Alert August 26, 2008

FDIC Proposes Rule Concerning Qualified Financial Contracts Recordkeeping Requirements

The FDIC proposed recordkeeping requirements (the “Proposed Rule”) for qualified financial contracts (“QFCs”) held by insured depository institutions in a troubled condition (“Troubled DIs” and each a “Troubled DI”).  QFCs are financial contracts such as securities contracts, commodity contracts, forward contracts, repurchase agreements and swap agreements that, under the Federal Deposit Insurance Act, receive special expedited netting treatment in the event of a Troubled DI’s failure.

Under the Proposed Rule, a Troubled DI would be required, upon written notification by the FDIC, to produce immediately at the close of processing of the Troubled DI’s business day:

  • Electronic files for certain position-level and counterparty-level data;
  • Electronic or written lists of QFC counterparty and portfolio location identifiers;
  • Certain affiliates of the Troubled DI and the Troubled DI’s counterparties to QFC transactions;
  • Contact information and organizational charts for key personnel involved in QFC activities;
  • Contact information for vendors; and
  • Copies of key agreements and related documents for each QFC.
Comments on the Proposed Rule are due by September 26, 2008.