The Clearing House Association and SIFMA, joined by the ABA, FSR, and ISDA, submitted  a comment letter in response to the January 7 FSOC notice of a proposed rulemaking that would implement the qualified financial contract (QFC) recordkeeping requirements outlined in the Dodd-Frank Act related to the FDIC’s receivership authority under Title II. The letter noted that the proposal is a necessary step in the implementation of effective OLA resolution strategies, but that certain aspects of the proposal are inconsistent with its purpose and statutory authority and may actually impede the FDIC’s decision making during a resolution scenario.

In the letter The Clearing House generally recommends that the final rule: (i) differentiate among financial companies to conform to the statutory purpose identified in the proposal; (ii) apply only to companies that could potentially require an OLA resolution; (iii) take into consideration the FDIC’s resolution strategies and apply it only to subsidiaries material to those strategies; and (iv) apply only to those QFCs that would be relevant to the FDIC’s decision-making as receiver.  In addition, the letter recommends that the initial compliance period be extended to two years and that compliance be phased-in over a period of years based on the potential criticality of QFCs to the FDIC during resolution.