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Joint-Trades Letter to OCC Re: Restrictions on the Terms of QFCs

The Clearing House (TCH), along with SIFMA, the ABA, the FSF, the FSR, and the IIB (Associations) filed a comment letter to the OCC on its NPR relating to restrictions on the terms of qualified financial contracts (QFCs) entered into by federally chartered and licensed financial institutions that are a part of U.S. banks identified as GSIBs or the U.S. operations of FBOs that are GSIBs. The NPR corresponds to recent proposed rules promulgated by the Federal Reserve and recent proposed rules promulgated by the FDIC. The Associations are supportive of the NPR, but recommend some minor modifications. Notably, the Associations believe that there are two modifications that should be made with respect to the OCC’s NPR in addition to those modifications proposed in the August 2016 comment letter, and they are: clarify that the implementation timeline for the NPR will be harmonized with the implementation timeline for both the Fed Rules and the FDIC Rules; clarify that subsidiaries of Covered Banks will be covered by the NPR and not by the Fed Rules; and clarify that the standards and processes set forth for approving alternative enhanced creditor protection conditions are consistent and harmonized as among the OCC, the Federal Reserve and the FDIC.