New QFC Recordkeeping Rule Proposed by Treasury Secretary as Chairman of FSOC

On January 7, 2015, the Secretary of the Treasury, as Chairperson of the FSOC, proposed rules requiring financial companies potentially subject to resolution under the Orderly Liquidation Authority to maintain and make available to regulators extensive records with respect to their portfolios of qualified financial contracts. The Proposed Rule is designed to ensure that the FDIC has comprehensive information about a financial institution’s QFC portfolio to enable it to plan for and execute the rapid and orderly resolution of Covered Financial Companies under OLA.

The Proposed Rule generally parallels a similar recordkeeping rule for insured banks promulgated by the FDIC in 2008 under the Federal Deposit Insurance Act. The 2008 FDIC Rule similarly was designed to assist the FDIC in resolving failing banks, but the Proposed Rule expands the coverage of the requirements to non-bank financial companies, while broadening the scope of the reporting requirements to a broader array of affiliated financial companies and requiring additional information. Significantly, the Proposed Rule does not require that reporting entities be “troubled” as the 2008 FDIC Rule did.

The below memo highlights important interpretative and compliance issues that the proposed rule raises for financial institutions and summarizes its key provisions. Comments on the Proposed Rule are due by April 7, 2015.