Compliance dates would be extended by up to nine months for a regulation applying qualified financial contract (“QFC”) recordkeeping requirements related to orderly liquidation authority (OLA), under a Treasury Department notice of a final rule expected to be issued next week.
According to a notice to be published in the Federal Register (made available Friday), Treasury Secretary Steven Mnuchin – acting as chairman of the Financial Stability Oversight Council (FSOC) – will propose extending the compliance date by nine months for records entities in the first compliance tier of the regulation (that is, institutions with $1 trillion or more in total consolidated assets). The new compliance date would be March 23, 2019 (based on the effective date of Dec. 301, 2016).
“Based on the substantive comment received in response to the proposed rule, the Secretary believes that this extension will allow sufficient time for such records entities to comply with the rule after determinations have been made with respect to the exemption requests,” according to the Federal Register notice.
The compliance date would be extended by six months (as proposed) for all other records entities, under the final rule.
For those with total assets equal to or greater than $500 billion (but less than $1 trillion), the new compliance date would be June 30, 2019; for those with total assets equal to or greater than $250 billion (but less than $500 billion), the new compliance date would be June 30, 2020; and for “all other records entities,” the compliance date would be June 30, 2021.
In the Register notice, Treasury noted that the “substantive comment” it received on its proposal to extend the compliance date focused, in part, on the resources being expended by entities to develop systems to collect information in the specific formats required by the rule and the changes that will have to be made to the plans for those compliance efforts once determinations as to the exemption requests are made.
Additionally, Treasury pointed out it is still considering exemptions requests from certain types of records entities within a corporate group and certain types of QFCs. The requests are remain subject to review by Treasury, the Federal Deposit Insurance Corp. (FDIC), and the primary financial regulatory agencies, the Register notice states.
“Although the Secretary recognizes the importance of the QFC recordkeeping requirements, the Secretary continues to believe that it would impose an unnecessary burden on records entities to require their compliance with the regulation before the scope of their recordkeeping responsibilities is determined,” the notice states. “An extension of the compliance dates is appropriate pending the Secretary’s decisions whether to grant, in whole or in part, conditional or unconditional exemptions based on the exemption requests received to date, and to allow adequate time for records entities to prepare for compliance once the exemption requests are resolved.”