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ST0-118 Symantec Enterprise Vault 10.0 for(R) Exchange Technical Assessment

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ST0-118 exam Dumps Source : Symantec Enterprise Vault 10.0 for(R) Exchange Technical Assessment

Test Code : ST0-118
Test appellation : Symantec Enterprise Vault 10.0 for(R) Exchange Technical Assessment
Vendor appellation : Symantec
: 318 existent Questions

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Symantec Symantec Enterprise Vault 10.0

up-to-date commercial enterprise Vault Enhances Archiving in SharePoint, alternate, Clearwell eDiscovery Platform | killexams.com existent Questions and Pass4sure dumps

up-to-date commercial enterprise Vault Enhances Archiving in SharePoint, alternate, Clearwell eDiscovery Platform

points permit archiving of extra SharePoint content material, more desirable trade reporting.

word: ESJ’s editors carefully select supplier-issued press releases about current or upgraded items and capabilities. we've edited and/or condensed this unlock to spotlight key features however accomplish no claims as to the accuracy of the supplier's statements.

Symantec has launched traffic Vault 10.0.2, containing tremendous enhancements to Microsoft SharePoint archiving and including Microsoft exchange archiving experiences and stronger integration with the Clearwell eDiscovery Platform from Symantec.

New aspects in traffic Vault 10.0.2 encompass:

  • Archive extra SharePoint content material: enterprise Vault 10.0.2 allows you to archive SharePoint content material beyond doc libraries. Now businesses can archive wikis, discussion boards, custom lists, “My websites,” and SharePoint companionable content material for increased storage optimization, retention, and expiration of content in addition to eDiscovery readiness. due to this fact, clients can stronger manage advanced initiatives corresponding to migrations, versioning, and placement consolidations and expiration with SharePoint archiving.
  • better alternate reporting: enterprise Vault 10.0.2 now presents more suitable experiences -- digital Vault client Diagnostic and more suitable Microsoft exchange archive reporting -- that deliver updated and proactive management of your mail archiving.
  • Clearwell eDiscovery platform integration: traffic Vault 10.0.2 optimizes eDiscovery by means of integrating with the Clearwell eDiscovery Platform edition 7.1.2. This integration makes it workable for investigators to accomplish consume of Clearwell to proceed looking complete kinds of suggestions in traffic Vault directly. furthermore, they can seamlessly find and apply felony holds throughout each archived and non-archived content to reduce time and costs associated with pilot assortment.
  • extra commercial enterprise Vault 10.0.2 facets consist of certification of SQL Server 2012, file device archiving supported on windows 2008 R2 Core Server, and a file gadget archiving API.

    business purchasers with a present upkeep settlement can download the supplant from Symantec FileConnect. For additional product counsel, talk over with www.symantec.com/enterprise-vault.


    Symantec enterprise Vault | killexams.com existent Questions and Pass4sure dumps

    This dealer-particular Certification is obtainable by means of:SymantecCupertino, CA USAPhone: 408-517-8000Email: This electronic mail tackle is being included from spambots. You want JavaScript enabled to view it.

    skill stage: groundwork                          status: Unknown

    within your budget: $150 (shortest tune)               

    summary:for people who Have the abilities and competencies integral to plan, installation, manage, and computer screen Symantec commercial enterprise Vault for change.

    preliminary necessities:You necessity to stream the Administration of Symantec traffic Vault for exchange examination ($a hundred and fifty) and accept the Symantec Certification agreement. The examination is one hundred and five minutes lengthy and consists of 86 questions. A passing rating of seventy one% is required. practising is attainable however no longer required.

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    Globanet Merge1 Extends the compass of Symantec enterprise Vault | killexams.com existent Questions and Pass4sure dumps

    April 06, 2015 eleven:09 ET | source: Globanet

    los angeles, Calif., April 6, 2015 (GLOBE NEWSWIRE) -- by the consume of PRWEB - Globanet, a leading developer and reseller of email archive migration, compliance and eDiscovery options, got focus from Symantec for its flagship product, Globanet Merge1. Symantec has established that Globanet Merge1 works with Symantec enterprise Vault SMTP connector and that it works with complete add-ons of enterprise Vault together with Discovery Accelerator and Compliance Accelerator.

    Symantec commercial enterprise Vault is a centralized locality for complete unstructured information with the aid of the additional connectors supplied by means of Globanet Merge1. right through interior testing, Globanet Merge1 accurately and exactly captured records from diverse sources. inner checks were carried out with the aid of Globanet with different connectors akin to Twitter, fb, and so on.

    Commented Sevag Ajemian, Globanet's Founder & CEO, "Merge1's power and value is the breadth and compatibility of the connector set. enterprise valued clientele crave simplicity, versatility and the consolation of figuring out they are wholly prepared to remain compliant in a artery forward for evolving choices related to inside IM platforms and companionable media policies."

    Globanet Merge1 features neatly with Symantec traffic Vault 11 - it places information interior traffic Vault and makes it searchable and discoverable. Globanet Merge1 continues to exist a platform that increases the attain of archiving solutions with the aid of pulling statistics from further information sources that the industry at present requires akin to companionable media. With probably the most concurrent release of Globanet Merge1 and Globanet's concurrent traffic Vault 11 certification, Globanet continues to give a boost to its recognition as a frontrunner in eDiscovery and Archiving.

    For more information concerning the list of suitable sources, delight search recommendation from: http://www.globanet.com/eDiscovery-application-Globanet-Merge1

    For assistance about Globanet's Archiving and eDiscovery capabilities and options, delight talk over with: http://www.globanet.com.

    Symantec commercial enterprise Vault is a fraction of Symantec's counsel management portfolio if you want to become fraction of a brand new, unbiased enterprise, Veritas applied sciences organisation, when the in the past introduced separation is completed at the finish of calendar 12 months 2015.

    About Globanet

    Globanet is a number one developer and reseller of e mail and guidance migration, archiving and eDiscovery solutions. centered in 1996, the enterprise is a pioneer in archive migration and quick-witted counsel governance. Globanet's portfolio of proprietary traffic utility comprises Globanet Merge1, a multi-supply IM and companionable media message capture platform, and Globanet Migrate, a leading facts migration device. Globanet additionally provides a broad latitude of professional capabilities together with tackle configuration and installation, email archive migrations and eDiscovery consulting. Globanet is a multi-level certified colleague of leading archive suppliers together with Symantec and Microsoft.

    For extra tips about Globanet, delight argue with the Globanet blog or web page, comply with us on Twitter or fondness us on facebook.

    this article was at the genesis dispensed on PRWeb. For the accustomed edition including any supplementary pictures or video, visit http://www.prweb.com/releases/2015/04/prweb12629274.htm

    Globanet Michael Swarz +1 3102020757 Ext: 156

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    No result found, try current keyword!Symantec (NASDAQ:SYMC) Q3 2006 Earnings Conference convene January 31st 2006, 5:00 PM. Executives: Helyn Corcos, Vice President, Investor Relations John Thompson, Chairman and Chief Executive Officer St ...

    Public Safety LTE & Mobile Broadband Market, 2030 | killexams.com existent questions and Pass4sure dumps

    DUBLIN, November 23, 2017 /PRNewswire/ --

    The "The Public Safety LTE & Mobile Broadband Market: 2017 - 2030 - Opportunities, Challenges, Strategies & Forecasts" report from SNS Research has been added to Research and Markets' offering.

    The Public Safety LTE & Mobile Broadband Market: 2017 - 2030 - Opportunities, Challenges, Strategies & Forecasts report presents an in-depth assessment of the global public safety LTE market, besides touching upon the wider LMR and mobile broadband industries. In addition to covering the traffic case, market drivers, challenges, enabling technologies, applications, key trends, standardization, spectrum availability/allocation, regulatory landscape, deployment case studies, opportunities, future roadmap, value chain, ecosystem player profiles and strategies for public safety LTE, the report presents comprehensive forecasts for mobile broadband, LMR, and public safety LTE subscriptions from 2017 till 2030.

    Also covered are unit shipment and revenue forecasts for public safety LTE infrastructure, devices, integration services and management solutions. In addition, the report tracks public safety LTE service revenues, over both private and commercial networks.

    Driven by require for both dedicated and secure MVNO networks, it's estimated that annual investments in public safety LTE infrastructure will surpass $800 Million by the finish of 2017, supporting ongoing deployments in multiple frequency bands across the 400/450 MHz, 700 MHz, 800 MHz, and higher frequency ranges. The market - which includes ground stations (eNBs), mobile core and transport network tackle - is further expected to grow at a CAGR of nearly 45% over the next three years. By 2020, these infrastructure investments will exist complemented by up to 3.8 Million LTE device shipments, ranging from smartphones and ruggedized handheld terminals to vehicular routers and IoT modules.

    Key Questions Answered

  • The report provides answers to the following key questions:
  • How substantial is the public safety LTE opportunity?
  • What trends, challenges and barriers are influencing its growth?
  • How is the market evolving by segment and region?
  • What will the market size exist in 2020 and at what rate will it grow?
  • Which regions and submarkets will espy the highest percentage of growth?
  • How does standardization repercussion the adoption of LTE for public safety?
  • What is the status of dedicated public safety LTE networks and secure MVNO offerings across the globe?
  • When will the public safety sector witness the large-scale commercialization of key enabling technologies such as MCPTT, ProSe, IOPS, and HPUE?
  • What opportunities exist for commercial LTE service providers and private LMR network operators?
  • What are the prospects of NIB (Network-in-a-Box), vehicular, airborne and maritime deployable LTE platforms?
  • Is there a substantial market opportunity for public safety LTE networks operating in troupe 31 (450 MHz), and newer frequency bands such as Bands 68 and 72?
  • How can public safety stakeholders leverage unused spectrum capacity to ensure the economic viability of dedicated LTE networks?
  • Who are the key market players and what are their strategies?
  • What strategies should system integrators, vendors, and mobile operators adopt to remain competitive?
  • Key Findings

    The Report has the Following Key Findings:

  • It's estimated that annual investments in public safety LTE infrastructure will surpass $800 Million by the finish of 2017. The market - which includes ground stations (eNBs), mobile core and transport network tackle - is further expected to grow at a CAGR of nearly 45% over the next three years.
  • By 2020, these infrastructure investments will exist complemented by up to 3.8 Million LTE device shipments, ranging from smartphones and ruggedized handheld terminals to vehicular routers and IoT modules.
  • A number of dedicated public safety LTE networks are already operational across the globe, ranging from nationwide systems in the oil-rich GCC region to citywide networks in Spain, China, Pakistan, Laos and Kenya.
  • At present, more than 45% of complete public safety LTE engagements - including in-service, planned, pilot, and demo networks - utilize spectrum in the 700 MHz range, primarily Bands 14 and 28.
  • Due to the unavailability of ProSe-capable chipsets and devices, several public safety stakeholders including the United Kingdom Home Office are considering the continued consume of LMR terminals to back direct-mode operation, as they migrate to LTE networks.
  • The wider captious communications industry is continuing to consolidate with several prominent M&A deals such as Motorola Solutions' recent acquisition of carrier-integrated PTT-over-cellular platform provider Kodiak Networks, and Hytera Communications' takeover of the Sepura Group - a well known provider of TETRA, DMR, P25 and LTE systems.
  • Key Topics Covered:

    1: Introduction

    2: An Overview Of The Public Safety Mobile Broadband Market

    3: Key Enabling Technologies For Public Safety Lte

    4: Review Of Major Public Safety Lte Engagements

    5: Public Safety Lte And Mobile Broadband Applications Ecosystem

    6: Spectrum For Public Safety Lte

    7: Standardization, Regulatory & Collaborative Initiatives

    8: Industry Roadmap & Value Chain

    9: Key Ecosystem Players

    10: Market Analysis And Forecasts

    11: Conclusion And Strategic Recommendations

    12: Expert feeling - Interview Transcripts

    Companies Mentioned

  • 3M
  • 450connect
  • 4K Solutions
  • 6Harmonics
  • A10 Networks
  • Aaoen Technology
  • AAS (Amphenol Antenna Solutions)
  • Accedian Networks
  • Accelleran
  • Ace Technologies Corporation
  • AceAxis
  • Actelis Networks
  • Aculab
  • Adax
  • ADLINK Technology
  • ADRF (Advanced RF Technologies)
  • ADTRAN
  • ADVA Optical Networking
  • AdvanceTec Industries
  • Advantech
  • Advantech Wireless
  • Affarii Technologies
  • Affirmed Networks
  • Airbus Defence and Space
  • Air-Lynx
  • Airspan Networks
  • Alea
  • Alepo
  • Allied Telesis
  • Allot Communications
  • Alpha Networks
  • Alpha Technologies
  • Altaeros Energies
  • Altair Semiconductor
  • Altiostar Networks
  • Alvarion Technologies
  • AM Telecom
  • Amarisoft
  • Amdocs
  • American Tower Corporation
  • Anritsu Corporation
  • Apple
  • Arcadyan Technology Corporation
  • Archos
  • Argela
  • ArgoNET
  • Aricent
  • ARM Holdings
  • Armour Communications
  • Arqiva
  • Artemis Networks
  • Artesyn Embedded Technologies
  • Artiza Networks
  • ASELAN
  • ASOCS
  • Assured Wireless Corporation
  • ASTRI (Hong Kong Applied Science and Technology Research Institute)
  • ASUS (ASUSTeK Computer)
  • AT&T
  • ATDI
  • Atel Antennas
  • Athonet
  • Atos
  • AttoCore
  • Avanti Communications Group
  • AVI
  • Aviat Networks
  • Avigilon Corporation
  • Avtec
  • Axis Communications
  • Axon
  • Azcom Technology
  • Azetti Networks
  • BAE Systems
  • Baicells Technologies
  • BandRich
  • Barrett Communications
  • BATS (Broadband Antenna Tracking Systems)
  • BCDVideo
  • BCE (Bell Canada)
  • BEC Technologies
  • Benetel
  • BeyondTrust Software
  • BFDX (BelFone)
  • BHE (Bonn Hungary Electronics)
  • Bird Technologies
  • Bittium Corporation
  • BK Technologies
  • Black & Veatch
  • Black Box Corporation
  • BlackBerry
  • Blackned
  • Blueforce evolution Corporation
  • Bosch Security Systems
  • BridgeWave Communications
  • Broadcom
  • Brocade Communications Systems
  • BTI Wireless
  • C Spire
  • CACI International
  • CalAmp Corporation
  • Cambium Networks
  • Capita
  • Carlson Wireless Technologies
  • Casa Systems
  • Casio Computer Company
  • Catalyst Communications Technologies
  • Caterpillar
  • Cavium
  • CCI (Communication Components Inc.)
  • CCI Systems
  • CCN (Cirrus Core Networks)
  • cellXica
  • CelPlan Technologies
  • Ceragon Networks
  • Certes Networks
  • Challenge Networks
  • Chemring Technology Solutions
  • Cielo Networks
  • Ciena Corporation
  • Cirpack
  • Cisco Systems
  • Cloudstreet
  • CND (Core Network Dynamics)
  • Cobham Wireless
  • Codan Radio Communications
  • Coherent Logix
  • Collinear Networks
  • Comba Telecom
  • COMLAB
  • CommAgility
  • CommandWear Systems
  • CommScope
  • Comrod Communication Group
  • Comtech Telecommunications Corporation
  • CONET Technologies
  • Connect Tech
  • Contela
  • Coolpad Group
  • Coriant
  • Cornet Technology
  • Corning
  • Covia Labs
  • Cradlepoint
  • Crown Castle International Corporation
  • CS Corporation
  • CybertelBridge
  • CyPhy Works
  • Dahua Technology (Zhejiang Dahua Technology)
  • Dali Wireless
  • DAMM Cellular Systems
  • Datang Mobile
  • Dell Technologies
  • Delta Electronics
  • Dialogic
  • DragonWave-X
  • Druid Software
  • DT (Deutsche Telekom)
  • Duons
  • Eastcom (Eastcom Communications Company)
  • EchoStar Corporation
  • Ecom Instruments
  • EE
  • EION Wireless
  • Elbit Systems
  • ELUON Corporation
  • ENENSYS Technologies
  • olane DOUARNENEZ
  • Ercom
  • Ericsson
  • ETELM
  • Etherstack
  • Ethertronics
  • ETRI (Electronics & Telecommunications Research Institute, South Korea)
  • EXACOM
  • Exalt Wireless
  • Excelerate Technology
  • EXFO
  • Expeto Wireless
  • Expway
  • ExteNet Systems
  • Eyecom Telecommunications Group
  • Fairwaves
  • FastBack Networks
  • Federated Wireless
  • Fenix Group
  • FiberHome Technologies
  • FireEye
  • Flash Private Mobile Networks
  • FLIR Systems
  • Forcepoint
  • Fortinet
  • Foxcom
  • Fraunhofer FOKUS (Institute for Open Communication Systems)
  • Fraunhofer HHI (Heinrich Hertz Institute)
  • FreeWave Technologies
  • Frequentis
  • FRTek
  • Fujian Sunnada Network Technology
  • Fujitsu
  • Funkwerk
  • Future Technologies
  • Galtronics Corporation
  • GCT Semiconductor
  • GE (General Electric)
  • Gemalto
  • Gemtek Technology
  • Genaker
  • GENBAND
  • General Dynamics Mission Systems
  • Genesis Group
  • GenXComm
  • GeoSafe
  • Getac Technology Corporation
  • GIKO GROUP
  • Gilat Satellite Networks
  • Globalstar
  • Goodman Networks
  • Goodmill Systems
  • Google
  • GRENTECH
  • GroupTalk
  • GSI (GS Instech)
  • Guangzhou Iplook Technologies
  • GWT (Global Wireless Technologies)
  • Hanwha Techwin
  • Harris Corporation
  • Haystax Technology
  • HCL Technologies
  • Hexagon
  • Hikvision (Hangzhou Hikvision Digital Technology)
  • HISPASAT Group
  • Hitachi
  • Hoimyung ICT
  • Honeywell International
  • Horsebridge Defence & Security
  • HPE (Hewlett Packard Enterprise)
  • HQT (Shenzhen HQT Science and Technology)
  • HTC Corporation
  • Huawei
  • Hughes Network Systems
  • Hunter Technology
  • Hytera Communications
  • IAI (Israel Aerospace Industries)
  • IBM Corporation
  • Icom
  • IDEMIA
  • IDY Corporation
  • IMPTT
  • Indra
  • Infinova
  • InfoVista
  • Inmarsat
  • InnoWireless
  • Insta Group
  • Intel Corporation
  • Intercede
  • InterDigital
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  • Intracom Telecom
  • Intrepid Networks
  • ip.access
  • IPITEK
  • Iridium Communications
  • Irvees Technology
  • ISCO International
  • IS-Wireless
  • Italtel
  • ITCEN
  • ITRI (Industrial Technology Research Institute, Taiwan)
  • ITS Ibelem
  • JMA Wireless
  • Johnson Controls
  • Jolla
  • JPS Interoperability Solutions
  • JRC (Japan Radio Company)
  • Juni Global
  • Juniper Networks
  • JVCKENWOOD Corporation
  • Kapsch CarrierCom
  • Kathrein-Werke KG
  • KBR
  • Keysight Technologies
  • Kirisun Communications
  • Kisan Telecom
  • Klas Telecom
  • Klein Electronics
  • Kleos
  • KMW
  • Kodiak Networks
  • Koning & Hartman
  • Kontron S&T
  • KPN
  • KRTnet Corporation
  • KT Corporation
  • Kudelski Group
  • Kumu Networks
  • Kyocera Corporation
  • L3 Technologies
  • LCR Embedded Systems
  • Leenos Corporation
  • Lemko Corporation
  • Lenovo
  • Leonardo
  • LG Electronics
  • LG Uplus
  • LGS Innovations
  • Ligado Networks
  • Lime Microsystems
  • LOCIVA
  • Lockheed Martin Corporation
  • Lookout
  • LS telcom
  • Luminate Wireless
  • M87
  • Macquarie Group
  • Magister Solutions
  • Martin UAV
  • Mavenir Systems
  • McAfee
  • MediaTek
  • Mellanox Technologies
  • Mentura Group
  • MER Group
  • Metaswitch Networks
  • MIC Nordic
  • Micro Focus
  • Microlab
  • Microsoft Corporation
  • Microwave Networks
  • Milestone Systems
  • MitraStar Technology Corporation
  • Mitsubishi Electric Corporation
  • Mobile Tornado
  • MobileDemand
  • MobileIron
  • Mobilicom
  • ModUcom (Modular Communication Systems)
  • MoMe
  • Moseley Associates
  • Motorola Solutions
  • Moxtra Public Safety
  • MP Antenna
  • MRV Communications
  • MTI (Microelectronics Technology, Inc.)
  • Mutualink
  • N.A.T.
  • Nash Technologies
  • NEC Corporation
  • Nemergent Solutions
  • Netas
  • NetMotion
  • NETSCOUT Systems
  • New Postcom Equipment
  • Nextivity
  • NextNav
  • NI (National Instruments)
  • NICE Systems
  • NIKSUN
  • Node-H
  • Nokia Networks
  • Northrop Grumman Corporation
  • NuRAN Wireless
  • NVIS Communications
  • NXP Semiconductors
  • Oceus Networks
  • Octasic
  • ODN (Orbital Data Network)
  • Omnitele
  • Omoco
  • One2many
  • Openet
  • Oracle Communications
  • Orange
  • PacStar (Pacific Star Communications)
  • Palo Alto Networks
  • Panasonic Corporation
  • Panda Electronics Group
  • Panorama Antennas
  • Parallel Wireless
  • Parsons Corporation
  • PCTEL
  • pdvWireless
  • Pelco (Schneider Electric)
  • Pepro
  • Persistent Telecom
  • Phluido
  • Plover Bay Technologies
  • PMN (Private Mobile Networks)
  • Polaris Networks
  • PoLTE Corporation
  • Potevio
  • PRISMA Telecom Testing
  • Pryme Radio Products
  • Pulse Electronics
  • Qinetiq
  • Qualcomm
  • Quanta Computer
  • Qucell
  • Quintel
  • Quortus
  • RACOM Corporation
  • RAD Data Communications
  • Radio IP Software
  • Radisys Corporation
  • RADWIN
  • Rafael Advanced Defense Systems
  • Range Networks
  • Rave Mobile Safety
  • Raycap
  • Raytheon Company
  • Reality Mobile (ASTRO Solutions)
  • Rebel Alliance
  • Red Hat
  • RED Technologies
  • REDCOM Laboratories
  • Redline Communications
  • Redwall Technologies
  • Rescue 42
  • RF Window
  • RFS (Radio Frequency Systems)
  • RIVA Networks
  • Rivada Networks
  • Rockwell Collins
  • Rogers Communications
  • Rohde & Schwarz
  • Rohill
  • ROK Mobile
  • Rosenberger
  • RugGear
  • Saab
  • SafeMobile
  • SAI Technology
  • SAIC (Science Applications International Corporation)
  • Samji Electronics
  • Samsung Electronics
  • Sapient Consulting
  • Savox Communications
  • Senstar Corporation
  • Sepura
  • Sequans Communications
  • SerComm Corporation
  • SES
  • Sevis Systems
  • SFR
  • Shentel (Shenandoah Telecommunications Company)
  • SIAE Microelettronica
  • Siemens Convergence Creators
  • Sierra Wireless
  • Signal Information & Communication Corporation
  • Siklu Communication
  • Silicom
  • Simoco Wireless Solutions
  • Singtel
  • SiRRAN
  • Sistelbanda
  • SITRONICS
  • Siyata Mobile
  • SK Telecom
  • SK Telesys
  • SLA Corporation
  • SmartSky Networks
  • Smith Micro Software
  • Softil
  • SOLiD
  • Soliton Systems
  • Sonim Technologies
  • Sonus Networks
  • Sony Corporation
  • Sooktha
  • SOTI
  • Southern Linc
  • Space Data Corporation
  • Spectra Group
  • SpiderCloud Wireless
  • Spirent Communications
  • Spreadtrum Communications
  • Sprint Corporation
  • SRS (Software Radio Systems)
  • Star Solutions
  • STMicroelectronics
  • Stop Noise
  • sTraffic
  • StreamWIDE
  • Sumitomo Electric Industries
  • Swisscom
  • Symantec
  • Sysoco Group
  • SyTech (Systems Engineering Technologies) Corporation
  • TacSat Networks
  • Tait Communications
  • Tampa Microwave
  • TASSTA
  • Tata Elxsi
  • TCL Communication
  • TCOM
  • Tech Mahindra
  • Tecom
  • Tecore Networks
  • TEKTELIC Communications
  • Telco Systems
  • Telefnica Group
  • Televate
  • Tellabs
  • Telo Systems Corporation
  • Telos Corporation
  • Telrad Networks
  • Telstra
  • Teltronic
  • Telum
  • Telus Corporation
  • TESSCO Technologies
  • TETRATAB
  • Thales
  • TI (Texas Instruments)
  • Tieto Corporation
  • TIM (Telecom Italia Mobile)
  • Titan Securite
  • TLC Solutions
  • T-Mobile USA
  • Toshiba Corporation
  • Trpico
  • TRX Systems
  • Twinhead International Corporation
  • U.S. Cellular
  • UANGEL
  • Ukkoverkot
  • UNIMO Technology
  • URSYS
  • US Digital Designs
  • Utility Associates
  • V5 Systems
  • Vanu
  • Vencore Labs
  • Verint Systems
  • Verizon Communications
  • ViaSat
  • Viavi Solutions
  • Vidyo
  • Vision Technologies
  • Visual Labs
  • VMware
  • VNC (Virtual Network Communications)
  • VNL (Vihaan Networks Limited)
  • Vodafone Group
  • Voxer
  • VTT Technical Research Centre of Finland
  • West Corporation
  • Westell Technologies
  • Wildox (Shenzhen joyful Technology)
  • WINITECH
  • WinMate
  • WiPro
  • Wireless Technologies Finland
  • Wireless Telecom Group
  • WNC (Wistron NeWeb Corporation)
  • WTL (World Telecom Labs)
  • Wytec International
  • xG Technology
  • Xiamen Puxing Electronics Science & Technology
  • Xilinx
  • Xplore Technologies Corporation
  • Z-Com
  • Zello
  • Zetel Solutions
  • Zetron
  • Zinwave
  • ZMTel (Shanghai Zhongmi Communication Technology)
  • ZTE
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    Liquidity Coverage Ratio: Liquidity Risk Measurement, Standards, and Monitoring | killexams.com existent questions and Pass4sure dumps

    Federal Information & news Dispatch, Inc.

    Notice of proposed rulemaking with request for public comment.

    CFR Part: "12 CFR fraction 50"

    RIN Number: "RIN 1557 AD 74"

    Citation: "78 FR 71818"

    Document Number: "RIN 3064-AE04"

    Page Number: "71818"

    "Proposed Rules"

    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 observation on a proposed rule (proposed rule) that would implement a quantitative liquidity requirement consistent with the liquidity coverage ratio gauge 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 dynamic banking organizations, thereby improving the banking sector's faculty to absorb shocks arising from pecuniary and economic stress, as well as improvements in the measurement and management of liquidity risk. The proposed rule would apply to complete internationally dynamic banking organizations, generally, bank holding companies, inescapable 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 likewise apply to companies designated for supervision by the Board by the pecuniary Stability Oversight Council under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that attain 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 likewise is proposing on its own a modified liquidity coverage ratio gauge 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.

       EFFECTIVE DATE: Comments on this notice of proposed rulemaking must exist received by January 31, 2014.

       ADDRESSES: Comments should exist directed to:

       OCC: Because paper mail in the Washington, DC locality is topic to delay, commenters are encouraged to submit comments by the Federal eRulemaking Portal or email, if possible. delight consume 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": proceed to http://www.regulations.gov. Enter "Docket ID OCC-2013-0016" in the Search Box and click "Search". Results can exist 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 bag information on using Regulations.gov, including instructions for submitting public comments.

        * Email: [email protected].

        * Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail halt 9W-11, Washington, DC 20219.

        * Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, Mail halt 9W-11, Washington, DC 20219.

        * Fax: (571) 465-4326.

       Instructions: You must include "OCC" as the agency appellation and "Docket ID OCC-2013-0016" in your comment. In general, OCC will enter complete comments received into the docket and publish them on the Regulations.gov Web site without change, including any traffic or personal information that you provide, such as appellation and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are fraction of the public record and topic to public disclosure. attain not fence any information in your observation or supporting materials that you deem 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: proceed to http://www.regulations.gov. Enter "Docket ID OCC-2013-0016" in the Search box and click "Search". Comments can exist 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 bag information on using Regulations.gov, including instructions for viewing public comments, viewing other supporting and related materials, and viewing the docket after the proximate of the observation 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 accomplish an appointment to inspect comments. You may attain so by calling (202) 649-6700. Upon arrival, visitors will exist required to present sound government-issued photo identification and to submit to security screening in order to inspect and photocopy comments.

        * Docket: You may likewise 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. supervene the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

        * Federal eRulemaking Portal: http://www.regulations.gov. supervene the instructions for submitting comments.

        * Email: [email protected]. include docket number in the topic 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. Accordingly, your comments will not exist edited to remove any identifying or contact information. Public comments may likewise exist viewed electronically or in paper form in margin MP-500 of the Board's Martin pile (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. supervene 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 pile (located on F Street), on traffic days between 7:00 a.m. and 5:00 p.m.

        * Email: [email protected].

       Instructions: Comments submitted must include "FDIC" and "RIN 3064-AE04." Comments received will exist 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 pecuniary Analyst, (202) 972-6903; Andrew Willis, Senior pecuniary 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 back 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 fork 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. flat 1 Liquid Assets

       b. flat 2A Liquid Assets

       c. flat 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. 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 consume of simple 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 observation 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 dynamic banking organizations, nonbank pecuniary companies designated by the pecuniary Stability Oversight Council for Board supervision that attain 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 fraction 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 likewise is proposing on its own to implement a modified version of the liquidity coverage ratio requirement as an enhanced prudential gauge for bank holding companies and savings and loan holding companies with at least $50 billion in total consolidated assets that are not internationally dynamic and attain not Have substantial insurance activities. This modified approach is described in section V of this preamble.

       FOOTNOTE 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. finish FOOTNOTE

       FOOTNOTE 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). finish FOOTNOTE

       FOOTNOTE 3 "Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools" (January 2013), available at http://www.bis.org/publ/bcbs238.htm. finish FOOTNOTE

       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 current requirements.

       FOOTNOTE 4 espy "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 pecuniary Companies," 77 FR 76628 (Dec. 28, 2012). finish FOOTNOTE

    B. Background

       The recent pecuniary exigency demonstrated significant weaknesses in the liquidity positions of banking organizations, many of which experienced hardship 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 back to companies in the pecuniary sector in an effort to sustain the global pecuniary system. In the United States, the Board and the FDIC established various temporary liquidity facilities to provide sources of funding for a ambit of asset classes.

       These events came in the wake of a term characterized by ample liquidity in the pecuniary system. The rapid reversal in market conditions and the declining availability of liquidity during the pecuniary exigency 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 pecuniary exigency highlighted the pervasive detrimental sequel of a liquidity exigency on the banking sector, the pecuniary system, and the economy as a whole.

       Banking organizations' failure to adequately address these challenges was in fraction due to lapses in basic liquidity risk management practices. Recognizing the necessity for banking organizations to help 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 pecuniary sector by improving the banking sector's faculty to absorb shocks arising from pecuniary 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 fraction of the Basel III liquidity framework. /8/ The agencies concede 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 deem amending the proposal if the BCBS proposes modifications to the Basel III LCR.

       FOOTNOTE 5 Principles for Sound Liquidity Risk Management and Supervision (September 2008), available at http://www.bis.org/publ/bcbs144.htm. finish FOOTNOTE

       FOOTNOTE 6 Basel III Liquidity Framework, supra note 2 . finish FOOTNOTE

       FOOTNOTE 7 Basel III Revised Liquidity Framework, supra note 3 . finish FOOTNOTE

       FOOTNOTE 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 term for implementation, and a variety of rules text clarifications. espy http://www.bis.org/press/p130106b.pdf for a complete list of revisions to the 2010 LCR. finish FOOTNOTE

       The Basel III LCR establishes for the first time an internationally harmonized quantitative liquidity gauge that has the primary objective of promoting the short-term resilience of the liquidity risk profile of internationally dynamic banking organizations. The Basel III LCR is designed to help the banking sector's faculty to absorb, without reliance on government support, shocks arising from pecuniary and economic stress, whatever the source, thus reducing the risk of spillover from the pecuniary sector to the broader economy.

       Beginning in January 2015, under the Basel III LCR, internationally dynamic banking organizations would exist required to hold enough 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 exist unencumbered by liens and other restrictions on transferability and must exist convertible into cash easily and immediately in deep, dynamic private markets.

       Current U.S. regulations attain 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 pecuniary 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 situation 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 likewise 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.

       FOOTNOTE 9 For instance, the Uniform pecuniary Rating System adopted by the Federal pecuniary Institutions Examination Council (FFIEC) requires examiners to assign a supervisory rating that assesses a banking organization's liquidity position and liquidity risk management. finish FOOTNOTE

       FOOTNOTE 10 75 FR 13656 (March 22, 2010). finish FOOTNOTE

       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, inescapable foreign banking organizations, and nonbank pecuniary companies designated by the pecuniary 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/

       FOOTNOTE 11 espy 12 U.S.C. 5365. finish FOOTNOTE

       FOOTNOTE 12 espy 77 FR 594 (Jan. 5, 2012); 77 FR 76628 (Dec. 28, 2012). finish FOOTNOTE

       FOOTNOTE 13 espy 12 U.S.C. 5365. finish FOOTNOTE

       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 capitalize the pecuniary system as a entire by improving the faculty of companies topic to the proposal to absorb potential market and liquidity shocks in a stern stress scenario over a short term. The agencies are proposing to establish a minimum liquidity coverage ratio that would exist 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 stout liquidity positions many U.S. banking organizations and other companies that would exist topic to the proposal Have achieved since the recent pecuniary 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 topic to the proposal enough time to adjust to the proposed rule while minimizing any potential adverse repercussion 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 term of stern stress, the NSFR is designed to promote resilience over a one-year time horizon by creating additional incentives for banking organizations and other pecuniary companies that would exist topic to the gauge 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 term as the agencies drudgery with other BCBS members and the banking industry to assemble data and study the repercussion of the proposed NSFR gauge 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 promote 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 complete internationally dynamic 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 dynamic 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 observation on whether to apply the rule to opt-in banking organizations. The proposed rule would likewise 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 pecuniary company or a subsidiary of a bridge pecuniary company, a current 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 faculty to resolve a depository institution or its affiliated companies in an systematic manner. /16/

       FOOTNOTE 14 espy 12 CFR fraction 3 (OCC), 12 CFR fraction 217 (Federal Reserve), and 12 CFR fraction 324 (FDIC). finish FOOTNOTE

       FOOTNOTE 15 espy 12 U.S.C. 1813(i) and 12 U.S.C. 5381(a)(3). finish FOOTNOTE

       FOOTNOTE 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 fork 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 common matter, Federal branches and agencies are topic to the same laws as national banks. The IBA and the OCC regulation state, however, that this common gauge 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 common gauge 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 gauge to an internationally dynamic banking organization. As fraction of its supervisory program for Federal branches and agencies of foreign banks, the OCC reviews liquidity risks and takes appropriate action to confine such risks in those entities. In addition, the OCC is monitoring other emerging initiatives in the U.S. that may repercussion liquidity risk supervision of Federal branches and agencies of foreign banks before considering applying a liquidity coverage ratio requirement to them. finish FOOTNOTE

       The Board likewise is proposing on its own to implement a modified version of the liquidity coverage ratio as an enhanced prudential gauge 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/

       FOOTNOTE 17 Total consolidated assets for the purposes of the proposed rule would exist as reported on a covered banking organization's most recent year-end Consolidated Reports of Condition and Income or Consolidated pecuniary Statements for Bank Holding Companies, Federal Reserve form FR Y-9C. foreign exposure data would exist calculated in accordance with the Federal pecuniary Institution Examination Council 009 Country Exposure Report. finish FOOTNOTE

       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 exist appropriate in light of a company's asset size, flat of complexity, risk profile, scope of operations, affiliation with foreign or domestic covered companies, or risk to the pecuniary system. A covered company would remain topic 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 confine the authority of the agencies under any other provision of law or regulation to buy supervisory or enforcement actions, including actions to address unsafe or unsound practices or conditions, deficient liquidity levels, or violations of law. The agencies likewise 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 buy any other measure to help the covered company's liquidity risk profile, if the pertinent agency determines that the 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, inescapable categories of assets may qualify as HQLA if they are unencumbered by liens and other restrictions on transfer so that they can exist converted into cash quickly with runt to no loss in value. Access to HQLA would enhance the faculty 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 exist determined by applying outflow and inflow rates, which reflect inescapable 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 pecuniary crisis. Consistent with the Basel III LCR, these components of the proposed rule buy into account the potential repercussion 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 inescapable 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 necessity 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 impress outflows linked to structured financing transactions, mortgages, central bank borrowings, and customer short positions.

       As renowned above, covered companies generally would exist required to maintain, on a consolidated basis, a liquidity coverage ratio equal to or greater than 100 percent. However, the agencies recognize that under inescapable circumstances, it may exist necessary for a covered company's liquidity coverage ratio to briefly plunge below 100 percent to fund unanticipated liquidity needs.

       However, a liquidity coverage ratio below 100 percent may likewise reflect a significant deficiency in a covered company's management of liquidity risk. Therefore, the proposed rule would establish a framework for resilient supervisory response when a covered company's liquidity coverage ratio falls below 100 percent. Under the proposed rule, a covered company would exist required to notify its primary Federal supervisor on any traffic 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 traffic days, a covered company would exist required to submit to its primary Federal supervisor a scheme 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 exist effectual as of January 1, 2015, topic to a transition period. Under the proposed rule's transition provisions, covered companies would exist 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 exist 90 percent. genesis on January 1, 2017 and thereafter, complete covered companies would exist 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 await companies that would exist topic 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 consume 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 necessity for higher liquidity buffers may necessity to buy additional steps beyond meeting the minimum ratio in order to meet supervisory expectations.

       The BCBS liquidity framework likewise 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. 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 exist better able to assess the company's faculty to meet its projected liquidity needs during periods of liquidity stress; buy appropriate actions to address liquidity needs; and, in situations of failure, to implement an systematic resolution of the covered company. The agencies anticipate that they will separately search observation 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 observation on complete aspects of the proposed rule, including observation 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 pertinent data and repercussion analysis to back their positions.

    II. Minimum Liquidity Coverage Ratio

       Under the proposed rule, a covered company would exist 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 effectual date of the rule and communicated in writing to its primary 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 exist 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 exist permitted to double signify items in this computation. For example, if an asset is included as a fraction of the stock of HQLA, such asset may not likewise exist 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 likewise explains how HQLA would exist 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 exist included in total cash outflows and total cash inflows, as well as rules for determining whether instruments develope or transactions occur within a 30 calendar-day stress term 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 effectual 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 deem 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 respect to covered companies' faculty to transfer HQLA on an intraday basis between entities? Why or why not? In particular, what appropriate limits should the agencies deem with respect 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 exist comprised of a covered company's HQLA, topic 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 elevated 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: flat 1, flat 2A and flat 2B liquid assets. Specifically and as described in greater detail below, the agencies are proposing that flat 1 liquid assets, which are the highest trait and most liquid assets, exist included in a covered company's HQLA amount without a limit. flat 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 flat 1 liquid assets. Accordingly, flat 2A liquid assets would exist topic to a 15 percent haircut and, when combined with flat 2B liquid assets, could not exceed 40 percent of the total stock of HQLA. flat 2B liquid assets, which are associated with a lesser degree of liquidity and more volatility than flat 2A liquid assets, would exist topic 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 flat 2A and flat 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 exist easily and immediately convertible into cash with runt or no loss of value during a term 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 attend to exist lower risk. There are various forms of risk that can exist 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 exist expected to remain liquid across various stress scenarios and should not suddenly lose their liquidity upon the incident of a inescapable sort of risk. Also, these assets generally undergo "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 extend the faculty to monetize assets as necessary to meet their own obligations.

       Assets that may exist highly liquid under accustomed conditions but undergo wrong-way risk and could become less liquid during a term of stress would not exist appropriate for consideration as HQLA. For example, securities issued or guaranteed by many companies in the pecuniary sector /18/ Have been more supine to lose value and, as a result, become less liquid and lose value in times of liquidity stress due to the elevated correlation between the health of these companies and the health of the pecuniary markets generally. This correlation was evident during the recent pecuniary crisis, as most debt issued by such companies traded at significant discounts for a prolonged period. Because of this elevated 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 pecuniary sector from HQLA. /19/

       FOOTNOTE 18 espy infra section II.A.2.c. finish FOOTNOTE

       FOOTNOTE 19 Identification of companies with elevated potential for wrong-way risk under the proposal is discussed below in section II.A.2. finish FOOTNOTE

    b. Market-Based Characteristics

       The agencies likewise Have create that assets appropriate for consideration as HQLA generally exhibit characteristics that are market-based in nature. First, these assets attend to Have dynamic outright sale or repurchase markets at complete times with significant diversity in market participants as well as elevated volume. This market-based liquidity characteristic may exist demonstrated by historical evidence, including evidence during recent periods of market liquidity stress, of low bid-ask spreads, elevated trading volumes, a large and diverse number of market participants, and other factors. Diversity of market participants, on both the buy and sell sides, is particularly considerable 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 badge that a market is liquid.

       Second, assets that are appropriate for consideration as HQLA generally attend to Have prices that attain not incur keen expense declines, even during times of stress. Volatility of traded prices and bid-ask spreads during accustomed times are simple proxy measures of market volatility; however, there should exist 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 expense or volume fluctuation during times of stress, assets appropriate for consideration as HQLA attend to extend in value and undergo a flight to trait during such times, as historically, the market moves into more liquid assets in times of systemic crisis.

       Third, assets that can serve as HQLA attend to exist easily and readily valued. The agencies generally Have create that an asset's liquidity is typically higher if market participants correspond on its valuation. Assets with more standardized, homogenous, and simple structures attend to exist more fungible, thereby promoting liquidity. The pricing formula of more liquid assets generally is simple to calculate when it is based upon sound assumptions and publicly available inputs. Whether an asset is listed on an dynamic and developed exchange can serve as a key indicator of an asset's expense 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 attend to exist 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 stern stress. Central bank eligibility should, therefore, provide additional assurance that assets could exist used in acute liquidity stress events without adversely affecting the broader pecuniary system and economy. However, central bank eligibility is not itself enough to categorize an asset as HQLA; complete of the proposed rule's requirements for HQLA would necessity to exist met if central bank eligible assets are to qualify as HQLA.

       3. What, if any, other characteristics should exist 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 expense volatility, are traded in high-volume, profound markets with transparent pricing, and that are eligible to exist pledged at a central bank. Consistent with these characteristics and the BCBS LCR framework, the proposed rule would establish common criteria for complete HQLA and specific requirements for each category of HQLA. For example, most of the assets in these categories would necessity to meet the proposed rule's definition of "liquid and readily-marketable" in order to exist included in HQLA. Under the proposed rule, an asset would exist liquid and readily-marketable if it is traded in an dynamic 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 elevated trading volumes. The "liquid and readily-marketable" requirement is meant to ensure that assets included in HQLA exhibit a flat of liquidity that would allow a covered company to metamorphose them into cash during times of stress and, therefore, to meet its obligations when other sources of funding may exist reduced or unavailable. Timely and observable market prices accomplish it likely that a buyer could exist create and that a expense could exist obtained within a short term of time such that a covered company could metamorphose the assets to cash, as needed.

       As renowned above, assets that are included in HQLA should not exist issued by pecuniary sector entities since they would then exist correlated with covered companies (or wrong-way risk assets). In the proposed rule, pecuniary sector entities are defined as regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, or a consolidated subsidiary of any of the foregoing. HQLA likewise could not exist issued by any company (or any of its consolidated subsidiaries) that an agency has determined should exist treated the same for the purposes of this proposed rule as a regulated pecuniary 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 pecuniary company" under the proposal would include bank holding companies and savings and loan holding companies (depository institution holding companies); nonbank pecuniary 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, situation member banks, or situation 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 likewise include any designated pecuniary market utility, as defined in section 803 of the Dodd-Frank Act. /23/ The definition likewise includes foreign companies if they are supervised and regulated in a manner similar to the institutions listed above. /24/

       FOOTNOTE 20 12 U.S.C. 1850a(a)(4). finish FOOTNOTE

       FOOTNOTE 21 7 U.S.C. 1a(28) and (49). finish FOOTNOTE

       FOOTNOTE 22 15 U.S.C. 78c(a)(71). finish FOOTNOTE

       FOOTNOTE 23 12 U.S.C. 5462(4). finish FOOTNOTE

       FOOTNOTE 24 Under paragraph (8) of the proposed rule's definition of "regulated pecuniary company," the following would not exist considered regulated pecuniary companies: U.S. government-sponsored enterprises; small traffic investment companies, as defined in section 102 of the small traffic Investment Act of 1958 (15 U.S.C. 661 et seq.); entities designated as Community evolution pecuniary Institutions (CDFIs) under 12 U.S.C. 4701 et seq. and 12 CFR fraction 1805; and central banks, the Bank for International Settlements, the International Monetary Fund, or a multilateral evolution bank. finish FOOTNOTE

       In addition, a "regulated pecuniary 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 headquarters (NIC) Web site, provided that the top tier depository institution holding company is topic to the proposed rule (FR Y-6 companies). /25/

       FOOTNOTE 25 espy http://www.ffiec.gov/nicpubweb/nicweb/nichome.aspx. finish FOOTNOTE

       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 pecuniary statements of a depository institution holding company, the links between the companies are sufficiently significant that the agencies believe it would exist appropriate to exclude securities issued by FR Y-6 companies (and their consolidated subsidiaries) from HQLA, for the same policy reasons that other regulated pecuniary companies' securities would exist 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 system for identifying these companies in order to reduce cross associated with obtaining the FR Y-6 organizational charts for complete depository institution holding companies topic 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 inescapable Commodity Pool Operators and Commodity Trading Advisors), and any consolidated subsidiary of such fund, other than a small traffic investment company, as defined in section 102 of the small traffic Investment Act of 1958 (15 U.S.C. 661 et seq.). Pension funds would exist defined as employee capitalize 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 exist excluded from HQLA.

       FOOTNOTE 26 15 U.S.C. 80a-1 et seq. finish FOOTNOTE

       FOOTNOTE 27 15 U.S.C. 80b-1 et seq. finish FOOTNOTE

       FOOTNOTE 28 espy paragraph (7) of SEC __.3 of the proposed rule's definition of "regulated pecuniary company." finish FOOTNOTE

       4. What, if any, modifications should the agencies deem to the definition of "regulated pecuniary company"? What, if any, entities should exist added to, or removed from, the definition and why? What operational difficulties may exist involved in identifying a "regulated pecuniary 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 exist addressed? What alternatives for identifying companies reported on the FR Y-6 should exist considered, and what difficulties may exist associated with using the organizational hierarchy chart produced by the NIC Web site?

       5. What, if any, modifications should the agencies deem to the definition of "non-regulated funds"? Should hedge funds or private equity funds whose managers are not required to file form PF exist 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 pellucid manner? Provide detailed suggestions and justifications.

       6. What, if any, modifications should the agencies deem 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 exist included in the respective definitions?

       7. What risk or operational issues should the agencies deem 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 deem with respect to identifying those companies whose securities should exist excluded from HQLA and should exist topic 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 exist 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 pertinent 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. flat 1 Liquid Assets

       Under the proposed rule, a covered company could include the plenary just value of flat 1 liquid assets in its HQLA amount. These assets Have the highest potential to generate liquidity for a covered company during periods of stern liquidity stress and thus would exist 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 flat 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 plenary faith and credit of the United States government); (5) inescapable 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 evolution bank; and (6) inescapable 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. Balances that depository institutions must maintain to satisfy a reserve equipoise requirement must exist 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 equipoise 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 exist maintained to satisfy a reserve equipoise requirement, known as "excess balances," may exist maintained in a master account or in an "excess equipoise account." Finally, balances maintained for a specified term of time, known as "term deposits," are maintained in a term deposit account offered by the Federal Reserve Banks. The proposed rule therefore uses the term "Reserve Bank balances" as the pertinent term to capture central bank reserves in the United States.

       FOOTNOTE 29 espy 12 U.S.C. 342. finish FOOTNOTE

       Under the proposed rule, complete 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 equipoise account participant) would exist considered flat 1 liquid assets, except for inescapable 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 exist withdrawn upon require prior to the expiration of the term, or that (2) permit such term deposits to exist pledged as collateral for term or automatically-renewing overnight advances from a Federal Reserve Bank. nobody of the term deposits offered under the Federal Reserve's Term Deposit Facility as currently configured would exist included in "Reserve Bank balances" because complete term deposits offered to date by the Federal Reserve Banks are not explicitly and contractually repayable on notice. Similarly, complete 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 exist considered flat 1 liquid assets under the proposed rule could exist 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 equipoise requirement would exist subtracted from its flat 1 liquid asset amount, because a depository institution generally satisfies its reserve requirement by maintaining vault cash or a equipoise in an account at a Federal Reserve Bank. /30/

       FOOTNOTE 30 espy SEC __.21(b)(1) of the proposed rule. finish FOOTNOTE

    Foreign Withdrawable Reserves

       The agencies are proposing that reserves held by a covered company in a foreign central bank that are not topic to restrictions on consume exist included in flat 1 liquid assets. Similar to Reserve Bank balances, foreign withdrawable reserves should exist 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 flat 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 elevated levels of liquidity even in times of extreme stress to the pecuniary system, and typically are the securities that undergo the most "flight to quality" when investors adjust their holdings. flat 1 liquid assets would likewise include securities issued by any other U.S. government agency whose obligations are fully and explicitly guaranteed by the plenary 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 flat 1 liquid assets securities that are a title on, or a title 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 evolution 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 exist liquid and readily-marketable, as discussed above. Third, these securities would exist required to exist 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 common liquidity stress, such as the term of pecuniary market stress experienced from 2007 to 2008. Covered companies should likewise discover to other periods of systemic and idiosyncratic stress to espy if the asset under consideration has proven to exist a reliable source of liquidity. Fourth, these securities could not exist an obligation of a regulated pecuniary company, non-regulated fund, pension fund, investment adviser, or identified company or any consolidated subsidiary of such entities.

       FOOTNOTE 31 espy 12 CFR fraction 3 (OCC), 12 CFR fraction 217 (Federal Reserve), and 12 CFR fraction 324 (FDIC). finish FOOTNOTE

    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 flat 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 exist appropriately included as flat 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 exist considered in determining the assets that qualify as flat 1 liquid assets? What, if any, additional assets should qualify as flat 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 flat 1 liquid assets under the proposed rule that should not qualify based on their liquidity characteristics? If so, which assets should not exist included and why? Provide detailed justification based on the liquidity characteristics of an asset in question, including historical data and observations.

    b. flat 2A Liquid Assets

       Under the proposed rule, flat 2A liquid assets would include inescapable claims on, or claims guaranteed by a U.S. government sponsored enterprise (GSE) /32/ and inescapable claims on, or claims guaranteed by, a sovereign entity or a multilateral evolution bank. Assets would exist required to exist liquid and readily-marketable, as described above, to exist considered flat 2A liquid assets.

       FOOTNOTE 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. finish FOOTNOTE

       The agencies are sensible 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 attain not Have the explicit guarantee of the plenary faith and credit of the United States. The agencies Have long held the view that obligations of U.S. GSEs should not exist 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 plenary faith and credit of the United States. Consistent with the agencies' regulatory capital rules, the agencies are not assigning the most conducive regulatory treatment to U.S. GSEs' issuances and guarantees under the proposed rule and therefore are assigning them to the flat 2A liquid asset category, so long as they are investment grade consistent with the OCC's investment regulation (12 CFR fraction 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 likewise would include claims on, or claims guaranteed by a sovereign entity or a multilateral evolution bank that: (1) is not included in flat 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 pecuniary 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 title on or claims guaranteed by a sovereign entity or a multilateral evolution 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 common liquidity stress. /34/ Covered companies should discover to multiple periods of systemic and idiosyncratic liquidity stress in compiling such records.

       FOOTNOTE 33 espy 12 CFR fraction 3 (OCC), 12 CFR fraction 217 (Federal Reserve), and 12 CFR fraction 324 (FDIC). finish FOOTNOTE

       FOOTNOTE 34 This would exist demonstrated if the market expense 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 term of significant stress. finish FOOTNOTE

       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 flat 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 attain not exhibit the liquidity characteristics necessary to exist included in HQLA under this proposed rule. For example, securities issued by public sector entities generally Have low middling daily trading volumes. Covered bonds, in particular, exhibit significant risks regarding interconnectedness and wrong-way risk among companies in the pecuniary sector such as regulated pecuniary companies, investment companies, and non-regulated funds.

       12. What other assets, if any, should the agencies include in flat 2A liquid assets? How should such assets exist identified and what are the characteristics of those assets that would warrant their inclusion in flat 2A liquid assets?

       13. Are there any assets that would qualify as flat 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 deem for obligations of U.S. GSEs and why? Provide justification and supporting data.

    c. flat 2B Liquid Assets

       Under the proposed rule, flat 2B liquid assets would include inescapable publicly traded corporate debt securities and publicly traded shares of common stock that are liquid and readily-marketable, as discussed above. The limitation of flat 2B liquid assets to those that are publicly traded is meant to ensure a minimum flat of liquidity, as privately traded assets are less liquid. Under the proposed rule, the definition of "publicly traded" would exist 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 exist defined as market where there are independent bona fide offers to buy and sell, so that a expense reasonably related to the ultimate sales expense or current bona fide competitive bid and present quotations can exist determined within one day and settled at that expense within a relatively short time frame, conforming to trade custom. This definition is likewise 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.

       FOOTNOTE 35 espy id. finish FOOTNOTE

       FOOTNOTE 36 Id. finish FOOTNOTE

    Publicly Traded Corporate Debt Securities

       Publicly traded corporate debt securities would exist considered flat 2B liquid assets under the proposed rule if they meet three requirements (in addition to being liquid and readily-marketable). First, the securities would exist required to meet the definition of "investment grade" under 12 CFR fraction 1 as of a calculation date. /37/ This gauge would ensure that assets not meeting the required credit trait gauge for bank investment would not exist included in HQLA. The agencies believe that meeting this gauge is indicative of lower risk and, therefore, higher liquidity for a corporate debt security. Second, the securities would exist 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 exist required to demonstrate this record of liquidity reliability and lower volatility during times of stress by showing that the market expense 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 securities or equivalent securities of the issuer increased by no more than 20 percentage points during a 30 calendar-day term 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 common liquidity stress.

       FOOTNOTE 37 12 CFR 1.2(d). finish FOOTNOTE

       Finally, for the reasons discussed above, the debt securities could not exist obligations of a regulated pecuniary 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 exist included in a covered company's flat 2B liquid assets if the shares meet the five requirements set forth below (in addition to being liquid and readily-marketable). Because of common statutory prohibitions on holding equity investments for their own account, /38/ depository institutions topic to the proposed rule would not exist able to include common stock in their flat 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 flat 2B liquid assets common stock permissibly held by a consolidated subsidiary, where the investments meet the proposed flat 2B requirements for publicly traded shares of common stock. Furthermore, a depository institution could only include in its flat 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 flat 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 flat 2B publicly traded common stock to its parent depository institution's consolidated flat 2B assets.

       FOOTNOTE 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). finish FOOTNOTE

       Under the rule, to exist considered a flat 2B liquid asset, the publicly traded common stock would exist required to exist included in either: (1) the gauge & 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 flat 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 considerable 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 exist considered a flat 2B liquid asset, a covered company's publicly traded common stock would exist required to exist 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 exist 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 exist required to demonstrate this record of reliable liquidity by showing that the market expense 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 term 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 common liquidity stress.

       Fourth, as with the other asset categories of HQLA and for the same reasons, common stock included in flat 2B liquid assets may not exist issued by a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, identified company, or any consolidated subsidiary of the foregoing. During the recent pecuniary crisis, the common stock of such companies experienced significant declines in value and the agencies believe that such declines witness those assets would exist 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 exist acquired in satisfaction of a debt previously contracted (DPC). In general, publicly traded common stock may exist acquired by a depository institution to preclude 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 exist divested in a timely manner. /39/ The agencies believe that depository institutions should accomplish a trustworthy faith effort to dispose of DPC publicly traded common stock as soon as commercially reasonable, topic to the applicable legal time limits for disposition. The agencies are concerned that permitting depository institutions to include DPC publicly traded common stock in flat 2B liquid assets may provide an inappropriate incentive for depository institutions to hold such assets beyond a commercially reasonable term for disposition. Therefore, the proposal would prohibit depository institutions from including DPC publicly traded common stock in flat 2B liquid assets.

       FOOTNOTE 39 espy generally 12 CFR 1.7 (OCC); 12 U.S.C. 1843(c)(2) (Board); 12 CFR 362.1(b)(3) (FDIC). finish FOOTNOTE

       15. What, if any, additional criteria should the agencies deem in determining the sort of securities that should qualify as flat 2B liquid assets? What alternatives to the S&P 500 should exist considered in determining the liquidity of an equity security and why? In addition to an investment grade classification, what additional characteristics denote the liquidity trait of corporate debt that the agencies would exist legally permitted to consume in light of the Dodd-Frank Act prohibition against agencies' regulations referencing credit ratings? The agencies 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 flat 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 deem for establishing an adequate historical record during times of liquidity stress in order to meet the pertinent criteria under the proposed rule? What operational burdens, if any, are associated with this requirement? What other standards, if any, should the agencies deem 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 flat 2B liquid assets? delight provide specific examples. Under what circumstances, if any, should DPC publicly traded common stock exist included in a depository institution's flat 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 flat 2B liquid assets?

    3. Operational Requirements for HQLA

       Under the proposed rule, an asset that a covered company includes in its HQLA would necessity to meet the following operational requirements. These operational requirements are intended to better ensure that a covered company's HQLA can exist liquidated in times of stress. Several of these requirements relate to the monetization of an asset, by which the agencies signify 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 exist required to Have the operational capability to monetize the HQLA. This capability would exist demonstrated by: (1) implementing and maintaining appropriate procedures and systems to monetize the asset at any time in accordance with pertinent gauge 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 term of actual stress. The agencies would monitor the procedures, systems, and intermittent sample liquidations through their supervisory process.

       Second, a covered company would exist required to implement policies that require complete HQLA to exist under the control of the management duty of the covered company that is charged with managing liquidity risk. To attain so, a covered company would exist required either to segregate the assets from other assets, with the sole intent to consume them as a source of liquidity or to demonstrate its faculty to monetize the assets and Have the resulting funds available to the risk management function, without conflicting with another traffic or risk management strategy. Thus, if an HQLA were being used to hedge a specific transaction, such as holding an asset to hedge a convene option that the covered company had written, it could not exist included in the HQLA amount because its sale would fight with another traffic or risk management strategy. However, if HQLA were being used as a common macro hedge, such as interest rate risk of the covered company's portfolio, it could still exist included in the HQLA amount. This requirement is intended to ensure that a central duty 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 pecuniary exigency 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 exist 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 repercussion of the hedge would exist required to exist included in the outflow because if the covered company were to liquidate the asset, it would exist required to proximate out the hedge to avoid creating a risk exposure. This requirement is not intended to apply to common 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 exist 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 pertinent 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 sort 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 likewise 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 necessity 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 animate inescapable companies to hold a disproportionate amount of their HQLA in locations outside the United States where unforeseen impediments may preclude timely repatriation of liquidity during a crisis. Nonetheless, establishing quantitative limits on the amount of HQLA that can exist held abroad and still signify towards a U.S. domiciled legal entity's LCR requirement is knotty and can exist 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 exist 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 extend the likelihood that HQLA is available to a covered company and to avoid 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 exist included in HQLA, regardless of such designation.

       19. Are the proposed operational criteria sufficiently pellucid to determine whether an asset could exist included in the pool of HQLA? Why or why not? If not, what requirements necessity clarification?

       20. What costs or other burdens would exist incurred as a result of the proposed operational requirements? What modifications should the agencies deem to mitigate such costs or burdens, while establishing appropriate operational criteria for HQLA to ensure its liquidity? delight provide detailed explanations and justifications.

       21. Given that, absent the requirement that a covered company develop and maintain policies and procedures to ensure enough HQLA is held domestically, a covered company could theoretically hold its entire HQLA in a foreign fork located in a jurisdiction that could impede its consume to back U.S. operations, should the proposed rule exist supplemented with quantitative restrictions on the amount of HQLA that can exist 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 search observation on complete 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 enough to withstand a 30 calendar-day stress period.

    4. Generally Applicable Criteria for HQLA

       Under the proposed rule, assets would exist required to meet the following generally applicable criteria to exist considered as HQLA.

    a. Unencumbered

       To exist included in HQLA, an asset would exist required to exist unencumbered as defined under the proposed rule. First, the asset would exist required to exist free of legal, regulatory, contractual, or other restrictions on the faculty of a covered company to monetize asset. The agencies believe that, as a common matter, HQLA should only include assets that could exist converted easily into cash. Second, the asset could not exist pledged, explicitly or implicitly, to secure or provide credit-enhancement to any transaction, except that the asset could exist pledged to a central bank or a U.S. GSE to secure potential borrowings if credit secured by the asset has not been extended to the covered company or its consolidated subsidiaries. This exception is meant to account for the faculty of central banks and U.S. GSEs to lend against the posted HQLA or to recur the posted HQLA, in which case a covered company could sell or engage in a repurchase agreement with the assets to receive cash. This exception is likewise meant to permit collateral that is covered by a blanket lien from a U.S. GSE to exist included in HQLA.

    b. Client Pool Security

       An asset included in HQLA could not exist a client pool security held in a segregated account or cash received from a repurchase agreement on client pool securities held in a segregated account. The proposed rule defines a client pool security as one that is owned by a customer of a covered company and is not an asset of the organization, regardless of the organization's hypothecation rights to the security. Since client pool securities held in a segregated account are not freely available to meet complete workable liquidity needs, they should not signify as a source of liquidity.

    c. Treatment of HQLA Held by U.S. Consolidated Subsidiaries

       Under the proposal, HQLA held in a legal entity that is a U.S. consolidated subsidiary of a covered company would exist included in HQLA topic to specific limitations depending on whether the subsidiary is topic to the proposed rule and is therefore required to calculate a liquidity coverage ratio under the proposed rule.

       If the consolidated subsidiary is topic to a minimum liquidity coverage ratio under the proposed rule, then a covered company could include in its HQLA amount the HQLA held in the consolidated subsidiary in an amount up to the consolidated subsidiary's net cash outflows calculated to meet its liquidity coverage ratio requirement. The covered company could likewise include in its HQLA amount any additional amount of HQLA the monetized proceeds from which would exist available for transfer to the covered company's top-tier parent entity during times of stress without statutory, regulatory, contractual, or supervisory restrictions. Regulatory restrictions would include, for example, sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 371c and 12 U.S.C. 371c-1) and Regulation W (12 CFR fraction 223). Supervisory restrictions may include, but would not exist limited to, enforcement actions, written agreements, supervisory directives or requests to a particular subsidiary that would directly or indirectly restrict the subsidiary's faculty to transfer the HQLA to the parent covered company.

       If the consolidated subsidiary is not topic to a minimum liquidity coverage ratio under section 10 of the proposed rule, a covered company could include in its HQLA amount the HQLA held in the consolidated subsidiary in an amount up to the net cash outflows of the consolidated subsidiary that are included in the covered company's calculation of its liquidity coverage ratio, plus any additional amount of HQLA held by the consolidated subsidiary the monetized proceeds from which would exist available for transfer to the covered company's top tier parent entity during times of stress without statutory, regulatory, contractual, or supervisory restrictions. This treatment is consistent with the Basel III LCR and ensures that assets in the pool of HQLA can exist freely monetized and the proceeds can exist freely transferred to a covered company's top-tier parent entity in times of a liquidity stress.

    d. Treatment of HQLA Held by Non-U.S. Consolidated Subsidiaries

       Consistent with the BCBS liquidity framework, HQLA held by a non-U.S. legal entity that is a consolidated subsidiary of a covered company could exist included in a covered company's HQLA in an amount up to the net cash outflows of the non-U.S. consolidated subsidiary that are included in the covered company's net cash outflows, plus any additional amount of HQLA held by the non-U.S. consolidated subsidiary that is available for transfer to the covered company's top-tier parent entity during times of stress without statutory, regulatory, contractual, or supervisory restrictions. The proposal would require covered companies with foreign operations to identify the location of HQLA and net cash outflows and exclude any HQLA above net cash outflows that is not freely available for transfer due to statutory, regulatory, contractual or supervisory restrictions. Such transfer restrictions would include liquidity coverage ratio requirements greater than those that would exist established by the proposed rule, counterparty exposure limits, and any other regulatory, statutory, or supervisory limitations. While the agencies believe it is appropriate for a covered company to hold HQLA in a particular geographic location in order to meet liquidity needs there, they attain not believe it is appropriate for a covered company to hold a disproportionate amount of HQLA in locations outside the United States given that unforeseen impediments may preclude timely repatriation of liquidity during a crisis. Therefore, under section 20(f) of the proposal, a covered company would exist generally expected to maintain in the United States an amount and sort of HQLA that is enough to meet its total net cash outflow amount in the United States.

       23. What effects may the provision in section 20(f) that a covered company is generally expected to maintain HQLA in the United States enough to meet its total net cash outflow amount in the United States Have on a company's management of HQLA? Should the agencies exist concerned about the transferability of liquidity between national jurisdictions during a time of pecuniary distress and, if so, would such a requirement exist enough to allay these concerns? Would holding HQLA in a foreign jurisdiction in an amount beyond such jurisdiction's estimated outflow confine the operational capacity of HQLA to meet liquidity needs in the United States; conversely, would the proposed common requirement unnecessarily disrupt overall banking operations? What changes, if any, to section 20(f) should the agencies deem to ensure that a covered company has enough HQLA readily available to meet its outflows in the United States? Should the agencies deem quantitative limits to ensure that a covered company has enough HQLA readily available in the United States to meet its net outflows in the United States and back its operations during periods of stress? Why or why not?

    e. Exclusion of Rehypothecated Assets

       Under the proposed rule, assets that a covered company received under a rehypothecation right where the advantageous owner has a contractual right to withdraw the asset without remuneration at any time during a 30 calendar-day stress term would not exist included in HQLA under the proposed rule. This exclusion extends to assets generated from another asset that was received under such a rehypothecation right. If the advantageous owner has such a right and were to exercise it within a 30 calendar-day stress period, the asset would not exist available to back the covered company's liquidity position.

    f. Exclusion of Assets Designated as Operational

       Assets included in a covered company's HQLA amount could not exist specifically designated to cover operational costs. The agencies believe that assets specifically designated to cover costs such as wages or facility maintenance generally would not exist available to cover liquidity needs that arise during stressed market conditions.

       24. The agencies search observation on the proposed rule's description of an unencumbered asset. What, if any, additional criteria should exist considered in determining whether an asset is unencumbered for purposes of consideration as HQLA?

       25. What difficulties or lack of clarity, if any, may arise from the proposed operational requirement that HQLA not exist a client pool security exist held in a segregated account? What, if any, terms could the agencies deem to clarify what securities are captured in this provision? For example, what characteristics should exist included to record the types of accounts that should intuition client pool securities to exist excluded from HQLA treatment?

       26. What, if any, modifications should the agencies deem to the treatment of HQLA held by consolidated U.S. subsidiaries and why?

       27. The agencies solicit observation on the proposed system for including the HQLA held at non-U.S. consolidated subsidiaries in a covered company's HQLA. Is it appropriate to include in HQLA some amount of HQLA that is held in non-U.S. consolidated subsidiaries? If not, why not? Should the proposed rule exist supplemented with quantitative restrictions on the amount of HQLA that can exist held in foreign branches and subsidiaries for the liquidity coverage ratio calculation of the consolidated U.S. entity? If so, how should the rule require a correlation between the geographic locations of a covered company's HQLA and the location of the outflows the HQLA is intended to cover? What portion of HQLA held by non-U.S. consolidated subsidiaries is freely available for consume in connection with a covered company's U.S. operations during times of stress? In determining the amount of HQLA held at a non-U.S. consolidated subsidiary that a covered company can include in its HQLA, should a covered company exist required to buy into account any net cash outflows arising in connection with transactions between a non-U.S. entity and another affiliate? What challenges, if any, of the proposed methodology are not addressed? delight imply specific solutions.

    5. Calculation of the HQLA Amount

       Instructions for calculating the HQLA amount, including the calculation of the required haircuts and asset caps that the agencies are proposing to apply to flat 2 liquid assets, are set forth in section 21 of the proposed rule. For the purposes of calculating a covered company's HQLA amount, the value of flat 1, flat 2A, and flat 2B liquid assets would exist equal to the just value of the assets as determined under U.S. Generally Accepted Accounting Principles (GAAP), multiplied by the appropriate haircut factor and taking in consideration the unwinding of inescapable transactions.

       Consistent with the Basel III LCR, the proposed rule would apply a 15 percent haircut to flat 2A liquid assets and a 50 percent haircut to flat 2B liquid assets. /40/ These haircuts are meant to recognize that flat 2 liquid assets generally are less liquid, Have larger haircuts in the repurchase markets, and Have more volatile prices in the outright sales markets. likewise consistent with the Basel III LCR, the proposed rule would cap the amount of flat 2 liquid assets that could exist included in the HQLA amount. Specifically, flat 2 liquid assets could account for no more than 40 percent of the HQLA amount and flat 2B liquid assets could account for no more than 15 percent of the HQLA amount. These caps are meant to ensure that these types of assets, which provide less liquidity as compared to flat 1 liquid assets, comprise a smaller portion of a covered company's total HQLA amount such that the majority of the HQLA amount is comprised of flat 1 liquid assets.

       FOOTNOTE 40 espy Basel III Revised Liquidity Framework, paragraphs 46-54 and Annex 1, supra note 3; proposed rule SEC __.21(b). finish FOOTNOTE

       As discussed in more detail in section II.A.5.b of this preamble, the agencies believe the proposed flat 2 caps and haircuts should exist applied to a covered company's HQLA amount both before and after inescapable transactions are unwound, such as transactions where HQLA will exist exchanged for HQLA within the next 30 calendar days in order to ensure that the HQLA portfolio is appropriately diversified. The calculation of adjusted HQLA would preclude a covered company from being able to manipulate its HQLA portfolio by engaging in transactions such as inescapable repurchase or invert repurchase transactions because the HQLA amount, including the caps and haircuts, would exist calculated both before and after unwinding those transactions. Formulas for calculating the HQLA amount are provided in section 21 of the proposed rule. Under these provisions, the HQLA amount would exist the sum of the three liquid asset category amounts after the application of appropriate haircuts, less the greater of the amount of HQLA that exceeds the flat 2 caps on the first day of a calculation term (unadjusted excess HQLA amount) or the amount of HQLA that exceeds the flat 2 caps at the finish of a 30 calendar-day stress term after unwinding inescapable transactions (adjusted excess HQLA amount). [

    a. Calculation of Unadjusted Excess HQLA Amount

       The unadjusted excess HQLA amount is the sum of the flat 2 cap excess amount and the flat 2B cap excess amount. The calculation of the unadjusted excess HQLA amount applies the 40 percent flat 2 liquid asset cap and the 15 percent flat 2B liquid asset cap at the start of a 30 calendar-day stressed term by subtracting the amount of flat 2 liquid assets that are in excess of the limits. The unadjusted HQLA excess amount enforces the cap limits without unwinding any transactions.

       The system of calculating the flat 2 cap excess amount and flat 2B cap excess amounts is set forth in sections 21(d) and (e) of the proposed rule, respectively. Under those provisions, the flat 2 cap excess amount would exist calculated by taking the greater of: (1) the flat 2A liquid asset amount plus the flat 2B liquid asset amount that exceeds 0.6667 (or 40/60, which is the ratio of the allowable flat 2 liquid assets to the flat 1 liquid assets) times the flat 1 liquid asset amount; or (2) zero. /41/ The calculation of the flat 2B cap excess amount would exist calculated by taking the greater of: (1) the flat 2B liquid asset amount less the flat 2 cap excess amount and less 0.1765 (or 15/85, which is the ratio of allowable flat 2B liquid assets to the sum of flat 1 and flat 2A liquid assets) times the sum of the flat 1 and flat 2A liquid asset amount; or (2) zero. /42/ Subtracting the flat 2 cap excess amount from the flat 2B liquid asset amount when applying the 15 percent flat 2B cap is appropriate because the flat 2B liquid assets should exist excluded before the flat 2A liquid assets when applying the 40 percent flat 2 cap.

       FOOTNOTE 41 espy SEC __.21(d) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 42 espy SEC __. 21(e) of the proposed rule. finish FOOTNOTE

    b. Calculation of Adjusted Excess HQLA Amount

       To determine its adjusted HQLA excess amount, a covered company must unwind complete secured funding transactions, secured lending transactions, asset exchanges, and collateralized derivatives transactions, each as defined by the proposed rule, that develope within a 30 calendar-day stress term where HQLA is exchanged. The unwinding of these transactions and the calculation of adjusted excess HQLA amount is intended to preclude a covered company from having a substantial amount of transactions that would create the appearance of a significant flat 1 liquid asset amount at the genesis of a 30 calendar-day stress period, but that would unwind by the finish of the 30 calendar-day stress period. For example, absent the unwinding of these transactions, a hard that has complete flat 2 liquid assets could appear compliant with the flat 2 liquid asset cap on a calculation date by borrowing a flat 1 liquid asset (such as cash or Treasuries) secured by a flat 2 liquid asset overnight. While doing so would lower the covered company's amount of flat 2 liquid assets and extend its amount of flat 1 liquid assets, the organization would Have a concentration of flat 2 liquid assets above the 40 percent cap after the transaction is unwound. Therefore, the calculation of the adjusted excess HQLA amount and its subtraction from the HQLA amount, if greater than unadjusted excess HQLA amount, would preclude covered companies from avoiding the liquid asset cap limitations.

       The adjusted flat 1 liquid asset amount would exist the just value, as determined under GAAP, of the flat 1 liquid assets that are held by a covered company upon the unwinding of any secured funding transaction, secured lending transaction, asset exchanges, or collateralized derivatives transaction that develope within a 30 calendar-day stress term and that involves an exchange of HQLA. Similarly, adjusted flat 2A and adjusted flat 2B liquid assets would only include those transactions involving an exchange HQLA. After unwinding complete the appropriate transactions, the asset haircuts of 15 percent and 50 percent would exist applied to the flat 2A and 2B liquid assets, respectively.

       The adjusted excess HQLA amount calculated pursuant to section 21(g) of the proposed rule would exist comprised of the adjusted flat 2 cap excess amount and adjusted flat 2B cap excess amount calculated pursuant to sections 21(h) and 21(i) of the proposed rule, respectively. These excess amounts are calculated in order to maintain the 40 percent cap on flat 2 liquid assets and the 15 percent cap on flat 2B liquid assets after unwinding a covered company's secured funding transactions, secured lending transactions, asset exchanges, and collateralized derivatives transactions.

       The adjusted flat 2 cap excess amount would exist calculated by taking the greater of: (1) the adjusted flat 2A liquid asset amount plus the adjusted flat 2B liquid asset amount minus 0.6667 (or 40/60, which is the ratio of the allowable flat 2 liquid assets to flat 1 liquid assets) times the adjusted flat 1 liquid asset amount; or (2) zero. /43/ The adjusted flat 2B cap excess amount would exist calculated by taking the greater of: (1) the adjusted 2B liquid asset amount less the adjusted flat 2 cap excess amount less 0.1765 (or 15/85, which is the ratio of allowable flat 2B liquid assets to the sum of flat 1 liquid assets and flat 2A liquid assets) times the sum of the adjusted flat 1 liquid asset amount and the adjusted flat 2A liquid asset amount; or (2) zero. /44/ As renowned above, the adjusted excess HQLA amount is the sum of the adjusted flat 2 cap excess amount and the adjusted flat 2B cap excess amount. /45/ likewise as renowned above, subtracting out the adjusted flat 2 cap excess amount from the adjusted flat 2B liquid asset amount when applying the 15 percent flat 2B cap is appropriate because the adjusted flat 2B liquid assets should exist excluded before the adjusted flat 2A liquid assets when applying the 40 percent flat 2 cap.

       FOOTNOTE 43 espy SEC __.21(h) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 44 espy SEC __.21(i) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 45 espy SEC __.21(g) of the proposed rule. finish FOOTNOTE

    c. example HQLA Calculation

       The following is an example calculation of the HQLA amount that would exist required under the proposed rule. Note that the given liquid asset amounts and adjusted liquid asset amounts already reflect the flat 2A and 2B haircuts.

    Level 1 liquid asset amount: 15

    Level 2A liquid asset amount: 25

    Level 2B liquid asset amount: 140

    Adjusted flat 1 liquid asset amount: 120

    Adjusted flat 2A liquid asset amount: 50

    Adjusted flat 2B liquid asset amount: 10

    Calculate unadjusted excess HQLA amount (section 21(c))

       Step 1: calculate the flat 2 cap excess amount (section 21(d)):

    Level 2 cap excess amount = Max (level 2A liquid asset amount + flat 2B liquid asset amount -0.6667*Level 1 liquid asset amount, 0)

       = Max (25 + 140 - 0.6667*15, 0)

       = Max (165 - 10.00, 0)

       = Max (155.00, 0)

       = 155.00

       Step 2: calculate the flat 2B cap excess amount (section 21(e)).

    Level 2B cap excess amount = Max (level 2B liquid asset amount - flat 2 cap excess amount - 0.1765*(level 1 liquid asset amount + flat 2 liquid asset amount), 0)

       = Max (140-155.00 - 0.1765*(15+25), 0)

       = Max (-15 - 7.06, 0)

       = Max (-22.06, 0)

       = 0

       Step 3: calculate the unadjusted excess HQLA amount (section 21(c)).

    Unadjusted excess HQLA amount = flat 2 cap excess amount + flat 2B cap excess amount

       = 155.00 + 0

       = 155

    Calculate adjusted excess HQLA amount (sections 21(g))

    Step 1: calculate the adjusted flat 2 cap excess amount (section 21(h)).

    Adjusted flat 2 cap excess amount = Max (adjusted flat 2A liquid asset amount + adjusted flat 2B liquid asset amount - 0.6667*adjusted flat 1 liquid asset amount, 0)

    = Max (50 + 10 - 0.6667*120, 0)

       = Max (60-80.00, 0)

       = Max (-20.00, 0)

       = 0

       Step 2: calculate the adjusted flat 2B cap excess amount (section 21(i)).

    Adjusted flat 2B cap excess amount = Max (adjusted flat 2B liquid asset amount-adjusted flat 2 cap excess amount-0.1765*(adjusted flat 1 liquid asset amount + adjusted flat 2 liquid asset amount, 0)

       = Max (10-0-0.1765*(120+50), 0)

       = Max (10-30.00, 0)

       = Max (-20.00, 0)

       = 0

       Step 3: calculate the adjusted excess HQLA amount (section 21(g)).

    Adjusted excess HQLA amount = adjusted flat 2 cap excess amount + adjusted flat 2B cap excess amount

       = 0 + 0

       = 0

    Determine the HQLA amount (section 21(a))

    HQLA = flat 1 liquid asset amount + flat 2A liquid asset amount + flat 2B liquid asset amount-Max(unadjusted excess HQLA amount, adjusted excess HQLA amount)

       = 15 + 25 + 140-Max (155, 0)

       = 180-155

       = 25

    B. Total Net Cash Outflow

       To determine the liquidity coverage ratio as of a calculation date, the proposed rule would require a covered company to calculate its total stressed net cash outflow amount for each of the 30 calendar days following the calculation date, thereby establishing the dollar value that must exist offset by the HQLA amount.

       Under section 30 of the proposed rule, the total net cash outflow amount would exist the dollar amount on the day within a 30 calendar-day stress term that has the highest amount of net cumulative cash outflows. The agencies believe that using the largest daily calculation as the denominator of the liquidity coverage ratio (rather than using total cash outflows over a 30 calendar-day stress period, which is the system employed by the Basel III LCR) is necessary because it takes into account potential maturity mismatches between a covered company's outflows and inflows, that is, the risk that a covered company could Have a substantial amount of contractual inflows late in a 30 calendar-day stress term while likewise having substantial outflows early in the same period. Such mismatches could menace the liquidity of the organization. By requiring the recognition of the highest net cumulative outflow day of a particular 30 calendar-day stress period, the agencies believe that the proposed liquidity coverage ratio would better capture a covered company's liquidity risk and capitalize foster more sound liquidity management.

       To determine the denominator of the liquidity coverage ratio as of a calculation date, the proposed rule would require a covered company to calculate its total cumulative stressed net cash outflows occurring on each of the 30 calendar days following the calculation date. Under section 30 of the proposed rule, the total net cash outflow amount for each of the next 30 calendar days would exist the sum of the cumulative stressed outflow amounts less the sum of the cumulative stressed inflow amounts, with cumulative stressed inflow amounts limited to 75 percent of cumulative stressed outflow amounts. Stressed outflow and inflow amounts would exist calculated by multiplying an outflow or inflow rate (designed to reflect a stress scenario) to each category of outflows and inflows. The cumulative stressed outflow amount would exist comprised of different groupings of outflow categories, including categories where the instruments and transactions attain not Have maturity dates /46/ and categories where the instruments develope and transactions occur on or prior to a day 30 calendar days or less after the calculation date. /47/ The cumulative stressed inflow amount, which would exist deducted from the cumulative stressed outflow amount, would equal the lesser of (1) the sum of categories where the inflows are grouped together and categories where the instruments develope and transactions occur on or prior to that calendar day /48/ and (2) 75 percent of the cumulative stressed outflow amount for that calendar day. /49/ The largest of these total net cash outflow amounts calculated for each of the 30 calendar days after the calculation date would exist equal to the amount of HQLA that a covered company would exist required to hold under the proposed rule.

       FOOTNOTE 46 espy SEC __.30(b) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 47 espy SEC __.30(c) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 48 espy SEC __.30(d)(1) of the proposed rule. finish FOOTNOTE

       FOOTNOTE 49 espy SEC __.30(d)(2) of the proposed rule. finish FOOTNOTE

       Consistent with the Basel III LCR and as renowned above, in calculating total net cash outflow, cumulative cash inflows would exist capped at 75 percent of aggregate cash outflows. This confine would preclude a covered company from relying exclusively on cash inflows (which may not materialize in a term of stress) to cover its liquidity needs under the proposal's stress scenario and ensure that covered companies maintain a minimum flat of HQLA to meet unexpected liquidity demands during the 30 calendar-day term of liquidity stress.

       Table 1 illustrates the determination of the total net cash outflow amount by applying the daily outflow and inflow calculations for a given 30 calendar-day stress period. Using Table 1, a covered company would, for each day, add (A) cash outflows as calculated under sections 32(a) through 32(g)(2) and cash outflows as calculated under sections 32(g)(3) through 32(l) for instruments and transactions that Have no contractual maturity date and (C) cumulative cash outflows as calculated under sections 32(g)(3) through 32(l) for instruments or transactions that Have a contractual maturity date up to and including the calculation date (the cumulative sum of amounts in column (B)) to arrive at (D) total cumulative cash outflows. Next, a covered company would subtract the lesser of (F) cumulative cash inflows as calculated under sections 33(b) through 33(f) where the instruments or transactions Have a contractual maturity date up to and including the calculation date (the cumulative sum of amounts in column (E)) or (G) 75 percent of (D) total cumulative cash outflows to determine (H) the net cumulative cash outflow. Based on the example provided below, the peak outflow would occur on Day 18, resulting in a total net cash outflow amount of 285.

    Table 1--Determination of Peak Net Contractual Outflow Day Non- Contrac- Cumula- Total Contrac- Cumula- Maximum Net maturity tual tive cumula- tual tive inflows cumula- cash cash contrac- tive cash contrac- permit- tive outflows outflows tual cash inflows tual ted cash (cons- with cash outflows with cash due to outflow tant) maturity outflows maturity inflows 75% date up with date up with inflow to and maturity to and maturity cap includ- date up includ- date up ing the to and ing the to and calcula- includ- calcula- includ- tion ing the tion ing the date calcula- date calcula- tion tion date date A B C D E F G H Day 1 200 100 100 300 90 90 225 210 Day 2 200 20 120 320 5 95 240 225 Day 3 200 10 120 330 5 100 248 230 Day 4 200 15 145 345 20 120 259 225 Day 5 200 20 165 365 15 135 274 230 Day 6 200 0 165 365 0 135 274 230 Day 7 200 0 165 365 0 135 274 230 Day 8 200 10 175 375 8 143 281 232 Day 9 200 15 190 390 7 150 293 240 Day 200 25 215 415 20 170 311 245 10 Day 200 35 250 450 5 175 338 275 11 Day 200 10 260 460 15 190 345 270 12 Day 200 0 260 460 0 190 345 270 13 Day 200 0 260 460 0 190 345 270 14 Day 200 5 265 465 5 195 349 270 15 Day 200 15 280 480 5 200 360 280 16 Day 200 5 285 485 5 205 364 280 17 Day 200 10 295 495 5 210 371 285 18 Day 200 15 310 510 20 230 383 280 19 Day 200 0 310 510 0 230 383 280 20 Day 200 0 310 510 0 230 383 280 21 Day 200 20 330 530 45 275 398 255 22 Day 200 20 350 550 40 315 413 235 23 Day 200 5 355 555 20 335 416 220 24 Day 200 40 395 595 5 340 446 255 25 Day 200 8 403 603 125 465 452 151 26 Day 200 0 403 603 0 465 452 151 27 Day 200 0 403 603 0 465 452 151 28 Day 200 5 408 608 10 475 456 152 29 Day 200 2 410 610 5 480 458 153 30

       28. Does the system the agencies are proposing for determining net cash outflows appropriately capture the potential mismatch between the timing of inflows and outflows under the 30 calendar-day stress period? Why or why not? Are there alternative methodologies for determining the net cumulative cash outflows that would more appropriately capture the maturity mismatch risk within 30 days about which the agencies are concerned? Provide specific suggestions and supporting data or other information.

       29. What costs or other burdens would exist incurred as a result of the proposed system for calculating net cash outflows? What modifications should the agencies deem to mitigate such costs or burdens, while establishing appropriate means to capture potential mismatches between the timing of inflows and outflows within a 30 calendar-day stress period?

    1. Determining the Maturity of Instruments and Transactions

       Under the proposal, a covered company generally would exist required to identify the maturity or transaction date that is the most conservative for an instrument or transaction in calculating inflows and outflows (that is, the earliest workable date for outflows and the latest workable date for inflows). In addition, under section 30 of the proposed rule, a covered company's total outflow amount as of a calculation date would include outflow amounts for inescapable instruments that attain not Have contractual maturity dates and that develope prior to or on a day 30 calendar days or less after the calculation date. Section 33 of the proposed rule would expressly exclude instruments with no maturity date from a covered company's total inflow amount.

       Section 31 of the proposed rule describes how covered companies would determine whether instruments develope or transactions occur within the 30 calendar-day stress term for the purposes of calculating outflows and inflows. Section 31 would require covered companies to assess whether any options, either explicit or embedded, exist that would modify maturity dates such that they would plunge within or beyond the 30 calendar-day stress period. If such an option exists for an outflow instrument or transaction, the proposed rule would direct a covered company to assume that the option would exist exercised at the earliest workable date. If such an option exists for an inflow instrument or transaction, the proposed rule would require covered companies to assume that the option would exist exercised at the latest workable date.

       In addition, if an option to adjust the maturity date of an instrument is topic to a notice period, a covered company would exist required to either disregard or buy into account the notice period, depending upon whether the instrument was an outflow or inflow instrument, respectively.

       30. The agencies solicit commenters' views on the proposed treatment for maturing instruments and for determining the date of transactions. Specifically, what are commenters' views on the proposed provisions that would require covered companies to apply the most conservative treatment with the respect to inflow and outflow dates and embedded options?

       31. What notice requirements, if any, should a covered company exist able to recognize for counterparties that Have options to accelerate the maturity of transactions and instruments included as outflows? Should a distinction exist drawn between wholesale and retail customers or counterparties? Provide justification and supporting information.

    2. Cash Outflow Categories

       Section 32 of the proposed rule sets forth the outflow categories for calculating cumulative cash outflows and their respective outflow rates, each as described below. The outflow rates are designed to reflect the 30 calendar-day stress scenario that is the basis for the proposed rule. Consistent with the Basel III LCR, the agencies are proposing to assign outflow rates for each category, ranging from 0 percent to 100 percent. These outflow rates would exist multiplied by the outstanding equipoise of each category of funding to arrive at the applicable outflow amount.

    a. Unsecured Retail Funding Outflow Amount

       Under the proposed rule, unsecured retail funding would include retail deposits (other than brokered deposits), that are not secured under applicable law by a lien on specifically designated assets owned by the covered company and that are provided by a retail customer or counterparty. Unsecured retail funding would exist divided into subcategories of stable retail deposits, other retail deposits, and funding from a retail customer or counterparty that is not a retail deposit or a brokered deposit provided by a retail customer or counterparty, each topic to the outflow rates set forth in section 32(a) of the proposed rule, as explained below.

       Under the proposed rule, retail customers and counterparties would include individuals and inescapable small businesses. A small traffic would qualify as a retail customer or counterparty if its transactions Have liquidity risks similar to those of individuals and are managed by a covered company in the same artery as comparable transactions with individuals. In addition, to qualify as a small traffic under the proposed rule the total aggregate funding raised from the small traffic must exist less than $1.5 million. If an entity provides $1.5 million or more in total funding, if it has liquidity risks that are not similar to individuals, or if the covered company manages the customer fondness corporate customers rather than individual customers, it would exist a wholesale customer under the proposed rule. This treatment reflects the agencies' understanding that, during the recent pecuniary crisis, small traffic customers generally behaved similarly to individual customers with respect to the stability of their deposits.

       Supervisory data from stressed or failed institutions indicates that retail depositors withdrew term deposits at a similar rate to deposits without a contractual term. Therefore, the proposed rule would require covered companies to hold the same amount of HQLA to meet retail customer withdrawals in a stressed environment, regardless of whether the deposits Have a contractual term. A retail deposit would thus exist defined under the proposed rule as a require or term deposit that is placed with a covered company by a retail customer or counterparty. This definition would not include wholesale brokered deposits or brokered deposits for retail customers or counterparties, which are covered in sunder outflow categories.

    i. Stable Retail Deposits

       The proposed rule would define a stable retail deposit as a retail deposit, the entire amount of which is covered by deposit insurance, /50/ and either (1) held in a transactional account by the depositor or (2) the depositor has another established relationship with a covered company, such that withdrawal of the deposit would exist unlikely. Under the proposed rule, the established relationship could exist another deposit account, a loan, bill payment services, or any other service or product provided to the depositor, provided that the banking organization demonstrates to the satisfaction of its primary Federal supervisor that the relationship would accomplish deposit withdrawal highly unlikely during a liquidity stress event.

       FOOTNOTE 50 For purposes of the proposed rule, "deposit insurance" is defined to signify deposit insurance provided by the FDIC and does not include other deposit insurance schemes that may exist. finish FOOTNOTE

       The agencies commemorate that in the recent pecuniary crisis, retail customers and counterparties with deposit balances below the FDIC's gauge maximum deposit insurance amount did not generally withdraw their deposits in such a artery as to intuition liquidity strains for banking organizations. However, the agencies attain not believe the presence of deposit insurance lonely is enough to deem a retail deposit stable because depositors with only one insured account are generally less stable than depositors with multiple accounts or relationships in a stress scenario. The combination of deposit insurance covering the entire amount of the deposit and the depositors' relationship with the bank, however, makes this category of retail deposits very unlikely to exist topic to withdrawal in a stress scenario, due to self-confidence in FDIC deposit insurance and the inconvenience of stirring transactional or multiple accounts. Historical undergo has demonstrated that retail customers and counterparties Have tended to avoid restructuring direct deposits, automatic payments, and similar banking products that are insured during a stress scenario because they generally Have enough self-confidence that insured funds would not exist lost in the event of a bank failure and the hardship of such restructuring does not seem to exist worthwhile when funds are insured.

       Therefore, under the proposed rule, stable retail deposit balances would exist multiplied by the relatively low outflow rate of 3 percent. Notwithstanding the above, the agencies note that a stressed environment could intuition a surge in retail deposit inflows, as customers search the safety of deposit insurance. Over several months or quarters, a surge in deposit inflows could warp a banking organization's liquidity coverage ratio calculation because these funds may not remain in the institution once market conditions and public self-confidence improves. A covered company's management should exist cognizant of this potential distortion and deem appropriate steps to maintain adequate liquidity for the potential future withdrawals.

       32. What, if any, aggregate funding thresholds should the agencies deem for application to individuals, such as the $1.5 million aggregate funding threshold applicable to qualify as a small traffic under the proposed rule? Provide justification and supporting information.

    ii. Other Retail Deposits

       Under the proposed rule, other retail deposits would include complete deposits from retail customers that are not stable retail deposits as described above. Supervisory data supports a higher outflow rate for deposits that are partially insured in the United States as compared to entirely insured. During the recent pecuniary crisis, to the extent that retail depositors whose deposits partially exceeded the FDIC's insurance confine withdrew deposits from a banking organization, they tended to withdraw not only the uninsured portion of the deposit, but the entire deposit. Furthermore, as discussed above, the agencies believe that insured retail deposits that are not either transactional account deposits or deposits of a customer with another relationship with the institution are less stable than those that are.

       Accordingly, the agencies are proposing to assign an outflow rate of 10 percent for those retail deposits that are not entirely covered by deposit insurance, or that otherwise attain not meet the proposed criteria for a stable retail deposit.

       All other retail deposits would include retail deposits not insured by the FDIC, whether entirely insured, or insured by other jurisdictions. While the Basel III Liquidity Framework contemplates recognition of foreign deposit insurance, the agencies are proposing to recognize only FDIC deposit insurance in defining stable retail deposits because of the flat of variability in terms of coverage and structure create in different foreign deposit insurance systems and because of the forthcoming potential revision of international best practices for deposit insurance. As discussed more fully below, the agencies are contemplating how best to identify and give comparable treatment to foreign deposit insurance systems that are similar to FDIC insurance once international best practices are further developed.

       Congress created the FDIC in 1933 to finish the banking exigency during the remarkable Depression, to restore public self-confidence in the banking system, and to safeguard bank deposits through deposit insurance. In the most recent crisis, the FDIC's deposit insurance guarantee contributed significantly to pecuniary stability in an otherwise unstable pecuniary environment. FDIC insurance has several characteristics that accomplish it effectual in stabilizing deposit outflows during liquidity stress events, including, but not limited to: capacity to accomplish insured funds promptly available, usually the next traffic day after a bank closure; coverage levels enough to protect most retail depositors in full; an ex-ante funding mechanism; a rigorous prudential supervision process; timely intervention and resolution protocols; public awareness of deposit insurance; and backing by the plenary faith and credit of the U.S. government.

       National adoption of deposit insurance systems has become prevalent since the 1980s, in fraction because of similar experiences to the remarkable Depression (for example, the Mexican peso exigency of the 1990s and the 1997 Asian pecuniary crisis). Numerous international organizations Have recognized the necessity of deposit insurance as fraction of a comprehensive pecuniary stability framework, and there are now at least 112 recognized deposit insurers, with several more jurisdictions in the process of implementing deposit insurance.

       Although many countries Have implemented deposit insurance programs, deposit insurance around the globe is uneven along a number of dimensions, including terms of coverage, deposit insurer powers, pecuniary resources, and public awareness. At one finish of the deposit insurance system spectrum, some systems appear to exist similar to the FDIC's insurance framework in terms of uniform coverage and back-up funding options. At the other end, a variety of less structured models exist, including private organizations with only implied or no sovereign support, sovereign guarantees with no deposit insurer, and minimal deposit insurance systems with limited powers.

       The international regulatory community has recognized the variance in global deposit insurance as a significant issue. In 2002, the International Association of Deposit Insurers (IADI) was formed to promote best practices in deposit insurance and has developed core principles that are recognized by both the IMF and the World Bank. IADI recently announced that its core principles would exist assessed and updated, as necessary, to reflect enhanced guidance, international regulatory developments, and the results of compliance assessment reviews conducted to date. /51/

       FOOTNOTE 51 Today, IADI consists of 70 members, 9 associates, and 12 colleague organizations, and is considered to exist the standard-setter for deposit insurance by the pecuniary Stability Board (FSB), the BCBS, the International Monetary Fund (IMF), and the World Bank. finish FOOTNOTE

       The agencies considered whether foreign deposit insurance systems, particularly those with sovereign backing, should exist given the same treatment as FDIC insurance in the proposed rule. While credible sovereign guarantees are useful in reassuring depositors of the safety of their principal balances, undergo has proven that without established operational infrastructure or explicit funding arrangement, depositors may not exist assured that their funds will exist available in a reasonable timeframe. History has shown that if depositors believe that their funds will exist unavailable for a protracted period, they may withdraw funds in large numbers to avoid the resulting hardship. The faculty of foreign deposit insurers to accomplish funds promptly available varies widely and is often in contrast to the FDIC's next-business-day standard. /52/

       FOOTNOTE 52 espy pecuniary Stability Board, Thematic Review on Deposit Insurance Systems (February 8, 2012), available at http://www.financialstabilityboard.org/publications/r_120208.pdf. finish FOOTNOTE

       33. The agencies solicit comments on the proposed rule's treatment of deposits that are insured in foreign jurisdictions, views on the stability of foreign-entity insured deposits in a stressed environment, and how to best determine if foreign deposit insurance system is similar to FDIC insurance.

    iii. Other Unsecured Retail Funding

       The other unsecured retail funding category would apply an outflow rate of 100 percent to complete funding provided by retail customers or counterparties that is not a retail deposit or a retail brokered deposit and that matures within 30 days. This is intended to capture complete additional types of retail funding that are not otherwise categorized.

       34. The agencies solicit commenters' views on the proposed outflow rates associated with stable retail deposits (3 percent outflow), less-stable retail deposits (10 percent outflow), and other unsecured retail funding (100 percent outflow). What, if any, additional factors should exist taken into consideration regarding the proposed outflow rates for these deposit types? attain the proposed outflow rates reflect industry experience? Why or why not? delight provide supporting data.

       35. Is it appropriate to handle inescapable small traffic customers fondness retail customers? Why or why not? What additional criteria, if any, would serve as more appropriate indicators?

       36. The agencies solicit observation on the outflow rate for the insured portion of those deposits that are in excess of deposit insurance limit. Specifically, should the insured portion of a deposit that exceeds $250,000 (e.g., the portion of deposit balances up to and including $250,000) receive a different outflow rate than the uninsured portion of the deposit? Why or why not? delight provide supporting data.

    b. Structured Transaction Outflow Amount

       The proposed rule's structured transaction outflow amount would capture obligations and exposures associated with structured transactions sponsored by a covered company, without respect to whether the structured transaction vehicle that is the issuing entity is consolidated on the covered company's equipoise sheet. Under the proposed rule, the outflow amount for each of a covered company's structured transactions would exist the greater of (1) 100 percent of the amount of complete debt obligations of the issuing entity that develope 30 days or less from a calculation date and complete commitments made by the issuing entity to purchase assets within 30 calendar days or less from the calculation date and (2) the maximum contractual amount of funding the covered company may exist required to provide to the issuing entity 30 calendar days or less from such calculation date through a liquidity facility, a recur or repurchase of assets from the issuing entity, or other funding agreement.

       The agencies believe that the maximum potential amount that a covered company may exist required to provide to back its sponsored structured transactions, including potential obligations arising out of commitments to an issuing entity, that arise from structured finance transactions should exist fully included in outflows when calculating the proposed liquidity coverage ratio because such transactions, whether issued directly or sponsored by covered companies, Have caused stern liquidity demands at covered companies during stressed environments. Their inclusion is considerable to measuring a covered company's short-term susceptibility to unexpected funding requirements.

       37. What, if any modifications to the structured transaction outflows should the agencies consider? In particular, what, if any, modifications to the definition of structured transaction should exist considered? delight provide justifications and supporting data.

    c. Net Derivative Cash Outflow Amount

       Under the proposed rule, a covered company's net derivative cash outflow amount would equal the sum of the payments and collateral that a covered company will accomplish or deliver to each counterparty under derivative transactions, less, if topic to a sound qualifying master netting agreement, /53/ the sum of payments and collateral due from each counterparty. This calculation would incorporate the amounts due to and from counterparties under the applicable transactions within 30 calendar days of a calculation date. Netting would exist permissible at the highest flat permitted by a covered company's contracts with its counterparties and could not include inflows where a covered company is already including assets in its HQLA that the counterparty has posted to back those inflows. If the derivative transactions are not topic to a sound qualifying master netting agreement, then the derivative cash outflow for that counterparty would exist included in the net derivative cash outflow amount and the derivative cash inflows for that counterparty would exist included in the net derivative cash inflow amount, without any netting. Net derivative cash outflow should exist calculated in accordance with existing valuation methodologies and expected contractual derivatives cash flows. In the event that net derivative cash outflow for a particular counterparty is less than zero, such amount would exist required to exist included in a covered company's net derivative cash inflow for that counterparty.

       FOOTNOTE 53 Under the proposal, a "qualifying master netting agreement" would exist defined as under the agencies' regulatory capital rules as a legally binding agreement that gives the covered company contractual rights to terminate, accelerate, and proximate out transactions upon the event of default and liquidate collateral or consume it to set off its obligation. The agreement likewise could not exist topic to a remain under bankruptcy or similar proceeding and the covered company would exist required to meet inescapable operational requirements with respect to the agreement, as set forth in section 4 of the proposed rule. finish FOOTNOTE

       Under the proposed rule, a covered company's net derivative cash outflow amount would not include amounts arising in connection with forward sales of mortgage loans or any derivatives that are mortgage commitments topic to section 32(d) of the proposed rule. Net derivative cash outflow would still include derivatives that hedge interest rate risk associated with a mortgage pipeline.

       This category is considerable to the proposed rule's liquidity coverage ratio in that many covered companies actively consume derivatives across their traffic lines. In a short-term stressed situation, the amount of potential cash outflow associated with derivatives positions can change as positions are adjusted for market conditions and as counterparties require additional collateral or more conservative constrict terms.

       38. What, if any, additional factors or aspects of derivatives transactions should exist considered for the treatment of derivatives contracts under the proposed rule?

       39. Is it appropriate to exclude forward sales of mortgage loans from the treatment of derivatives contracts under the proposed rule? Why or why not?

    d. Mortgage Commitment Outflow Amount

       During the recent pecuniary crisis, it was evident that pecuniary institutions were not able to curtail mortgage loan pipelines and had hardship liquidating loans held for sale. Accordingly, the proposed rule would require a covered company to recognize potential cash outflows related to commitments to fund retail mortgage loans that could exist drawn upon within 30 days of a calculation date. Under the proposal, a retail mortgage would exist a mortgage that is primarily secured by a first or subsequent lien on a one-to-four family property.

       The proposed rule would require a covered company to consume an outflow rate of 10 percent for complete retail mortgage commitments that can exist drawn upon within a 30 calendar-day stress period. In addition, the proposed rule would not include in inflows proceeds from the potential sale of mortgages in the to-be-announced, specified pool, or similar forward sales market. /54/ The agencies believe that, in a crisis, such inflows may not materialize as investors may curtail most or complete of their investment in the mortgage market.

       FOOTNOTE 54 espy SEC __.33(a) of the proposed rule. finish FOOTNOTE

       40. What, if any, modifications should the agencies accomplish to the mortgage commitment outflow amount? Provide data and other supporting information.

       41. What sequel may the treatment for retail mortgage funding under the proposed rule Have on the banking system and the mortgage markets, including in combination with the effects of other regulations that apply to the mortgage market? What other treatments, if any, should the agencies consider? Provide data and other supporting information.

    e. Commitment Outflow Amount

       This category would include the undrawn portion of committed credit and liquidity facilities provided by a covered company to its customers and counterparties that can exist drawn down within 30 days of the calculation date. A liquidity facility would exist defined under the proposed rule as a legally binding agreement to extend funds at a future date to a counterparty that is made expressly for the purpose of refinancing the debt of the counterparty when it is unable to obtain a primary or anticipated source of funding. A liquidity facility would include an agreement to provide liquidity back to asset-backed commercial paper by lending to, or purchasing assets from, any structure, program, or conduit in the event that funds are required to repay maturing asset-backed commercial paper. Liquidity facilities would exclude common working capital facilities, such as revolving credit facilities for common corporate or working capital purposes.

       A credit facility would exist defined as a legally binding agreement to extend funds if requested at a future date, including a common working capital facility such as a revolving credit facility for common corporate or working capital purposes. Under the proposed rule, a credit facility would not include a facility extended expressly for the purpose of refinancing the debt of a counterparty that is otherwise unable to meet its obligations in the ordinary course of business. Facilities that Have aspects of both credit and liquidity facilities would exist classified as liquidity facilities for the purposes of the proposed rule.

       Under the proposed rule, a liquidity or credit facility would exist considered committed when the terms governing the facility prohibit a covered company from refusing to extend credit or funding under the facility, except where inescapable conditions specified by the terms of the facility--other than customary notice, administrative conditions, or changes in pecuniary condition of the borrower--have been met. The undrawn amount for a committed credit or liquidity facility would exist the entire undrawn amount of the facility that could exist drawn upon within 30 calendar days of the calculation date under the governing agreement, less the just value of flat 1 or flat 2A liquid assets, if any, which secure the facility, after recognizing the applicable haircut for the assets serving as collateral. In the case of a liquidity facility, the undrawn amount would not include the portion of the facility that supports customer obligations that attain not develope 30 calendar days or less after the calculation date. A covered company's proportionate ownership partake of a syndicated credit facility likewise would exist included in the appropriate category of wholesale credit commitments.

       The proposed rule would assign the outflow amounts to commitments as set forth in section 32(e) of the proposed rule. First, in contrast to the outflow rates applied to other commitments, those between affiliated depository institutions topic to the proposed rule would receive an outflow rate of 0 percent because the agencies recognize that both institutions should Have adequate liquidity to meet their obligations during a stress scenario and therefore should not reckon extensively on such liquidity facilities. The other outflow rates are meant to reflect the characteristics of each class of customers and counterparties in a stress scenario, as well as the reputational and legal risks covered companies visage if they try to restructure a commitment during a exigency to avoid drawdowns by customers. Accordingly, a relatively low outflow rate of 5 percent is proposed for retail facilities because individuals and small businesses would likely Have a lesser necessity for committed credit facilities in stressed scenarios than institutional or wholesale customers (that is, the correlation between draws on such facilities and the stress scenario of the liquidity coverage ratio is low). The agencies are proposing to assign outflow rates of 10 percent for credit facilities and 30 percent for liquidity facilities committed to entities that are not pecuniary sector companies whose securities are excluded from HQLA /55/ based on their typically longer-term funding structures and perceived higher credit trait profile in the capital markets, particularly during times of pecuniary stress. The proposed rule would assign a 50 percent outflow rate to credit and liquidity facilities committed to depository institutions, depository institution holding companies, and foreign banks (other than commitments between affiliated depository institutions). Commitments to complete other regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, or identified companies (or to a consolidated subsidiary of any of the foregoing) would exist topic to a 40 percent outflow rate for credit facilities and 100 percent for liquidity facilities.

       FOOTNOTE 55 espy section II.A.2. These pecuniary sector companies are regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment adviser, or identified companies, and consolidated subsidiaries of the foregoing, as defined in the proposal. finish FOOTNOTE

       The agencies are generally proposing higher outflow rates for liquidity facilities than credit facilities as described above because the exigency scenario that is incorporated into the proposed rule focuses on liquidity pressures increasing the likelihood of large draws on liquidity lines as compared to credit lines, which typically are used more during the accustomed course of traffic and not as substantially during a liquidity stress. The lower liquidity commitment outflow rate for depository institutions, depository institution holding companies, and foreign banks compared to other pecuniary sector entities, is reflective of historical experience, which indicates these entities drew on liquidity lines less than other pecuniary sector entities did during periods of liquidity stress. The higher outflow rate for commitments to other types of companies in the pecuniary sector reflects their likely elevated necessity to consume every available liquidity source during a liquidity exigency in order to meet their obligations and the fact that these entities are less likely to exist able to immediately access government liquidity sources.

       The agencies are proposing a 100 percent outflow rate for a covered company's liquidity facilities with special purpose entities (SPEs), given SPEs' sensitivity to emergency cash and backstop needs in a short-term stress environment, such as those experienced with SPEs during the recent pecuniary crisis. During that period, many SPEs experienced stern cash shortfalls, as they could not rollover debt and had to reckon on borrowing and backstop lines.

       Under the proposed rule, the amount of flat 1 or flat 2A liquid assets securing the undrawn portion of a commitment would reduce the outflow associated with the commitment if inescapable conditions are met. The amount of flat 1 or flat 2A liquid assets securing a committed credit or liquidity facility would exist the just value (as determined under GAAP) of complete flat 1 liquid assets and 85 percent of the just value of flat 2A liquid assets posted or required to exist posted upon funding of the commitment as collateral to secure the facility, provided that the following conditions are met during the applicable 30 calendar-day period: (1) the pledged assets meet the criteria for HQLA as set forth in section 20 of the proposed rule; and (2) the covered company has not included the assets in its HQLA amount as calculated under subpart C of the proposed rule.

       42. What, if any, additional factors should exist considered in determining the treatment of unfunded commitments under the proposal? What, if any, additional distinctions between different types of unfunded commitments should the agencies consider? If necessary, how might the definitions of credit facility and liquidity facility exist further clarified or distinguished? Are the various proposed treatments for unfunded commitments consistent with industry experience? Provide detailed explanations and supporting information.

       43. Is the proposed rule's definition of SPE appropriate, under-inclusive, or over-inclusive? Why?

       Consistent with the BCBS LCR, specified run-off rates are not provided for credit card lines, since they are typically unconditionally cancelable and therefore attain not meet the proposed definition of a committed facility. The agencies believe that during a pecuniary crisis, draws on credit card lines would remain relatively constant and predictable; thus, outstanding lines should not materially impress a covered company's liquidity demands in a crisis. Accordingly, undrawn retail credit card lines are not included in cash outflows in the proposed rule. However, for a few banking organizations, these lines are significant relative to their equipoise sheet and these banking organizations may undergo reputational or other risks if lines are withdrawn or significantly reduced during a crisis.

       44. What, if any, outflow rate should the agencies apply to outstanding credit card lines? What factors associated with these lines should the agencies consider?

    f. Collateral Outflow Amount

       The proposed rule would require a covered company to recognize outflows related to changes in collateral positions that could arise during a term of pecuniary stress. Such changes could include posting additional or higher trait collateral, returning excess collateral, accepting lower trait collateral as a substitute for already-posted collateral, or changing collateral value, complete of which could Have a significant repercussion upon a covered company's liquidity profile. The following discussion describes the subcategories of collateral outflow addressed by the proposed rule.

    Changes in pecuniary Condition

       Certain contractual clauses in derivatives and other transaction documents, such as material adverse change clauses and downgrade triggers, are aimed at capturing changes in a covered company's pecuniary condition and, if triggered, would require a covered company to post more collateral or accelerate require features in inescapable obligations that require collateral. During the recent pecuniary crisis, various companies that would exist topic to the proposed rule came under stern liquidity stress as the result of contractual requirements to post collateral following a credit rating downgrade.

       Accordingly, the proposed rule would require a covered company to signify as an outflow 100 percent of complete additional amounts that the covered company would necessity to post or fund as additional collateral under a constrict as a result of a change in its pecuniary condition. A covered company would calculate this outflow amount by evaluating the terms of such contracts and calculating any incremental additional collateral or higher trait collateral that would necessity to exist posted as a result of the triggering of clauses tied to a ratings downgrade or similar event, or change in the covered company's pecuniary condition. If multiple methods of meeting the requirement for additional collateral are available (i.e., providing more collateral of the same sort or replacing existing collateral with higher trait collateral) the banks may consume the lower calculated outflow amount in its calculation.

       45. What are the operational difficulties in identifying the collateral outflows related to changes in pecuniary condition? What, if any, additional factors should exist considered?

    Potential Valuation Changes

       The proposed rule would apply a 20 percent outflow rate to the just value of any assets posted as collateral that are not flat 1 liquid assets to recognize that a covered company likely would exist required to post additional collateral if market prices fell. The agencies are not proposing to apply outflow rates to flat 1 liquid assets that are posted as collateral, as they are not expected to visage mark-to-market losses in times of stress.

    Excess Collateral

       The agencies believe that a covered company's counterparty would not maintain any more collateral at the covered company than is required. Therefore, the proposed rule would apply an outflow rate of 100 percent on the just value of the collateral posted by counterparties that exceeds the current collateral requirement in a governing contract. Under the proposed rule, this category would include unsegregated excess collateral that a covered company may exist required to recur to a counterparty based on the terms of a derivative or other pecuniary agreement and which is not already excluded from the covered company's HQLA amount.

    Contractually-Required Collateral

       The proposed rule would require that 100 percent of the just value of collateral that a covered company is contractually obligated to post, but has not yet posted, exist included in the cash outflows calculation. Where a covered company has not yet posted such collateral, the agencies believe that, in stressed market conditions, a covered company's counterparties would likely require complete contractually required collateral.

    Collateral Substitution

       The proposed rule's collateral substitution outflow amount would exist the differential between the post-haircut just value of HQLA collateral posted by a counterparty and the lower trait HQLA or non-HQLA with which it could exist substituted under an applicable contract. This outflow category assumes that, in a stress scenario, a covered company's counterparty would post the lowest trait collateral permissible under the governing contract. For example, an agreement could require a minimum of flat 2A liquid assets as collateral, but allow a customer to pledge flat 1 or flat 2A liquid assets as collateral to meet such requirement. If a covered company is currently holding a flat 1 liquid asset as collateral, the proposed rule would impose an outflow rate of 15 percent, which results from discounting the equivalent market value of the flat 2A liquid asset. For a flat 2B liquid asset, the amount of the market value included as an outflow would exist 50 percent, which is equal to the market value of the flat 2B liquid asset discounted by 50 percent. If the minimum required collateral under an agreement is comprised of assets that are not HQLA, a covered company currently holding flat 1 assets would exist required to include 100 percent of such assets' market value. The proposed rule provides outflow rates for each workable permutation.

    Derivative Collateral Change

       The proposed rule would require a covered company to consume a two-year look-back approach in calculating its market valuation change outflow amounts for collateral securing its derivative positions. This approach is intended to capture the risk of a covered company facing additional collateral calls as a result of asset expense fluctuations. The risk of such fluctuations can exist particularly acute for a covered company with significant derivative operations and other traffic lines that reckon on collateral postings.

       Under the proposed rule, the derivative collateral amount would equal the absolute value of the largest consecutive 30 calendar-day cumulative net mark-to-market collateral outflow or inflow resulting from derivative transactions realized during the preceding 24 months.

       46. What, if any, additional factors or aspects for collateral outflow amounts should exist considered under the proposal? For example, should the outflow include initial margin collateral flows in addition to variation margin collateral flows? Why or why not? Does the 24 month discover back approach adequately capture heed to market valuation changes, or are there alternative treatments that would better capture this risk?

    g. Brokered Deposit Outflow Amount for Retail Customers or Counterparties

       Under the proposed rule, a brokered deposit would exist defined as any deposit held at the covered company that is obtained directly or indirectly, from or through the mediation or assistance of a deposit broker, as that term is defined in section 29(g) of the Federal Deposit Insurance Act. /56/ The agencies deem brokered deposits for retail customers or counterparties to exist a more volatile form of funding than stable retail deposits, even if deposit insurance coverage is present, because of the structure of the attendant third-party relationship and the potential instability of such deposits during a liquidity stress event. The agencies are likewise concerned that statutory restrictions on inescapable brokered deposits accomplish this form of funding less stable than other deposit types. Specifically, a covered company that is not "well capitalized" or becomes less than "well capitalized" /57/ is topic to prohibitions on accepting funds obtained through a deposit broker. In addition, because the retention of brokered deposits from retail customers or counterparties is highly correlated with a covered company's faculty to legally accept such brokered deposits and continue offering competitive interest rates, the agencies are proposing higher outflow rates for this class of liabilities. The agencies are proposing to assign outflow rates to brokered deposits for retail customers or counterparties based on the sort of account, whether deposit insurance is in place, and the maturity date of the deposit agreement. Outflow rates for retail brokered deposits would exist further subdivided into reciprocal brokered deposits, brokered sweep deposits, and complete other brokered deposits.

       .S.C. 1831f(g). finish FOOTNOTE

       FOOTNOTE 57 As defined by section 38 of the Federal Deposit Insurance Act, 12 U.S.C. 1831o. finish FOOTNOTE

       A reciprocal brokered deposit is defined in the proposed rule as a brokered deposit that a covered company receives through a deposit placement network on a reciprocal basis such that for any deposit received, the covered company (as agent for the depositor) places the same amount with other depository institutions through the network and each member of the network sets the interest rate to exist paid on the entire amount of funds it places with other network members.

       Reciprocal brokered deposits generally Have been observed to exist more stable than typical brokered deposits because each institution within the deposit placement network typically has an established relationship with the retail customer or counterparty making the initial over-the-insurance-limit deposit that necessitates placing the deposit through the network. The proposed rule would therefore apply a 10 percent outflow rate to complete reciprocal brokered deposits at a covered company that are entirely covered by deposit insurance. Reciprocal brokered deposits would receive an outflow rate of 25 percent if less than the entire amount of the deposit is covered by deposit insurance.

       Brokered sweep deposits involve securities firms or investment companies that "sweep" or transfer idle customer funds into deposit accounts at one or more banks. Accordingly, such deposits are defined under the proposed rule as those that are held at the covered company by a customer or counterparty through a contractual feature that automatically transfers to the covered company from another regulated pecuniary company at the proximate of each traffic day amounts identified under the agreement governing the account from which the amount is being transferred. The proposed rule would assign brokered sweep deposits progressively higher outflow rates depending on deposit insurance coverage and the affiliation of the broker sweeping the deposits. Under the proposed rule, brokered sweep deposits that are entirely covered by deposit insurance and that are deposited in accordance with a constrict between a retail customer or counterparty and a covered company, a covered company's consolidated subsidiary, or a company that is a consolidated subsidiary of the same top tier company would exist topic to a 10 percent outflow rate. Brokered sweep deposits that are entirely covered by deposit insurance but that attain not originate with a covered company, a covered company's consolidated subsidiary, or a company that is a consolidated subsidiary of the same top tier company of a covered company would exist assigned a 25 percent outflow rate. Brokered sweep deposits that are not entirely covered by deposit insurance would exist topic to a 40 percent outflow rate because they Have been observed to exist more volatile during stressful periods, as customers search alternative investment vehicles or consume those funds for other purposes.

       Under the proposed rule, complete other brokered deposits would include those brokered deposits that are not reciprocal deposits or are not fraction of a brokered sweep arrangement. These accounts would exist topic to an outflow rate of 10 percent if they develope later than 30 calendar days from a calculation date or 100 percent if they develope 30 calendar days or less from a calculation date.

       47. The agencies search commenters' views on the proposed outflow rates for brokered deposits. Specifically, what are commenters' views on the ambit of outflow rates to brokered deposits? Where commenters disagree with the proposed treatment, delight provide alternative proposals supported by sound analysis as well as the associated advantages and disadvantages for such alternative proposals.

       48. Is it appropriate to assign a particular outflow rate to brokered sweep deposits entirely covered by deposit insurance that originate with a consolidated subsidiary of a covered company, and different outflow rates to other brokered deposits entirely covered by deposit insurance? Why or why not? What different outflow rates, if any should the agencies deem for application to complete brokered sweep deposits entirely covered by deposit insurance? Provide justification and supporting information.

    h. Unsecured Wholesale Funding Outflow Amount

       The proposed rule includes three common categories of unsecured wholesale funding: (1) unsecured wholesale funding transactions; (2) operational deposits; and (3) other unsecured wholesale funding. Funding instruments within these categories are not secured under applicable law by a lien on specifically designated assets. The proposed rule would assign a ambit of outflow rates depending upon whether deposit insurance is covering the funding, the counterparty, and other characteristics that intuition these instruments to exist more or less stable when compared to other instruments in this category. Unsecured wholesale funding instruments typically would include wholesale deposits, /58/ federal funds purchased, unsecured advances from a public sector entity, sovereign entity, or U.S. government enterprise, unsecured notes and bonds, or other unsecured debt securities issued by a covered company (unless sold exclusively in retail markets to retail customers or counterparties), brokered deposits from non-retail customers and any other transactions where an on-balance sheet unsecured credit obligation has been contracted.

       FOOTNOTE 58 inescapable small traffic deposits are included within unsecured retail funding. espy section II.B.2.a.i supra. finish FOOTNOTE

       The agencies are proposing to assign three sunder outflow rates to unsecured wholesale funding that is not an operational deposit. These outflow rates are meant to address the stability of these obligations based on deposit insurance and the nature of the counterparty. Unsecured wholesale funding that is provided by an entity that is not a pecuniary sector company whose securities are excluded from HQLA, as described above, /59/ generally would exist topic to an outflow rate of 20 percent where the entire amount is covered by deposit insurance, whereas deposits that are less than fully covered by deposit insurance or the funding is a brokered deposit would Have a 40 percent outflow rate. However, the proposed rule would require that complete other unsecured wholesale funding, including that provided by a consolidated subsidiary or affiliate of a covered company, exist topic to an outflow rate of 100 percent. This higher outflow rate is associated with the elevated refinancing or roll-over risk in a stressed situation and the interconnectedness of pecuniary institutions.

       FOOTNOTE 59 espy section II.A.2 for a description of these companies. finish FOOTNOTE

       Some covered companies provide services, such as those related to clearing, custody, and cash management services, that require their customers to maintain inescapable deposit balances with them. These services are defined in the proposed rule as operational services, and the corresponding deposits, which are termed "operational deposits," can exist a key component of unsecured wholesale funding for inescapable covered companies. The proposed rule would define an operational deposit as wholesale funding that is required for a covered company to provide operational services, as defined by the proposed rule, as an independent third-party intermediary to the wholesale customer or counterparty providing the unsecured wholesale funding.

       In developing the proposed outflow rates for these assets, the agencies contemplated the nature of operational deposits, their deposit insurance coverage, the customers' rights under their deposit agreements, and the economic incentives associated with customers' accounts. The agencies await operational deposits to Have a lower repercussion on a covered company's liquidity in a stressed environment because these accounts Have significant legal or operational limitations that accomplish significant withdrawals within 30 calendar days unlikely. For example, an entity that relies on a covered company for payroll processing services is not likely to wobble that operation to another covered company during a liquidity stress because it needs stability in providing payroll, regardless of stresses in the broader pecuniary markets.

       Under the proposed rule, operational deposits (other than escrow accounts) that meet the criteria in section 4(b) would exist assigned a 5 percent outflow rate where the entire deposit amount is fully covered by deposit insurance. complete other operational deposits (including complete escrow deposits) would exist assigned a 25 percent outflow rate. The agencies believe that insured operational deposits eligible for inclusion at the lower outflow rate exhibit relatively stable funding characteristics in a 30 calendar-day stress term and Have a reduced likelihood of rapid outflow. Escrow deposits, while operational in nature, are more likely to exist withdrawn upon the incident of a motivating event regardless of deposit insurance coverage, and the 25 percent outflow rate approximately reflects this aspect of escrow deposits. The agencies believe that operational deposits that are not fully covered by deposit insurance likewise are a less stable source of funding for covered companies. The higher outflow rate reflects the higher likelihood of withdrawal by the wholesale customer if any fraction of the deposit is uninsured.

       Balances in these accounts should exist recognized as operational deposits only to the extent that they are critically considerable to customers to utilize operational services offered by a covered company. The agencies believe that amounts beyond that which is critically considerable for the customer's operations should not exist included in the operational deposit category. Section 4(b) of the proposed rule enumerates specific criteria for operational deposits that search to confine operational deposit amounts to those that are held for operational needs, such as by excluding from operational deposits those deposit products that create economic incentives for the customer to maintain funds in the deposit in excess of what is needed for operational services. /60/ The criteria for a deposit to qualify as operational are intended to exist restrictive because the agencies await these deposits to exist truly operational in nature, import they are used for the enumerated operational services related to clearing, custody, and cash management and Have contractual terms that accomplish it unlikely that a counterparty would significantly shift this activity to other organizations within 30 days. The agencies intend to closely monitor classification of operational deposits by covered companies to ensure that the deposits meet these operational criteria.

       FOOTNOTE 60 espy SEC __.4(b) of the proposed rule. finish FOOTNOTE

       Covered companies would exist expected to develop internal policies and methodologies to ensure that amounts categorized as operational deposits are limited to only those funds needed to facilitate the customer's operational service needs. Amounts in excess of what customers Have historically held to facilitate such purposes, such as surge balances, would exist considered excess operational deposits. The agencies believe it would exist inappropriate to give excess operational deposit amounts the same conducive treatment as deposits truly needed for operational purposes, because such treatment would provide opportunities for regulatory arbitrage and warp the proposed liquidity coverage ratio calculation. The agencies, therefore, are proposing that funds in excess of those required for the provision of operational services exist excluded from operational deposit balances and treated on a counterparty-by-counterparty basis as a non-operational deposit. If a covered company is unable to separately identify excess balances and balances needed for operational services, the entire equipoise would exist ineligible for treatment as an operational deposit. The agencies attain not intend for covered companies to allow customers to retain funds in this operational deposit category unless doing so is necessary to utilize the actual services offered by a covered company.

       Consistent with the Basel III LCR, deposits maintained in connection with the provision of prime brokerage services are excluded from operational deposits by focusing on the sort of customer that uses operational services linked to an operational account. Under the proposal, an account cannot qualify as an operational deposit if it is provided in connection with operational services provided to an investment company, non-regulated fund, or investment adviser.

       While prime brokerage clients typically consume operational services related to clearing, custody, and cash management, the agencies believe that balances maintained by prime brokerage clients should not exist considered operational deposits because such balances, owned by hedge funds and other institutional investors, are at risk of margin and other immediate cash calls in stressed scenarios and Have proven to exist more volatile during stress periods. Moreover, after finding themselves with limited access to liquidity in the recent pecuniary crisis, most prime brokerage customers maintain multiple prime brokerage relationships and are able to quickly shift from one covered company to another. Accordingly, the agencies are proposing that deposit balances maintained in connection with the provision of prime brokerage services exist treated the same as unsecured wholesale funding provided by a pecuniary entity or affiliate of a covered company, and thus exist assigned a 100 percent outflow rate.

       Finally, operational deposits exclude correspondent banking arrangements under which a covered company holds deposits owned by another depository institution bank that temporarily places excess funds in an overnight deposit with the covered company. While these deposits may meet some of the operational requirements, historically they are not stable during stressed liquidity events and therefore are assigned a 100 percent outflow rate.

       The proposed rules would assign an outflow rate of 100 percent to complete unsecured wholesale funding not described above.

       49. The agencies solicit commenters' views on the criteria for, and treatment of, operational deposits. What, if any, of the identified operational services should not exist included or what other services not identified should exist included? What, if any, additional conditions should exist considered with respect to the definition of operational deposits? Is the proposed outflow rate consistent with industry experience, particularly during the recent pecuniary crisis? Why or why not?

       50. What are commenters' views on the proposed treatment of excess operational deposits? What operational burdens or other issues may exist associated with identifying excess amounts in operational deposits? What other factors, if any, should exist considered in determining whether to classify an unsecured wholesale deposit as an operational deposit?

       51. Have the agencies appropriately identified prime brokerage services for the purposes of the exclusion of prime brokerage deposits from operational deposits? Should additional categories of customer exist included, such as insurance companies or pension funds? What additional characteristics could identify prime brokerage deposits? Should the proposed rule include a definition of prime brokerage services or prime brokerage deposits and if so, how should those terms exist defined? Is the higher outflow rate for prime brokerage deposits appropriate? Why or why not? What other treatments, if any, should the agencies consider?

    i. Debt Security Outflow Amount

       The agencies are proposing that where a covered company is the primary market maker for its own debt securities, the outflow rate for such funding would equal 3 percent for complete debt securities that are not structured securities that develope outside of a 30 calendar-day stress term and 5 percent for complete debt securities that are structured debt securities that develope outside of a 30 calendar-day stress period. Under the proposal, a structured security would exist a security whose cash stream characteristics depend upon one or more indices or that Have embedded forwards, options, or other derivatives or a security where an investor's investment recur and the issuer's payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows. This outflow is in addition to any outflow that must exist included in net cash outflows due to the maturity of the underlying security during a 30 calendar-day stress period.

       Institutions that accomplish markets in their own debt by quoting buy and sell prices for such instruments implicitly or explicitly witness that they will provide bids on their own debt issuances. In such cases, a covered company may exist called upon to provide liquidity to the market by purchasing its debt securities without having an offsetting sale through which it can readily recoup the cash outflow. Based on historical experience, including the recent pecuniary crisis, in which institutions went to remarkable lengths to ensure the liquidity of their debt securities, the agencies are proposing relatively low outflow rates for a covered company's own debt securities. The proposed rule would differentiate between structured and non-structured debt on the basis of data from stressed institutions that witness the likelihood that structured debt require more liquidity support.

       52. What, if any, other factors should the agencies deem in identifying structured securities and the treatment for such securities under the proposal?

       53. What additional criteria could exist considered in determining whether inescapable unsecured wholesale funding activities should receive a 3 or 5 percent outflow rate associated with primary market maker activity?

    j. Secured Funding and Asset Exchange Outflow Amount

       A secured funding transaction would exist defined under the proposed rule as any funding transaction that gives rise to a cash obligation of a covered company that is secured under applicable law by a lien on specifically designated assets owned by the covered company that gives the counterparty, as holder of the lien, priority over the assets in the case of bankruptcy, insolvency, liquidation, or resolution. In practice, secured funding can exist borrowings from repurchase transactions, Federal Home Loan Bank advances, secured deposits from municipalities or other public sector entities (which typically require collateralization in the United States), loans of collateral to sequel customer short positions, and other secured wholesale funding arrangements with Federal Reserve Banks, regulated pecuniary companies, non-regulated funds, or other counterparties.

       Secured funding could give rise to cash outflows or increased collateral requirements in the form of additional collateral or higher trait collateral to back a given flat of secured debt. In the proposed rule, this risk is reflected through the proposed secured funding transaction outflow rates, which are based on the trait and liquidity of assets posted as collateral under the terms of the transaction. /61/ Secured funding outflow rates progressively extend on a spectrum that ranges from funding secured by levels 1, 2A, and 2B liquid assets to funding secured by assets that are not HQLA. For the reasons described above, the agencies believe that rather than applying an outflow treatment that is based on the nature of the funding provider, the proposed rule would generally apply a treatment that is based on the nature of the collateral securing the funding. The proposed rule recognizes customer short positions covered by other customers' collateral that is not HQLA as secured funding and applies to them an outflow rate of 50 percent. This outflow reflects the agencies' recognition that clients will not exist able to proximate complete short positions without likewise reducing leverage, which would offset a portion of the liquidity outflows associated with closing the short. Section 32(j)(1) of the proposed rule sets forth the outflow rates for various secured funding transactions.

       FOOTNOTE 61 In section __.32(g) of the proposed rule, the agencies Have proposed outflow rates related to changes in collateral. finish FOOTNOTE

       The agencies are proposing to handle borrowings from Federal Reserve Banks the same as other secured funding transactions because these borrowings are not automatically rolled over, and a Federal Reserve Bank may pick not to renew the borrowing. Therefore, an outflow rate based on the collateral posted is most appropriate for purposes of the proposed rule. Should the Federal Reserve Banks present alternative facilities with different terms than the current primary credit facility, or modify the terms on the primary credit facility, outflow rates for the proposed liquidity coverage ratio may exist modified.

       An asset exchange would exist defined under the proposed rule as a transaction that requires the counterparties to exchange non-cash assets at a future date. Asset exchanges could give rise to actual cash outflows or increased collateral requirements if the covered company is contractually obligated to provide higher-quality assets in recur for less liquid, lower-quality assets. In the proposed rule, this risk is reflected through the proposed asset exchange outflow rates, which are based on the HQLA levels of the assets exchanged by each party. Asset exchange outflow rates progressively extend from the covered company posting assets that are the same HQLA flat as the assets it will receive to the covered company posting assets that are of significantly lower trait than the assets it will receive. Section 32(j)(2) of the proposed rule sets forth the outflow rates for various asset exchanges.

       54. The agencies solicit commenters' views on the proposed treatment of secured funding activities. attain commenters correspond with the proposed outflow rates as they relate to the collateral? Why or why not? Should municipal and other public sector entity deposits exist treated as secured funding transactions? What, if any, additional secured-funding risk factors should exist reflected in the rule?

       55. What, if any, alternative treatments should the agencies deem for borrowings from a Federal Reserve Bank? Provide justification and support.

       56. The agencies solicit commenters' views on the proposed treatment of asset exchanges. attain commenters correspond with the proposed outflow rates as they relate to the collateral? Why or why not? What, if any, additional asset exchange risk factors should exist reflected in the rule?

    k. foreign Central Bank Borrowings

       The agencies recognize central banks' lending terms and expectations vary by jurisdiction. Accordingly, for a covered company's borrowings from a particular foreign jurisdiction's central bank, the proposed rule would assign an outflow rate equal to the outflow rate that such jurisdiction has established for central bank borrowings under a minimum liquidity standard. If such an outflow rate has not been established in a foreign jurisdiction, the outflow rate for such borrowings would exist calculated as secured funding pursuant to section 32(j) of the proposed rule.

       57. What, if any, alternative treatments should the agencies deem for foreign central bank borrowings? Should borrowings from foreign central banks exist treated as borrowings from the Federal Reserve Bank? What effects on the conduct of covered companies may the contrast in the treatment between Federal Reserve Bank borrowings and foreign central bank create? What unintended results may occur?

    l. Other Contractual Outflow Amounts

       Under the proposed rule, a covered company would apply a 100 percent outflow rate to amounts payable 30 days or less after a calculation date under applicable contracts that are not otherwise specified in the proposed rule. These would include contractual payments such as salaries and any other payments owed 30 days or less from a calculation date that is not otherwise enumerated in section 32 of the proposed rule.

       58. The Basel III LCR gauge suggests that national authorities provide outflow rates for stable value funds. Should the agencies attain so? Why or why not? If so, delight provide suggestions as to specific outflow rates for stable value funds. delight provide justification and supporting information.

       59. The agencies solicit commenters' views on the proposed criteria for each of the categories discussed above, their proposed outflow rates, and the associated underlying assumptions for the proposed treatment. Are there specific outflow rates for other types of transactions that Have not been included, but should be? If so, delight specify the types of transactions and the applicable outflow rates that should exist applied and the reasons for doing so. Alternatively, are there outflow rates that Have been provided that should not be?

    m. Excluded Amounts for Intragroup Transactions

       Under the proposed rule, a covered company would exclude complete transactions from its outflows and inflows between the covered company and a consolidated subsidiary of the covered company or a consolidated subsidiary of the covered company and another consolidated subsidiary of the covered company. Such transactions are excluded because they involve outflows that would transfer to a company that is itself included in the financials of the covered company, so the inflows and outflows at the consolidated flat should net to zero.

    3. Total Cash Inflow Amount

       As explained above, the total cash inflow amount for the proposed rule's liquidity coverage ratio would exist limited to the lesser of (1) the sum of cash inflow amounts as described in section 33 of the proposed rule; and (2) 75 percent of expected cash outflows as calculated under section 32 of the proposed rule. The total cash inflow amount would exist calculated by multiplying the outstanding balances of contractual receivables and other cash inflows as of a calculation date by the inflow rates described in section 33 of the proposed rule. The proposed rule likewise sets forth inescapable exclusions from cash inflow amounts, as described immediately below.

    a. Items not included as inflows

       The agencies Have identified six categories of items that are explicitly excluded from cash inflows under the proposed rule. These exclusions are meant to ensure that the denominator of the proposed rule's liquidity coverage ratio would not exist influenced by potential cash inflows that may not exist reliable sources of liquidity during a stressed scenario.

       The first excluded category would exist amounts a covered company holds in operational deposits at other regulated pecuniary companies. Because these deposits are for operational purposes, it is unlikely that a covered company would exist able to withdraw these funds in a exigency to meet other liquidity needs, and they are therefore excluded.

       The second excluded category would exist amounts that a covered company expects to receive or is contractually entitled to receive from derivative transactions due to forward sales of mortgage loans and any derivatives that are mortgage commitments. The agencies recognize that covered companies may exist receiving inflows as a result of the sale of mortgages or derivatives that are mortgage commitments within 30 days after the calculation date. However, as discussed above, the agencies believe that inflow amounts from such transactions may not materialize during a liquidity exigency or may exist delayed beyond the 30 calendar-day time horizon. During the recent pecuniary crisis, it was evident that many institutions were unable to rapidly reduce the mortgage lending pipeline even as market require for mortgages slowed.

       The third excluded category would exist amounts arising from any credit or liquidity facility extended to a covered company. The agencies believe that in a stress scenario, inflows from such facilities may not materialize. Furthermore, to the extent that a covered company relies upon inflows from credit facilities with other pecuniary entities, it would extend the interconnectedness within the system and a stress at one institution could result in additional strain throughout the pecuniary system as the company draws down its lines of credit. Because of these likelihoods, a covered company's credit and liquidity facilities would not exist counted as inflows.

       The fourth excluded category would exist the amounts of any asset included in a covered company's HQLA amount under section 21 of the proposed rule and any amount payable to the covered company with respect to those assets. Given that HQLA is already included in the numerator at just market value (as determined under GAAP), including such amounts as inflows would result in double counting. Consistent with the Basel III LCR, this exclusion likewise includes complete HQLA that develope within 30 days.

       The fifth excluded category would exist any amounts payable to the covered company or any outstanding exposure to a customer or counterparty that is a nonperforming asset as of a calculation date, or the covered company has intuition to await will become a nonperforming exposure 30 calendar days or less from a calculation date. Under the proposed rule, a nonperforming exposure is any exposure that is past due by more than 90 calendar days or on nonaccrual. This is meant to recognize that it is not likely that a covered company will receive inflow amounts due from a nonperforming customer.

       The sixth excluded category includes those items that Have no contractual maturity date. The agencies' stress scenario assumes that in a time of liquidity stress a covered company's counterparties will not pay amounts not contractually required in order to maintain liquidity for other purposes.

       60. What, if any, additional items the agencies should explicitly exclude from inflows? What, if any excluded items should the agencies deem including in inflows? delight provide justification and supporting information.

       61. Should the agencies handle credit and liquidity facility inflows differently than proposed? For example, should credit and liquidity facilities extended by inescapable counterparties exist counted as inflows while others are prohibited? If so, which entities and why?

    b. Net Derivatives Cash Inflow Amount

       Under the proposed rule, a covered company's net derivative cash inflow amount would equal the sum of the payments and collateral that a covered company will receive from each counterparty under derivative transactions, less, if topic to a qualifying master netting agreement, the sum of payments and collateral that the covered company will accomplish or deliver to each counterparty. This calculation would incorporate the amounts due from and to counterparties under applicable transactions within 30 calendar days of a calculation date. Netting would exist permissible at the highest flat permitted by a covered company's contracts with its counterparties and could not include outflows where a covered company is already including assets in its HQLA that the counterparty has posted to back those outflows. If the derivatives transactions are not topic to a sound qualifying master netting agreement, then the derivative cash inflow amount for that counterparty would exist included in the net derivative cash inflow amount and the derivative cash outflows for that counterparty would exist included in the net derivative cash outflow amount, without any netting. Net derivative cash inflow should exist calculated in accordance with existing valuation methodologies and expected contractual derivative cash flows. In the event that net derivative cash inflow for a particular counterparty is less than zero, such amount would exist required to exist included in a covered company's net derivative cash outflow amount.

       As with net derivative cash outflow, net derivative cash inflow would not include amounts arising in connection with forward sales of mortgage loans and derivatives that are mortgage commitments topic to section 32(d) of the proposed rule. Net derivative cash inflow would still include derivatives that hedge interest rate risk associated with a mortgage pipeline.

    c. Retail Cash Inflow Amount

       The proposed rule would allow a covered company to signify as inflow 50 percent of complete contractual payments it expects to receive within a particular 30 calendar-day stress term from retail customers and counterparties. This inflow rate is reflective of the agencies' expectation that covered companies will necessity to maintain a portion of their retail lending even during periods of liquidity stress, albeit not to the same extent as they Have in the past. During the recent pecuniary crisis, several stressed institutions tightened their credit standards but continued to accomplish loans to maintain customer relationships and avoid further signaling of distress to the market.

       62. Is the proposed retail cash inflow rate reflective of industry experience? Why or why not? What, if any, additional funding activities could exist included in this category? What, if any, inflow sources should exist excluded from this category?

    d. Unsecured Wholesale Cash Inflow Amount

       The agencies believe that for purposes of this proposed rule, complete wholesale inflows (e.g., principal and interest) from regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, and identified companies (and consolidated subsidiaries of any of the foregoing), and from central banks generally would exist available to meet a covered company's liquidity needs. Therefore, the agencies are proposing to assign such inflows a rate of 100 percent. This rate likewise reflects the assumption that covered companies would halt extending credits to such counterparties when faced with the stress envisioned by the proposed rule.

       However, the agencies likewise await covered companies to maintain ample liquidity to sustain core businesses lines, including continuing to extend credit to retail customers and wholesale customers and counterparties that are not pecuniary sector companies whose securities are excluded from HQLA. /62/ Indeed, one purpose of the proposed rule is to ensure that covered companies Have enough liquidity to sustain such traffic lines during a term of liquidity stress. While the agencies concede that, in times of liquidity stress, covered companies can curtail this activity to a limited extent, due to reputational and traffic considerations, covered companies would likely continue to renew at least a portion of maturing credits and extend some current loans. Therefore, the agencies are proposing to apply an inflow rate of 50 percent for inflows due from wholesale customers or counterparties that are not regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, or identified companies, or consolidated subsidiary of any of the foregoing. With respect to revolving credit facilities, already drawn amounts would not exist included in a covered company's inflow amount, and undrawn amounts would exist treated as outflows under section 32(e) of the proposed rule. This is based upon the agencies' assumption that a covered company's counterparty would not repay funds it is not contractually obligated to repay in a stressed scenario.

       FOOTNOTE 62 espy section II.A.2 for a description of these companies. finish FOOTNOTE

       63. What are commenters' views regarding the differing rates for unsecured wholesale inflows? What, if any, modifications should the agencies deem making to the proposed inflow rates? Provide justification and supporting data.

    e. Securities Cash Inflow Amount

       Inflows from securities owned by a covered company that are not included in a covered company's HQLA amount would receive a 100 percent inflow rate. Accordingly, if an asset is not included in the HQLA amount, complete contractual dividend, interest, and principal payments due and expected to exist paid to a covered company, regardless of their trait or liquidity, would receive an inflow rate of 100 percent.

       64. What, if any, modifications should the agencies deem for the proposed rate for securities inflows? delight provide justification and supporting data.

    f. Secured Lending and Asset Exchange Cash Inflow Amount

       Under the proposed rule, a covered company would exist able to recognize cash inflows from secured lending transactions. The proposed rule would define a secured lending transaction as any lending transaction that gives rise to a cash obligation of a counterparty to a covered company that is secured under applicable law by a lien on specifically designated assets owned by the counterparty and included in the covered company's HQLA amount that gives the covered company, as a holder of the lien, priority over the assets in the case of bankruptcy, insolvency, liquidation, or resolution and includes invert repurchase transactions and securities borrowing transactions. If the specifically designated assets are not included in a covered company's HQLA amount but are still held by the covered company, then the transaction would exist included in the unsecured wholesale cash inflow amount. Secured lending transactions could give rise to cash inflows or additional or higher trait collateral being provided to a covered company to back a given flat of secured debt.

       Under the proposed rule, secured lending transaction inflow rates progressively extend on a spectrum that ranges from funding secured by levels 2B and 2A liquid assets to lending secured by assets that are not HQLA. /63/ A covered company likewise may apply a 50 percent inflow rate to the contractual payments due from customers that Have borrowed on margin, where such loans are collateralized. These inflows could only exist counted if a covered company is not including the collateral it received in its HQLA amount or using it to cover any of its short positions.

       FOOTNOTE 63 espy proposed rule SUBSEC __.33(f)(1)(i)-(iv). finish FOOTNOTE

       Similarly, asset exchanges could give rise to actual cash inflow or decreased collateral requirements if the covered company's counterparty is contractually obligated to provide higher-quality assets in recur for less liquid, lower-quality assets. In the proposed rule, this is reflected through the proposed asset exchange inflow rates, which are based on the HQLA flat of the asset to exist posted by a covered company and the HQLA flat of the asset posted by the counterparty. Asset exchange inflow rates progressively extend on a spectrum that ranges from receiving assets that are the same HQLA flat as the assets a covered company is required to post to receiving assets that are of significantly higher trait than the assets that the covered company is required to post. Section 33(f)(2) of the proposed rule sets forth the inflow amounts for various asset exchanges.

       65. The agencies solicit commenters' views on the treatment of secured lending transaction and asset exchange inflows. What, if any, modifications should the agencies consider? Specifically, what are commenters' perspectives on when an inflow should exist reflected in the ratio's denominator as opposed to the HQLA amount? Provide justification and supporting data.

    III. Liquidity Coverage Ratio Shortfall

       While the Basel III LCR provides that a banking organization is required to maintain an adequate amount of HQLA in order to meet its liquidity needs within a 30 calendar-day stress period, it likewise makes pellucid that it may exist necessary for a banking organization to plunge below the requirement during a term of liquidity stress. The Basel III LCR therefore provides that any supervisory decisions in response to a reduction of a banking organization's liquidity coverage ratio should buy into consideration the objectives and definitions of the Basel III LCR. This provision of the Basel III LCR indicates that supervisory actions should not discourage or deter a banking organization from using its HQLA when necessary to meet unforeseen liquidity needs arising from pecuniary stress that exceeds accustomed traffic fluctuations.

       The agencies are proposing a supervisory framework for addressing a shortfall with respect to the proposed rule's liquidity coverage ratio that is consistent with the intent of having HQLA available for consume during stressed conditions as described in the Basel III LCR. This approach likewise reflects the agencies' views on the appropriate supervisory response to such shortfalls. The agencies understand that there are a wide variety of potential liquidity stresses that a covered company may undergo (both idiosyncratic and market-wide), and that it is difficult to foresee the different circumstances that may precipitate or chaperone such stress scenarios. Therefore, the agencies believe that the regulatory framework for the proposed rule's liquidity coverage ratio must exist sufficiently resilient to allow supervisors to respond appropriately under the given circumstances surrounding a liquidity coverage ratio shortfall.

       Accordingly, the proposed rule sets forth notice and response procedures that would require a covered company to notify its primary Federal supervisor of any liquidity coverage ratio shortfall on any traffic day and provides the necessary flexibility in the supervisory response. In addition, if a covered company's liquidity coverage ratio is below the minimum requirement for three consecutive traffic days or if its supervisor has determined that the covered company is otherwise materially noncompliant with the proposed rule, the covered company would exist required to provide to its supervisor a scheme for remediation. As set forth in section 40(b) of the proposed rule, the remediation scheme would necessity to include an assessment of the covered company's liquidity position, the actions the covered company has taken and will buy to achieve plenary compliance with the proposed rule, an estimated timeframe for achieving compliance, and a commitment to report to its supervisor no less than weekly on progress to achieve compliance with the scheme until plenary compliance with the proposed rule has been achieved.

       A supervisory or enforcement action may exist appropriate based on operational issues at a covered company, whether the violation is a fraction of a pattern, whether the liquidity shortfall was temporary or caused by an unusual event, and the extent of the shortfall or the noncompliance. Depending on the circumstances, a liquidity coverage ratio shortfall below 100 percent would not necessarily result in supervisory action, but, at a minimum, would result in heightened supervisory monitoring. For example, as with other regulatory violations, a covered company may exist required to enter into a written agreement if it does not meet the proposed minimum requirement within an appropriate term of time.

       The agencies would consume existing supervisory processes and procedures for addressing a covered company's liquidity coverage ratio shortfall under the proposed rule. As with existing supervisory actions to address deficiencies in regulatory compliance or in risk management, the actions to exist taken if a covered company's liquidity coverage ratio were to plunge below 100 percent would exist at the discretion of the appropriate Federal banking agency.

       66. Is the current banking supervisory regime enough to address situations in which a covered company needs to utilize its stock of HQLA? Why or why not?

       67. Are there additional supervisory tools that the agencies could reckon on to address situations in which a covered company needs to utilize its stock of HQLA? If so, provide detailed examples and explanations.

       68. Should a de minimis exception to a liquidity coverage ratio shortfall exist implemented, such that a covered company would not necessity to report such a shortfall, provided its liquidity coverage ratio returns to the required minimum within a short grace period? If so, what de minimis amount would exist appropriate and why? What duration of grace term would exist appropriate and why?

       69. Should a covered company exist required to submit a sunder remediation scheme to address its liquidity coverage ratio shortfall or should a modification to existing plans, such as contingency funding plans that include provisions to address the liquidity shortfalls, exist sufficient? delight provide justifications supporting such a view.

       70. Should the supervisory response vary depending on the intuition of the stress event? Why or why not?

       71. Should restrictions exist imposed on the circumstances under which a covered company's liquidity coverage ratio may plunge below 100 percent? If so, provide detailed examples and explanations.

    IV. Transition and Timing

       The agencies are proposing to implement a transition term for the proposed rule's liquidity coverage ratio that is more accelerated than the transition provided in the Basel III Revised LCR Framework. The proposed rule would require covered companies to comply with the minimum liquidity coverage ratio as follows: 80 percent on January 1, 2015, 90 percent on January 1, 2016, and 100 percent on January 1, 2017 and thereafter. The agencies are proposing an accelerated transition term for covered companies to build on the stout liquidity positions these companies Have achieved since the recent pecuniary crisis, thereby providing greater stability to the firms and the pecuniary system. The proposed transition term accounts for the potential implications of the proposed rule on pecuniary markets, credit extension, and economic growth and seeks to equipoise these concerns with the proposed liquidity coverage ratio's considerable role in promoting a more robust and resilient banking sector.

       While these transition periods are intended to facilitate compliance with a current minimum liquidity requirement, the agencies await that covered companies with liquidity coverage ratios at or near the 100 percent minimum generally would not reduce their liquidity coverage during the transition period, as reflected by this proposed requirement. The agencies emphasize that the proposed rule's liquidity coverage ratio is a minimum requirement, and that companies should Have internal liquidity management systems and policies in dwelling to ensure they hold liquid assets enough to meet their liquidity needs that could arise in a term of stress. The transition provisions of the final rule are likewise set forth in table 2 below.

    Table 2: Transition term for the Liquidity Coverage Ratio Transition term Liquidity coverage ratio Calendar year 2015 0.80 Calendar year 2016 0.90 Calendar year 2017 and thereafter 1.00

       72. What concerns, if any, attain commenters Have in meeting the proposed transitional arrangements?

       73. Are the proposed transition periods appropriate for complete covered companies? Are there any situations that may preclude a covered company from achieving compliance within the proposed transition periods? Are there alternatives to the proposed transition periods that would better achieve the agencies' goal of establishing a quantitative liquidity requirement in a timely style while not disrupting lending and the existent economy?

    V. Modified Liquidity Coverage Ratio Applicable to Covered Depository Institution Holding Companies

    A. Overview and Applicability

       As renowned above, complete bank holding companies topic to the proposed rule are topic to enhanced liquidity requirements under section 165 of the Dodd-Frank Act. /64/ Section 165 additionally authorizes the Board to tailor the application of the standards, including differentiating among covered companies on an individual basis or by category. When differentiating among companies for purposes of applying the standards established under section 165, the Board may deem the companies' size, capital structure, riskiness, complexity, pecuniary activities, and any other risk-related factor the Board deems appropriate. /65/

       FOOTNOTE 64 espy 12 U.S.C. 5365(a) and (b). finish FOOTNOTE

       FOOTNOTE 65 espy 12 U.S.C. 5365(a)(2). finish FOOTNOTE

       The Basel III LCR was developed for internationally dynamic banking organizations, taking into account the complexity of their funding sources and structure. While covered depository institution holding companies with at least $50 billion in total consolidated assets that are not covered companies (modified LCR holding companies) are large pecuniary companies with extensive operations in banking, brokerage, and other pecuniary activities, they generally are smaller in size, less knotty in structure, and less reliant on riskier forms of market funding. These companies attend to Have simpler equipoise sheets, better enabling management and supervisors to buy corrective actions more quickly than is the case with an internationally dynamic banking organization in a stressed scenario.

       Accordingly, the Board is tailoring the proposed rule's liquidity coverage ratio requirement as applied to the modified LCR holding companies pursuant to its authority under section 165 of the Dodd-Frank Act. While the Board believes it is considerable for complete bank holding companies topic to section 165 of the Dodd-Frank Act (and similarly situated savings and loan holding companies) to exist topic to a quantitative liquidity requirement as an enhanced prudential standard, it recognizes that these companies would likely not Have as remarkable a systemic repercussion as larger, more knotty companies if they experienced liquidity stress. Therefore, because the options for addressing their liquidity needs under such a scenario (or, if necessary, for resolving such companies) would likely exist less knotty and therefore more likely to exist implemented in a shorter term of time, the Board is proposing to establish a modified liquidity coverage ratio incorporating a shorter (21-calendar day) stress scenario for the modified LCR holding companies.

       The modified liquidity coverage ratio would exist a simpler, less stringent form of the proposed rule's liquidity coverage ratio (for the purposes of this section V, unmodified liquidity coverage ratio) and would Have outflow rates based on a 21calendar-day rather than a 30 calendar-day stress scenario. As a result, outflow rates for the modified liquidity coverage ratio generally would exist 70 percent of the unmodified liquidity coverage ratio's outflow rates. In addition, modified LCR holding companies would not Have to calculate a peak maximum cumulative outflow day for total net cash outflows as required for covered companies topic to the unmodified liquidity coverage ratio. /66/ The requirements of the modified liquidity coverage ratio gauge would otherwise exist the same as the unmodified liquidity coverage ratio as described above, including the proposed HQLA criteria and the calculation of the HQLA amount, and modified LCR holding companies would Have to comply with complete unmodified aspects of the gauge to the same extent as covered companies.

       FOOTNOTE 66 espy supra section II.B. finish FOOTNOTE

    B. High-Quality Liquid Assets

       Modified LCR holding companies generally would calculate their HQLA amount as covered companies attain pursuant to section 21 of the proposed rule. However, when calculating the adjusted liquid asset amounts, modified LCR holding companies would incorporate the unwinding of secured funding and lending transactions, asset exchanges, and collateralized derivative transactions that develope within 21 calendar days (rather than 30 calendar days) of a calculation date. complete other aspects of the calculation would remain the same and assets that attain not qualify as HQLA under the proposed rule could not exist included into the HQLA amount of a modified LCR holding company.

       The adjustments of the modified liquidity coverage ratio reflect the lesser size and complexity of modified LCR holding companies through a shorter stress scenario, which is not pertinent to the trait of liquid assets that a company would necessity to cover its needs during any stress scenario. Therefore, the HQLA amount would exist calculated on the same basis under the modified liquidity coverage ratio as the unmodified liquidity coverage ratio, with the only adjustment reflecting the shorter stress scenario term of the modified liquidity coverage ratio. The policy purposes and rationales for applying the unmodified requirements to covered companies, articulated above, likewise pertain to the application of these requirements to modified LCR holding companies.

    C. Total Net Cash Outflow

       Under the unmodified liquidity coverage ratio, the outflow and inflow rates applied to different sources of outflows and inflows are based on a 30 calendar-day stress scenario. Because the modified liquidity coverage ratio is based on a 21calendar-day stress scenario, 70 percent of each outflow and inflow rate for outflows and inflows without a contractual maturity date, as described above, would exist applied in calculating total net cash outflow under the modified liquidity coverage ratio, as set forth in Table 3. Outflows and inflows with a contractual maturity date would exist calculated on the basis of the maturity (as determined under the proposal and described above) occurring within 21 calendar days from a calculation date, rather than 30 calendar days.

       In addition, as explained above, a modified LCR holding company would not exist required to consume its peak maximum cumulative outflow day as its total net cash outflow amount. Instead, the total net cash outflow amount under the modified liquidity coverage ratio would exist the contrast between a modified LCR company's outflows amounts and inflows amounts, calculated as required under the proposed rule. The Board believes this approach is appropriate as a modified LCR holding company would likely exist less topic on cash inflows to meet the proposed rule's liquidity coverage ratio requirement, thereby reducing its likelihood of having a significant maturity mismatch within a 21 calendar-day stress period. However, as fraction of sound liquidity risk management, modified LCR holding companies should exist sensible of any potential mismatches within the 21 calendar-day stress term and ensure that a enough amount of HQLA is available to meet any net cash outflow gaps throughout the period.

    Table 3--Non-Maturity Modified Outflows Category Agencies' Modified liquidity liquidity coverage coverage ratio ratio outflow outflow amount amount Unsecured retail funding: Stable retail deposits 3.0% 2.1% Other retail deposits 10.0 7.0 Other retail funding 100.0 70.0 Retail brokered deposits: Brokered deposits that develope later than 30 calendar days 10.0 7.0 from the calculation date Reciprocal brokered deposits, entirely covered by deposit 10.0 7.0 insurance Reciprocal brokered deposits, not entirely covered by 25.0 17.5 deposit insurance Brokered sweep deposits, issued by a consolidated 10.0 7.0 subsidiary, entirely covered by deposit insurance Brokered sweep deposits, not issued by a consolidated 25.0 17.5 subsidiary, entirely covered by deposit insurance Brokered sweep deposits, not entirely covered by deposit 40.0 28.0 insurance complete other retail brokered deposits 100.0 70.0 Unsecured wholesale funding: Non-operational, entirely covered by deposit insurance 20.0 14.0 Non-operational, not entirely covered by deposit 40.0 28.0 insurance Non-operational, from pecuniary entity or consolidated 100.0 70.0 subsidiary Operational deposit, entirely covered by deposit 5.0 3.5 insurance Operational deposit, not entirely covered by deposit 25.0 17.5 insurance complete other wholesale funding 100.0 70.0 Commitments: Undrawn credit and liquidity facilities to retail 5.0 3.5 customers Undrawn credit facility to wholesale customers 10.0 7.0 Undrawn liquidity facility to wholesale customers 30.0 21.0 Undrawn credit and liquidity facilities to inescapable 50.0 35.0 banking organizations Undrawn credit facility to pecuniary entities 40.0 28.0 Undrawn liquidity facility to pecuniary entities 100.0 70.0 Undrawn liquidity facilities to SPEs or any other entity 100.0 70.0

       74. What, if any, modifications to the modified liquidity coverage ratio should the Board consider? In particular, what, if any, modifications to incorporation of the 21-calendar day stress term should exist considered? delight provide justification and supporting data.

       75. What, if any, modifications to the calculation of total net cash outflow rate should the Board consider? What versions of the peak maximum cumulative outflow day might exist appropriate for the modified liquidity coverage ratio? delight provide justification and supporting data.

       76. What operational burdens may modified LCR holding companies visage in complying with the proposal? What modifications to transition periods should the Board deem for modified LCR holding companies?

    VI. Solicitation of Comments on consume of simple Language

       Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking agencies to consume simple language in complete proposed and final rules published after January 1, 2000. The Federal banking agencies invite your comments on how to accomplish this proposal easier to understand. For example:

        * Have the agencies organized the material to suit your needs? If not, how could this material exist better organized?

        * Are the requirements in the proposed rule clearly stated? If not, how could the proposed rule exist more clearly stated?

        * Does the proposed rule accommodate language or jargon that is not clear? If so, which language requires clarification?

        * Would a different format (grouping and order of sections, consume of headings, paragraphing) accomplish the proposed rule easier to understand? If so, what changes to the format would accomplish the proposed rule easier to understand?

        * What else could the agencies attain to accomplish the regulation easier to understand?

    VII. Regulatory Flexibility Act

       The Regulatory Flexibility Act /67/ (RFA), requires an agency to either provide an initial regulatory flexibility analysis with a proposed rule for which common notice of proposed rulemaking is required or to certify that the proposed rule will not Have a significant economic repercussion on a substantial number of small entities (defined for purposes of the RFA to include banks with assets less than or equal to $500 million). In accordance with section 3(a) of the RFA, the Board is publishing an initial regulatory flexibility analysis with respect to the proposed rule. The OCC and FDIC are certifying that the proposed rule will not Have a significant economic repercussion on a substantial number of small entities.

       FOOTNOTE 67 5 U.S.C. 601 et seq. finish FOOTNOTE

    Board

       Based on its analysis and for the reasons stated below, the Board believes that this proposed rule will not Have a significant economic repercussion on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis. A final regulatory flexibility analysis will exist conducted after comments received during the public observation term Have been considered.

       The proposed rule is intended to implement a quantitative liquidity requirement consistent with the liquidity coverage ratio gauge established by the Basel Committee on Banking Supervision applicable for bank holding companies, savings and loan holding companies, nonbank pecuniary companies, and situation member banks.

       Under regulations issued by the small traffic Administration, a "small entity" includes firms within the "Finance and Insurance" sector with asset sizes that vary from $7 million or less in assets to $500 million or less in assets. /68/ The Board believes that the Finance and Insurance sector constitutes a reasonable universe of firms for these purposes because such firms generally engage in activities that are pecuniary in nature. Consequently, bank holding companies, savings and loan holding companies, nonbank pecuniary companies, and situation member banks with asset sizes of $500 million or less are small entities for purposes of the RFA.

       FOOTNOTE 68 13 CFR 121.201. finish FOOTNOTE

       As discussed previously in this preamble, the proposed rule generally would apply to Board-regulated institutions with (i) consolidated total assets equal to $250 billion or more; (ii) consolidated total on-balance sheet foreign exposure equal to $10 billion or more; or (iii) consolidated total assets equal to $10 billion or more if that Board-regulated institution is a consolidated subsidiary of a company topic to the proposed rule or if a company topic to the proposed rule owns, controls, or holds with the power to vote 25 percent or more of a class of voting securities of the company. The Board is likewise proposing to implement a modified version of the liquidity coverage ratio as enhanced prudential standards for top-tier bank holding companies and savings and loan holding companies domiciled in the United States that Have consolidated total assets equal to $50 billion or more. The modified version of the liquidity coverage ratio would not apply to (i) a grandfathered unitary savings and loan holding company that derived 50 percent or more of its total consolidated assets or 50 percent of its total revenues on an enterprise-wide basis from activities that are not pecuniary in nature under section 4(k) of the Bank Holding Company Act; (ii) a top-tier bank holding company or savings and loan holding company that is an insurance underwriting company; or (iii) a top-tier bank holding company or savings and loan holding company that had 25 percent or more of its total consolidated assets in subsidiaries that are insurance underwriting companies and either calculates its total consolidated assets in accordance with GAAP or estimates its total consolidated assets, topic to review and adjustment by the Board.

       Companies that are topic to the proposed rule therefore substantially exceed the $500 million asset threshold at which a banking entity is considered a "small entity" under SBA regulations. The proposed rule would apply to a nonbank pecuniary company designated by the Council under section 113 of the Dodd-Frank Act regardless of such a company's asset size. Although the asset size of nonbank pecuniary companies may not exist the determinative factor of whether such companies may pose systemic risks and would exist designated by the Council for supervision by the Board, it is an considerable consideration. /69/ It is therefore unlikely that a pecuniary hard that is at or below the $500 million asset threshold would exist designated by the Council under section 113 of the Dodd-Frank Act because material pecuniary distress at such firms, or the nature, scope, size, scale, concentration, interconnectedness, or merge of its activities, are not likely to pose a threat to the pecuniary stability of the United States.

       FOOTNOTE 69 espy 77 FR 21637 (April 11, 2012). finish FOOTNOTE

       As renowned above, because the proposed rule is not likely to apply to any company with assets of $500 million or less, if adopted in final form, it is not expected to apply to any small entity for purposes of the RFA. The Board does not believe that the proposed rule duplicates, overlaps, or conflicts with any other Federal rules. In light of the foregoing, the Board does not believe that the proposed rule, if adopted in final form, would Have a significant economic repercussion on a substantial number of small entities supervised. Nonetheless, the Board seeks observation on whether the proposed rule would impose undue burdens on, or Have unintended consequences for, small organizations, and whether there are ways such potential burdens or consequences could exist minimized in a manner consistent with standards established by the Basel Committee on Banking Supervision.

    OCC

       The RFA requires an agency to provide an initial regulatory flexibility analysis with a proposed rule or to certify that the rule will not Have a significant economic repercussion on a substantial number of small entities (defined for purposes of the RFA to include banking entities with total assets of $500 million or less and dependence companies with assets of $35.5 million or less).

       As discussed previously in this Supplementary Information section, the proposed rule generally would apply to national banks and Federal savings associations with: (i) consolidated total assets equal to $250 billion or more; (ii) consolidated total on-balance sheet foreign exposure equal to $10 billion or more; or (iii) consolidated total assets equal to $10 billion or more if a national bank or Federal savings association is a consolidated subsidiary of a company topic to the proposed rule. As of December 31, 2012, the OCC supervises 1,291 small entities. Since the proposed rule would only apply to institutions that Have total consolidated total assets or consolidated total on-balance sheet foreign exposure equal to $10 billion or more, the proposed rule would not Have any repercussion on small banks and small Federal savings associations. Therefore, the proposed rule would not Have a significant economic repercussion on a substantial number of small OCC-supervised entities.

       The OCC certifies that the proposed rule would not Have a significant economic repercussion on a substantial number of small national banks and small Federal savings associations.

    FDIC

       The RFA requires an agency to provide an initial regulatory flexibility analysis with a proposed rule or to certify that the rule will not Have a significant economic repercussion on a substantial number of small entities (defined for purposes of the RFA to include banking entities with total assets of $500 million or less).

       As described in section I of this preamble, the proposed rule would establish a quantitative liquidity gauge for internationally dynamic banking organizations with $250 billion or more in total assets or $10 billion or more of on-balance sheet foreign exposure (internationally dynamic banking organizations), covered nonbank companies, and their consolidated subsidiary depository institutions with $10 billion or more in in total consolidated assets. Two FDIC-supervised institutions satisfy the foregoing criteria, and neither is a small entity. As of June 30, 2013, based on a $500 million threshold, 2 (out of 3,363) small situation nonmember banks, and zero (out of 53) small situation savings associations were subsidiaries of a covered company that is topic to the proposed rule. Therefore, the FDIC does not believe that the proposed rule will result in a significant economic repercussion on a substantial number of small entities under its supervisory jurisdiction.

       The FDIC certifies that the NPR would not Have a significant economic repercussion on a substantial number of small FDIC-supervised institutions.

    VIII. Paperwork Reduction Act

    Request for observation on Proposed Information Collection

       Certain provisions of the proposed rule accommodate "collection of information" requirements within the import of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently sound Office of Management and Budget (OMB) control number. The information collection requirements contained in this joint notice of proposed rulemaking are being submitted by the FDIC and OCC to OMB for approval under section 3507(d) of the PRA and section 1320.11 of OMB's implementing regulations (5 CFR fraction 1320). The Board reviewed the proposed rule under the authority delegated to the Board by OMB.

       Comments are invited on:

       (a) Whether the collections of information are necessary for the proper performance of the agencies' functions, including whether the information has practical utility;

       (b) The accuracy of the agencies' estimates of the cross of the information collections, including the validity of the methodology and assumptions used;

       (c) Ways to enhance the quality, utility, and clarity of the information to exist collected;

       (d) Ways to minimize the cross of the information collections on respondents, including through the consume of automated collection techniques or other forms of information technology; and

       (e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

       All comments will become a matter of public record. Commenters may submit comments on aspects of this notice that may impress cross estimates at the addresses listed in the ADDRESSES section. A copy of the comments may likewise exist submitted to the OMB desk officer for the agencies: By mail to U.S. Office of Management and Budget, 725 17th Street NW., #10235, Washington, DC 20503; by facsimile to 202-395-6974; or by email to: [email protected]. Attention, Federal Banking Agency Desk Officer.

    Proposed Information Collection

       Title of Information Collection: Reporting and Recordkeeping Requirements Associated with Liquidity Coverage Ratio: Liquidity Risk Measurement, Standards, and Monitoring.

       Frequency of Response: Event generated.

    Affected Public

    < p>

    &#160;&#160;&#160;OCC: National banks, Federal savings associations, or any operating subsidiary thereof.

    &#160;&#160;&#160;Board: Insured situation member banks, bank holding companies, savings and loan holding companies, nonbank pecuniary companies supervised by the Board, and any subsidiary thereof.

    &#160;&#160;&#160;Abstract: The notice sets forth implementing a quantitative liquidity requirement consistent with the liquidity coverage ratio gauge established by the Basel Committee on Banking Supervision. The proposed rule contains requirements topic to the PRA. The reporting and recordkeeping requirements in the joint proposed rule are create in SEC __.40. Compliance with the information collections would exist mandatory. Responses to the information collections would exist kept confidential and there would exist no mandatory retention term for the proposed collections of information.

    &#160;&#160;&#160;Section __.40 would require that an institution must notify its primary Federal supervisor on any day when its liquidity coverage ratio is calculated to exist less than the minimum requirement in SEC __.10. If an institution's liquidity coverage ratio is below the minimum requirement in SEC __.10 for three consecutive days, or if its primary Federal supervisor has determined that the institution is otherwise materially noncompliant, the institution must promptly provide a scheme for achieving compliance with the minimum liquidity requirement in SEC __.10 and complete other requirements of this fraction to its primary Federal supervisor.

    &#160;&#160;&#160;The liquidity scheme must include, as applicable, (1) an assessment of the institution's liquidity position; (2) the actions the institution has taken and will buy to achieve plenary compliance including a scheme for adjusting the institution's risk profile, risk management, and funding sources in order to achieve plenary compliance and a scheme for remediating any operational or management issues that contributed to noncompliance; (3) an estimated timeframe for achieving plenary compliance; and (4) a commitment to provide a progress report to its primary Federal supervisor at least weekly until plenary compliance is achieved.

    Estimated Paperwork Burden

    &#160;&#160;&#160;Estimated cross Per Response: reporting--0.25 hours; recordkeeping--100 hours.

    &#160;&#160;&#160;Frequency: reporting--5; recordkeeping--1.

    FDIC

    &#160;&#160;&#160;Estimated Number of Respondents: 2.

    &#160;&#160;&#160;Total Estimated Annual Burden: reporting--3 hours; recordkeeping--200 hours.

    OCC

    &#160;&#160;&#160;Estimated Number of Respondents: 3.

    &#160;&#160;&#160;Total Estimated Annual Burden: reporting--4 hours; recordkeeping--300 hours.

    Board

    &#160;&#160;&#160;Estimated Number of Respondents: 3.

    &#160;&#160;&#160;Total Estimated Annual Burden: reporting--4 hours; recordkeeping--300 hours.

    IX. OCC Unfunded Mandates Reform Act of 1995 Determination

    &#160;&#160;&#160;The Unfunded Mandates Reform Act of 1995 (UMRA) requires federal agencies to prepare a budgetary repercussion statement before promulgating a rule that includes a federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more (adjusted annually for inflation) in any one year. The current inflation-adjusted expenditure threshold is $141 million. If a budgetary repercussion statement is required, section 205 of the UMRA likewise requires an agency to identify and deem a reasonable number of regulatory alternatives before promulgating a rule.

    &#160;&#160;&#160;In conducting the regulatory analysis, UMRA requires each federal agency to provide:

    &#160;&#160;&#160; * The text of the draft regulatory action, together with a reasonably detailed description of the necessity for the regulatory action and an explanation of how the regulatory action will meet that need;

    &#160;&#160;&#160; * An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate and, to the extent permitted by law, promotes the President's priorities and avoids undue interference with State, local, and tribal governments in the exercise of their governmental functions;

    &#160;&#160;&#160; * An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety, the protection of the natural environment, and the elimination or reduction of discrimination or bias) together with, to the extent feasible, a quantification of those benefits;

    &#160;&#160;&#160; * An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs;

    &#160;&#160;&#160; * An assessment, including the underlying analysis, of costs and benefits of potentially effectual and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable non-regulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives;

    &#160;&#160;&#160; * An evaluate of any disproportionate budgetary effects of the federal mandate upon any particular regions of the nation or particular State, local, or tribal governments, urban or bucolic or other types of communities, or particular segments of the private sector; and

    &#160;&#160;&#160; * An evaluate of the sequel the rulemaking action may Have on the national economy, if the OCC determines that such estimates are reasonably feasible and that such sequel is pertinent and material.

    Need for Regulatory Action

    &#160;&#160;&#160;Liquidity is defined as a pecuniary institution's capacity to readily meet its cash and collateral obligations at a reasonable cost. As discussed in the preamble of the proposed rule, the recent pecuniary exigency saw unprecedented levels of liquidity back from governments and central banks around the world, suggesting that banks and other pecuniary market participants were not adequately prepared to meet their cash and collateral obligations at reasonable cost. Table 1 provides a list of some of the liquidity facilities provided by the Federal Reserve and the FDIC during the pecuniary crisis. The proposed rule introduces the U.S. implementation of one of the two international liquidity standards (the liquidity coverage ratio and the net stable funding ratio) intended by the Basel Committee on Banking Supervision and the U.S. banking agencies to create a more resilient pecuniary sector by strengthening the banking sector's liquidity risk management.

    &#160;&#160;&#160;A maturity mismatch in a bank's equipoise sheet creates liquidity risk. Banks will typically manage this liquidity risk by holding enough liquid assets to meet their accustomed net outflow demands. The presence of a central bank that can serve as a lender of ultimate resort provides an component of liquidity insurance, which, as is often the case with insurance, creates ethical hazard. Because of the presence of a lender of ultimate resort, banks may not hold socially optimal levels of liquid assets. The LCR buffer established by the proposed rule offsets the ethical hazard to a degree, and lowers the probability of a liquidity exigency and may confine the severity of liquidity crises when they attain occur. Reducing the severity of liquidity crises will likewise confine the damage from negative externalities associated with liquidity crises, e.g., asset fire sales, rapid deleveraging, liquidity hoarding, and reduced credit availability. /70/ Furthermore, the LCR buffer at institutions affected by the proposed rule could capitalize alleviate liquidity stress at smaller institutions that may still hold less than the socially optimal flat of liquid assets because of ongoing ethical hazard problems. As van den finish and Kruidhof (2013) point out, the degree of systemic liquidity stress will ultimately depend on the size of liquidity shocks the pecuniary system encounters, the size of the initial liquidity buffer, regulatory constraints on the buffer, and behavioral reactions by banks and other market participants.

    &#160;&#160;&#160;FOOTNOTE 70 For a discussion of liquidity risk and problems associated with liquidity risk, espy Douglas W. Diamond and Philip H. Dybvig, "Bank Runs, Deposit Insurance, and Liquidity", Journal of Political Economy, Vol. 91, No. 3, June 1983, pp. 401-419 and Jan Willem van den finish and heed Kruidhof, "Modelling the liquidity ratio as macroprudential instrument", Journal of Banking Regulation, Vol. 14, No. 2, 2013, pp. 91-106. finish FOOTNOTE

    &#160;&#160;&#160;Capital and liquidity in the banking sector provide captious buffers to the broader economy. Capital allows the banking sector to absorb unexpected losses from some customers while continuing to extend credit to others. Liquidity in the banking sector allows banks to provide cash to customers who Have unexpected demands for liquidity. The pecuniary exigency of 2007-2009 began with a stern liquidity exigency when the asset-backed commercial paper market (ABCP) essentially froze in August of 2007 and the require for liquidity from the banking sector quickly outstripped its supply of liquid assets. Acharya, Afonso, and Kovner (2013) argue the problems in the ABCP market in 2007 and how foreign and domestic banks scrambled for liquidity in U.S. pecuniary markets. /71/ They find that U.S. banks sought to extend liquidity by increasing deposits and borrowing through Federal Home Loan Bank advances. foreign banks operating in the United States were generally not eligible for Federal Home Loan Bank advances and sought liquidity by decreasing overnight interbank lending and borrowed from the Federal Reserve's Term Auction Facility when that became available.

    &#160;&#160;&#160;FOOTNOTE 71 espy Acharya, Viral V., Gara Afonso, and Anna Kovner, (2013), "How attain Global Banks Scramble for Liquidity? Evidence from the Asset-Backed Commercial Paper Freeze of 2007", Federal Reserve Bank of current York, Staff Report No. 623, August 2013. finish FOOTNOTE

    Table 1--Special Liquidity Facilities Introduced During the 2007-2009 pecuniary exigency Facility or Dates sort of activity Activity levels program Agency Began 11/2008 Purchase of Agency $1.25 trillion Mortgage-Backed guaranteed MBS purchased between Security (MBS) 1/2009 and Purchase Program 3/2010. Term Auction 12/12/2007-3/8/2010 28-day and 84-day Maximum one day Facility loans to depository auction of institutions $142.3 billion on 2/12/2009. Central Bank Began 12/12/2007 1-day to 90-day Maximum one day Liquidity Swap swap lines of extension of Lines credit with inescapable $422.5 billion foreign central on 10/15/2008. banks Primary Dealer Announced 3/16/2008 Overnight loan Maximum of Credit Facility facility for $155.8 billion primary dealers on 9/29/2008. Term Securities Announced 3/11/2008 One-month loans of One-day Maximum Lending Facility Treasury Securities of $75.0 billion to primary dealers on 3/28/2008. Asset-Backed Announced 9/19/2008 Nonrecourse loans One-day Maximum Commercial Paper to pecuniary of $31.1 billion Money Market institutions to on 9/23/2008. Mutual Fund purchase eligible Liquidity ABCP from Money Facility Market Mutual Funds Commercial Paper Announced 10/7/2008 Three-month loans One-day Maximum Funding Facility to specially lent of $56.6 created company billion on that purchased 10/29/2008. commercial paper from eligible issuers Term Asset-Backed Announced Nonrecourse loans Loan Total of Securities Loan 11/25/2008 of up to five years $71.1 billion. Facility to holders of eligible asset-backed securities FDIC Temporary 10/14/2008 Transaction Account TAGP covered Liquidity Guarantee Program $834.5 billion Guarantee Program (TAGP) guaranteed in eligible noninterest-bearing deposits as of transaction 12/31/2009; DGP accounts; Debt peak guarantee of Guarantee Program $348.5 billion (DGP) guaranteed of outstanding inescapable newly debt. issued senior unsecured debt Source: Federal Reserve, FDIC.

    &#160;&#160;&#160;A study by Cornett, McNutt, Strahan, and Tehranian (2011) suggests that banks with less liquid assets at the start of the exigency reduced lending, and that the overall effort by banks to manage the liquidity exigency led to a decrease in credit supply. /72/ Cornett et al likewise point out that through current and existing credit lines, banks provide crucial liquidity to the overall market during a liquidity drought. This sentiment is shared in an earlier study by Gatev and Strahan (2006), which suggests that large firms that consume the commercial paper and bond markets during accustomed times, depend upon banks for liquidity during periods of market stress. Gatev and Strahan likewise provide evidence that banks attend to undergo funding inflows during liquidity crises, for instance, when commercial-paper spreads widen. Gatev and Strahan's results note that when commercial-paper spreads widen, banks extend their reliance on transaction deposits and yields on large certificates-of-deposit attend to fall. They mention these inflows at least partially to implicit government back for banks. They likewise point out that deposit outflows during the remarkable Depression led to a stern credit contraction. /73/

    &#160;&#160;&#160;FOOTNOTE 72 espy Cornett, Marcia Millon, Jamie John McNutt, Philip E. Strahan, and Hassan Tehranian, (2011), "Liquidity risk management and credit supply in the pecuniary crisis," Journal of pecuniary Economics, Vol. 101, pp. 297-312. finish FOOTNOTE

    &#160;&#160;&#160;FOOTNOTE 73 espy Gatev, Evan, and Philip E. Strahan, (2006), "Banks' odds in Hedging Liquidity Risk: Theory and Evidence from the Commercial Paper Market," Journal of Finance, Vol. 61, No. 2, pp. 867-892. finish FOOTNOTE

    &#160;&#160;&#160;This evidence of the role that banks play in providing liquidity during a liquidity exigency highlights the weight of ensuring that banks are properly managing their liquidity risk so that they are able to provide liquidity to others under complete but the most dire of circumstances. The proposed rule does not search to ensure that banks always Have a specific amount of elevated trait liquid assets, because such a requirement could prove counterproductive during a liquidity crisis. Rather, the proposed rule seeks to ensure that inescapable banks Have an amount of elevated trait liquid assets that will enable them to meet their own liquidity needs and the liquidity needs of their customers, even during periods of market stress.

    The Proposed Rule

    &#160;&#160;&#160;The proposed rule would require covered institutions to maintain a liquidity coverage ratio (LCR) according to the transition schedule (shown in table 2) genesis January 1, 2015.

    Table 2--Transition term for the Minimum Liquidity Coverage Ratio Calendar year Minimum liquidity coverage ratio (in percent) 2015 80 2016 90 2017, and beyond 100

    &#160;&#160;&#160;The proposed rule would require covered institutions to calculate their LCR on a daily basis at a set time selected by the institution. The proposed rule does not require a covered institution to report its LCR to the appropriate regulatory agency unless the institution expects a shortfall at its selected reporting time.

    &#160;&#160;&#160;The LCR is equal to the bank's qualifying high-quality liquid assets (HQLA) divided by the bank's total net cash outflows over a prospective 30-day liquidity stress scenario:

    &#160;&#160;&#160;LCR = [(HQLA)/(Total net cash outflow)] * 100.

    &#160;&#160;&#160;HQLA = (Level 1 liquid assets-Required Reserves) + .85*(Level 2A liquid assets) + .5*(Level 2B liquid assets)-(the maximum of the Adjusted or Unadjusted Excess HQLA Amount).

    &#160;&#160;&#160;Total net cash outflow = (Total cash outflow)-(Limited Total cash inflow), where the total net cash outflow is equal to total net cash outflow on the day within the 30-day stress term that has the largest net cumulative cash outflows after limiting cash inflow amounts to 75 percent of cash outflows.

    &#160;&#160;&#160;When the LCR of a covered institution falls below the minimum LCR on a particular day, the institution must notify its primary federal supervisor. If the LCR is below the minimum LCR for three consecutive traffic days, the institution must submit a scheme for remediation of the shortfall to its primary federal supervisor. In addition to public disclosure requirements described later in this section, the proposed rule includes various reporting requirements that a covered institution must accomplish to its primary federal regulator on a intermittent basis.

    &#160;&#160;&#160;Both the Basel III LCR framework and the proposed rule recognize the weight of allowing a covered institution to consume its HQLA when necessary to meet liquidity needs. The proposed rule would require a covered banking organization to report to its appropriate federal banking agency when its liquidity coverage ratio falls below 100 percent on any traffic day. In addition, if a covered banking organization's LCR is below 100 percent for three consecutive traffic days, then the covered banking organization would exist required to provide its supervisory agency with (1) the reasons its liquidity coverage ratio has fallen below the minimum, and (2) a scheme for remediation. While an LCR shortfall will always result in supervisory monitoring, circumstances will impose whether the shortfall results in supervisory enforcement action. Existing supervisory processes and procedures related to regulatory compliance and risk management would capitalize determine the appropriate response to LCR non-compliance by the appropriate federal banking agency.

    Institutions Affected by the Proposed Rule

    &#160;&#160;&#160;The proposed rule would apply to (1) complete internationally dynamic banking organizations with more than $250 billion in total assets or more than $10 billion in on-balance sheet foreign exposure and to their subsidiary depository institutions with $10 billion or more in total consolidated assets, and (2) companies designated for supervision by the Federal Reserve Board by the pecuniary Stability Oversight Council under section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that attain not Have significant insurance operations, and to their consolidated subsidiaries that are depository institutions with $10 billion or more in total consolidated assets. As of June 30, 2013, they evaluate that approximately 16 bank holding companies will exist topic to the proposed rule and 27 subsidiary depository institutions with $10 billion or more in consolidated assets. Of these, 13 holding companies include OCC-supervised institutions (national bank or federal savings association), and within these 13 holding companies, there are a total of 21 OCC-supervised subsidiaries with $10 billion or more in consolidated assets. Thus, they evaluate that 21 OCC-supervised banks will exist topic to the proposed rule.

    Estimated Costs and Benefits of the Proposed Rule

    &#160;&#160;&#160;The proposed rule entails costs in two principal areas: the operational costs associated with establishing programs and procedures to calculate and report the LCR on a daily basis, and the opportunity costs of adjusting the bank's assets and liabilities to comply with the minimum LCR gauge on a daily basis. The benefits of the proposed rule are qualitative in nature, but substantial nonetheless. As described by the Basel Committee on Banking Supervision, "the objective of the LCR is to promote the short-term resilience of the liquidity risk profile of banks." /74/ A principal capitalize of the proposed rule is that, in the guise of the LCR, the proposed rule establishes a measure of liquidity that will exist consistent across time and across covered institutions. A consistent measure of liquidity could prove invaluable to bank supervisors and bank managers during periods of pecuniary market stress.

    &#160;&#160;&#160;FOOTNOTE 74 espy Basel Committee on Banking Supervision (2013), "Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools," Bank for International Settlements, January, p. 1. finish FOOTNOTE

    &#160;&#160;&#160;To capitalize calibrate the LCR proposal and gauge the distance covered institutions may Have to cover to comply with a liquidity rule, the banking agencies Have been conducting a quantitative repercussion study (QIS) by collecting consolidated data from bank holding companies on various components of the LCR and the net stable funding ratio. They consume QIS data from the fourth quarter of 2012, to evaluate the current LCR shortfall across complete OCC-supervised institutions topic to the proposed rule. Institutions facing an LCR shortfall Have three options to meet the minimum LCR standard. They may either (1) extend their holdings of elevated trait liquid assets to extend the numerator of the LCR, (2) decrease the denominator of the LCR by decreasing their outflows, or (3) decrease the denominator by adjusting assets and liabilities to extend their inflows. Of course, they may likewise elect to meet the LCR gauge by pursuing some combination of the three options.

    &#160;&#160;&#160;Data from the QIS for the fourth quarter of 2012 suggests that there is currently a shortfall of approximately $151 billion among OCC-supervised institutions participating in the QIS. OCC-supervised institutions participating in the QIS account for approximately 90 percent of the assets of complete OCC-supervised institutions that they evaluate may exist topic to the proposed rule. To evaluate the potential shortfall among OCC-supervised institutions that are topic to the proposal but attain not participate in the QIS, they apply the ratio of the shortfall to total assets across QIS participants to the total assets across nonparticipants. This system yields an additional shortfall of approximately $9 billion. Combining these two shortfall amounts results in an overall shortfall evaluate of approximately $160 billion for the OCC-supervised institutions' shortfall.

    &#160;&#160;&#160;In pursuing one or more of the options open to them to accomplish up the shortfall and comply with the minimum LCR standard, they anticipate that affected institutions would Have to surrender some defer to proximate the LCR gap. If they elect to proximate the gap by replacing assets that are not HQLAs with HQLAs, they would likely receive a lower rate of recur on the HQLA relative to the non-HQLA. Similarly, they would likely Have to pay a higher rate of interest to either reduce their outflows or extend their inflows. Although they attain not know the exact size of the change in defer necessary to proximate the LCR gap, a recent industry report card by gauge & Poor's suggests that a recent quarter over quarter decline of 4 basis points in net interest margin at large, knotty banks was due in fraction to an extend in HQLA to help Basel III LCRs. /75/ The median year over year overall decline was 21 basis points. Table 3 shows the estimated cost of eliminating the $160 billion LCR shortfall for a ambit of basis points. For the purposes of this analysis, they evaluate that the cost of closing the LCR gap will exist between 10 basis points and 15 basis points. As shown in table 3, this implies that their evaluate of the opportunity cost of changes in the equipoise sheet to satisfy the requirements of the proposed rule will plunge between $160 million and $241 million.

    &#160;&#160;&#160;FOOTNOTE 75 espy gauge & Poor's, RatingsDirect, "Industry Report Card: U.S. Large, knotty Banks' Capital Markets traffic Trumped Traditional Banking in the Second Quarter," August 8, 2013, p. 5. finish FOOTNOTE

    Table 3--LCR opportunity Cost Estimates Basis points Estimated opportunity LCR cost to shortfall eliminate (In shortfall billion) (In million) 0 $160 $0 5 160 80 10 160 160 15 160 241 20 160 321 25 160 401 30 160 481

    &#160;&#160;&#160;In addition to opportunity costs associated with changes in the banks' equipoise sheets, institutions affected by the rule likewise visage compliance costs related to the time and effort necessary to establish programs and procedures to calculate and report the LCR on a daily basis. The principal compliance costs of the proposed rule will involve the costs of establishing procedures and maintaining the programs that calculate the LCR and report the results. These efforts will likewise involve various recordkeeping, reporting, and training requirements.

    &#160;&#160;&#160;In particular, the proposed rule would require each covered institution to:

    &#160;&#160;&#160;1. Establish and maintain a system of controls, oversight, and documentation for its LCR program.

    &#160;&#160;&#160;2. Establish and maintain a program to demonstrate an institutional capacity to liquidate their stock of HQLA, which requires a bank to periodically sell a portion of its HQLAs.

    &#160;&#160;&#160;3. calculate the LCR on a daily basis.

    &#160;&#160;&#160;4. Establish procedures to report an LCR deficiency to the institution's primary federal supervisor.

    &#160;&#160;&#160;Table 4 shows their estimates of the hours needed to complete tasks associated with establishing systems to calculate the LCR, reporting the LCR, and training staff responsible for the LCR. In developing these estimates, they deem the requirements of the proposed rule and the extent to which these requirements extend current traffic practices. Because liquidity measurement and management are already integral components of a bank's ongoing operations, complete institutions affected by the proposed rule already engage in some sort of liquidity measurement activity. Thus, their hour estimates reflect the additional time necessary to build upon current internal practices. /76/ As shown in table 4, they evaluate that pecuniary institutions covered by the proposed rule will expend approximately 2,760 hours during the first year the rule is in effect. Because most of these costs reflect start-up costs associated with the introduction of systems to collect and process the data needed to calculate the LCR, they evaluate that in subsequent years, after LCR systems are in place, annual compliance hours will taper off to 800 hours per year.

    &#160;&#160;&#160;FOOTNOTE 76 For instance, inescapable operational requirements, especially with respect to demonstrating the liquidity of an institution's HQLA portfolio, could further extend operational costs if these requirements attain not reflect current traffic practices. They attain not include these potential costs in their current estimate, and they will discover to observation letters especially with respect to this potential cost for information regarding divergence from current traffic practices. finish FOOTNOTE

    &#160;&#160;&#160;Table 5 shows their overall operational cost evaluate for the proposed rule. This evaluate is the product of their evaluate of the hours required per institution, their evaluate of the number of institutions affected by the rule, and an evaluate of hourly wages. To evaluate hours necessary per activity, they evaluate the number of employees each activity is likely to necessity and the number of days necessary to assess, implement, and impeccable the required activity. To evaluate hourly wages, they reviewed data from May 2012 for wages (by industry and occupation) from the U.S. Bureau of Labor Statistics (BLS) for depository credit intermediation (NAICS 522100). To evaluate compensation costs associated with the proposed rule, they consume $92 per hour, which is based on the middling of the 90th percentile for seven occupations (i.e., accountants and auditors, compliance officers, pecuniary analysts, lawyers, management occupations, software developers, and statisticians) plus an additional 33 percent to cover inflation and private sector benefits. /77/

    &#160;&#160;&#160;FOOTNOTE 77 According to BLS' employer costs of employee benefits data, thirty percent represents the middling private sector costs of employee benefits. finish FOOTNOTE

    &#160;&#160;&#160;As shown in table 5, they evaluate that the overall operational costs of the proposed rule in the first year of implementation will exist approximately $5.3 million. Eliminating start-up costs after the first year, they await annual operational costs in subsequent years to exist approximately $2.0 million. They attain not await the OCC to incur any material costs as a result of the proposed rule. Combining their opportunity cost estimates (between $160 million and $241 million) and their operational cost evaluate ($5.3 million) results in their overall cost evaluate of between $165 million and $246 million for the proposed LCR rule. This evaluate exceeds the threshold for a significant rule under the OCC's Unfunded Mandates Reform Act (UMRA) procedures.

    Table 4--Estimated Annual Hours for LCR Calculation Activity Estimated start-up hours Estimated per institution ongoing hours per institution Develop and maintain 2,400 520 systems for LCR program Daily internal reporting 260 260 of LCR Training 100 20 Total 2,760 800 Table 5--Estimated Operational Costs for LCR Proposal Number of covered Estimated hours Estimated cost per Estimated total OCC institutions per institution operational costs institution 21 2,760 $253,920 $5,332,320

    Potential Costs

    &#160;&#160;&#160;In addition to the anticipated operational and opportunity costs described earlier, the introduction of an LCR as described in the proposed rule could likewise impress some broader markets. In this section they list some aspects of the proposed rule that they attain not await to carry substantial direct costs, but under some circumstances, could impress the intended outcome of the proposed rule. They will discover to observation letters to espy if any of these considerations warrant a more specific inclusion in their analysis of the final rule. These potential costs include:

    &#160;&#160;&#160;1. Potential problems from liquidity hoarding: The proposed rule increases the potential for liquidity hoarding among covered institutions, especially during a crisis. To the extent that this possibility emerges as a significant concern among observation letters, an alternative proposal that allows the LCR to plunge within a ambit of 90-100 percent could alleviate some potential for hoarding. The study by van den finish and Kruidhof (2013) imply several workable policy responses to increasingly stern liquidity shocks. These policy responses include (1) reducing the minimum flat of the LCR, (2) widening the LCR buffer definition to include more assets, and (3) concede central bank funding in the LCR denominator. They likewise point out that in the most stern liquidity stress scenarios, the lender of ultimate resort may still necessity to rescue the pecuniary system. In the event of a liquidity crisis, Diamond and Dybvig (1983) imply that the discount window or expanding deposit insurance on either a temporary or permanent basis are tools that can capitalize preclude bank runs.

    &#160;&#160;&#160;2. No LCR reporting requirement in the proposal: While the LCR proposal does not include a reporting requirement, the agencies scheme to attain so in the future. Any such reporting requirement will exist published for notice and comment. One of the principal benefits of the proposed rule is the introduction of a liquidity risk measurement that is consistent across time and across covered institutions. lore of the LCR and its components across institutions makes the LCR an considerable supervisory utensil and a lack of a standardized reporting requirement would signify a significant loss of the benefits of the proposal. For instance, a decrease in the LCR may occur because of changes in one or more of its three components: a decrease in HQLA, an extend in outflow, or a decrease in inflow. It is considerable for bank supervisors and the lender of ultimate resort to know which component is changing. Bank supervisors likewise necessity to know if the change in the LCR is idiosyncratic or systemic. In particular, bank supervisors should know the number of banks reacting to the liquidity shock and the extent of these reactions to capitalize determine the appropriate policy response, e.g., adjusting LCR requirements, discount window lending, expansion of deposit insurance coverage, or asset purchases. Furthermore, the current LCR formula is not likely to exist a static formula, and banking supervisors will necessity information on the conduct of components in the LCR to calibrate it and update it over time.

    &#160;&#160;&#160;3. Public disclosure: While it is considerable for bank supervisors to exist well informed regarding changes in the LCR and its components, the likelihood of liquidity hoarding increases if banks are required to publicly disclose their LCR. Thus, it is appropriate that the proposed rule does not include a public disclosure requirement, though there may exist some public disclosure at the bank holding company level.

    &#160;&#160;&#160;4. Temporary Gaming Opportunity: The absence of a Net Stable Funding Ratio (NSFR) requirement creates some opportunity to game the LCR with maturity dates.

    &#160;&#160;&#160;5. Challenges to LCR Calibration: The components of the LCR attend to focus on the conduct of assets in the most recent pecuniary exigency and may not capture asset performance during the next liquidity crisis, and the focus of the LCR should exist on future liquidity events.

    &#160;&#160;&#160;6. HQLA Designation Should Enhance Liquidity: Including an asset in eligible HQLA will attend to extend the liquidity of that particular asset, except under stress conditions when there may exist hoarding. Similarly, excluding assets from HQLA will attend to decrease the liquidity of those assets.

    &#160;&#160;&#160;7. Potential for additional operational costs: inescapable operational requirements, especially with respect to demonstrating the liquidity of an institution's HQLA portfolio, could further extend operational costs if these requirements attain not reflect current traffic practices. They will discover to observation letters especially with respect to this potential cost for information regarding divergence from current traffic practices.

    Comparison Between the Proposed Rule and the Baseline

    &#160;&#160;&#160;Under current rules, banks are topic to a common liquidity risk management requirement captured as fraction of the CAMELS rating system. The CAMELS rating system examines capital adequacy, asset quality, management quality, earnings, liquidity, and sensitivity to market risk. According to the Comptroller's Handbook, the liquidity component of this rating system requires banks to Have a sound understanding of the following seven factors affecting a bank's liquidity risk.

    &#160;&#160;&#160;1. Projected funding sources and needs under a variety of market conditions.

    &#160;&#160;&#160;2. Net cash stream and liquid asset positions given planned and unplanned equipoise sheet changes.

    &#160;&#160;&#160;3. Projected borrowing capacity under stable conditions and under adverse scenarios of varying severity and duration.

    &#160;&#160;&#160;4. Highly liquid asset (which is currently defined as U.S. Treasury and Agency securities and excess reserves at the Federal Reserve) and collateral position, including the eligibility and marketability of such assets under a variety of market environments.

    &#160;&#160;&#160;5. Vulnerability to rollover risk, which is the risk that a bank is unable to renew or supplant funds at reasonable costs when they develope or otherwise near due.

    &#160;&#160;&#160;6. Funding requirements for unfunded commitments over various time horizons.

    &#160;&#160;&#160;7. Projected funding costs, as well as earnings and capital positions under varying rate scenarios and market conditions.

    &#160;&#160;&#160;Under the baseline scenario, liquidity requirements incorporated in the CAMELS rating process and the Comptroller's Handbook on liquidity would continue to apply. Thus, under the baseline, institutions affected by the proposed rule would not Have to calculate and report the LCR, and the banks would incur no additional costs related to liquidity risk measurement and management. Under the baseline, however, there would likewise exist no added benefits related to the introduction of a consistent measure of liquidity.

    Comparison Between the Proposed Rule and Alternatives

    &#160;&#160;&#160;With respect to OCC-supervised institutions, the proposed rule would apply to 21 national banks or federal savings associations that are topic to the advanced approaches risk-based capital rules and their subsidiary depository institutions with $10 billion or more in total consolidated assets. For their feasible alternatives, they deem applying the proposed rule using criteria other than consume of the advanced approaches threshold. In particular, they deem the repercussion of the proposal if (1) the rule only applied to institutions designated as global systemically considerable banks (G-SIBs) and their subsidiary depository institutions with $10 billion or more in total consolidated assets, and (2) the rule applied to complete depository institutions with $10 billion or more in total assets.

    &#160;&#160;&#160;The first alternative considers applying the LCR to U.S. bank or pecuniary holding companies identified in November 2012, as global systemically considerable banking organizations by the Basel Committee on Banking Supervision. This implies that the U.S. banking organizations that would exist topic to the proposed rule are Citigroup Inc., JP Morgan Chase & Co., Bank of America Corporation, The Bank of current York Mellon Corporation, Goldman Sachs Group, Inc., Morgan Stanley, situation Street Corporation, and Wells Fargo & Company. Together with their insured depository institution subsidiaries likewise covered by the proposed rule, 12 OCC-supervised banks would exist topic to the proposal.

    &#160;&#160;&#160;Applying the same methodology as before, they evaluate that the LCR shortfall for OCC-supervised G-SIBS would exist approximately $104 billion, which yields an opportunity cost evaluate of between $104 million and $157 million. This opportunity cost evaluate again assumes a 10-15 basis point cost to the equipoise sheet adjustment. Applying the same operational cost evaluate as before to the 12 OCC institutions topic to the proposal under the first alternative scenario, results in an operational cost evaluate of $3.0 million. Combining opportunity and operational costs provides a total cost evaluate of between $107 million and $160 million under the first alternative.

    &#160;&#160;&#160;The second alternative considers applying the LCR to complete U.S. banks with total assets of $10 billion or more. This size threshold would extend the number of OCC-supervised banks to 59, and the estimated LCR shortfall would extend to $179 billion. The opportunity cost evaluate would then exist between $179 million and $269 million. The operational cost evaluate would extend to $15.0 million across the 59 institutions. Thus, the overall cost evaluate under the second alternative would exist between $194 million and $284 million.

    The Unfunded Mandates Reform Act (UMRA) Conclusion

    &#160;&#160;&#160;UMRA requires federal agencies to assess the effects of federal regulatory actions on State, local, and tribal governments and the private sector. As required by the UMRA, their review considers whether the mandates imposed by the rule may result in an expenditure of approximately $141 million or more annually by state, local, and tribal governments, or by the private sector. /78/ Their evaluate of the total cost is between $165 million and $246 million per year. They conclude that the proposed rule will result in private sector costs that exceed the UMRA threshold for a significant rule. /79/

    &#160;&#160;&#160;FOOTNOTE 78 UMRA's aggregate expenditure threshold to determine the significance of regulatory actions is $100 million or more adjusted annually for inflation. Using the GDP deflator published by the Bureau of Economic Analysis, they apply the ratio of the 2012 GDP deflator to the 1995 deflator and multiply by $100 million to arrive at their inflation adjusted UMRA threshold of approximately $141 million. finish FOOTNOTE

    &#160;&#160;&#160;FOOTNOTE 79 UMRA describes costs as expenditures necessary to comply with federal private sector mandates, and could thus exist interpreted to exclude opportunity costs. Their evaluate of direct expenditures (excluding opportunity costs) is approximately $7 million per year. finish FOOTNOTE

    &#160;&#160;&#160;Other than the aforementioned costs to banking organizations affected by the proposed rule, they attain not anticipate any disproportionate effects upon any particular regions of the United States or particular State, local, or tribal governments, or urban or bucolic communities. They attain not await an extend in costs or prices for consumers, individual industries, Federal, State, or local government agencies. Nor attain they await this proposed rule to Have a significant adverse sequel on economic growth, competition, employment, investment, productivity, innovation, or on the faculty of United States-based enterprises to compete with foreign-based enterprises.

    Text of the Proposed Common Rules (All Agencies)

    &#160;&#160;&#160;The text of the proposed common rules appears below:

    PART [INSERT PART]--LIQUIDITY RISK MEASUREMENT, STANDARDS AND MONITORING

    Subpart A common Provisions

    &#160;&#160;&#160; SEC __.1 Purpose and applicability.

    &#160;&#160;&#160; SEC __.2 Reservation of authority.

    &#160;&#160;&#160; SEC __.3 Definitions.

    &#160;&#160;&#160; SEC __.4 inescapable operational requirements.

    Subpart B Liquidity Coverage Ratio

    &#160;&#160;&#160; SEC __.10 Liquidity coverage ratio.

    Subpart C High-Quality Liquid Assets

    &#160;&#160;&#160; SEC __.20 High-Quality Liquid Asset Criteria.

    &#160;&#160;&#160; SEC __.21 High-Quality Liquid Asset Amount.

    Subpart D Total Net Cash Outflow&lt;/p>

    &#160;&#160;&#160; SEC __.30 Total net cash outflow amount.

    &#160;&#160;&#160; SEC __.31 Determining maturity.

    &#160;&#160;&#160; SEC __.32 Outflow amounts.

    &#160;&#160;&#160; SEC __.33 Inflow amounts.

    Subpart E Liquidity Coverage Shortfall

    &#160;&#160;&#160; SEC __.40 Liquidity coverage shortfall: supervisory framework.

    Subpart F Transitions

    &#160;&#160;&#160; SEC __.50 Transitions.

    Text of Common Rule

    Subpart A--General Provisions

    SEC __.1 Purpose and applicability.

    &#160;&#160;&#160;(a) Purpose. This fraction establishes a minimum liquidity gauge and disclosure requirements for inescapable [BANK]s, as set forth herein.

    &#160;&#160;&#160;(b) Applicability. (1) A [BANK] is topic to the minimum liquidity gauge and other requirements of this fraction if:

    &#160;&#160;&#160;(i) It has consolidated total assets equal to $250 billion or more, as reported on the most recent year-end [REGULATORY REPORT];

    &#160;&#160;&#160;(ii) It has consolidated total on-balance sheet foreign exposure at the most recent year-end equal to $10 billion or more (where total on-balance sheet foreign exposure equals total cross-border claims less claims with a head office or guarantor located in another country plus redistributed guaranteed amounts to the country of head office or guarantor plus local country claims on local residents plus revaluation gains on foreign exchange and derivative transaction products, calculated in accordance with the Federal pecuniary Institutions Examination Council (FFIEC) 009 Country Exposure Report);

    &#160;&#160;&#160;(iii) It is a depository institution that is a consolidated subsidiary of a company described in paragraphs (b)(1)(i) or (b)(1)(ii) of this section and has consolidated total assets equal to $10 billion or more, as reported on the most recent year-end Consolidated Report of Condition and Income; or

    &#160;&#160;&#160;(iv) The [AGENCY] has determined that application of this fraction is appropriate in light of the [BANK]'s asset size, flat of complexity, risk profile, scope of operations, affiliation with foreign or domestic covered entities, or risk to the pecuniary system.

    &#160;&#160;&#160;(2) This fraction does not apply to:

    &#160;&#160;&#160;(i) A bridge pecuniary company as defined in 12 U.S.C. 5381(a)(3), or a subsidiary of a bridge pecuniary company; or

    &#160;&#160;&#160;(ii) A current depository institution or a bridge depository institution, as defined in 12 U.S.C. 1813(i).

    &#160;&#160;&#160;(3) A [BANK] topic to a minimum liquidity gauge under this fraction shall remain topic until the [AGENCY] determines in writing that application of this fraction to the [BANK] is not appropriate in light of the [BANK]'s asset size, flat of complexity, risk profile, scope of operations, affiliation with foreign or domestic covered entities, or risk to the pecuniary system.

    &#160;&#160;&#160;(4) In making a determination under paragraphs (b)(1)(iv) or (3) of this section, the [AGENCY] will apply notice and response procedures in the same manner and to the same extent as the notice and response procedures in [12 CFR 3.404 (OCC), 12 CFR 263.202 (Board), and 12 CFR 324.5 (FDIC)].

    SEC __.2 Reservation of authority.

    &#160;&#160;&#160;(a) The [AGENCY] may require a [BANK] to hold an amount of high-quality liquid assets (HQLA) greater than otherwise required under this part, or to buy any other measure to help the [BANK]'s liquidity risk profile, if the [AGENCY] determines that the [BANK]'s liquidity requirements as calculated under this fraction are not commensurate with the [BANK]'s liquidity risks. In making determinations under this section, the [AGENCY] will apply notice and response procedures as set forth in [12 CFR 3.404 (OCC), 12 CFR 263.202 (Board), and 12 CFR 324.5 (FDIC)].

    &#160;&#160;&#160;(b) Nothing in this fraction limits the authority of the [AGENCY] under any other provision of law or regulation to buy supervisory or enforcement action, including action to address unsafe or unsound practices or conditions, deficient liquidity levels, or violations of law.

    SEC __.3 Definitions.

    &#160;&#160;&#160;For the purposes of this part:

    &#160;&#160;&#160;Affiliated depository institution means with respect to a [BANK] that is a depository institution, another depository institution that is a consolidated subsidiary of a bank holding company or savings and loan holding company of which the [BANK] is likewise a consolidated subsidiary.

    &#160;&#160;&#160;Asset exchange means a transaction that requires the counterparties to exchange non-cash assets at a future date. Asset exchanges attain not include secured funding and secured lending transactions.

    &#160;&#160;&#160;Bank holding company is defined in section 2 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1841 et seq.).

    &#160;&#160;&#160;Brokered deposit means any deposit held at the [BANK] that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker as that term is defined in section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f(g)), and includes a reciprocal brokered deposit and a brokered sweep deposit.

    &#160;&#160;&#160;Brokered sweep deposit means a deposit held at the [BANK] by a customer or counterparty through a contractual feature that automatically transfers to the [BANK] from another regulated pecuniary company at the proximate of each traffic day amounts identified under the agreement governing the account from which the amount is being transferred.

    &#160;&#160;&#160;Calculation date means any date on which a [BANK] calculates its liquidity coverage ratio under SEC __.10.

    &#160;&#160;&#160;Client pool security means a security that is owned by a customer of the [BANK] and is not an asset of the [BANK] regardless of a [BANK]'s hypothecation rights to the security.

    &#160;&#160;&#160;Committed means, with respect to a credit facility or liquidity facility, that under the terms of the legally binding agreement governing the facility:

    &#160;&#160;&#160;(1) The [BANK] may not rebuff to extend credit or funding under the facility; or

    &#160;&#160;&#160;(2) The [BANK] may rebuff to extend credit under the facility (to the extent permitted under applicable law) only upon the satisfaction or incident of one or more specified conditions not including change in pecuniary condition of the borrower, customary notice, or administrative conditions.

    &#160;&#160;&#160;Company means a corporation, partnership, limited liability company, depository institution, traffic trust, special purpose entity, association, or similar organization.

    &#160;&#160;&#160;Consolidated subsidiary means a company that is consolidated on a [BANK]'s equipoise sheet under GAAP.

    &#160;&#160;&#160;Covered depository institution holding company means a top-tier bank holding company or savings and loan holding company domiciled in the United States other than:

    &#160;&#160;&#160;(1) A top-tier savings and loan holding company that is:

    &#160;&#160;&#160;(i) A grandfathered unitary savings and loan holding company as defined in section 10(c)(9)(A) of the Home Owners' Loan Act (12 U.S.C. 1461 et seq.); and

    &#160;&#160;&#160;(ii) As of June 30 of the previous calendar year, derived 50 percent or more of its total consolidated assets or 50 percent of its total revenues on an enterprise-wide basis (as calculated under GAAP) from activities that are not pecuniary in nature under section 4(k) of the Bank Holding Company Act (12 U.S.C. 1842(k));

    &#160;&#160;&#160;(2) A top-tier depository institution holding company that is an insurance underwriting company; or

    &#160;&#160;&#160;(3)(i) A top-tier depository institution holding company that, as of June 30 of the previous calendar year, held 25 percent or more of its total consolidated assets in subsidiaries that are insurance underwriting companies (other than assets associated with insurance for credit risk); and

    &#160;&#160;&#160;(ii) For purposes of paragraph 3(i) of this definition, the company must calculate its total consolidated assets in accordance with GAAP, or if the company does not calculate its total consolidated assets under GAAP for any regulatory purpose (including compliance with applicable securities laws), the company may evaluate its total consolidated assets, topic to review and adjustment by the Board.

    &#160;&#160;&#160;Covered nonbank company means a company that the pecuniary Stability Oversight Council has determined under section 113 of the Dodd-Frank Act (12 U.S.C. 5323) shall exist supervised by the Board and for which such determination is still in sequel (designated company) other than:

    &#160;&#160;&#160;(1) A designated company that is an insurance underwriting company; or

    &#160;&#160;&#160;(2)(i) A designated company that, as of June 30 of the previous calendar year, held 25 percent or more of its total consolidated assets in subsidiaries that are insurance underwriting companies (other than assets associated with insurance for credit risk); and

    &#160;&#160;&#160;(ii) For purposes of paragraph 2(i) of this definition, the company must calculate its total consolidated assets in accordance with GAAP, or if the company does not calculate its total consolidated assets under GAAP for any regulatory purpose (including compliance with applicable securities laws), the company may evaluate its total consolidated assets, topic to review and adjustment by the Board.

    &#160;&#160;&#160;Credit facility means a legally binding agreement to extend funds if requested at a future date, including a common working capital facility such as a revolving credit facility for common corporate or working capital purposes. Credit facilities attain not include facilities extended expressly for the purpose of refinancing the debt of a counterparty that is otherwise unable to meet its obligations in the ordinary course of traffic (including through its accustomed sources of funding or other anticipated sources of funding). espy liquidity facility.

    &#160;&#160;&#160;Deposit means "deposit" as defined in section 3( l) of the Federal Deposit Insurance Act (12 U.S.C. 1813( l)) or an equivalent liability of the [BANK] in a jurisdiction outside of the United States.

    &#160;&#160;&#160;Depository institution is defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)).

    &#160;&#160;&#160;Depository institution holding company means a bank holding company or savings and loan holding company.

    &#160;&#160;&#160;Deposit insurance means deposit insurance provided by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).

    &#160;&#160;&#160;Derivative transaction means a pecuniary constrict whose value is derived from the values of one or more underlying assets, reference rates, or indices of asset values or reference rates. Derivative contracts include interest rate derivative contracts, exchange rate derivative contracts, equity derivative contracts, commodity derivative contracts, credit derivative contracts, and any other instrument that poses similar counterparty credit risks. Derivative contracts likewise include unsettled securities, commodities, and foreign currency exchange transactions with a contractual settlement or delivery lag that is longer than the lesser of the market gauge for the particular instrument or five traffic days. A derivative does not include any identified banking product, as that term is defined in section 402(b) of the Legal certitude for Bank Products Act of 2000 (7 U.S.C. 27(b)), that is topic to section 403(a) of that Act (7 U.S.C. 27a(a)).

    &#160;&#160;&#160;Dodd-Frank Act means the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010).

    &#160;&#160;&#160;Foreign withdrawable reserves means a [BANK]'s balances held by or on behalf of the [BANK] at a foreign central bank that are not topic to restrictions on the [BANK]'s faculty to consume the reserves.

    &#160;&#160;&#160;GAAP means generally accepted accounting principles as used in the United States.

    &#160;&#160;&#160;High-quality liquid asset (HQLA) means an asset that meets the requirements for flat 1 liquid assets, flat 2A liquid assets, or flat 2B liquid assets, as set forth in subpart C of this part.

    &#160;&#160;&#160;HQLA amount means the HQLA amount as calculated under SEC __.21.

    &#160;&#160;&#160;Identified company means any company that the [AGENCY] has determined should exist treated the same for the purposes of this fraction as a regulated pecuniary company, investment company, non-regulated fund, pension fund, or investment adviser, based on activities similar in scope, nature, or operations to those entities.

    &#160;&#160;&#160;Individual means a natural person, and does not include a sole proprietorship.

    &#160;&#160;&#160;Investment adviser means a company registered with the SEC as an investment adviser under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.), or foreign equivalents of such company.

    &#160;&#160;&#160;Investment company means a company registered with the SEC under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or foreign equivalents of such company.

    &#160;&#160;&#160;Liquid and readily-marketable means, with respect to a security, that the security is traded in an dynamic secondary market with:

    &#160;&#160;&#160;(1) More than two committed market makers;

    &#160;&#160;&#160;(2) A large number of non-market maker participants on both the buying and selling sides of transactions;

    &#160;&#160;&#160;(3) Timely and observable market prices; and

    &#160;&#160;&#160;(4) A elevated trading volume.

    &#160;&#160;&#160;Liquidity facility means a legally binding agreement to extend funds at a future date to a counterparty that is made expressly for the purpose of refinancing the debt of the counterparty when it is unable to obtain a primary or anticipated source of funding. A liquidity facility includes an agreement to provide liquidity back to asset-backed commercial paper by lending to, or purchasing assets from, any structure, program or conduit in the event that funds are required to repay maturing asset-backed commercial paper. Liquidity facilities exclude facilities that are established solely for the purpose of common working capital, such as revolving credit facilities for common corporate or working capital purposes. espy credit facility.

    &#160;&#160;&#160;Multilateral evolution bank means the International Bank for Reconstruction and Development, the Multilateral Investment Guarantee Agency, the International Finance Corporation, the Inter-American evolution Bank, the Asian evolution Bank, the African evolution Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the European Investment Fund, the Nordic Investment Bank, the Caribbean evolution Bank, the Islamic evolution Bank, the Council of Europe evolution Bank, and any other entity that provides financing for national or regional evolution in which the U.S. government is a shareholder or contributing member or which the [AGENCY] determines poses comparable credit risk.

    &#160;&#160;&#160;Non-regulated fund means any hedge fund or private equity fund whose investment adviser is required to file SEC form PF (Reporting form for Investment Advisers to Private Funds and inescapable Commodity Pool Operators and Commodity Trading Advisors), and any consolidated subsidiary of such fund, other than a small traffic investment company as defined in section 102 of the small traffic Investment Act of 1958 (15 U.S.C. 661 et seq.).

    &#160;&#160;&#160;Nonperforming exposure means an exposure that is past due by more than 90 days or nonaccrual.

    &#160;&#160;&#160;Operational deposit means unsecured wholesale funding that is required for the [BANK] to provide operational services as an independent third-party intermediary to the wholesale customer or counterparty providing the unsecured wholesale funding. In order to recognize a deposit as an operational deposit for purposes of this part, a [BANK] must comply with the requirements of SEC __.4(b) with respect to that deposit.

    &#160;&#160;&#160;Operational services means the following services, provided they are performed as fraction of cash management, clearing, or custody services:

    &#160;&#160;&#160;(1) Payment remittance;

    &#160;&#160;&#160;(2) Payroll administration and control over the disbursement of funds;

    &#160;&#160;&#160;(3) Transmission, reconciliation, and confirmation of payment orders;

    &#160;&#160;&#160;(4) Daylight overdraft;

    &#160;&#160;&#160;(5) Determination of intra-day and final settlement positions;

    &#160;&#160;&#160;(6) Settlement of securities transactions;

    &#160;&#160;&#160;(7) Transfer of recurring contractual payments;

    &#160;&#160;&#160;(8) Client subscriptions and redemptions;

    &#160;&#160;&#160;(9) Scheduled distribution of client funds;

    &#160;&#160;&#160;(10) Escrow, funds transfer, stock transfer, and agency services, including payment and settlement services, payment of fees, taxes, and other expenses; and

    &#160;&#160;&#160;(11) Collection and aggregation of funds.

    &#160;&#160;&#160;Pension fund means an employee capitalize scheme as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income and Security Act of 1974 (29 U.S.C. 1001 et seq.), a "governmental plan" (as defined in 29 U.S.C. 1002(32)) that complies with the tax deferral qualification requirements provided in the Internal Revenue Code, or any similar employee capitalize scheme established under the laws of a foreign jurisdiction.

    &#160;&#160;&#160;Public sector entity means a state, local authority, or other governmental subdivision below the sovereign entity level.

    &#160;&#160;&#160;Publicly traded means, with respect to a security, that the security is traded on:

    &#160;&#160;&#160;(1) Any exchange registered with the SEC as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); or

    &#160;&#160;&#160;(2) Any non-U.S.-based securities exchange that:

    &#160;&#160;&#160;(i) Is registered with, or approved by, a national securities regulatory authority; and

    &#160;&#160;&#160;(ii) Provides a liquid, two-way market for the security in question.

    &#160;&#160;&#160;Qualifying master netting agreement (1) Means a written, legally binding agreement that:

    &#160;&#160;&#160;(i) Creates a single obligation for complete individual transactions covered by the agreement upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty;

    &#160;&#160;&#160;(ii) Provides the [BANK] the right to accelerate, terminate, and proximate out on a net basis complete transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not exist stayed or avoided under applicable law in the pertinent jurisdictions, other than in receivership, conservatorship, resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to U.S. government-sponsored enterprises;

    &#160;&#160;&#160;(iii) Does not accommodate a walkaway clause (that is, a provision that permits a non-defaulting counterparty to accomplish a lower payment than it otherwise would accomplish under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement); and

    &#160;&#160;&#160;(2) In order to recognize an agreement as a qualifying master netting agreement for purposes of this part, a [BANK] must comply with the requirements of SEC __.4(a) with respect to that agreement.

    &#160;&#160;&#160;Reciprocal brokered deposit means a brokered deposit that a [BANK] receives through a deposit placement network on a reciprocal basis, such that:

    &#160;&#160;&#160;(1) For any deposit received, the [BANK] (as agent for the depositors) places the same amount with other depository institutions through the network; and

    &#160;&#160;&#160;(2) Each member of the network sets the interest rate to exist paid on the entire amount of funds it places with other network members.

    &#160;&#160;&#160;Regulated pecuniary company means:

    &#160;&#160;&#160;(1) A bank holding company; savings and loan holding company (as defined in section 10(a)(1)(D) of the Home Owners' Loan Act (12 U.S.C. 1467a(a)(1)(D)); nonbank pecuniary institution supervised by the Board of Governors of the Federal Reserve System under Title I of the Dodd-Frank Act (12 U.S.C. 5323);

    &#160;&#160;&#160;(2) A company 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 headquarters (NIC) Web site, /1/ provided that the top-tier depository institution holding company is topic to a minimum liquidity gauge under this part;

    &#160;&#160;&#160;FOOTNOTE 1 http://www.ffiec.gov/nicpubweb/nicweb/NicHome.aspx. finish FOOTNOTE

    &#160;&#160;&#160;(3) A depository institution; foreign bank; credit union; industrial loan company, industrial bank, or other similar institution described in section 2 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1841 et seq.); national bank, situation member bank, or situation non-member bank that is not a depository institution;

    &#160;&#160;&#160;(4) An insurance company;

    &#160;&#160;&#160;(5) A securities holding company as defined in section 618 of the Dodd-Frank Act (12 U.S.C. 1850a); broker or dealer registered with the SEC under section 15 of the Securities Exchange Act (15 U.S.C. 78o); futures commission merchant as defined in section 1a of the Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.); swap dealer as defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a); or security-based swap dealer as defined in section 3 of the Securities Exchange Act (15 U.S.C. 78c);

    &#160;&#160;&#160;(6) A designated pecuniary market utility, as defined in section 803 of the Dodd-Frank Act (12 U.S.C. 5462); and

    &#160;&#160;&#160;(7) Any company not domiciled in the United States (or a political subdivision thereof) that is supervised and regulated in a manner similar to entities described in paragraphs (1) through (6) of this definition (e.g., a foreign banking organization, foreign insurance company, foreign securities broker or dealer or foreign designated pecuniary market utility).

    &#160;&#160;&#160;(8) A regulated pecuniary institution does not include:

    &#160;&#160;&#160;(i) U.S. government-sponsored enterprises;

    &#160;&#160;&#160;(ii) small traffic investment companies, as defined in section 102 of the small traffic Investment Act of 1958 (15 U.S.C. 661 et seq.);

    &#160;&#160;&#160;(iii) Entities designated as Community evolution pecuniary Institutions (CDFIs) under 12 U.S.C. 4701 et seq. and 12 CFR fraction 1805; or

    &#160;&#160;&#160;(iv) Central banks, the Bank for International Settlements, the International Monetary Fund, or a multilateral evolution bank.

    &#160;&#160;&#160;Reserve Bank balances means:

    &#160;&#160;&#160;(1) Balances held in a master account of the [BANK] at a Federal Reserve Bank, less any balances that are attributable to any respondent of the [BANK] if the [BANK] is a correspondent for a pass-through account as defined in section 204.2(l) of Regulation D (12 CFR 204.2(l));

    &#160;&#160;&#160;(2) Balances held in a master account of a correspondent of the [BANK] that are attributable to the [BANK] if the [BANK] is a respondent for a pass-through account as defined in section 204.2(l) of Regulation D;

    &#160;&#160;&#160;(3) "Excess balances" of the [BANK] as defined in section 204.2(z) of Regulation D (12 CFR 204.2(z)) that are maintained in an "excess equipoise account" as defined in section 204.2(aa) of Regulation D (12 CFR 204.2(aa)) if the [BANK] is an excess equipoise account participant; and

    &#160;&#160;&#160;(4) "Term deposits" of the [BANK] as defined in section 204.2(dd) of Regulation D (12 CFR 204.2(dd)) if such term deposits are offered and maintained pursuant to terms and conditions that:

    &#160;&#160;&#160;(i) Explicitly and contractually permit such term deposits to exist withdrawn upon require prior to the expiration of the term, or that

    &#160;&#160;&#160;(ii) Permit such term deposits to exist pledged as collateral for term or automatically-renewing overnight advances from the Reserve Bank.

    &#160;&#160;&#160;Retail customer or counterparty means a customer or counterparty that is:

    &#160;&#160;&#160;(1) An individual; or

    &#160;&#160;&#160;(2) A traffic customer, but solely if and to the extent that:

    &#160;&#160;&#160;(i) The [BANK] manages its transactions with the traffic customer, including deposits, unsecured funding, and credit facility and liquidity facility transactions, in the same artery it manages its transactions with individuals;

    &#160;&#160;&#160;(ii) Transactions with the traffic customer Have liquidity risk characteristics that are similar to comparable transactions with individuals; and

    &#160;&#160;&#160;(iii) The total aggregate funding raised from the traffic customer is less than $1.5 million.

    &#160;&#160;&#160;Retail deposit means a require or term deposit that is placed with the [BANK] by a retail customer or counterparty, other than a brokered deposit.

    &#160;&#160;&#160;Retail mortgage means a mortgage that is primarily secured by a first or subsequent lien on one-to-four family residential property.

    &#160;&#160;&#160;Savings and loan holding company means a savings and loan holding company as defined in section 10 of the Home Owners' Loan Act (12 U.S.C. 1467a).

    &#160;&#160;&#160;SEC means the Securities and Exchange Commission.

    &#160;&#160;&#160;Secured funding transaction means any funding transaction that gives rise to a cash obligation of the [BANK] to a counterparty that is secured under applicable law by a lien on specifically designated assets owned by the [BANK] that gives the counterparty, as holder of the lien, priority over the assets in the case of bankruptcy, insolvency, liquidation, or resolution, including repurchase transactions, loans of collateral to the [BANK]'s customers to sequel short positions, and other secured loans. Secured funding transactions likewise include borrowings from a Federal Reserve Bank.

    &#160;&#160;&#160;Secured lending transaction means any lending transaction that gives rise to a cash obligation of a counterparty to the [BANK] that is secured under applicable law by a lien on specifically designated assets owned by the counterparty and included in the [BANK]'s HQLA amount that gives the [BANK], as holder of the lien, priority over the assets in the case of bankruptcy, insolvency, liquidation, or resolution, including invert repurchase transactions and securities borrowing transactions. If the specifically designated assets are not included in the [BANK]'s HQLA amount but are still held by the [BANK], then the transaction is an unsecured wholesale funding transaction. espy unsecured wholesale funding.

    &#160;&#160;&#160;Securities Exchange Act means the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).

    &#160;&#160;&#160;Short position means a legally binding agreement to deliver a non-cash asset to a counterparty in the future.

    &#160;&#160;&#160;Sovereign entity means a central government (including the U.S. government) or an agency, department, ministry, or central bank of a central government.

    &#160;&#160;&#160;Special purpose entity means a company organized for a specific purpose, the activities of which are significantly limited to those appropriate to accomplish a specific purpose, and the structure of which is intended to insulate the credit risk of the special purpose entity.

    &#160;&#160;&#160;Stable retail deposit means a retail deposit that is entirely covered by deposit insurance and:

    &#160;&#160;&#160;(1) Is held by the depositor in a transactional account; or

    &#160;&#160;&#160;(2) The depositor that holds the account has another established relationship with the [BANK] such as another deposit account, a loan, bill payment services, or any similar service or product provided to the depositor that the [BANK] demonstrates to the satisfaction of the [AGENCY] would accomplish deposit withdrawal highly unlikely during a liquidity stress event.

    &#160;&#160;&#160;Structured security means a security whose cash stream characteristics depend upon one or more indices or that Have imbedded forwards, options, or other derivatives or a security where an investor's investment recur and the issuer's payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates or cash flows.

    &#160;&#160;&#160;Structured transaction means a secured transaction in which repayment of obligations and other exposures to the transaction is largely derived, directly or indirectly, from the cash stream generated by the pool of assets that secures the obligations and other exposures to the transaction.

    &#160;&#160;&#160;Two-way market means a market where there are independent bona fide offers to buy and sell so that a expense reasonably related to the ultimate sales expense or current bona fide competitive bid and present quotations can exist determined within one day and settled at that expense within a relatively short time frame conforming to trade custom.

    &lt;p>&#160;&#160;&#160;U.S. government-sponsored enterprise means an entity established or chartered by the Federal government to serve public purposes specified by the United States Congress, but whose debt obligations are not explicitly guaranteed by the plenary faith and credit of the United States government.

    &#160;&#160;&#160;Unsecured wholesale funding means a liability or common obligation of the [BANK] to a wholesale customer or counterparty that is not secured under applicable law by a lien on specifically designated assets owned by the [BANK], including a wholesale deposit.

    &#160;&#160;&#160;Wholesale customer or counterparty means a customer or counterparty that is not a retail customer or counterparty.

    &#160;&#160;&#160;Wholesale deposit means a require or term deposit that is provided by a wholesale customer or counterparty.

    SEC ___.4 inescapable operational requirements.

    &#160;&#160;&#160;(a) Qualifying Master netting agreements. In order to recognize an agreement as a qualifying master netting agreement as defined in SEC __.3, a [BANK] must:

    &#160;&#160;&#160;(1) Conduct enough legal review to conclude with a well-founded basis (and maintain enough written documentation of that legal review) that:

    &#160;&#160;&#160;(i) The agreement meets the requirements of the definition of qualifying master netting agreement in SEC __.3; and

    &#160;&#160;&#160;(ii) In the event of a legal challenge (including one resulting from default or from receivership, insolvency, liquidation, or similar proceeding) the pertinent judicial and administrative authorities would find the agreement to exist legal, valid, binding, and enforceable under the law of the pertinent jurisdictions; and

    &#160;&#160;&#160;(2) Establish and maintain written procedures to monitor workable changes in pertinent law and to ensure that the agreement continues to satisfy the requirements of the definition of qualifying master netting agreement in SEC __.3.

    &#160;&#160;&#160;(b) Operational deposits. In order to recognize a deposit as an operational deposit as defined in SEC __.3:

    &#160;&#160;&#160;(1) The deposit must exist held pursuant to a legally binding written agreement, the termination of which is topic to a minimum 30 calendar-day notice term or significant termination costs are borne by the customer providing the deposit if a majority of the deposit equipoise is withdrawn from the operational deposit prior to the finish of a 30 calendar-day notice period;

    &#160;&#160;&#160;(2) There must not exist significant volatility in the middling equipoise of the deposit;

    &#160;&#160;&#160;(3) The deposit must exist held in an account designated as an operational account;

    &#160;&#160;&#160;(4) The customer must hold the deposit at the [BANK] for the primary purpose of obtaining the operational services provided by the [BANK];

    &#160;&#160;&#160;(5) The deposit account must not exist designed to create an economic incentive for the customer to maintain excess funds therein through increased revenue, reduction in fees, or other offered economic incentives;

    &#160;&#160;&#160;(6) The [BANK] must demonstrate that the deposit is empirically linked to the operational services and that it has a methodology for identifying any excess amount, which must exist excluded from the operational deposit amount;

    &#160;&#160;&#160;(7) The deposit must not exist provided in connection with the [BANK]'s provision of operational services to an investment company, non-regulated fund, or investment adviser; and

    &#160;&#160;&#160;(8) The deposits must not exist for correspondent banking arrangements pursuant to which the [BANK] (as correspondent) holds deposits owned by another depository institution bank (as respondent) and the respondent temporarily places excess funds in an overnight deposit with the [BANK].

    Subpart B--Liquidity Coverage Ratio

    SEC __.10 Liquidity coverage ratio.

    &#160;&#160;&#160;(a) Minimum liquidity coverage ratio requirement. topic to the transition provisions in subpart F of this part, a [BANK] must calculate and maintain a liquidity coverage ratio that is equal to or greater than 1.0 on each traffic day in accordance with this part. A [BANK] must calculate its liquidity coverage ratio as of the same time on each traffic day (elected calculation time). The [BANK] must select this time by written notice to the [AGENCY] prior to the effectual date of this rule. The [BANK] may not thereafter change its elected calculation time without written approval from the [AGENCY].

    &#160;&#160;&#160;(b) Calculation of the liquidity coverage ratio. A [BANK]'s liquidity coverage ratio equals:

    &#160;&#160;&#160;(1) The [BANK]'s HQLA amount as of the calculation date, calculated under subpart C of this part; divided by

    &#160;&#160;&#160;(2) The [BANK]'s total net cash outflow amount as of the calculation date, calculated under subpart D of this part.

    Subpart C--High-Quality Liquid Assets

    SEC __.20 High-Quality Liquid Asset Criteria.

    &#160;&#160;&#160;(a) flat 1 liquid assets. An asset is a flat 1 liquid asset if it meets complete of the criteria set forth in paragraphs (d) and (e) of this section and is one of the following types of assets:

    &#160;&#160;&amp;#160;(1) Reserve Bank balances;

    &#160;&#160;&#160;(2) foreign withdrawable reserves;

    &#160;&#160;&#160;(3) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the U.S. Department of the Treasury;

    &#160;&#160;&#160;rity that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a U.S. government agency (other than the U.S. Department of the Treasury) whose obligations are fully and explicitly guaranteed by the plenary faith and credit of the United States government, provided that the security is liquid and readily-marketable;

    &#160;&#160;&#160;(5) A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a sovereign entity, the Bank for International Settlements, the International Monetary Fund, the European Central Bank and European Community, or a multilateral evolution bank, that is:

    &#160;&#160;&#160;(i) Assigned a 0 percent risk weight under subpart D of [AGENCY CAPITAL REGULATION] as of the calculation date;

    &#160;&#160;&#160;(ii) Liquid and readily-marketable;

    &#160;&#160;&#160;(iii) 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;

    &#160;&#160;&#160;(iv) Not an obligation of a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, and not an obligation of a consolidated subsidiary of any of the foregoing; and

    &#160;&#160;&#160;(6) A security issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, a sovereign entity that is not assigned a 0 percent risk weight under subpart D of [AGENCY CAPITAL REGULATION], where the sovereign entity issues the security in its own currency, the security is liquid and readily-marketable, and the [BANK] holds the security in order to meet its net cash outflows in the jurisdiction of the sovereign entity, as calculated under subpart D of [AGENCY CAPITAL REGULATION].

    &#160;&#160;&#160;(b) flat 2A liquid assets. An asset is a flat 2A liquid asset if the asset is liquid and readily-marketable, meets complete of the criteria set forth in paragraphs (d) and (e) of this section, and is one of the following types of assets:

    &#160;&#160;&#160;(1) A security issued by, or guaranteed as to the timely payment of principal and interest by, a U.S. government-sponsored enterprise, that is investment grade under 12 CFR fraction 1 as of the calculation date, provided that the title is senior to preferred stock;

    &#160;&#160;&#160;(2) A security that is issued by, or guaranteed as to the timely payment of principal and interest by, a sovereign entity or multilateral evolution bank that is:

    &#160;&#160;&#160;(i) Not included in flat 1 liquid assets;

    &#160;&#160;&#160;(ii) Assigned no higher than a 20 percent risk weight under subpart D of [AGENCY CAPITAL REGULATION] as of the calculation date;

    &#160;&#160;&#160;(iii) 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 demonstrated by:

    &#160;&#160;&#160;(A) The market expense of the security or equivalent securities of the issuer declining by no more than 10 percent during a 30 calendar-day term of significant stress, or

    &#160;&#160;&#160;(B) The market haircut demanded by counterparties to secured lending and secured funding transactions that are collateralized by the security or equivalent securities of the issuer increasing by no more than 10 percentage points during a 30 calendar-day term of significant stress; and

    &#160;&#160;&#160;(iv) Not an obligation of a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, and not an obligation of a consolidated subsidiary of any of the foregoing.

    &#160;&#160;&#160;(c) flat 2B liquid assets. An asset is a flat 2B liquid asset if the asset is liquid and readily-marketable, meets complete of the criteria set forth in paragraphs (d) and (e) of this section, and is one of the following types of assets:

    &#160;&#160;&#160;(1) A publicly traded corporate debt security that is:

    &#160;&#160;&#160;(i) Investment grade under 12 CFR fraction 1 as of the calculation date;

    &#160;&#160;&#160;(ii) 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, demonstrated by:

    &#160;&#160;&#160;(A) The market expense of the publicly traded corporate debt security or equivalent securities of the issuer declining by no more than 20 percent during a 30 calendar-day term of significant stress, or

    &#160;&#160;&#160;(B) The market haircut demanded by counterparties to secured lending and secured funding transactions that are collateralized by the publicly traded corporate debt security or equivalent securities of the issuer increasing by no more than 20 percentage points during a 30 calendar-day term of significant stress; and

    &#160;&#160;&#160;(iii) Not an obligation of a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, and not an obligation of a consolidated subsidiary of any of the foregoing; or

    &#160;&#160;&#160;(2) A publicly traded common equity partake that is:

    &#160;&#160;&#160;(i) Included in:

    &#160;&#160;&#160;(A) The gauge & Poor's 500 Index;

    &#160;&#160;&#160;(B) An index that a [BANK]'s supervisor in a foreign jurisdiction recognizes for purposes of including equity shares in flat 2B liquid assets under applicable regulatory policy, if the partake is held in that foreign jurisdiction; or

    &#160;&#160;&#160;(C) Any other index for which the [BANK] can demonstrate to the satisfaction of the [AGENCY] that the equities represented in the index are as liquid and readily marketable as equities included in the gauge & Poor's 500 Index;

    &#160;&#160;&#160;(ii) Issued in:

    &#160;&#160;&#160;(A) U.S. dollars; or

    &#160;&#160;&#160;(B) In the currency of a jurisdiction where the [BANK] operates and the [BANK] holds the common equity partake in order to cover its net cash outflows in that jurisdiction, as calculated under subpart D of this part;

    &#160;&#160;&#160;(iii) Issued by an entity whose publicly traded common equity shares Have a proven record as a reliable source of liquidity in repurchase or sales markets during stressed market conditions, demonstrated by:

    &#160;&#160;&#160;(A) The market expense of the security or equivalent securities of the issuer declining by no more than 40 percent during a 30 calendar-day term of significant stress, or

    &#160;&#160;&#160;(B) The market haircut demanded by counterparties to securities borrowing and lending transactions that are collateralized by the publicly traded common equity shares or equivalent securities of the issuer increasing by no more than 40 percentage points, during a 30 calendar day term of significant stress;

    &#160;&#160;&#160;(iv) Not issued by a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, and not issued by a consolidated subsidiary of any of the foregoing;

    &#160;&#160;&#160;(v) If held by a depository institution, is not acquired in satisfaction of a debt previously contracted (DPC); and

    &#160;&#160;&#160;(vi) If held by a consolidated subsidiary of a depository institution, the depository institution can include the publicly traded common equity partake in its flat 2B liquid assets only if the partake is held to cover net cash outflows of the depository institution's consolidated subsidiary, as calculated by the [BANK] under this part.

    &#160;&#160;&#160;(d) Operational requirements for HQLA. With respect to each asset that a [BANK] includes in its HQLA amount, a [BANK] must meet complete of the following operational requirements:

    &#160;&#160;&#160;(1) The [BANK] must Have the operational capability to monetize the HQLA by:

    &#160;&#160;&#160;(i) Implementing and maintaining appropriate procedures and systems to monetize any HQLA at any time in accordance with pertinent gauge settlement periods and procedures; and

    &#160;&#160;&#160;(ii) Periodically monetize a sample of HQLA that reasonably reflects the composition of the [BANK]'s HQLA amount, including with respect to asset type, maturity, and counterparty characteristics;

    &#160;&#160;&#160;(2) The [BANK] must implement policies that require complete HQLA to exist under the control of the management duty in the [BANK] that is charged with managing liquidity risk, and this management duty evidences its control over the HQLA by either:

    &#160;&#160;&#160;(i) Segregating the assets from other assets, with the sole intent to consume the assets as a source of liquidity; or

    &#160;&#160;&#160;(ii) Demonstrating the faculty to monetize the assets and making the proceeds available to the liquidity management duty without conflicting with a traffic risk or management strategy of the [BANK];

    &#160;&#160;&#160;(3) The [BANK] must include in its total net cash outflow amount under subpart D of this fraction the amount of cash outflows that would result from the termination of any specific transaction hedging HQLA included in its HQLA amount; and

    &#160;&#160;&#160;(4) The [BANK] must implement and maintain policies and procedures that determine the composition of the assets in its HQLA amount on a daily basis, by:

    &#160;&#160;&#160;(i) Identifying where its HQLA is held by legal entity, geographical location, currency, custodial or bank account, or other pertinent identifying factor as of the calculation date;

    &#160;&#160;&#160;(ii) Determining HQLA included in the [BANK]'s HQLA amount meet the criteria set forth in this section; and

    &#160;&#160;&#160;(iii) Ensuring the appropriate diversification of the assets included in the [BANK]'s HQLA amount by asset type, counterparty, issuer, currency, borrowing capacity, or other factors associated with the liquidity risk of the assets.

    &#160;&#160;&#160;(e) Generally applicable criteria for HQLA. Assets that a [BANK] includes in its HQLA amount must meet complete of the following criteria:

    &#160;&#160;&#160;(1) The assets are unencumbered in accordance with the following criteria:

    &#160;&#160;&#160;(i) The assets are free of legal, regulatory, contractual, or other restrictions on the faculty of the [BANK] to monetize the asset; and

    &#160;&#160;&#160;(ii) The assets are not pledged, explicitly or implicitly, to secure or to provide credit enhancement to any transaction, except that the assets may exist pledged to a central bank or a U.S. government-sponsored enterprise if potential credit secured by the assets is not currently extended to the [BANK] or its consolidated subsidiaries.

    &#160;&#160;&#160;(2) The asset is not:

    &#160;&#160;&#160;(i) A client pool security held in a segregated account; or

    &#160;&#160;&#160;(ii) Cash received from a secured funding transaction involving client pool securities that were held in a segregated account.

    &#160;&#160;&#160;(3) For HQLA held in a legal entity that is a U.S. consolidated subsidiary of a [BANK]:

    &#160;&#160;&#160;(i) If the U.S. consolidated subsidiary is topic to a minimum liquidity gauge under this part, the [BANK] may include the assets in its HQLA amount up to:

    &#160;&#160;&#160;(A) The amount of net cash outflows of the U.S. consolidated subsidiary calculated by the U.S. consolidated subsidiary for its own minimum liquidity gauge under this part; plus

    &#160;&#160;&#160;(B) Any additional amount of assets, including proceeds from the monetization of assets, that would exist available for transfer to the top-tier [BANK] during times of stress without statutory, regulatory, contractual, or supervisory restrictions, including sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 371c and 12 U.S.C. 371c-1) and Regulation W (12 CFR fraction 223);

    &#160;&#160;&#160;(ii) If the U.S. consolidated subsidiary is not topic to a minimum liquidity gauge under this part, the [BANK] may include the assets in its HQLA amount up to:

    &#160;&#160;&#160;(A) The amount of the net cash outflows of the U.S. consolidated subsidiary as of the 30th calendar day after the calculation date, as calculated by the [BANK] for the [BANK]'s minimum liquidity gauge under this part; plus

    &#160;&#160;&#160;(B) Any additional amount of assets, including proceeds from the monetization of assets, that would exist available for transfer to the top-tier [BANK] during times of stress without statutory, regulatory, contractual, or supervisory restrictions, including sections 23A and 23B of the Federal Reserve Act (12 U.S.C. 371c and 12 U.S.C. 371c-1) and Regulation W (12 CFR fraction 223); and

    &#160;&#160;&#160;(4) For HQLA held by a consolidated subsidiary of the [BANK] that is organized under the laws of a foreign jurisdiction, the [BANK] may only include the assets in its HQLA amount up to:

    &#160;&#160;&#160;(i) The amount of net cash outflows of the consolidated subsidiary as of the 30th calendar day after the calculation date, as calculated by the [BANK] for the [BANK]'s minimum liquidity gauge under this part; plus

    &#160;&#160;&#160;(ii) Any additional amount of assets that are available for transfer to the top-tier [BANK] during times of stress without statutory, regulatory, contractual, or supervisory restrictions.

    &#160;&#160;&#160;(5) The [BANK] must not include in its HQLA amount any assets, or HQLA generated from an asset, that it received under a rehypothecation right if the advantageous owner has a contractual right to withdraw the assets without remuneration at any time during the 30 calendar days following the calculation date;

    &#160;&#160;&#160;(6) The [BANK] has not designated the assets to cover operational costs.

    &#160;&#160;&#160;(f) Maintenance of U.S. HQLA. A [BANK] is generally expected to maintain in the United States an amount and sort of HQLA that is enough to meet its total net cash outflow amount in the United States under subpart D of this part.

    SEC __.21 High-Quality Liquid Asset Amount.

    &#160;&#160;&#160;(a) Calculation of the HQLA amount. As of the calculation date, a [BANK]'s HQLA amount equals:

    &#160;&#160;&#160;(1) The flat 1 liquid asset amount; plus

    &#160;&#160;&#160;(2) The flat 2A liquid asset amount; plus

    &#160;&#160;&#160;(3) The flat 2B liquid asset amount; minus

    &#160;&#160;&#160;(4) The greater of:

    &#160;&#160;&#160;(i) The unadjusted excess HQLA amount; or

    &#160;&#160;&#160;(ii) The adjusted excess HQLA amount.

    &#160;&#160;&#160;(b) Calculation of liquid asset amounts. (1) flat 1 liquid asset amount. The flat 1 liquid asset amount equals the just value (as determined under GAAP) of complete flat 1 liquid assets held by the [BANK] as of the calculation date, less required reserves under section 204.4 of Regulation D (12 CFR 204.4).

    &#160;&#160;&#160;(2) flat 2A liquid asset amount. The flat 2A liquid asset amount equals 85 percent of the just value (as determined under GAAP) of complete flat 2A liquid assets held by the [BANK] as of the calculation date.

    &#160;&#160;&#160;(3) flat 2B liquid asset amount. The flat 2B liquid asset amount equals 50 percent of the just value (as determined under GAAP) of complete flat 2B liquid assets held by the [BANK] as of the calculation date.

    &#160;&#160;&#160;(c) Calculation of the unadjusted excess HQLA amount. As of the calculation date, the unadjusted excess HQLA amount equals:

    &#160;&#160;&#160;(1) The flat 2 cap excess amount; plus

    &#160;&#160;&#160;(2) The flat 2B cap excess amount.

    &#160;&#160;&#160;(d) Calculation of the flat 2 cap excess amount. As of the calculation date, the flat 2 cap excess amount equals the greater of:

    &#160;&#160;&#160;(1) The flat 2A liquid asset amount plus the flat 2B liquid asset amount minus 0.6667 times the flat 1 liquid asset amount; or

    &#160;&#160;&#160;(2) 0.

    &#160;&#160;&#160;(e) Calculation of the flat 2B cap excess amount. As of the calculation date, the flat 2B excess amount equals the greater of:

    &#160;&#160;&#160;(1) The flat 2B liquid asset amount minus the flat 2 cap excess amount minus 0.1765 times the sum of the flat 1 liquid asset amount and the flat 2A liquid asset amount; or

    &#160;&#160;&#160;(2) 0.

    &#160;&#160;&#160;(f) Calculation of adjusted liquid asset amounts. (1) Adjusted flat 1 liquid asset amount. A [BANK]'s adjusted flat 1 liquid asset amount equals the just value (as determined under GAAP) of complete flat 1 liquid assets that would exist held by the [BANK] upon the unwind of any secured funding transaction, secured lending transaction, asset exchange, or collateralized derivatives transaction that matures within 30 calendar days of the calculation date and where the [BANK] and the counterparty exchange HQLA.

    &#160;&#160;&#160;(2) Adjusted flat 2A liquid asset amount. A [BANK]'s adjusted flat 2A liquid asset amount equals 85 percent of the just value (as determined under GAAP) of complete flat 2A liquid assets that would exist held by the [BANK] upon the unwind of any secured funding transaction, secured lending transaction, asset exchange, or collateralized derivatives transaction that matures within 30 calendar days of the calculation date and where the [BANK] and the counterparty exchange HQLA.

    &#160;&#160;&#160;(3) Adjusted flat 2B liquid asset amount. A [BANK]'s adjusted flat 2B liquid asset amount equals 50 percent of the just value (as determined under GAAP) of complete flat 2B liquid assets that would exist held by the [BANK] upon the unwind of any secured funding transaction, secured lending transaction, asset exchange, or collateralized derivatives transaction that matures within 30 calendar days of the calculation date and where the [BANK] and the counterparty exchange HQLA.

    &#160;&#160;&#160;(g) Calculation of the adjusted excess HQLA amount. As of the calculation date, the adjusted excess HQLA amount equals:

    &#160;&#160;&#160;(1) The adjusted flat 2 cap excess amount; plus

    &#160;&#160;&#160;(2) The adjusted flat 2B cap excess amount.

    &#160;&#160;&#160;(h) Calculation of the adjusted flat 2 cap excess amount. As of the calculation date, the adjusted flat 2 cap excess amount equals the greater of:

    &#160;&#160;&#160;(1) The adjusted flat 2A liquid asset amount plus the adjusted flat 2B liquid asset amount minus 0.6667 times the adjusted flat 1 liquid asset amount; or

    &#160;&#160;&#160;(2) 0.

    &#160;&#160;&#160;(i) Calculation of the adjusted flat 2B excess amount. As of the calculation date, the adjusted flat 2B excess liquid asset amount equals the greater of:

    &#160;&#160;&#160;(1) The adjusted flat 2B liquid asset amount minus the adjusted flat 2 cap excess amount minus 0.1765 times the sum of the adjusted flat 1 liquid asset amount and the adjusted flat 2A liquid asset amount; or

    &#160;&#160;&#160;(2) 0.

    Subpart D--Total Net Cash Outflow

    SEC __.30 Total net cash outflow amount.

    &#160;&#160;&#160;As of the calculation date, a [BANK]'s total net cash outflow amount equals the largest contrast between cumulative inflows and cumulative outflows, as calculated for each of the next 30 calendar days after the calculation date as:

    &#160;&#160;&#160;(a) The sum of the outflow amounts calculated under SUBSEC __.32(a) through __.32(g)(2); plus

    &#160;&#160;&#160;(b) The sum of the outflow amounts calculated under SUBSEC __.32(g)(3) through __.32(l) for instruments or transactions that Have no contractual maturity date; plus

    &#160;&#160;&#160;(c) The sum of the outflow amounts for instruments or transactions identified in SUBSEC __.32(g)(3) through __.32(l) that Have a contractual maturity date up to and including that calendar day; less

    &#160;&#160;&#160;(d) The lesser of:

    &#160;&#160;&#160;(1) The sum of the inflow amounts under SUBSEC __.33(b) through __.33(f), where the instrument or transaction has a contractual maturity date up to and including that calendar day, and

    &#160;&#160;&#160;(2) 75 percent of the sum of paragraphs (a), (b), and (c) of this section as calculated for that calendar day.

    SEC __.31 Determining maturity.

    &#160;&#160;&#160;(a) For purposes of calculating its liquidity coverage ratio and the components thereof under this subpart, a [BANK] shall assume an asset or transaction matures:

    &#160;&#160;&#160;(1) With respect to an instrument or transaction topic to SEC __.32, on the earliest workable contractual maturity date or the earliest workable date the transaction could occur, taking into account any option that could accelerate the maturity date or the date of the transaction as follows:

    &#160;&#160;&#160;(i) If an investor or funds provider has an option that would reduce the maturity, the [BANK] must assume that the investor or funds provider will exercise the option at the earliest workable date;

    &#160;&#160;&#160;(ii) If a [BANK] has an option that would extend the maturity of an obligation it issued, the [BANK] must assume the [BANK] will not exercise that option to extend the maturity; and

    &#160;&#160;&#160;(iii) If an option is topic to a contractually defined notice period, the [BANK] must determine the earliest workable contractual maturity date regardless of the notice period.

    &#160;&#160;&#160;(2) With respect to an instrument or transaction topic to SEC __.33, on the latest workable contractual maturity date or the latest workable date the transaction could occur, taking into account any option that could extend the maturity date or the date of the transaction as follows:

    &#160;&#160;&#160;(i) If the borrower has an option that would extend the maturity, the [BANK] must assume that the borrower will exercise the option to extend the maturity to the latest workable date;

    &#160;&#160;&#160;(ii) If a [BANK] has an option that would accelerate a maturity of an instrument or transaction, the [BANK] must assume the [BANK] will not exercise the option to accelerate the maturity; and

    &#160;&#160;&#160;(iii) If an option is topic to a contractually defined notice period, the [BANK] must determine the latest workable contractual maturity date based on the borrower using the entire notice period.

    &#160;&#160;&#160;(b) [Reserved]

    SEC __.32 Outflow amounts.

    &#160;&#160;&#160;(a) Unsecured retail funding outflow amount. A [BANK]'s unsecured retail funding outflow amount as of the calculation date includes (regardless of maturity):

    &#160;&#160;&#160;(1) 3 percent of complete stable retail deposits held at the [BANK];

    &#160;&#160;&#160;(2) 10 percent of complete other retail deposits held at the [BANK]; and

    &#160;&#160;&#160;(3) 100 percent of complete funding from a retail customer or counterparty that is not a retail deposit or a brokered deposit provided by a retail customer or counterparty.

    &#160;&#160;&#160;(b) Structured transaction outflow amount. If a [BANK] is a sponsor of a structured transaction, without respect to whether the issuing entity is consolidated on the [BANK]'s equipoise sheet under GAAP, the structured transaction outflow amount for each structured transaction as of the calculation date is the greater of:

    &#160;&#160;&#160;(1) 100 percent of the amount of complete debt obligations of the issuing entity that develope 30 calendar days or less from such calculation date and complete commitments made by the issuing entity to purchase assets within 30 calendar days or less from such calculation date; and

    &#160;&#160;&#160;(2) The maximum contractual amount of funding the [BANK] may exist required to provide to the issuing entity 30 calendar days or less from such calculation date through a liquidity facility, a recur or repurchase of assets from the issuing entity, or other funding agreement.

    &#160;&#160;&#160;(c) Net derivative cash outflow amount. The net derivative cash outflow amount as of the calculation date is the sum of the net derivative cash outflow, if greater than zero, for each counterparty. The net derivative cash outflow for a counterparty is the sum of the payments and collateral that the [BANK] will accomplish or deliver to the counterparty 30 calendar days or less from the calculation date under derivative transactions less, if the derivative transactions are topic to a qualifying master netting agreement, the sum of the payments and collateral that the [BANK] will receive from the counterparty 30 calendar days or less from the calculation date under derivative transactions. This paragraph does not apply to forward sales of mortgage loans and any derivatives that are mortgage commitments topic to paragraph (d) of this section.

    &#160;&#160;&#160;(d) Mortgage commitment outflow amount. The mortgage commitment outflow amount as of a calculation date is 10 percent of the amount of funds the [BANK] has contractually committed for its own origination of retail mortgages that can exist drawn upon 30 calendar days or less from such calculation date.

    &#160;&#160;&#160;(e) Commitment outflow amount. (1) A [BANK]'s commitment outflow amount as of the calculation date includes:

    &#160;&#160;&#160;(i) 0 percent of the undrawn amount of complete committed credit and liquidity facilities extended by a [BANK] that is a depository institution to an affiliated depository institution that is topic to a minimum liquidity gauge under this part;

    &#160;&#160;&#160;(ii) 5 percent of the undrawn amount of complete committed credit and liquidity facilities extended by the [BANK] to retail customers or counterparties;

    &#160;&#160;&#160;(iii)(A) 10 percent of the undrawn amount of complete committed credit facilities; and

    &#160;&#160;&#160;(B) 30 percent of the undrawn amount of complete committed liquidity facilities extended by the [BANK] to a wholesale customer or counterparty that is not a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, or to a consolidated subsidiary of any of the foregoing;

    &#160;&#160;&#160;(iv) 50 percent of the undrawn amount of complete committed credit and liquidity facilities extended by the [BANK] to depository institutions, depository institution holding companies, and foreign banks, excluding commitments described in paragraph (e)(1)(i) of this section;

    &#160;&#160;&#160;(v)(A) 40 percent of the undrawn amount of complete committed credit facilities; and

    &#160;&#160;&#160;(B) 100 percent of the undrawn amount of complete committed liquidity facilities extended by the [BANK] to a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, or identified company, or to a consolidated subsidiary of any of the foregoing, excluding other commitments described in paragraph (e)(1)(i) or (e)(1)(iv) of this section;

    &#160;&#160;&#160;(vi) 100 percent of the undrawn amount of complete committed credit and liquidity facilities extended to special purpose entities, excluding liquidity facilities included in SEC _.32(b)(2); and

    &#160;&#160;&#160;(vii) 100 percent of the undrawn amount of complete other committed credit or liquidity facilities extended by the [BANK].

    &#160;&#160;&#160;(2) For the purposes of this paragraph (e), the undrawn amount is:

    &#160;&#160;&#160;(i) For a committed credit facility, the entire undrawn amount of the facility that could exist drawn upon within 30 calendar days of the calculation date under the governing agreement, less the amount of flat 1 liquid assets and 85 percent of the amount of flat 2A liquid assets securing the facility; and

    &#160;&#160;&#160;(ii) For a committed liquidity facility, the entire undrawn amount of the facility, that could exist drawn upon within 30 calendar days of the calculation date under the governing agreement, less:

    &#160;&#160;&#160;(A) The amount of flat 1 liquid assets and flat 2A liquid assets securing the portion of the facility that could exist drawn upon within 30 calendar days of the calculation date under the governing agreement; and

    &#160;&#160;&#160;(B) That portion of the facility that supports obligations of the [BANK]'s customer that attain not develope 30 calendar days or less from such calculation date. If facilities Have aspects of both credit and liquidity facilities, the facility must exist classified as a liquidity facility.

    &#160;&#160;&#160;(3) For the purposes of this paragraph (e), the amount of flat 1 liquid assets and flat 2A liquid assets securing a committed credit or liquidity facility is the just value (as determined under GAAP) of flat 1 liquid assets and 85 percent of the just value (as determined under GAAP) of flat 2A liquid assets that are required to exist posted as collateral by the counterparty to secure the facility, provided that the following conditions are met as of the calculation date and for the 30 calendar days following such calculation date:

    &#160;&#160;&#160;(i) The assets pledged meet the criteria for flat 1 liquid assets or flat 2A liquid assets in SEC __.20; and

    &#160;&#160;&#160;(ii) The [BANK] has not included the assets in its HQLA amount under subpart C of this part.

    &#160;&#160;&#160;(f) Collateral outflow amount. The collateral outflow amount as of the calculation date includes:

    &#160;&#160;&#160;(1) Changes in pecuniary condition. 100 percent of complete additional amounts of collateral the [BANK] could exist contractually required to post or to fund under the terms of any transaction as a result of a change in the [BANK]'s pecuniary condition.

    &#160;&#160;&#160;(2) Potential valuation changes. 20 percent of the just value (as determined under GAAP) of any collateral posted to a counterparty by the [BANK] that is not a flat 1 liquid asset.

    &#160;&#160;&#160;(3) Excess collateral. 100 percent of the just value (as determined under GAAP) of collateral that:

    &#160;&#160;&#160;(i) The [BANK] may exist required by constrict to recur to a counterparty because the collateral posted to the [BANK] exceeds the current collateral requirement of the counterparty under the governing contract;

    &#160;&#160;&#160;(ii) Is not segregated from the [BANK]'s other assets; and

    &#160;&#160;&#160;(iii) Is not already excluded from the [BANK]'s HQLA amount under SEC __.20(e)(5).

    &#160;&#160;&#160;(4) Contractually required collateral. 100 percent of the just value (as determined under GAAP) of collateral that the [BANK] is contractually required to post to a counterparty and, as of such calculation date, the [BANK] has not yet posted;

    &#160;&#160;&#160;(5) Collateral substitution. (i) 0 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 1 liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as flat 1 liquid assets without the consent of the [BANK];

    &#160;&#160;&#160;(ii) 15 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 1 liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as flat 2A liquid assets without the consent of the [BANK];

    &#160;&#160;&#160;(iii) 50 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 1 liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as flat 2B liquid assets without the consent of the [BANK];

    &#160;&#160;&#160;(iv) 100 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 1 liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that attain not qualify as HQLA without the consent of the [BANK];

    &#160;&#160;&#160;(v) 0 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 2A liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as flat 1 or flat 2A liquid assets without the consent of the [BANK];

    &#160;&#160;&#160;(vi) 35 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 2A liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as flat 2B liquid assets without the consent of the [BANK];

    &#160;&#160;&#160;(vii) 85 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 2A liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that attain not qualify as HQLA without the consent of the [BANK];

    &#160;&#160;&#160;(viii) 0 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 2B liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that qualify as HQLA without the consent of the [BANK];

    &#160;&#160;&#160;(ix) 50 percent of the just value of collateral posted to the [BANK] by a counterparty that the [BANK] includes in its HQLA amount as flat 2B liquid assets, where under the constrict governing the transaction the counterparty may supplant the posted collateral with assets that attain not qualify as HQLA without the consent of the [BANK]; and

    &#160;&#160;&#160;(6) Derivative collateral change. The absolute value of the largest 30-consecutive calendar day cumulative net mark-to-market collateral outflow or inflow resulting from derivative transactions realized during the preceding 24 months.

    &#160;&#160;&#160;(g) Brokered deposit outflow amount for retail customers or counterparties. The brokered deposit outflow amount for retail customers or counterparties as of the calculation date includes:

    &#160;&#160;&#160;(1) 100 percent of complete brokered deposits at the [BANK] provided by a retail customer or counterparty that are not described in paragraphs (g)(3) through (g)(7) of this section and which develope 30 calendar days or less from the calculation date;

    &#160;&#160;&#160;(2) 10 percent of complete brokered deposits at the [BANK] provided by a retail customer or counterparty that are not described in paragraphs (g)(3) through (g)(7) of this section and which develope later than 30 calendar days from the calculation date;

    &#160;&#160;&#160;(3) 10 percent of complete reciprocal brokered deposits at the [BANK] provided by a retail customer or counterparty, where the entire amount is covered by deposit insurance;

    &#160;&#160;&#160;(4) 25 percent of complete reciprocal brokered deposits at the [BANK] provided by a retail customer or counterparty, where less than the entire amount is covered by deposit insurance;

    &#160;&#160;&#160;(5) 10 percent of complete brokered sweep deposits at the [BANK] provided by a retail customer or counterparty:

    &#160;&#160;&#160;(i) That are deposited in accordance with a constrict between the retail customer or counterparty and the [BANK], a consolidated subsidiary of the [BANK], or a company that is a consolidated subsidiary of the same top-tier company of which the [BANK] is a consolidated subsidiary; and

    &#160;&#160;&#160;(ii) Where the entire amount of the deposits is covered by deposit insurance;

    &#160;&#160;&#160;(6) 25 percent of complete brokered_sweep deposits at the [BANK] provided by a retail customer or counterparty:

    &#160;&#160;&#160;(i) That are not deposited in accordance with a constrict between the retail customer or counterparty and the [BANK], a consolidated subsidiary of the [BANK], or a company that is a consolidated subsidiary of the same top-tier company of which the [BANK] is a consolidated subsidiary; and

    &#160;&#160;&#160;(ii) Where the entire amount of the deposits is covered by deposit insurance; and

    &#160;&#160;&#160;(7) 40 percent of complete brokered sweep deposits at the [BANK] provided by a retail customer or counterparty where less than the entire amount of the deposit equipoise is covered by deposit insurance.

    &#160;&#160;&#160;(h) Unsecured wholesale funding outflow amount. A [BANK]'s unsecured wholesale funding outflow amount as of the calculation date includes:

    &#160;&#160;&#160;(1) For unsecured wholesale funding that is not an operational deposit and is not provided by a regulated pecuniary company, investment company, non-regulated fund, pension fund, investment adviser, identified company, or consolidated subsidiary of any of the foregoing:

    &#160;&#160;&#160;(i) 20 percent of complete such funding (not including brokered deposits), where the entire amount is covered by deposit insurance;

    &#160;&#160;&#160;(ii) 40 percent of complete such funding, where:

    &#160;&#160;&#160;(A) Less than the entire amount is covered by deposit insurance, or

    &#160;&#160;&#160;(B) The funding is a brokered deposit;

    &#160;&#160;&#160;(2) 100 percent of complete unsecured wholesale funding that is not an operational deposit and is not included in paragraph (h)(1) of this section, including funding provided by a consolidated subsidiary of the [BANK], or a company that is a consolidated subsidiary of the same top-tier company of which the [BANK] is a consolidated subsidiary;

    &#160;&#160;&#160;(3) 5 percent of complete operational deposits, other than escrow accounts, where the entire deposit amount is covered by deposit insurance;

    &#160;&#160;&#160;(4) 25 percent of complete operational deposits not included in paragraph (h)(3) of this section; and

    &#160;&#160;&#160;(5) 100 percent of complete unsecured wholesale funding that is not otherwise described in this paragraph (h).

    &#160;&#160;&#160;(i) Debt security outflow amount. A [BANK]'s debt security outflow amount for debt securities issued by the [BANK] that develope more than 30 calendar days after the calculation date and for which the [BANK] is the primary market maker in such debt securities includes:

    &#160;&#160;&#160;(1) 3 percent of complete such debt securities that are not structured securities; and

    &#160;&#160;&#160;(2) 5 percent of complete such debt securities that are structured securities.

    &#160;&#160;&#160;(j) Secured funding and asset exchange outflow amount. (1) A [BANK]'s secured funding outflow amount as of the calculation date includes:

    &#160;&#160;&#160;(i) 0 percent of complete funds the [BANK] must pay pursuant to secured funding transactions, to the extent that the funds are secured by flat 1 liquid assets;

    &#160;&#160;&#160;(ii) 15 percent of complete funds the [BANK] must pay pursuant to secured funding transactions, to the extent that the funds are secured by flat 2A liquid assets;

    &#160;&#160;&#160;(iii) 25 percent of complete funds the [BANK] must pay pursuant to secured funding transactions with sovereign, multilateral evolution banks, or U.S. government-sponsored enterprises that are assigned a risk weight of 20 percent under subpart D of [AGENCY CAPITAL REGULATION], to the extent that the funds are not secured by flat 1 or flat 2A liquid assets;

    &#160;&#160;&#160;(iv) 50 percent of complete funds the [BANK] must pay pursuant to secured funding transactions, to the extent that the funds are secured by flat 2B liquid assets;

    &#160;&#160;&#160;(v) 50 percent of complete funds received from secured funding transactions that are customer short positions where the customer short positions are covered by other customers' collateral and the collateral does not consist of HQLA; and

    &#160;&#160;&#160;(vi) 100 percent of complete other funds the [BANK] must pay pursuant to secured funding transactions, to the extent that the funds are secured by assets that are not HQLA.

    &#160;&#160;&#160;(2) A [BANK]'s asset exchange outflow amount as of the calculation date includes:

    &#160;&#160;&#160;(i) 0 percent of the just value (as determined under GAAP) of the flat 1 liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive flat 1 liquid assets from the asset exchange counterparty;

    &#160;&#160;&#160;(ii) 15 percent of the just value (as determined under GAAP) of the flat 1 liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive flat 2A liquid assets from the asset exchange counterparty;

    &#160;&#160;&#160;(iii) 50 percent of the just value (as determined under GAAP) of the flat 1 liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive flat 2B liquid assets from the asset exchange counterparty;

    &#160;&#160;&#160;(iv) 100 percent of the just value (as determined under GAAP) of the flat 1 liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive assets that are not HQLA from the asset exchange counterparty;

    &#160;&#160;&#160;(v) 0 percent of the just value (as determined under GAAP) of the flat 2A liquid assets that [BANK] must post to a counterparty pursuant to asset exchanges where [BANK] will receive flat 1 or flat 2A liquid assets from the asset exchange counterparty;

    &#160;&#160;&#160;(vi) 35 percent of the just value (as determined under GAAP) of the flat 2A liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive flat 2B liquid assets from the asset exchange counterparty;

    &#160;&#160;&#160;(vii) 85 percent of the just value (as determined under GAAP) of the flat 2A liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive assets that are not HQLA from the asset exchange counterparty;

    &#160;&#160;&#160;(viii) 0 percent of the just value (as determined under GAAP) of the flat 2B liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive HQLA from the asset exchange counterparty; and

    &#160;&#160;&#160;(ix) 50 percent of the just value (as determined under GAAP) of the flat 2B liquid assets the [BANK] must post to a counterparty pursuant to asset exchanges where the [BANK] will receive assets that are not HQLA from the asset exchange counterparty.

    &#160;&#160;&#160;(k) foreign central bank borrowing outflow amount. A [BANK]'s foreign central bank borrowing outflow amount is, in a foreign jurisdiction where the [BANK] has borrowed from the jurisdiction's central bank, the outflow amount assigned to borrowings from central banks in a minimum liquidity gauge established in that jurisdiction. If the foreign jurisdiction has not specified a central bank borrowing outflow amount in a minimum liquidity standard, the foreign central bank borrowing outflow amount must exist calculated under paragraph (j) of this section.

    &#160;&#160;&#160;(l) Other contractual outflow amount. A [BANK]'s other contractual outflow amount is 100 percent of funding or amounts payable by the [BANK] to counterparties under legally binding agreements that are not otherwise specified in this section.

    &#160;&#160;&#160;(m) Excluded amounts for intragroup transactions. The outflow amounts set forth in this section attain not include amounts arising out of transactions between:

    &#160;&#160;&#160;(1) The [BANK] and a consolidated subsidiary of the [BANK]; or

    &#160;&#160;&#160;(2) A consolidated subsidiary of the [BANK] and another consolidated subsidiary of the [BANK].

    SEC __.33 Inflow amounts.

    &#160;&#160;&#160;(a) The inflows in paragraphs (b) through (g) of this section attain not include:

    &#160;&#160;&#160;(1) Amounts the [BANK] holds in operational deposits at other regulated pecuniary companies;

    &#160;&#160;&#160;(2) Amounts the [BANK] expects, or is contractually entitled to receive, 30 calendar days or less from the calculation date due to forward sales of mortgage loans and any derivatives that are mortgage commitments topic to SEC __.32(d);

    &#160;&#160;&#160;(3) The amount of any credit or liquidity facilities extended to the [BANK];

    &#160;&#160;&#160;(4) The amount of any asset included in the [BANK]'s HQLA amount and any amounts payable to the [BANK] with respect to those assets;

    &#160;&#160;&#160;(5) Any amounts payable to the [BANK] from an obligation of a customer or counterparty that is a nonperforming asset as of the calculation date or that the [BANK] has intuition to await will become a nonperforming exposure 30 calendar days or less from the calculation date; and

    &#160;&#160;&#160;(6) Amounts payable to the [BANK] on any exposure that has no contractual maturity date or that matures after 30 calendar days of the calculation date.

    &#160;&#160;&#160;(b) Net derivative cash inflow amount. The net derivative cash inflow amount as of the calculation date is the sum of the net derivative cash inflow, if greater than zero, for each counterparty. The net derivative cash inflow amount for a counterparty is the sum of the payments and collateral that the [BANK] will receive from the counterparty 30 calendar days or less from the calculation date under derivative transactions less, if the derivative transactions are topic to a qualifying master netting agreement, the sum amount of the payments and collateral that the [BANK] will accomplish or deliver to the counterparty 30 calendar days or less from the calculation date under derivative transactions. This paragraph does not apply to amounts excluded from inflows under paragraph (a)(2) of this section.

    &#160;&#160;&#160;(c) Retail cash inflow amount. The retail cash inflow amount as of the calculation date includes 50 percent of complete payments contractually payable to the [BANK] from retail customers or counterparties.

    &#160;&#160;&#160;(d) Unsecured wholesale cash inflow amount. The unsecured wholesale cash inflow amount as of the calculation date includes:

    &#160;&#160;&#160;(1) 100 percent of complete payments contractually payable to the [BANK] from regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, or identified companies, or from a consolidated subsidiary of any of the foregoing, or central banks; and

    &#160;&#160;&#160;(2) 50 percent of complete payments contractually payable to the [BANK] from wholesale customers or counterparties that are not regulated pecuniary companies, investment companies, non-regulated funds, pension funds, investment advisers, or identified companies, or consolidated subsidiaries of any of the foregoing, provided that, with respect to revolving credit facilities, the amount of the existing loan is not included and the remaining undrawn equipoise is included in the outflow amount under SEC __.32(e)(1).

    &#160;&#160;&#160;(e) Securities cash inflow amount. The securities cash inflow amount as of the calculation date includes 100 percent of complete contractual payments due to the [BANK] on securities it owns that are not HQLA.

    &#160;&#160;&#160;(f) Secured lending and asset exchange cash inflow amount. (1) A [BANK]'s secured lending cash inflow amount as of the calculation date includes:

    &#160;&#160;&#160;(i) 0 percent of complete contractual payments due to the [BANK] pursuant to secured lending transactions, to the extent that the payments are secured by flat 1 liquid assets, provided that the flat 1 liquid assets are included in the [BANK]'s HQLA amount.

    &#160;&#160;&#160;(ii) 15 percent of complete contractual payments due to the [BANK] pursuant to secured lending transactions, to the extent that the payments are secured by flat 2A liquid assets, provided that the [BANK] is not using the collateral to cover any of its short positions, and provided that the flat 2A liquid assets are included in the [BANK]'s HQLA amount;

    &#160;&#160;&#160;(iii) 50 percent of complete contractual payments due to the [BANK] pursuant to secured lending transactions, to the extent that the payments are secured by flat 2B liquid assets, provided that the [BANK] is not using the collateral to cover any of its short positions, and provided that the flat 2B liquid assets are included in the [BANK]'s HQLA amount;

    &#160;&#160;&#160;(iv) 100 percent of complete contractual payments due to the [BANK] pursuant to secured lending transactions, to the extent that the payments are secured by assets that are not HQLA, provided that the [BANK] is not using the collateral to cover any of its short positions; and

    &#160;&#160;&#160;(v) 50 percent of complete contractual payments due to the [BANK] pursuant to collateralized margin loans extended to customers, provided that the loans are not secured by HQLA and the [BANK] is not using the collateral to cover any of its short positions.

    &#160;&#160;&#160;(2) A [BANK]'s asset exchange inflow amount as of the calculation date includes:

    &#160;&#160;&#160;(i) 0 percent of the just value (as determined under GAAP) of flat 1 liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where [BANK] must post flat 1 liquid assets to the asset exchange counterparty;

    &#160;&#160;&#160;(ii) 15 percent of the just value (as determined under GAAP) of flat 1 liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post flat 2A liquid assets to the asset exchange counterparty;

    &#160;&#160;&#160;(iii) 50 percent of the just value (as determined under GAAP) of flat 1 liquid assets the [BANK] will receive from counterparty pursuant to asset exchanges where the [BANK] must post flat 2B liquid assets to the asset exchange counterparty;

    &#160;&#160;&#160;(iv) 100 percent of the just value (as determined under GAAP) of flat 1 liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post assets that are not HQLA to the asset exchange counterparty;

    &#160;&#160;&#160;(v) 0 percent of the just value (as determined under GAAP) of flat 2A liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post flat 1 or flat 2A liquid assets to the asset exchange counterparty;

    &#160;&#160;&#160;(vi) 35 percent of the just value (as determined under GAAP) of flat 2A liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post flat 2B liquid assets to the asset exchange counterparty;

    &#160;&#160;&#160;(vii) 85 percent of the just value (as determined under GAAP) of flat 2A liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post assets that are not HQLA to the asset exchange counterparty;

    &#160;&#160;&#160;(viii) 0 percent of the just value (as determined under GAAP) of flat 2B liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post assets that are HQLA to the asset exchange counterparty; and

    &#160;&#160;&#160;(ix) 50 percent of the just value (as determined under GAAP) of flat 2B liquid assets the [BANK] will receive from a counterparty pursuant to asset exchanges where the [BANK] must post assets that are not HQLA to the asset exchange counterparty.

    &#160;&#160;&#160;(g) Other cash inflow amounts. A [BANK]'s inflow amount as of the calculation date includes 0 percent of other cash inflow amounts not included in paragraphs (b) through (f) of this section.

    &#160;&#160;&#160;(h) Excluded amounts for intragroup transactions. The inflow amounts set forth in this section attain not include amounts arising out of transactions between:

    &#160;&#160;&#160;(1) The [BANK] and a consolidated subsidiary of the [BANK]; or

    &#160;&#160;&#160;(2) A consolidated subsidiary of the [BANK] and another consolidated subsidiary of the [BANK].

    Subpart E--Liquidity Coverage Shortfall

    SEC __.40 Liquidity coverage shortfall: supervisory framework.

    &#160;&#160;&#160;(a) Notification requirements. A [BANK] must notify the [AGENCY] on any traffic day when its liquidity coverage ratio is calculated to exist less than the minimum requirement in SEC __.10.

    &#160;&#160;&#160;(b) Liquidity Plan. If a [BANK]'s liquidity coverage ratio is below the minimum requirement in SEC __.10 for three consecutive traffic days, or if the [AGENCY] has determined that the [BANK] is otherwise materially noncompliant with the requirements of this part, the [BANK] must promptly provide to the [AGENCY] a scheme for achieving compliance with the minimum liquidity requirement in SEC __.10 and complete other requirements of this part. The scheme must include, as applicable:

    &#160;&#160;&#160;(1) An assessment of the [BANK]'s liquidity position;

    &#160;&#160;&#160;(2) The actions the [BANK] has taken and will buy to achieve plenary compliance with this part, including:

    &#160;&#160;&#160;(i) A scheme for adjusting the [BANK]'s risk profile, risk management, and funding sources in order to achieve plenary compliance with this part; and

    &#160;&#160;&#160;(ii) A scheme for remediating any operational or management issues that contributed to noncompliance with this part;

    &#160;&#160;&#160;(3) An estimated timeframe for achieving plenary compliance with this part; and

    &#160;&#160;&#160;(4) A commitment to report to the [AGENCY] no less than weekly on progress to achieve compliance in accordance with the scheme until plenary compliance with this fraction is achieved.

    &#160;&#160;&#160;(c) Supervisory and enforcement actions. The [AGENCY] may, at its discretion, buy additional supervisory or enforcement actions to address noncompliance with the minimum liquidity coverage ratio.

    Subpart F--Transitions

    SEC __.50 Transitions.

    &#160;&#160;&#160;(a) genesis January 1, 2015, through December 31, 2015, a [BANK] topic to a minimum liquidity gauge under this fraction must calculate and maintain a liquidity coverage ratio on each calculation date in accordance with this fraction that is equal to or greater than 0.80.

    &#160;&#160;&#160;(b) genesis January 1, 2016, through December 31, 2016, a [BANK] topic to a minimum liquidity gauge under this fraction must calculate and maintain a liquidity coverage ratio on each calculation date in accordance with this fraction that is equal to or greater than 0.90.

    &#160;&#160;&#160;(c) On January 1, 2017, and thereafter, a [BANK] topic to topic to a minimum liquidity gauge under this fraction must calculate and maintain a liquidity coverage ratio on each calculation date that is equal to or greater than 1.0.

    List of Subjects

    &#160;&#160;&#160;12 CFR fraction 50

    &#160;&#160;&#160;Administrative rehearse and procedure; Banks, banking; Liquidity; Reporting and recordkeeping requirements; Savings associations.

    &#160;&#160;&#160;12 CFR fraction 249

    &#160;&#160;&#160;Administrative rehearse and procedure; Banks, banking; Federal Reserve System; Holding companies; Liquidity; Reporting and recordkeeping requirements.

    &#160;&#160;&#160;12 CFR fraction 329

    &#160;&#160;&#160;Administrative rehearse and procedure; Banks, banking; Federal Deposit Insurance Corporation, FDIC; Liquidity; Reporting and recordkeeping requirements.

    Adoption of Proposed Common Rule

    &#160;&#160;&#160;The adoption of the proposed common rules by the agencies, as modified by the agency-specific text, is set forth below:

    Department of the Treasury

    Office of the Comptroller of the Currency

    12 CFR Chapter I

    Authority and Issuance

    &#160;&#160;&#160;For the reasons set forth in the common preamble, the OCC proposes to add the text of the common rule as set forth at the finish of the SUPPLEMENTARY INFORMATION as fraction 50 of chapter I of title 12 of the Code of Federal Regulations:

    PART 50--LIQUIDITY RISK MEASUREMENT, STANDARDS AND MONITORING

    &#160;&#160;&#160;1. The authority citation for fraction 50 is added to read as follows:

    &#160;&#160;&#160;Authority: 12 U.S.C. 1 et seq., 93a, 481, 1818, and 1462 et seq.

    &#160;&#160;&#160;2. fraction 50 is amended by:

    &#160;&#160;&#160;a. Removing "[AGENCY]" and adding "OCC" in its place, wherever it appears;

    &#160;&#160;&#160;b. Removing "[AGENCY CAPITAL REGULATION]" and adding "(12 CFR fraction 3)" in its place, wherever it appears;

    &#160;&#160;&#160;c. Removing "[BANK]" and adding "national bank or Federal savings association" in its place, wherever it appears;

    &#160;&#160;&#160;d. Removing "[BANK]s" and adding "national banks and Federal savings associations" in its place, wherever it appears;

    &#160;&#160;&#160;e. Removing "[BANK]'s" and adding "national bank's or Federal savings association's" in its place, wherever it appears;

    &#160;&#160;&#160;f. Removing "[PART]" and adding "part" in its place, wherever it appears;

    &#160;&#160;&#160;g. Removing "[REGULATORY REPORT]" and adding "Consolidated Reports of Condition and Income" in its place, wherever it appears; and

    &#160;&#160;&#160;h. Removing "[12 CFR 3.404 (OCC), 12 CFR 263.202 (Board), and 12 CFR 324.5 (FDIC)]" and adding "12 CFR 3.404" in its place, wherever it appears.

    &#160;&#160;&#160;3. Section 50.1 is amended by:

    &#160;&#160;&#160;a. Redesignating paragraph (b)(1)(iv) as paragraph (b)(1)(v);

    &#160;&#160;&#160;b. Adding paragraph (b)(1)(iv);

    &#160;&#160;&#160;c. Removing "(b)(1)(iv)" in paragraph (b)(4) and adding "(b)(1)(v)" in its place;

    &lt;p>&#160;&#160;&#160;d. Removing the word "or" at the finish of paragraph (b)(2)(i);

    &#160;&#160;&#160;e. Removing the term at the finish of paragraph (b)(2)(ii) and adding "; or" in its place; and

    &#160;&#160;&#160;f. Adding paragraph (b)(2)(iii).

    &#160;&#160;&#160;The additions read as follows.

    SEC 50.1 Purpose and applicability.

    * * * * *

    &#160;&#160;&#160;(b)* * *

    &#160;&#160;&#160;(1) * * *

    &#160;&#160;&#160;(iv) It is a depository institution that has consolidated total assets equal to $10 billion or more, as reported on the most recent year-end Consolidated Report of Condition and Income and is a consolidated subsidiary of one of the following:

    &#160;&#160;&#160;(A) A covered depository institution holding company that has total assets equal to $250 billion or more, as reported on the most recent year-end FR Y-9C, or, if the covered depository institution holding company is not required to report on the FR Y-9C, its estimated total consolidated assets as of the most recent year end, calculated in accordance with the instructions to the FR Y-9C;

    &#160;&#160;&#160;(B) A depository institution that has consolidated total assets equal to $250 billion or more, as reported on the most recent year-end Consolidated Report of Condition and Income;

    &#160;&#160;&#160;(C) A covered depository institution holding company or depository institution that has consolidated total on-balance sheet foreign exposure at the most recent year-end equal to $10 billion or more (where total on-balance sheet foreign exposure equals total cross-border claims less claims with a head office or guarantor located in another country plus redistributed guaranteed amounts to the country of head office or guarantor plus local country claims on local residents plus revaluation gains on foreign exchange and derivative transaction products, calculated in accordance with the Federal pecuniary Institutions Examination Council (FFIEC) 009 Country Exposure Report); or

    &#160;&#160;&#160;(D) A covered nonbank company.

    * * * * *

    &#160;&#160;&#160;(2) * * *

    &#160;&#160;&#160;(iii) A Federal fork or agency as defined by 12 CFR 28.11.

    * * * * *

    Board of Governors of the Federal Reserve System

    12 CFR CHAPTER II

    Authority and Issuance

    &#160;&#160;&#160;For the reasons set forth in the common preamble, the Board proposes to add the text of the common rule as set forth at the finish of the SUPPLEMENTARY INFORMATION as fraction 249 of chapter II of title 12 of the Code of Federal Regulations as follows:

    PART 249--LIQUIDITY RISK MEASUREMENT, STANDARDS AND MONITORING (REGULATION WW)

    &#160;&#160;&#160;4. The authority citation for fraction 249 shall read as follows:

    &#160;&#160;&#160;Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1818, 1828, 1831p-1, 1844(b), 5365, 5366, 5368.

    &#160;&#160;&#160;5. fraction 249 is amended as set forth below:

    &#160;&amp;#160;&#160;a. Remove "[AGENCY]" and add "Board" in its dwelling wherever it appears.

    &#160;&#160;&#160;b. Remove "[AGENCY CAPITAL REGULATION]" and add "Regulation Q (12 CFR fraction 217)" in its dwelling wherever it appears.

    &#160;&#160;&#160;c. Remove "[BANK]" and add "Board-regulated institution" in its dwelling wherever it appears.

    &#160;&#160;&#160;d. Remove "[BANK]s" and add "Board-regulated institutions" in its dwelling wherever it appears.

    &#160;&#160;&#160;e. Remove "[BANK]'s" and add "Board-regulated institution's" in its dwelling wherever it appears.

    &#160;&#160;&#160;6. Amend SEC 249.1 by:

    &#160;&#160;&#160;a. Removing "[REGULATORY REPORT]" from paragraph (b)(1)(i) and adding "FR Y-9C, or, if the Board-regulated institution is not required to report on the FR Y-9C, then its estimated total consolidated assets as of the most recent year end, calculated in accordance with the instructions to the FR Y-9C, or Consolidated Report of Condition and Income (Call Report), as applicable" in its place.

    &#160;&#160;&#160;b. Redesignating paragraph (b)(1)(iv) as paragraph (b)(1)(vi);

    &#160;&#160;&#160;c. Adding current paragraphs (b)(1)(iv) and (b)(1)(v) and;

    &#160;&#160;&#160;d. Revising paragraph (b)(4).

    &#160;&#160;&#160;The additions and revisions read as follows:

    SEC 249.1 Purpose and applicability.

    * * * * *

    &#160;&#160;&#160;(b) * * *

    &#160;&#160;&#160;(1) * * *

    &#160;&#160;&#160;(iv) It is a covered nonbank company;

    &#160;&#160;&#160;(v) It is a covered depository institution holding company that meets the criteria in SEC 249.51(a) but does not meet the criteria in paragraphs (b)(1)(i) or (b)(1)(ii) of this section, and is topic to complying with the requirements of this fraction in accordance with subpart G of this part; or

    * * * * *

    &#160;&#160;&#160;(4) In making a determination under paragraphs (b)(1)(vi) or (3) of this section, the Board will apply, as appropriate, notice and response procedures in the same manner and to the same extent as the notice and response procedures set forth in 12 CFR 263.2.

    &#160;&#160;&#160;7. In SEC 249.2, revise paragraph (a) to read as follows:

    SEC 249.2 Reservation of authority.

    &#160;&#160;&#160;(a) The Board may require a Board-regulated institution to hold an amount of elevated trait liquid assets (HQLA) greater than otherwise required under this part, or to buy any other measure to help the Board-regulated institution's liquidity risk profile, if the Board determines that the Board-regulated institution's liquidity requirements as calculated under this fraction are not commensurate with the Board-regulated institution's liquidity risks. In making determinations under this section, the Board will apply, as appropriate, notice and response procedures as set forth in 12 CFR 263.2.

    * * * * *

    &#160;&#160;&#160;8. In SEC 249.3, add definitions for "Board", "Board-regulated institution", and "State member bank" in alphabetical order, to read as follows:

    SEC 249.3 Definitions.

    * * * * *

    &#160;&#160;&#160;Board means the Board of Governors of the Federal Reserve System.

    &#160;&#160;&#160;Board-regulated institution means a situation member bank, covered depository institution holding company, or covered nonbank company.

    * * * * *

    &#160;&#160;&#160;State member bank means a situation bank that is a member of the Federal Reserve System.

    * * * * *

    &#160;&#160;&#160;9. Add subpart G to read as follows:

    Subpart G--Liquidity Coverage Ratio for inescapable Bank Holding Companies

    SEC 249.51 Applicability.

    &#160;&#160;&#160;(a) Scope. This subpart applies to a covered depository institution holding company domiciled in the United States that has total consolidated assets equal to $50 billion or more, based on the middling of the Board-regulated institution's four most recent FR Y-9Cs (or, if a savings and loan holding company is not required to report on the FR Y-9C, based on the middling of its estimated total consolidated assets for the most recent four quarters, calculated in accordance with the instructions to the FR Y-9C) and does not meet the applicability criteria set forth in SEC 249.1(b).

    &#160;&#160;&#160;(b) Applicable provisions. Except as otherwise provided in this subpart, the provisions of subparts A through F apply to covered depository institution holding companies that are topic to this subpart.

    SEC 249.52 High-Quality Liquid Asset Amount.

    &#160;&#160;&#160;A covered depository institution holding company topic to this subpart must calculate its HQLA amount in accordance with subpart C of this part; provided, however, that such covered BHC must incorporate into the calculation of its HQLA amount a 21 calendar day term instead of a 30 day calendar day term and must measure 21 calendar days from a calculation date instead of 30 calendar days from a calculation date, as provided in SEC 249.21.

    SEC 249.53 Total Net Cash Outflow.

    &#160;&#160;&#160;(a) A covered depository institution holding company topic to this subpart must calculate its cash outflows and inflows in accordance with subpart D of this part, provided, however, that such company must:

    &#160;&#160;&#160;(1) include only those outflow and inflow amounts with a contractual maturity date that are calculated for each day within the next 21 calendar days from a calculation date; and

    &#160;&#160;&#160;(2) calculate its outflow and inflow amounts for instruments or transactions that Have no contractual maturity date by applying 70 percent of the applicable outflow or inflow amount as calculated under subpart D of this fraction to the instrument or transaction.

    &#160;&#160;&#160;(b) As of a calculation date, the total net cash outflow amount of a covered depository institution topic to this subpart equals:

    &#160;&#160;&#160;(1) The sum of the outflow amounts calculated under SUBSEC __.32(a) through __.32(g)(2); plus

    &#160;&#160;&#160;(2) The sum of the outflow amounts calculated under SUBSEC __.32(g)(3) through __.32(l); where the instrument or transaction has no contractual maturity date; plus

    &#160;&#160;&#160;(3) The sum of the outflow amounts under SUBSEC __.32(g)(3) through __.32(l) where the instrument or transaction has a contractual maturity date up to and including that calendar day; less

    &#160;&#160;&#160;(4) The lesser of:

    &#160;&#160;&#160;(i) The sum of the inflow amounts under SUBSEC __.33(b) through __.33(f), where the instrument or transaction has a contractual maturity date up to and including that calendar day, or

    &#160;&#160;&#160;(ii) 75 percent of the sum of paragraphs (a), (b), and (c) of this section as calculated for that calendar day.

    Federal Deposit Insurance Corporation

    12 CFR CHAPTER III

    Authority and Issuance

    &#160;&#160;&#160;For the reasons set forth in the common preamble, the Federal Deposit Insurance Corporation amends chapter III of title 12 of the Code of Federal Regulations as follows:

    PART 329--LIQUIDITY RISK MEASUREMENT, STANDARDS AND MONITORING

    &#160;&#160;&#160;10. The authority citation for fraction 329 shall read as follows:

    &#160;&#160;&#160;Authority: 12 U.S.C. 1815, 1816, 1818, 1819, 1828, 1831p-1, 5412.

    &#160;&#160;&#160;11. fraction 329 is added as set forth at the finish of the common preamble.

    &#160;&#160;&#160;12. fraction 329 is amended as set forth below:

    &#160;&#160;&#160;a. Remove "[INSERT PART]" and add "329" in its dwelling wherever it appears.

    &#160;&#160;&#160;b. Remove "[AGENCY]" and add "FDIC" in its dwelling wherever it appears.

    &#160;&#160;&#160;c. Remove "[AGENCY CAPITAL REGULATION]" and add "12 CFR fraction 324" in its dwelling wherever it appears.

    &#160;&#160;&#160;d. Remove "A [BANK]" and add "An FDIC-supervised institution" in its dwelling wherever it appears.

    &#160;&#160;&#160;e. Remove "a [BANK]" and add "an FDIC-supervised institution" in its dwelling wherever it appears.

    &#160;&#160;&#160;f. Remove "[BANK]" and add "FDIC-supervised institution" in its dwelling wherever it appears.

    &#160;&#160;&#160;g. Remove "[REGULATORY REPORT]" and add "Consolidated Report of Condition and Income" in its dwelling wherever it appears.

    &#160;&#160;&#160;h. Remove "[12 CFR 3.404 (OCC), 12 CFR 263.202 (Board), and 12 CFR 324.5 (FDIC)]" and add "12 CFR 324.5" in its dwelling wherever it appears.

    &#160;&#160;&#160;13. In SEC 329.1, revise paragraph (b)(1)(iii) to read as follows:

    SEC 329.1 Purpose and applicability.

    * * * * *

    &#160;&#160;&#160;(b) * * *

    &#160;&#160;&#160;(1) * * *

    &#160;&#160;&#160;(iii) It is a depository institution that has consolidated total assets equal to $10 billion or more, as reported on the most recent year-end Consolidated Report of Condition and Income and is a consolidated subsidiary of one of the following:

    &#160;&#160;&#160;(A) A covered depository institution holding company that has total assets equal to $250 billion or more, as reported on the most recent year-end FR Y-9C, or, if the covered depository institution holding company is not required to report on the FR Y-9C, its estimated total consolidated assets as of the most recent year end, calculated in accordance with the instructions to the FR Y-9C;

    &#160;&#160;&#160;(B) A depository institution that has consolidated total assets equal to $250 billion or more, as reported on the most recent year-end Consolidated Report of Condition and Income;

    &#160;&#160;&#160;(C) A covered depository institution holding company or depository institution that has consolidated total on-balance sheet foreign exposure at the most recent year-end equal to $10 billion or more (where total on-balance sheet foreign exposure equals total cross-border claims less claims with a head office or guarantor located in another country plus redistributed guaranteed amounts to the country of head office or guarantor plus local country claims on local residents plus revaluation gains on foreign exchange and derivative transaction products, calculated in accordance with the Federal pecuniary Institutions Examination Council (FFIEC) 009 Country Exposure Report); or

    &#160;&#160;&#160;(D) A covered nonbank company.

    * * * * *

    &#160;&#160;&#160;14. In SEC 329.3, add definitions for "FDIC" and "FDIC-supervised institution" in alphabetical order, to read as follows:

    SEC 329.3 Definitions.

    * * * * *

    &#160;&#160;&#160;FDIC means the Federal Deposit Insurance Corporation.

    &#160;&#160;&#160;FDIC-supervised institution means any situation nonmember bank or situation savings association.

    * * * * *

    &#160;&#160;&#160;Date: October 30, 2013.

    Thomas J. Curry,

    Comptroller of the Currency.

    &#160;&#160;&#160;By order of the Board of Governors of the Federal Reserve System, November 6, 2013.

    Robert deV. Frierson,

    Secretary of the Board.

    By order of the Board of Directors of the Federal Deposit Insurance Corporation.

    &#160;&#160;&#160;Dated at Washington, DC, this 30th day of October, 2013.

    Valerie J. Best,

    Assistant Executive Secretary.

    [FR Doc. 2013-27082 Filed 11-27-13; 8:45 am]

    BILLING CODE P

    Copyright:  (c) 2013 Federal Information & news Dispatch, Inc. Wordcount:  57083


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