An interim final rule codifying the “standard withdrawal period” for a collective investment fund (CIF) and allowing for an exception, with the regulator’s approval, was issued for comment Tuesday by the Office of the Comptroller of the Currency (OCC).
“The exception is intended to enable a bank to preserve the value of the CIF’s assets for the benefit of fund participants during unanticipated and severe market conditions, such as those resulting from the current national health emergency concerning the coronavirus disease (COVID-19) outbreak,” the agency stated.
The interim final rule amends the OCC’s requirements applicable to national banks and federal savings associations administering CIFs invested primarily in real estate or other assets that are not readily marketable and codifies the time a bank generally has for withdrawing accounts from those CIFs. The interim rule’s limited exception allows a bank, with OCC approval, to withdraw an account from the CIF up to one year beyond the standard withdrawal period, with opportunities for further extensions, provided that certain conditions are satisfied.
The OCC is inviting comment on all aspects of this rulemaking. It noted it is particularly interested in receiving comment on whether the OCC approval requirement and associated conditions for an extended withdrawal period are (1) sufficient to ensure that any extension of the withdrawal period would be consistent with fiduciary principles and applicable law; and (2) consistent with general business practices.
The interim final rule will take effect upon its publication in the Federal Register; comments from the public will be due 30 days after that.