6 companies (and their
consolidated subsidiaries) from HQLA,
for the same policy reasons that other
regulated financial companies’
securities would be excluded from
HQLA under the proposal. The
organizational hierarchy chart produced
by the NIC Web site reflects (as updates
regularly occur) the FR Y–6 companies
a depository institution holding
company must report on the form
ued
by FR Y–6 companies (and their
consolidated subsidiaries) from HQLA,
for the same policy reasons that other
regulated financial companies’
securities would be excluded from
HQLA under the proposal. The
organizational hierarchy chart produced
by the NIC Web site reflects (as updates
regularly occur) the FR Y–6 companies
a depository institution holding
company must report on the form. The
agencies are proposing this method for
identifying these companies in order to
reduce burden associated with obtaining
the FR Y–6 organizational charts for all
depository institution holding
companies subject to the proposed rule,
because the charts are not uniformly
available by electronic means.
Under the proposal, investment
companies would include companies
registered with the SEC under the
Investment Company Act of 1940 26 and
investment advisers would include
companies registered with the SEC as
investment advisers under the
Investment Advisers Act of 1940,27 as
well as the foreign equivalent of such
companies. Non-regulated funds would
include hedge funds or private equity
funds whose investment advisers are
required to file SEC Form PF (Reporting
Form for Investment Advisers to Private
Funds and Certain Commodity Pool
Operators and Commodity Trading
Advisors), and any consolidated
subsidiary of such fund, other than a
small business investment company, as
defined in section 102 of the Small
Business Investment Act of 1958 (15
U.S.C. 661 et seq.). Pension funds would
be defined as employee benefit plans as
defined in ERISA and government
pension plans,28 as well as their foreign
equivalents. Securities issued by the
foregoing entities or their consolidated
subsidiaries would be excluded from
HQLA.
4
small business investment company, as
defined in section 102 of the Small
Business Investment Act of 1958 (15
U.S.C. 661 et seq.). Pension funds would
be defined as employee benefit plans as
defined in ERISA and government
pension plans,28 as well as their foreign
equivalents. Securities issued by the
foregoing entities or their consolidated
subsidiaries would be excluded from
HQLA.
4. What, if any, modifications should
the agencies consider to the definition of
‘‘regulated financial company’’? What,
if any, entities should be added to, or
removed from, the definition and why?
What operational difficulties may be
involved in identifying a ‘‘regulated
financial company,’’ including
companies a depository institution
holding company must report on the FR
Y–6 organizational chart (or in
identifying consolidated subsidiaries)?
How should those operational
difficulties be addressed? What
alternatives for identifying companies
reported on the FR Y–6 should be
considered, and what difficulties may be
associated with using the organizational
hierarchy chart produced by the NIC
Web site?
5. What, if any, modifications should
the agencies consider to the definition of
‘‘non-regulated funds’’? Should hedge
funds or private equity funds whose
managers are not required to file Form
PF be included in the definition? What
operational or other difficulties may
covered companies encounter in
identifying ‘‘non-regulated’’ funds and
their consolidated subsidiaries? What
other definitions would generally
capture hedge funds and private equity
funds in an appropriate and clear
manner? Provide detailed suggestions
and justifications.
6. What, if any, modifications should
the agencies consider to the definitions
of ‘‘investment company,’’ ‘‘pension
fund,’’ ‘‘investment adviser,’’ or
‘‘identified company’’? Should
investment companies or investment
advisers not required to register with the
SEC be included in the respective
definitions?
7
appropriate and clear
manner? Provide detailed suggestions
and justifications.
6. What, if any, modifications should
the agencies consider to the definitions
of ‘‘investment company,’’ ‘‘pension
fund,’’ ‘‘investment adviser,’’ or
‘‘identified company’’? Should
investment companies or investment
advisers not required to register with the
SEC be included in the respective
definitions?
7. What risk or operational issues
should the agencies consider regarding
the definitions and the exclusion of
securities issued by the companies
described above from HQLA, as well as
the higher outflow rates applied to such
companies, as described below?
8. What additional factors or
characteristics should the agencies
consider with respect to identifying
those companies whose securities
should be excluded from HQLA and
should be subject to the accompanying
higher outflow rates for such
companies, as discussed below?
9. How well does the proposed
definition of ‘‘liquid and readily-
marketable’’ meet the agencies’ goal of
identifying HQLA that could be
converted into cash in order to meet a
covered company’s liquidity needs
during times of stress? What other
characteristics, if any, of a traded
security and relevant markets should
the agencies consider? What other
approaches for capturing this liquidity
characteristic should the agencies
consider? Provide detailed description
of and justifications for any alternative
approaches.
a. Level 1 Liquid Assets
Under the proposed rule, a covered
company could include the full fair
value of level 1 liquid assets in its
HQLA amount. These assets have the
highest potential to generate liquidity
for a covered company during periods of
severe liquidity stress and thus would
be includable in a covered company’s
HQLA amount without limit
ations for any alternative
approaches.
a. Level 1 Liquid Assets
Under the proposed rule, a covered
company could include the full fair
value of level 1 liquid assets in its
HQLA amount. These assets have the
highest potential to generate liquidity
for a covered company during periods of
severe liquidity stress and thus would
be includable in a covered company’s
HQLA amount without limit. As
discussed in further detail in this
section, the proposed rule would
include the following assets in level 1
liquid assets: (1) Federal Reserve Bank
balances; (2) foreign withdrawable
reserves; (3) securities issued or
unconditionally guaranteed as to the
timely payment of principal and interest
by the U.S. Department of the Treasury;
(4) liquid and readily-marketable
securities issued or unconditionally
guaranteed as to the timely payment of
principal and interest by any other U.S.
government agency (provided that its
obligations are fully and explicitly
guaranteed by the full faith and credit
of the United States government); (5)
certain liquid and readily marketable
securities that are claims on, or claims
guaranteed by, a sovereign entity, a
central bank, the Bank for International
Settlements, the International Monetary
Fund, the European Central Bank and
European Community, or a multilateral
development bank; and (6) certain debt
securities issued by sovereign entities.
Reserve Bank Balances
Under the BCBS LCR framework,
‘‘central bank reserves’’ are included in
HQLA. In the United States, Federal
Reserve Banks are generally authorized
under the Federal Reserve Act to
maintain balances only for ‘‘depository
institutions’’ and for other limited types
of organizations.29 Pursuant to the
Federal Reserve Act, there are different
kinds of balances that depository
institutions may maintain at Federal
Reserve Banks, and they are maintained
in different kinds of Federal Reserve
Bank accounts
erve Banks are generally authorized
under the Federal Reserve Act to
maintain balances only for ‘‘depository
institutions’’ and for other limited types
of organizations.29 Pursuant to the
Federal Reserve Act, there are different
kinds of balances that depository
institutions may maintain at Federal
Reserve Banks, and they are maintained
in different kinds of Federal Reserve
Bank accounts. Balances that depository
institutions must maintain to satisfy a
reserve balance requirement must be
maintained in the depository
institution’s ‘‘master account’’ at a
Federal Reserve Bank or, if the
institution has designated a pass-
through correspondent, in the
correspondent’s master account. A
‘‘reserve balance requirement’’ is the
amount that a depository institution
must maintain in an account at a
Federal Reserve Bank in order to satisfy
that portion of the institution’s reserve
requirement that is not met with vault
cash. Balances in excess of those
required to be maintained to satisfy a
reserve balance requirement, known as
‘‘excess balances,’’ may be maintained
in a master account or in an ‘‘excess
balance account.’’ Finally, balances
maintained for a specified period of
time, known as ‘‘term deposits,’’ are
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Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
30 See § __.21(b)(1) of the proposed rule.
31 See 12 CFR part 3 (OCC), 12 CFR part 217
(Federal Reserve), and 12 CFR part 324 (FDIC).
32 GSEs include the Federal Home Loan Mortgage
Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), the Farm Credit
System, and the Federal Home Loan Bank System.
maintained in a term deposit account
offered by the Federal Reserve Banks
es
30 See § __.21(b)(1) of the proposed rule.
31 See 12 CFR part 3 (OCC), 12 CFR part 217
(Federal Reserve), and 12 CFR part 324 (FDIC).
32 GSEs include the Federal Home Loan Mortgage
Corporation (FHLMC), the Federal National
Mortgage Association (FNMA), the Farm Credit
System, and the Federal Home Loan Bank System.
maintained in a term deposit account
offered by the Federal Reserve Banks.
The proposed rule therefore uses the
term ‘‘Reserve Bank balances’’ as the
relevant term to capture central bank
reserves in the United States.
Under the proposed rule, all balances
a depository institution maintains at a
Federal Reserve Bank (other than
balances that an institution maintains
on behalf of another institution, such as
balances it maintains on behalf of a
respondent or on behalf of an excess
balance account participant) would be
considered level 1 liquid assets, except
for certain term deposits as explained
immediately below.
Consistent with the concept of
‘‘central bank reserves’’ in the BCBS
LCR framework, the proposed rule
includes in its definition of ‘‘Reserve
Bank balances’’ only those term deposits
offered and maintained pursuant to
terms and conditions that (1) explicitly
and contractually permit such term
deposits to be withdrawn upon demand
prior to the expiration of the term, or
that (2) permit such term deposits to be
pledged as collateral for term or
automatically-renewing overnight
advances from a Federal Reserve Bank.
None of the term deposits offered under
the Federal Reserve’s Term Deposit
Facility as currently configured would
be included in ‘‘Reserve Bank balances’’
because all term deposits offered to date
by the Federal Reserve Banks are not
explicitly and contractually repayable
on notice. Similarly, all term deposits
offered to date may not serve as
collateral against which the depository
institutions can borrow from a Federal
Reserve Bank on a term or automatically
renewable basis
rently configured would
be included in ‘‘Reserve Bank balances’’
because all term deposits offered to date
by the Federal Reserve Banks are not
explicitly and contractually repayable
on notice. Similarly, all term deposits
offered to date may not serve as
collateral against which the depository
institutions can borrow from a Federal
Reserve Bank on a term or automatically
renewable basis. Federal Reserve term
deposits that are not included in
‘‘Reserve Bank balances’’ and, therefore,
would not be considered level 1 liquid
assets under the proposed rule could be
included in a covered company’s
inflows, if the terms of such deposits
expire within 30 days of the calculation
date.
Under the proposed rule, a covered
company’s reserve balance requirement
would be subtracted from its level 1
liquid asset amount, because a
depository institution generally satisfies
its reserve requirement by maintaining
vault cash or a balance in an account at
a Federal Reserve Bank.30
Foreign Withdrawable Reserves
The agencies are proposing that
reserves held by a covered company in
a foreign central bank that are not
subject to restrictions on use be
included in level 1 liquid assets. Similar
to Reserve Bank balances, foreign
withdrawable reserves should be able to
serve as a medium of exchange in the
currency of the country where they are
held.
United States Government Securities
The proposed rule would include in
level 1 liquid assets securities issued by,
or unconditionally guaranteed as to the
timely payment of principal and interest
by, the U.S Department of the Treasury.
Generally, these types of securities have
exhibited high levels of liquidity even
in times of extreme stress to the
financial system, and typically are the
securities that experience the most
‘‘flight to quality’’ when investors adjust
their holdings. Level 1 liquid assets
would also include securities issued by
any other U.S
principal and interest
by, the U.S Department of the Treasury.
Generally, these types of securities have
exhibited high levels of liquidity even
in times of extreme stress to the
financial system, and typically are the
securities that experience the most
‘‘flight to quality’’ when investors adjust
their holdings. Level 1 liquid assets
would also include securities issued by
any other U.S. government agency
whose obligations are fully and
explicitly guaranteed by the full faith
and credit of the U.S. government,
provided that they are liquid and
readily-marketable.
Certain Sovereign and Multilateral
Organization Securities
The proposed rule would include in
level 1 liquid assets securities that are
a claim on, or a claim guaranteed by, a
sovereign entity, a central bank, the
Bank for International Settlements, the
International Monetary Fund, the
European Central Bank and European
Community, or a multilateral
development bank, provided that such
securities meet the following three
requirements.
First, these securities must have been
assigned a zero percent risk weight
under the standardized approach for
risk-weighted assets of the agencies’
regulatory capital rules.31 Generally,
securities issued by sovereigns that are
assigned a zero percent risk weight have
shown resilient liquidity characteristics.
Second, the proposed rule would
require these securities to be liquid and
readily-marketable, as discussed above.
Third, these securities would be
required to be issued by an entity whose
obligations have a proven record as a
reliable source of liquidity in the
repurchase or sales markets during
stressed market conditions. A covered
company could demonstrate a historical
record that meets this criterion through
reference to historical market prices
during times of general liquidity stress,
such as the period of financial market
stress experienced from 2007 to 2008
y whose
obligations have a proven record as a
reliable source of liquidity in the
repurchase or sales markets during
stressed market conditions. A covered
company could demonstrate a historical
record that meets this criterion through
reference to historical market prices
during times of general liquidity stress,
such as the period of financial market
stress experienced from 2007 to 2008.
Covered companies should also look to
other periods of systemic and
idiosyncratic stress to see if the asset
under consideration has proven to be a
reliable source of liquidity. Fourth,
these securities could not be an
obligation of a regulated financial
company, non-regulated fund, pension
fund, investment adviser, or identified
company or any consolidated subsidiary
of such entities.
Certain Foreign Sovereign Debt
Securities
Debt securities issued by a foreign
sovereign entity that are not assigned a
zero percent risk weight under the
standardized approach for risk-weighted
assets of the agencies’ regulatory capital
rules may serve as level 1 liquid assets
if they are liquid and readily
marketable, the sovereign entity issues
such debt securities in its own currency,
and a covered company holds the debt
securities to meet its cash outflows in
the jurisdiction of the sovereign entity,
as calculated in the outflow section of
the proposed rule. These assets would
be appropriately included as level 1
liquid assets despite having a risk
weight greater than zero because a
sovereign often is able to meet
obligations in its own currency through
control of its monetary system, even
during fiscal challenges.
10
et its cash outflows in
the jurisdiction of the sovereign entity,
as calculated in the outflow section of
the proposed rule. These assets would
be appropriately included as level 1
liquid assets despite having a risk
weight greater than zero because a
sovereign often is able to meet
obligations in its own currency through
control of its monetary system, even
during fiscal challenges.
10. What, if any, alternative factors
should be considered in determining the
assets that qualify as level 1 liquid
assets? What, if any, additional assets
should qualify as level 1 liquid assets
based on the characteristics for HQLA
that the agencies discussed above?
Provide detailed justification based on
the liquidity characteristics of any such
assets, including historical data and
observations.
11. Are there any assets that would
qualify as level 1 liquid assets under the
proposed rule that should not qualify
based on their liquidity characteristics?
If so, which assets should not be
included and why? Provide detailed
justification based on the liquidity
characteristics of an asset in question,
including historical data and
observations.
b. Level 2A Liquid Assets
Under the proposed rule, level 2A
liquid assets would include certain
claims on, or claims guaranteed by a
U.S. government sponsored enterprise
(GSE) 32 and certain claims on, or claims
guaranteed by, a sovereign entity or a
multilateral development bank. Assets
would be required to be liquid and
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certain
claims on, or claims guaranteed by a
U.S. government sponsored enterprise
(GSE) 32 and certain claims on, or claims
guaranteed by, a sovereign entity or a
multilateral development bank. Assets
would be required to be liquid and
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Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules
33 See 12 CFR part 3 (OCC), 12 CFR part 217
(Federal Reserve), and 12 CFR part 324 (FDIC).
34 This would be demonstrated if the market price
of the security or equivalent securities of the issuer
declined by no more than 10 percent or the market
haircut demanded by counterparties to secured
funding or lending transactions that are
collateralized by such security or equivalent
securities of the issuer increased by no more than
10 percentage points during a 30 calendar-day
period of significant stress.
35 See id.
36 Id.
37 12 CFR 1.2(d).
readily-marketable, as described above,
to be considered level 2A liquid assets.
The agencies are aware that some
securities issued and guaranteed by U.S.
GSEs consistently trade in very large
volumes and generally have been highly
liquid, including during times of stress.
However, the U.S. GSEs remain
privately owned corporations, and their
obligations do not have the explicit
guarantee of the full faith and credit of
the United States. The agencies have
long held the view that obligations of
U.S. GSEs should not be accorded the
same treatment as obligations that carry
the explicit guarantee of the U.S.
government and under the agencies’
regulatory capital rules, have currently
and historically assigned a 20 percent
risk weight to their obligations and
guarantees, rather than the zero percent
risk weight assigned to securities
guaranteed by the full faith and credit
of the United States
hould not be accorded the
same treatment as obligations that carry
the explicit guarantee of the U.S.
government and under the agencies’
regulatory capital rules, have currently
and historically assigned a 20 percent
risk weight to their obligations and
guarantees, rather than the zero percent
risk weight assigned to securities
guaranteed by the full faith and credit
of the United States. Consistent with the
agencies’ regulatory capital rules, the
agencies are not assigning the most
favorable regulatory treatment to U.S.
GSEs’ issuances and guarantees under
the proposed rule and therefore are
assigning them to the level 2A liquid
asset category, so long as they are
investment grade consistent with the
OCC’s investment regulation (12 CFR
part 1) as of the calculation date.
Additionally, consistent with the
agencies’ regulatory capital rules’ higher
risk weight for the preferred stock of
U.S. GSEs, the agencies are proposing to
exclude such preferred stock from
HQLA.
Level 2A liquid assets also would
include claims on, or claims guaranteed
by a sovereign entity or a multilateral
development bank that: (1) is not
included in level 1 liquid assets; (2) is
assigned no higher than a 20 percent
risk weight under the standardized
approach for risk-weighted assets of the
agencies’ regulatory capital rules; 33 (3)
is issued by an entity whose obligations
have a proven record as a reliable source
of liquidity in repurchase or sales
markets during stressed market
conditions; and (4) is not an obligation
of a regulated financial company,
investment company, non-regulated
fund, pension fund, investment adviser,
identified company, or any consolidated
subsidiary of the foregoing
y capital rules; 33 (3)
is issued by an entity whose obligations
have a proven record as a reliable source
of liquidity in repurchase or sales
markets during stressed market
conditions; and (4) is not an obligation
of a regulated financial company,
investment company, non-regulated
fund, pension fund, investment adviser,
identified company, or any consolidated
subsidiary of the foregoing. A covered
company could demonstrate that a
claim on or claims guaranteed by a
sovereign entity or a multilateral
development bank that has issued
obligations have a proven record as a
reliable source of liquidity in
repurchase or sales markets during
stressed market conditions through
reference to historical market prices
during times of general liquidity
stress.34 Covered companies should
look to multiple periods of systemic and
idiosyncratic liquidity stress in
compiling such records.
The proposed rule likely would not
permit covered bonds and securities
issued by public sector entities, such as
a state, local authority, or other
government subdivision below the level
of a sovereign (including U.S. states and
municipalities) to qualify as HQLA at
this time. While these assets are
assigned a 20 percent risk weight under
the standardized approach for risk-
weighted assets in the agencies’
regulatory capital rules, the agencies
believe that, at this time, these assets are
not liquid and readily-marketable in
U.S. markets and thus do not exhibit the
liquidity characteristics necessary to be
included in HQLA under this proposed
rule. For example, securities issued by
public sector entities generally have low
average daily trading volumes. Covered
bonds, in particular, exhibit significant
risks regarding interconnectedness and
wrong-way risk among companies in the
financial sector such as regulated
financial companies, investment
companies, and non-regulated funds.
12
to be
included in HQLA under this proposed
rule. For example, securities issued by
public sector entities generally have low
average daily trading volumes. Covered
bonds, in particular, exhibit significant
risks regarding interconnectedness and
wrong-way risk among companies in the
financial sector such as regulated
financial companies, investment
companies, and non-regulated funds.
12. What other assets, if any, should
the agencies include in level 2A liquid
assets? How should such assets be
identified and what are the
characteristics of those assets that
would justify their inclusion in level 2A
liquid assets?
13. Are there any assets that would
qualify as level 2A liquid assets under
the proposed rule that should not
qualify based on their liquidity
characteristics? If so, which assets and
why? Provide a detailed justification
based on the liquidity characteristics of
the asset in question, including
historical data and observations.
14. What alternative treatment, if any,
should the agencies consider for
obligations of U.S. GSEs and why?
Provide justification and supporting
data.
c. Level 2B Liquid Assets
Under the proposed rule, level 2B
liquid assets would include certain
publicly traded corporate debt securities
and publicly traded shares of common
stock that are liquid and readily-
marketable, as discussed above. The
limitation of level 2B liquid assets to
those that are publicly traded is meant
to ensure a minimum level of liquidity,
as privately traded assets are less liquid
Assets
Under the proposed rule, level 2B
liquid assets would include certain
publicly traded corporate debt securities
and publicly traded shares of common
stock that are liquid and readily-
marketable, as discussed above. The
limitation of level 2B liquid assets to
those that are publicly traded is meant
to ensure a minimum level of liquidity,
as privately traded assets are less liquid.
Under the proposed rule, the definition
of ‘‘publicly traded’’ would be
consistent with the definition used in
the agencies’ regulatory capital rules
and would identify securities traded on
registered exchanges with liquid two-
way markets.35 A two-way market
would be defined as market where there
are independent bona fide offers to buy
and sell, so that a price reasonably
related to the last sales price or current
bona fide competitive bid and offer
quotations can be determined within
one day and settled at that price within
a relatively short time frame,
conforming to trade custom. This
definition is also consistent with the
definition in the agencies’ capital
rules 36 and is designed to identify
markets with transparent and readily
available pricing, which, for the reasons
discussed above, is fundamental to the
liquidity of an asset.
Publicly Traded Corporate Debt
Securities
Publicly traded corporate debt
securities would be considered level 2B
liquid assets under the proposed rule if
they meet three requirements (in
addition to being liquid and readily-
marketable). First, the securities would
be required to meet the definition of
‘‘investment grade’’ under 12 CFR part
1 as of a calculation date.37 This
standard would ensure that assets not
meeting the required credit quality
standard for bank investment would not
be included in HQLA. The agencies
believe that meeting this standard is
indicative of lower risk and, therefore,
higher liquidity for a corporate debt
security
ould
be required to meet the definition of
‘‘investment grade’’ under 12 CFR part
1 as of a calculation date.37 This
standard would ensure that assets not
meeting the required credit quality
standard for bank investment would not
be included in HQLA. The agencies
believe that meeting this standard is
indicative of lower risk and, therefore,
higher liquidity for a corporate debt
security. Second, the securities would
be required to have been issued by an
entity whose obligations have a proven
record as a reliable source of liquidity
in repurchase or sales markets during
stressed market conditions. A covered
company would be required to
demonstrate this record of liquidity
reliability and lower volatility during
times of stress by showing that the
market price of the publicly traded debt
securities or equivalent securities of the
issuer declined by no more than 20
percent or the market haircut demanded
by counterparties to secured lending
and secured funding transactions that
were collateralized by such debt
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38 12 U.S.C. 24(Seventh) (national banks); 12
U.S.C. 1464(c) (federal savings associations); 12
U.S.C. 1831a (state banks); 12 U.S.C. 1831e (state
savings associations).
39 See generally 12 CFR 1.7 (OCC); 12 U.S.C.
1843(c)(2) (Board); 12 CFR 362.1(b)(3) (FDIC).
securities or equivalent securities of the
issuer increased by no more than 20
percentage points during a 30 calendar-
day period of significant stress. As
discussed above, a covered company
could demonstrate a historical record
that meets this criterion through
reference to historical market prices of
the debt security during times of general
liquidity stress
12 CFR 362.1(b)(3) (FDIC).
securities or equivalent securities of the
issuer increased by no more than 20
percentage points during a 30 calendar-
day period of significant stress. As
discussed above, a covered company
could demonstrate a historical record
that meets this criterion through
reference to historical market prices of
the debt security during times of general
liquidity stress.
Finally, for the reasons discussed
above, the debt securities could not be
obligations of a regulated financial
company, investment company, non-
regulated fund, pension fund,
investment adviser, identified company,
or any consolidated subsidiary of the
foregoing.
Publicly Traded Shares of Common
Stock
Under the proposed rule, publicly
traded shares of common stock could be
included in a covered company’s level
2B liquid assets if the shares meet the
five requirements set forth below (in
addition to being liquid and readily-
marketable). Because of general
statutory prohibitions on holding equity
investments for their own account,38
depository institutions subject to the
proposed rule would not be able to
include common stock in their level 2B
liquid assets (including common stock
held pursuant to authority for debt
previously contracted, as discussed
further below). However, a depository
institution could include in its
consolidated level 2B liquid assets
common stock permissibly held by a
consolidated subsidiary, where the
investments meet the proposed level 2B
requirements for publicly traded shares
of common stock. Furthermore, a
depository institution could only
include in its level 2B assets the amount
of a consolidated subsidiary’s publicly
traded shares of common stock if it is
held to cover the net cash outflows for
the consolidated subsidiary
permissibly held by a
consolidated subsidiary, where the
investments meet the proposed level 2B
requirements for publicly traded shares
of common stock. Furthermore, a
depository institution could only
include in its level 2B assets the amount
of a consolidated subsidiary’s publicly
traded shares of common stock if it is
held to cover the net cash outflows for
the consolidated subsidiary. For
example, if Subsidiary A holds level 2B
publicly traded common stock of $100
in a legally permissible manner and has
outflows of $80, Subsidiary A could not
contribute more than $80 of its level 2B
publicly traded common stock to its
parent depository institution’s
consolidated level 2B assets.
Under the rule, to be considered a
level 2B liquid asset, the publicly traded
common stock would be required to be
included in either: (1) the Standard &
Poor’s 500 Index (S&P 500); (2) if the
stock is held in a non-U.S. jurisdiction
to meet liquidity risks in that
jurisdiction, an index that the covered
company’s supervisor in that
jurisdiction recognizes for purposes of
including the equities as level 2B liquid
assets under applicable regulatory
policy; or (3) any other index for which
the covered company can demonstrate
to the satisfaction of its primary federal
supervisor that the stock is as liquid and
readily-marketable as equities traded on
the S&P 500.
The agencies believe that being
included in a major stock index is an
important indicator of the liquidity of a
stock, because such stock tends to have
higher trading volumes and lower bid-
ask spreads during stressed market
conditions than those that are not listed.
The agencies identified the S&P 500 as
being appropriate for this purpose given
that it is considered a major index in the
United States and generally includes the
most liquid and actively traded stocks
indicator of the liquidity of a
stock, because such stock tends to have
higher trading volumes and lower bid-
ask spreads during stressed market
conditions than those that are not listed.
The agencies identified the S&P 500 as
being appropriate for this purpose given
that it is considered a major index in the
United States and generally includes the
most liquid and actively traded stocks.
Moreover, stocks that are included in
the S&P 500 are selected by a committee
that considers, among other
characteristics, the volume of trading
activity and length of time the stock has
been publicly traded.
Second, to be considered a level 2B
liquid asset, a covered company’s
publicly traded common stock would be
required to be issued in: (1) U.S. dollars;
or (2) the currency of a jurisdiction
where the covered company operates
and the stock offsets its net cash
outflows in that jurisdiction. This
requirement is meant to ensure that,
upon liquidation of the stock, the
currency received from the sale matches
the outflow currency.
Third, the common stock would be
required to have been issued by an
entity whose common stock has a
proven record as a reliable source of
liquidity in the repurchase or sales
markets during stressed market
conditions. Under the proposed rule, a
covered company would be required to
demonstrate this record of reliable
liquidity by showing that the market
price of the common stock or equivalent
securities of the issuer declined by no
more than 40 percent or that the market
haircut, as evidenced by observable
market prices, of secured funding or
lending transactions collateralized by
such common stock or equivalent
securities of the issuer increased by no
more than 40 percentage points during
a 30 calendar-day period of significant
stress. This limitation is meant to
account for the volatility inherent in
equities, which is a risk to the
preservation of liquidity value
evidenced by observable
market prices, of secured funding or
lending transactions collateralized by
such common stock or equivalent
securities of the issuer increased by no
more than 40 percentage points during
a 30 calendar-day period of significant
stress. This limitation is meant to
account for the volatility inherent in
equities, which is a risk to the
preservation of liquidity value. As
above, a covered company could
demonstrate this historical record
through reference to the historical
market prices of the common stock
during times of general liquidity stress.
Fourth, as with the other asset
categories of HQLA and for the same
reasons, common stock included in
level 2B liquid assets may not be issued
by a regulated financial company,
investment company, non-regulated
fund, pension fund, investment adviser,
identified company, or any consolidated
subsidiary of the foregoing. During the
recent financial crisis, the common
stock of such companies experienced
significant declines in value and the
agencies believe that such declines
indicate those assets would be less
likely to provide substantial liquidity
during future periods of stress and,
therefore, are not appropriate for
inclusion in a covered company’s stock
of HQLA.
Fifth, if held by a depository
institution, the publicly traded common
stock could not be acquired in
satisfaction of a debt previously
contracted (DPC). In general, publicly
traded common stock may be acquired
by a depository institution to prevent a
loss from a DPC. However, in order for
a depository institution to avail itself of
the authority to hold DPC assets, such
as by holding publicly traded common
stock, such assets typically must be
divested in a timely manner.39 The
agencies believe that depository
institutions should make a good faith
effort to dispose of DPC publicly traded
common stock as soon as commercially
reasonable, subject to the applicable
legal time limits for disposition
on to avail itself of
the authority to hold DPC assets, such
as by holding publicly traded common
stock, such assets typically must be
divested in a timely manner.39 The
agencies believe that depository
institutions should make a good faith
effort to dispose of DPC publicly traded
common stock as soon as commercially
reasonable, subject to the applicable
legal time limits for disposition. The
agencies are concerned that permitting
depository institutions to include DPC
publicly traded common stock in level
2B liquid assets may provide an
inappropriate incentive for depository
institutions to hold such assets beyond
a commercially reasonable period for
disposition. Therefore, the proposal
would prohibit depository institutions
from including DPC publicly traded
common stock in level 2B liquid assets.
15. What, if any, additional criteria
should the agencies consider in
determining the type of securities that
should qualify as level 2B liquid assets?
What alternatives to the S&P 500 should
be considered in determining the
liquidity of an equity security and why?
In addition to an investment grade
classification, what additional
characteristics denote the liquidity
quality of corporate debt that the
agencies would be legally permitted to
use in light of the Dodd-Frank Act
prohibition against agencies’ regulations
referencing credit ratings? The agencies
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tional
characteristics denote the liquidity
quality of corporate debt that the
agencies would be legally permitted to
use in light of the Dodd-Frank Act
prohibition against agencies’ regulations
referencing credit ratings? The agencies
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solicit detailed comment, with
supporting data, on the advantages and
disadvantages of the proposed
investment grade criteria as well as
recommended alternatives.
16. Are there any assets that would
qualify as level 2B liquid assets under
the proposed rule that should not
qualify based on their liquidity
characteristics? If so, which assets and
why? Provide a detailed justification
based on the liquidity characteristics of
the asset in question, including
historical data and observations.
17. What other criteria, if any, should
the agencies consider for establishing an
adequate historical record during times
of liquidity stress in order to meet the
relevant criteria under the proposed
rule? What operational burdens, if any,
are associated with this requirement?
What other standards, if any, should the
agencies consider to achieve the same
result?
18. Is the proposed treatment for
publicly traded common stock
appropriate? Why or why not? Are there
circumstances under which a depository
institution may permissibly hold
publicly traded common stock that the
agencies should not prohibit from being
included in level 2B liquid assets?
Please provide specific examples. Under
what circumstances, if any, should DPC
publicly traded common stock be
included in a depository institution’s
level 2B liquid assets and why? What
liquidity risks, if any, are introduced or
mitigated if DPC publicly traded
common stock are permitted in a
depository institution’s level 2B liquid
assets?
3
being
included in level 2B liquid assets?
Please provide specific examples. Under
what circumstances, if any, should DPC
publicly traded common stock be
included in a depository institution’s
level 2B liquid assets and why? What
liquidity risks, if any, are introduced or
mitigated if DPC publicly traded
common stock are permitted in a
depository institution’s level 2B liquid
assets?
3. Operational Requirements for HQLA
Under the proposed rule, an asset that
a covered company includes in its
HQLA would need to meet the
following operational requirements.
These operational requirements are
intended to better ensure that a covered
company’s HQLA can be liquidated in
times of stress. Several of these
requirements relate to the monetization
of an asset, by which the agencies mean
the receipt of funds from the outright
sale of an asset or from the transfer of
an asset pursuant to a repurchase
agreement.
First, a covered company would be
required to have the operational
capability to monetize the HQLA. This
capability would be demonstrated by:
(1) implementing and maintaining
appropriate procedures and systems to
monetize the asset at any time in
accordance with relevant standard
settlement periods and procedures; and
(2) periodically monetizing a sample of
HQLA that reasonably reflects the
composition of the covered company’s
total HQLA portfolio, including with
respect to asset type, maturity, and
counterparty characteristics. This
requirement is designed to ensure a
covered company’s access to the market,
the effectiveness of its processes for
monetization, and the availability of the
assets for monetization and to minimize
the risk of negative signaling during a
period of actual stress. The agencies
would monitor the procedures, systems,
and periodic sample liquidations
through their supervisory process
ics. This
requirement is designed to ensure a
covered company’s access to the market,
the effectiveness of its processes for
monetization, and the availability of the
assets for monetization and to minimize
the risk of negative signaling during a
period of actual stress. The agencies
would monitor the procedures, systems,
and periodic sample liquidations
through their supervisory process.
Second, a covered company would be
required to implement policies that
require all HQLA to be under the
control of the management function of
the covered company that is charged
with managing liquidity risk. To do so,
a covered company would be required
either to segregate the assets from other
assets, with the sole intent to use them
as a source of liquidity or to
demonstrate its ability to monetize the
assets and have the resulting funds
available to the risk management
function, without conflicting with
another business or risk management
strategy. Thus, if an HQLA were being
used to hedge a specific transaction,
such as holding an asset to hedge a call
option that the covered company had
written, it could not be included in the
HQLA amount because its sale would
conflict with another business or risk
management strategy. However, if
HQLA were being used as a general
macro hedge, such as interest rate risk
of the covered company’s portfolio, it
could still be included in the HQLA
amount. This requirement is intended to
ensure that a central function of a
covered company has the authority and
capability to liquidate HQLA to meet its
obligations in times of stress without
exposing the covered company to risks
associated with specific transactions
and structures that had been hedged.
There were instances at specific firms
during the recent financial crisis where
unencumbered assets of the firms were
not available to meet liquidity demands
because the firms’ treasuries were
restricted or did not have access to such
assets
igations in times of stress without
exposing the covered company to risks
associated with specific transactions
and structures that had been hedged.
There were instances at specific firms
during the recent financial crisis where
unencumbered assets of the firms were
not available to meet liquidity demands
because the firms’ treasuries were
restricted or did not have access to such
assets.
Third, a covered company would be
required to include in its total net cash
outflow amount the amount of cash
outflow that would result from the
termination of any specific transaction
hedging HQLA. The impact of the hedge
would be required to be included in the
outflow because if the covered company
were to liquidate the asset, it would be
required to close out the hedge to avoid
creating a risk exposure. This
requirement is not intended to apply to
general macro hedges such as holding
interest rate derivatives to adjust
internal duration or interest rate risk
measurements, but is intended to cover
specific hedges that would become risk
exposures if the asset were sold.
Fourth, a covered company would be
required to implement and maintain
policies and procedures that determine
the composition of the assets in its
HQLA amount on a daily basis by (1)
identifying where its HQLA is held by
legal entity, geographical location,
currency, custodial or bank account,
and other relevant identifying factors,
hat would become risk
exposures if the asset were sold.
Fourth, a covered company would be
required to implement and maintain
policies and procedures that determine
the composition of the assets in its
HQLA amount on a daily basis by (1)
identifying where its HQLA is held by
legal entity, geographical location,
currency, custodial or bank account,
and other relevant identifying factors,
(2) determining that the assets included
in a covered company’s HQLA amount
continue to qualify as HQLA, (3)
ensuring that the HQLA in the HQLA
amount are appropriately diversified by
asset type, counterparty, issuer,
currency, borrowing capacity or other
factors associated with the liquidity risk
of the assets, and (4) ensuring that the
amount and type of HQLA included in
a covered company’s HQLA amount that
is held in foreign jurisdictions is
appropriate with respect to the covered
company’s net cash outflows in foreign
jurisdictions.
The agencies also recognize that
significant international banking
activity occurs through non-U.S.
branches of legal entities organized in
the United States and that a foreign
branch’s activities may give rise to the
need to hold HQLA in the jurisdiction
where it is located. While the agencies
believe that holding HQLA in a
geographic location where it is needed
to meet liquidity needs such as those
envisioned by the LCR is appropriate,
they are concerned that other factors
such as taxes, re-hypothecation rights,
and legal and regulatory restrictions
may encourage certain companies to
hold a disproportionate amount of their
HQLA in locations outside the United
States where unforeseen impediments
may prevent timely repatriation of
liquidity during a crisis. Nonetheless,
establishing quantitative limits on the
amount of HQLA that can be held
abroad and still count towards a U.S.
domiciled legal entity’s LCR
requirement is complex and can be
overly restrictive in some cases
d a disproportionate amount of their
HQLA in locations outside the United
States where unforeseen impediments
may prevent timely repatriation of
liquidity during a crisis. Nonetheless,
establishing quantitative limits on the
amount of HQLA that can be held
abroad and still count towards a U.S.
domiciled legal entity’s LCR
requirement is complex and can be
overly restrictive in some cases.
Therefore, the agencies are proposing
to require a covered company to
establish policies to ensure that HQLA
maintained in locations is appropriate
with respect to where the net cash
outflows arise. By requiring that there
be a correlation between the HQLA
amount held outside of the United
States and the net cash outflows
attributable to non-U.S. operations, the
agencies intend to increase the
likelihood that HQLA is available to a
covered company and to avoid
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repatriation concerns from HQLA held
in another jurisdiction.
The agencies note that assets that
meet the criteria of HQLA and are held
by a covered company as either
‘‘available-for-sale’’ or ‘‘held-to-
maturity’’ can be included in HQLA,
regardless of such designation.
19. Are the proposed operational
criteria sufficiently clear to determine
whether an asset could be included in
the pool of HQLA? Why or why not? If
not, what requirements need
clarification?
20. What costs or other burdens would
be incurred as a result of the proposed
operational requirements? What
modifications should the agencies
consider to mitigate such costs or
burdens, while establishing appropriate
operational criteria for HQLA to ensure
its liquidity? Please provide detailed
explanations and justifications.
21
why not? If
not, what requirements need
clarification?
20. What costs or other burdens would
be incurred as a result of the proposed
operational requirements? What
modifications should the agencies
consider to mitigate such costs or
burdens, while establishing appropriate
operational criteria for HQLA to ensure
its liquidity? Please provide detailed
explanations and justifications.
21. Given that, absent the requirement
that a covered company develop and
maintain policies and procedures to
ensure sufficient HQLA is held
domestically, a covered company could
theoretically hold its entire HQLA in a
foreign branch located in a jurisdiction
that could impede its use to support
U.S. operations, should the proposed
rule be supplemented with quantitative
restrictions on the amount of HQLA that
can be held in foreign branches and
included in the liquidity coverage ratio
calculation? If so, how should the rule
require a correlation between the
geographic location of a covered
company’s HQLA and the location of
the outflows the HQLA is intended to
cover?
22. The agencies seek comment on all
aspects of the criteria for HQLA,
including issues of domestic and
international competitive equity, and
the adequacy of the proposed HQLA
criteria in meeting the agencies’ goal of
requiring a covered company to
maintain a buffer of liquid assets
sufficient to withstand a 30 calendar-
day stress period.
4. Generally Applicable Criteria for
HQLA
Under the proposed rule, assets
would be required to meet the following
generally applicable criteria to be
considered as HQLA.
a. Unencumbered
To be included in HQLA, an asset
would be required to be unencumbered
as defined under the proposed rule.
First, the asset would be required to be
free of legal, regulatory, contractual, or
other restrictions on the ability of a
covered company to monetize asset. The
agencies believe that, as a general
matter, HQLA should on

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- [FDIC FIL-4-2006 Commercial Real Estate Lending Proposed Interagency Guidance](https://www.frixlaw.com/law-library/statutes/FDIC_FIL06004.md)
- [FDIC FIL-4-2021 Revised Guidelines for Appeals of Material Supervisory Determinations](https://www.frixlaw.com/law-library/statutes/FDIC_FIL21004.md)
- [FDIC FIL-4-2023 Guidance to Help Financial Institutions and Facilitate Recovery in Areas of California Affected by Severe Winter Storms, Flooding, Landslides and Mudslides](https://www.frixlaw.com/law-library/statutes/FDIC_FIL23004.md)
- [FDIC FIL-4-2025 FDIC Statement of Policy on Bank Merger Transactions](https://www.frixlaw.com/law-library/statutes/FDIC_FIL25004.md)
- [FDIC FIL-5-2000 Consumer Credit Reporting Practices](https://www.frixlaw.com/law-library/statutes/FDIC_FIL00005.md)
- [FDIC FIL-5-2003 LETTER TO STAKEHOLDERS](https://www.frixlaw.com/law-library/statutes/FDIC_FIL03005.md)
- [FDIC FIL-5-2021 Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering (AML) Considerations](https://www.frixlaw.com/law-library/statutes/FDIC_FIL21005.md)
- [FDIC FIL-6-2000 Special Alert](https://www.frixlaw.com/law-library/statutes/FDIC_FIL00006.md)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/FDIC_FIL13052. Check the current official text before relying on it. Not legal advice.