The FDIC Board of Directors approved a notice of proposed rulemaking (the “ NPR”) that imposes safety and soundness requirements (including, among others, margin requirements, customer disclosure requirements, capital requirements) on insured depository institutions (“IDIs”) for whom the FDIC serves as principal federal regulator. The NPR is similar to the notice of proposed rulemaking on the same topic issued by the OCC, which is described in the May 3, 2011 Alert and is also consistent with rules on retail foreign exchange transactions issued by the FRB and the CFTC. The FDIC notes that the NPR applies only to transactions with retail customers and only to futures, options and similar transactions, such as rolling spot trades (and does not cover forward contracts or spot contracts). The NPR limits the definition of retail customers to certain small businesses and individuals with $10 million or less invested on a discretionary basis and who are not “using the trades to reduce risks associated with other investments.” FDIC Chairman Bair said that the FDIC believes the NPR, currently, would not affect any FDIC-regulated IDI with total assets of less than $1 billion, but that adoption of the NPR would prevent a financial institution that faces restrictions in the area because of tightened regulation by the OCC, FRB or CFTC from seeing the FDIC’s lack of a rule ‘as an arbitrage opportunity.” Comments on the NPR must be received by June 16, 2011.
Alert May 17, 2011