[Federal Register Volume 84, Number 209 (Tuesday, October 29, 2019)]
[Notices]
[Pages 57869-57874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23527]



[[Page 57869]]

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FEDERAL DEPOSIT INSURANCE CORPORATION


Agency Information Collection Activities: Proposed Collection 
Renewal; Comment Request (OMB No. 3064-0029; -0030; -0070; -0104; -
0204)

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice and request for comment.

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SUMMARY: The FDIC, as part of its obligations under the Paperwork 
Reduction Act of 1995 (PRA), invites the general public and other 
Federal agencies to take this opportunity to comment on the renewal of 
the existing information collections described below (OMB No. 3064-
0029; -0030; -0070; -0104; -0204).

DATES: Comments must be submitted on or before December 30, 2019.

ADDRESSES: Interested parties are invited to submit written comments to 
the FDIC by any of the following methods:
     https://www.FDIC.gov/regulations/laws/federal.
     Email: [email protected]. Include the name and number of 
the collection in the subject line of the message.
     Mail: Manny Cabeza (202-898-3767), Regulatory Counsel, MB-
3128, Federal Deposit Insurance Corporation, 550 17th Street NW, 
Washington, DC 20429.
     Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 17th Street building (located on F Street), 
on business days between 7:00 a.m. and 5:00 p.m.
    All comments should refer to the relevant OMB control number. A 
copy of the comments may also be submitted to the OMB desk officer for 
the FDIC: Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503.

FOR FURTHER INFORMATION CONTACT: Manny Cabeza, Regulatory Counsel, 202-
898-3767, [email protected], MB-3128, Federal Deposit Insurance 
Corporation, 550 17th Street NW, Washington, DC 20429.

SUPPLEMENTARY INFORMATION: 
    Proposal to renew the following currently approved collections of 
information:
    1. Title: Notification of Performance of Bank Services.
    OMB Number: 3064-0029.
    Form Number: 6120/06.
    Affected Public: Insured state nonmember banks and state savings 
associations.
    Burden Estimate:

                                                                Summary of Annual Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 Estimated    Estimated
                                                                                           Estimated    Estimated frequency of    time per      annual
  Information collection description        Type of burden        Obligation to respond    number of          responses           response      burden
                                                                                          respondents                            (minutes)     (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notification of Performance of Bank    Reporting...............  Mandatory..............          634  On Occasion............           30          318
 Services (FDIC Form 6120/06).
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Total Estimated Annual Burden: 318.
    General Description of Collection: Insured state nonmember banks 
are required to notify the FDIC, under section 7 of the Bank Service 
Company Act (12 U.S.C. 1867), of the relationship with a bank service 
company. The Form FDIC 6120/06, Notification of Performance of Bank 
Services, may be used by banks to satisfy the notification requirement. 
There is no change in the method or substance of the collection. The 
estimated number of respondents is estimated to increase based on the 
response rate observed over the last three years. The estimated time 
per response and the frequency of response is expected to remain the 
same.
    2. Title: Securities of State Nonmember Banks and State Savings 
Associations.
    OMB Number: 3064-0030.
    Affected Public: Insured state nonmember banks and state savings 
associations.
    Type of Burden: Reporting.
    Obligation to Respond: Mandatory.
    Burden Estimate:

                                                Summary of Burden
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                                 Estimated    Estimated time     Frequency of        number of       Estimated
                                 number of       to respond        response       responses  per   annual burden
                                 responses        (hours)                              year           (hours)
----------------------------------------------------------------------------------------------------------------
Form 3--Initial Statement of              58               1  On Occasion.......               1              58
 Beneficial Ownership.
Form 4--Statement of Changes             297             0.5  On Occasion.......               4             594
 in Beneficial Ownership.
Form 5--Annual Statement of               69               1  Annual............               1              69
 Beneficial Ownership.
Form 8-A....................               2               3  On Occasion.......               2              12
Form 8-C....................               2               2  On Occasion.......               1               4
Form 8-K....................              21               2  On Occasion.......               4             168
Form 10.....................               2             215  On Occasion.......               1             430
Form 10-C...................               1               1  On Occasion.......               1               1
Form10-K....................              21             140  Annual............               1           2,940
Form 10-Q...................              21             100  Quarterly.........               3           6,300
Form 12b-25.................               6               3  On Occasion.......               1              18
Form 15.....................               2               1  On Occasion.......               1               2
Form 25.....................               2               1  On Occasion.......               1               2
Schedule 13D................               2               3  On Occasion.......               1               6
Schedule 13E-3..............               2               3  On Occasion.......               1               6
Schedule 13G................               2               3  On Occasion.......               1               6
Schedule 14A................              21              40  Annual............               1             840
Schedule 14C................               2              40  On Occasion.......               1              80
Schedule 14D-1 (Schedule TO)               2               5  On Occasion.......               1              10
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[[Page 57870]]

 
    Total Estimated Annual    ..............  ..............  ..................  ..............          11,546
     Burden.
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    General Description of Collection: Section 12(i) of the Exchange 
Act grants authority to the Federal banking agencies to administer and 
enforce sections 10A(m), 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of 
the Exchange Act and sections 302, 303, 304, 306, 401(b), 404, 406, and 
407 of the Sarbanes-Oxley Act of 2002. Pursuant to section 12(i), the 
FDIC has the authority, including rulemaking authority, to administer 
and enforce these enumerated provisions as may be necessary with 
respect to state nonmember banks and state savings associations over 
which it has been designated the appropriate Federal banking agency. 
Section 12(i) generally requires the FDIC to issue regulations 
substantially similar to those issued by the Securities and Exchange 
Commission (SEC) regulations to carry out these responsibilities. Thus, 
part 335 of the FDIC regulations incorporates by cross-reference the 
SEC rules and regulations regarding the disclosure and filing 
requirements of registered securities of state nonmember banks and 
state savings associations.
    This information collection includes the following:
    Beneficial Ownership Forms: FDIC Forms 3, 4, and 5 (FDIC Form 
Numbers 6800/03, 6800/04, and 6800/05). Pursuant to section 16 of the 
Exchange Act, every director, officer, and owner of more than ten 
percent of a class of equity securities registered with the FDIC under 
section 12 of the Exchange Act must file with the FDIC a statement of 
ownership regarding such securities. The initial filing is on Form 3 
and changes are reported on Form 4. The Annual Statement of beneficial 
ownership of securities is on Form 5. The forms contain information on 
the reporting person's relationship to the company and on purchases and 
sales of such equity securities. 12 CFR 335.601 through 336.613 of the 
FDIC's regulations, which cross-reference 17 CFR 240.16a of the SEC's 
regulations, provide the FDIC form requirements for FDIC Forms 3, 4, 
and 5 in lieu of SEC Forms 3, 4, and 5, which are described at 17 CFR 
249.103 (Form 3), 249.104 (Form 4), and 249.105 (Form 5).
    Forms 8-A and 8-C for Registration of Certain Classes of 
Securities. Form 8-A is used for registration pursuant to section 12(b) 
or (g) of the Exchange Act of any class of securities of any issuer 
which is required to file reports pursuant to section 13 or 15(d) of 
that Act or pursuant to an order exempting the exchange on which the 
issuer has securities listed from registration as a national securities 
exchange. Form 8-C has been replaced by Form 8-A. Form 8-A is described 
at 17 CFR 249.208a. There is no actual ``Form 8-A'' as filers must 
produce a customized narrative document in compliance with the 
requirements in accordance with the filer's particular circumstances.
    Form 8-K: Current Report. This is the current report that is used 
to report the occurrence of any material events or corporate changes 
that are of importance to investors or security holders and have not 
been reported previously by the registrant. It provides more current 
information on certain specified events than would Forms 10-Q and 10-K. 
The form description is at 17 CFR 249.308. There is no actual ``Form 8-
K'' as filers must produce a customized narrative document in 
compliance with the requirements in accordance with the filer's 
particular circumstances.
    Forms 10 and 10-C: Forms for Registration of Securities. Form 10 is 
the general reporting form for registration of securities pursuant to 
section 12(b) or (g) of the Exchange Act of classes of securities of 
issuers for which no other reporting form is prescribed. It requires 
certain business and financial information about the issuer. Form 10-C 
has been replaced by Form 10. Form 10 is described at 17 CFR 249.210. 
There is no actual ``Form 10'' as filers must produce a customized 
narrative document in compliance with the requirements in accordance 
with the filer's particular circumstances.
    Form 10-K: Annual Report. This annual report is used by issuers 
registered under the Exchange Act to provide information described in 
Regulation S-K, 17 CFR 229. The form is described at 17 CFR 249.310. 
There is no actual ``Form 10-K'' as filers must produce a customized 
narrative document in compliance with the requirements in accordance 
with the filer's particular circumstances.
    Form 10-Q: Quarterly Reports. The Form 10-Q is a report filed 
quarterly by most reporting companies. It includes unaudited financial 
statements and provides a continuing overview of major changes in the 
company's financial position during the year, as compared to the prior 
corresponding period. The report must be filed for each of the first 
three fiscal quarters of the company's fiscal year and is due within 40 
or 45 days of the close of the quarter, depending on the size of the 
reporting company. The description of Form 10-Q is at 17 CFR 249.308a. 
There is no actual ``Form 10-Q'' as filers must produce a customized 
narrative document in compliance with the requirements in accordance 
with the filer's particular circumstances.
    Form 12b-25: Notification of Late Filing. This notification extends 
the reporting deadlines for filing quarterly and annual reports for 
qualifying companies. There is no FDIC Form 12b-25. The form is 
described at 17 CFR 249.322.
    Form 15: Certification and Notice of Termination of Registration. 
This form is filed by each issuer to certify that the number of holders 
of record of a class of security registered under section 12(g) of the 
Exchange Act is reduced to a specified level in order to terminate the 
registration of the class of security. For a bank, the number of 
holders of record of a class of registered security must be reduced to 
less than 1,200 persons. For a savings association, the number of 
record holders of a class of registered security must be reduced to (1) 
less than 300 persons or (2) less than 500 persons and the total assets 
of the issuer have not exceeded $10 million on the last day of each of 
the issuer's most recent three fiscal years. In general, registration 
terminates 90 days after the filing of the certification. There is no 
FDIC Form 15. This form is described at 17 CFR 249.323.
    Schedule 13D: Certain Beneficial Ownership Changes. This Schedule 
discloses beneficial ownership of certain registered equity securities. 
Any person or group of persons who acquire a beneficial ownership of 
more than 5 percent of a class of registered equity securities of 
certain issuers must file a Schedule 13D reporting such acquisition 
together with certain other information within ten days after such

[[Page 57871]]

acquisition. Moreover, any material changes in the facts set forth in 
the Schedule generally precipitates a duty to promptly file an 
amendment on Schedule 13D. The SEC's rules define the term beneficial 
owner to be any person who directly or indirectly shares voting power 
or investment power (the power to sell the security). There is no FDIC 
form for Schadule13D. This schedule is described at 17 CFR 240.13d-101.
    Schedule 13E-3: Going Private Transactions by Certain Issuers or 
Their Affiliates. This schedule must be filed if an issuer engages in a 
solicitation subject to Regulation 14A or a distribution subject to 
Regulation 14C, in connection with a going private merger with its 
affiliate. An affiliate and an issuer may be required to complete, 
file, and disseminate a Schedule 13E-3, which directs that each person 
filing the schedule state whether it reasonably believes that the Rule 
13e-3 transaction is fair or unfair to unaffiliated security holders. 
There is no FDIC form for Schedule13E-3. This schedule is described at 
17 CFR 240.13e-100.
    Schedule 13G: Certain Acquisitions of Stock. Certain acquisitions 
of stock that are over than 5 percent of an issuer must be reported to 
the public. Schedule 13G is a much abbreviated version of Schedule 13D 
that is only available for use by a limited category of persons (such 
as banks, broker/dealers, and insurance companies) and even then only 
when the securities were acquired in the ordinary course of business 
and not with the purpose or effect of changing or influencing the 
control of the issuer. There is no FDIC form for Schadule13G. This 
schedule is described at 17 CFR 240.13d-102.
    Schedule 14A: Proxy Statements. State law governs the circumstances 
under which shareholders are entitled to vote. When a shareholder vote 
is required and any person solicits proxies with respect to securities 
registered under section 12 of the Exchange Act, that person generally 
is required to furnish a proxy statement containing the information 
specified by Schedule 14A. The proxy statement is intended to provide 
shareholders with the proxy information necessary to enable them to 
vote in an informed manner on matters intended to be acted upon at 
shareholders' meetings, whether the traditional annual meeting or a 
special meeting. Typically, a shareholder is also provided with a proxy 
card to authorize designated persons to vote his or her securities on 
the shareholder's behalf in the event the holder does not vote in 
person at the meeting. Copies of preliminary and definitive (final) 
proxy statements and proxy cards are filed with the FDIC. There is no 
FDIC form for Schadule14A. The description of this schedule is at 17 
CFR 240.14a-101.
    Schedule 14C: Information Required in Information Statements. An 
information statement prepared in accordance with the requirements of 
the SEC's Regulation 14C is required whenever matters are submitted for 
shareholder action at an annual or special meeting when there is no 
proxy solicitation under the SEC's Regulation 14A. There is no FDIC 
form for Schadule14C. This schedule is described at 17 CFR 240.14c-101.
    Schedule 14D-1: Tender Offer. This schedule is also known as 
Schedule TO. Any person, other than the issuer itself, making a tender 
offer for certain equity securities registered pursuant to section 12 
of the Exchange Act is required to file this schedule if acceptance of 
the offer would cause that person to own over 5 percent of that class 
of the securities. This schedule must be filed and sent to various 
parties, such as the issuer and any competing bidders. In addition, the 
SEC's Regulation 14D sets forth certain requirements that must be 
complied with in connection with a tender offer. This schedule is 
described at 17 CFR 240.14d-100. There is no actual form for Schedule 
14D-1 as filers must produce a customized narrative document in 
compliance with the requirements in accordance with the filer's 
particular circumstances.
    There is no change in the method or substance of the collection. 
The estimated number of respondents, as well as the estimated time per 
response and the frequency of response, is expected to remain the same.
    3. Title: Application for a Bank to Establish a Branch or Move its 
Main Office or a Branch.
    OMB Number: 3064-0070.
    Affected Public: Insured state nonmember banks and state savings 
associations.
    Type of Burden: Reporting.
    Obligation to Respond: Mandatory.
    Burden Estimate:

                                                                Summary of Annual Burden
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                                                                                                                                 Estimated    Estimated
                                                                                           Estimated    Estimated frequency of    time per      annual
  Information collection description        Type of burden        Obligation to respond    number of           response           response      burden
                                                                                          respondents                             (hours)      (hours)
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Application to Establish a Branch,     Reporting...............  Mandatory..............          718  On Occasion............            5        3,590
 Move Main Office or Move Branch.
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    Total Estimated Annual Burden: 3,590.
    General Description of Collection: Section 18(d) of the Federal 
Deposit Insurance Act (12 U.S.C. 1828(d)) (FDI Act) provides that no 
FDIC insured state nonmember bank or state savings association shall 
establish and operate any new domestic branch or move its main office 
or any such branch from one location to another without the prior 
written consent of the FDIC. In granting or withholding consent to the 
applicant, FDIC considers: (a) The financial history and condition of 
the depository institution; (b) the adequacy of its capital structure; 
(c) its future earnings prospects; (d) the general character and 
fitness of its management; (e) the risk presented by the depository 
institution to the Deposit Insurance Fund; (f) the convenience and 
needs of the community to be served; and (g) whether its corporate 
powers are consistent with the purposes of the FDI Act. FDIC 
regulations found at 12 CFR 303, subpart C, specify the steps that 
respondents must take to comply with the statutory mandate. There is no 
change in the method or substance of the collection. The estimated 
number of respondents has been revised based on the number of responses 
recorded over the last three years. The estimated time per response and 
the frequency of response, is expected to remain the same.
    4. Title: Activities and Investments of Savings Associations.
    OMB Number: 3064-0104.
    Affected Public: Insured state savings associations.
    Type of Burden: Reporting.
    Obligation to Respond: Mandatory.
    Burden Estimate:

[[Page 57872]]



                                                                Summary of Annual Burden
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                                                                                                                                 Estimated    Estimated
                                                                                           Estimated    Estimated frequency of    time per      annual
  Information collection description        Type of burden        Obligation to respond    number of           response           response      burden
                                                                                          respondents                             (hours)      (hours)
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Application for Exemption--Sec.   28   Reporting...............  Mandatory..............           18  On Occasion............           12          216
 and Subsidiary Notice--Sec.   18(m).
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    Total Estimated Annual Burden....  ........................  .......................  ...........  .......................  ...........          216
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    General Description of Collection: Section 28 of the Federal 
Deposit Insurance Act limits the powers of state savings associations 
to acquire or retain equity investments of a type or amount not 
permitted for a federal savings association. Section 28 also prohibits 
insured state savings associations and their subsidiaries from engaging 
as principal in any activity of a type or in an amount that is not 
permitted for a federal savings association or its subsidiaries. 
Section 28 charges the FDIC with the responsibility of enforcing the 
restrictions and filing requirements, and permits the FDIC to grant 
exceptions under certain circumstances.
    12 CFR part 362 details the activities that state savings 
associations and/or their subsidiaries may engage in, under certain 
criteria and conditions, and identifies the information that banks must 
furnish to the FDIC in order to obtain the FDIC's approval or non-
objection.
    There is no change in the method or substance of the collection. 
The estimated number of respondents has been revised upward based on 
the number of responses recorded over the last three years. The 
estimated time per response and the frequency of response, is expected 
to remain the same.
    5. Title: Margin and Capital Requirements for Covered Swap 
Entities.
    OMB Number: 3064-0204.
    Affected Public: Any FDIC-insured state-chartered bank that is not 
a member of the Federal Reserve System or FDIC-insured state-chartered 
savings association that is registered as a swap dealer, major swap 
participant, security-based swap dealer, or major security-based swap 
participant.
    Obligation to Respond: Mandatory.
    Burden Estimate:

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                                                                                                             Estimated       Estimated       Estimated
                   Regulation                                 Type of burden                 Number of        annual       average hours   annual burden
                                                                                            respondents      frequency     per response        hours
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Sec.   349.1(d)(1), (d)(2) Meeting criteria for  Reporting..............................               1               1           1,000           1,000
 exemption.
Sec.   349.1(h)................................  Disclosure.............................               1               1              10              10
Sec.   349.2 Definition of ``Eligible Master     Recordkeeping..........................               1               1               5               5
 Netting Agreement,'' paragraphs (4)(i) and
 (ii).
Sec.   349.8(g) Documentation..................
Sec.   349.10 Documentation of Margin Matters..
40+50++20+20++10++250+Sec.   349.5(c)(2)(i)      Recordkeeping..........................               1               1               4               4
 Required Margin.
Sec.   349.7(c) Custody Agreement..............  Recordkeeping..........................               1               1             100             100
Sec.   349.8(c) and (d) Initial Margin Model...  Reporting..............................               1               1             240             240
Sec.   349.8(e) Periodic Review................  Recordkeeping..........................               1               1              40              40
Sec.   349.8(f) Control, Oversight, and
 Validation Mechanisms..
Sec.   349.8(f)(3) Initial Margin Modeling       Reporting..............................               1               1              50              50
 Report.
Sec.   349.8(h) Escalation Procedures..........  Recordkeeping..........................               1               1              20              20
Sec.   349.9(e) Requests for Determinations....  Reporting..............................               1               3              10              30
Sec.   349.11(b)(1) Posting Initial Margin.....  Recordkeeping..........................               1             250               1             250
                                                --------------------------------------------------------------------------------------------------------
    Totals.....................................  .......................................  ..............  ..............  ..............           1,749
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    General Description of Collection: The Dodd-Frank Wall Street 
Reform and Consumer Protection Act (Dodd-Frank Act) required the Office 
of the Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System, the FDIC, the Farm Credit Administration, and 
Federal Home Finance Agency (each, an agency, and collectively, the 
agencies) to jointly adopt rules that establish capital and margin 
requirements for swap entities that are prudentially regulated by one 
of the agencies (covered swap entities).\1\ These capital and margin 
requirements apply to swaps that are not cleared by a registered 
derivatives clearing organization or a registered clearing agency (non-
cleared swaps).\2\ The agencies published regulations that require swap 
dealers and security-based swap dealers under the agencies' respective 
jurisdictions to exchange margin with their counterparties for swaps 
that are not centrally cleared (Swap Margin Rule or Rule). First issued 
in 2015, the Swap Margin Rule includes

[[Page 57873]]

a phased compliance schedule from 2016 to 2020 and generally applies 
only to a non-cleared swap entered into on or after the applicable 
compliance date. A non-cleared swap entered into prior to an entity's 
applicable compliance date is ``grandfathered'' by this regulatory 
provision and is generally not subject to the margin requirements in 
the Swap Margin Rule (legacy swap) unless it is amended or novated on 
or after the applicable compliance date. The FDIC's Swap Margin Rule 
can be found at 12 CFR part 349.
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    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 124 Stat. 1376 (2010). See 7 U.S.C. 6s; 15 
U.S.C. 78o-10. Sections 731 and 764 of the Dodd-Frank Act added a 
new section 4s to the Commodity Exchange Act of 1936, as amended, 
and a new section, section 15F, to the Securities Exchange Act of 
1934, as amended, respectively, which require registration with the 
Commodity Futures Trading Commission (CFTC) of swap dealers and 
major swap participants and the U.S. Securities and Exchange 
Commission (SEC) of security-based swap dealers and major security-
based swap participants (each a swap entity and, collectively, swap 
entities). Section 1a(39) of the Commodity Exchange Act of 1936, as 
amended, defines the term ``prudential regulator'' for purposes of 
the margin requirements applicable to swap dealers, major swap 
participants, security-based swap dealers and major security-based 
swap participants. See 7 U.S.C. 1a(39).
    \2\ A ``swap'' is defined in section 721 of the Dodd-Frank Act 
to include, among other things, an interest rate swap, commodity 
swap, equity swap, and credit default swap, and a security-based 
swap is defined in section 761 of the Dodd-Frank Act to include a 
swap based on a single security or loan or on a narrow-based 
security index. See 7 U.S.C. 1a(47); 15 U.S.C. 78c(a)(68).
---------------------------------------------------------------------------

    The reporting requirements found in 12 CFR 349.1(d) refer to 
statutory provisions that set forth conditions for an exemption from 
clearing. Section 349.1(d)(1) provides an exemption for non-cleared 
swaps if one of the counterparties to the swap is not a financial 
entity, is using swaps to hedge or mitigate commercial risk, and 
notifies the Commodity Futures Trading Commission of how it generally 
meets its financial obligations associated with entering into non-
cleared swaps. Section 349.1(d)(2) provides an exemption for security-
based swaps if the counterparty notifies the Securities and Exchange 
Commission (SEC) of how it generally meets its financial obligations 
associated with entering into non-cleared security-based swaps. Section 
349.2 defines terms used in part 349, including the definition of 
``eligible master netting agreement,'' which provides that a covered 
swap entity that relies on the agreement for purpose of calculating the 
required margin must: (1) Conduct sufficient legal review of the 
agreement to conclude with a well-founded basis that the agreement 
meets specified criteria; and (2) establish and maintain written 
procedures for monitoring relevant changes in law and to ensure that 
the agreement continues to satisfy the requirements of this section. 
The term ``eligible master netting agreement'' is used elsewhere in 
part 349 to specify instances in which a covered swap entity may: (1) 
Calculate variation margin on an aggregate basis across multiple non-
cleared swaps and security-based swaps and (2) calculate initial margin 
requirements under an initial margin model for one or more swaps and 
security-based swaps. Section 349.5(c)(2)(i) specifies that a covered 
swap entity shall not be deemed to have violated its obligation to 
collect or post margin from or to a counterparty if the covered swap 
entity has made the necessary efforts to collect or post the required 
margin, including the timely initiation and continued pursuit of formal 
dispute resolution mechanisms, or has otherwise demonstrated upon 
request to the satisfaction of the agency that it has made appropriate 
efforts to collect or post the required margin. Section 349.7 generally 
requires a covered swap entity to ensure that any initial margin 
collateral that it collects or posts is held at a third-party 
custodian. Section 349.7(c) requires the custodian to act pursuant to a 
custody agreement that: (1) Prohibits the custodian from 
rehypothecating, repledging, reusing, or otherwise transferring 
(through securities lending, securities borrowing, repurchase 
agreement, reverse repurchase agreement or other means) the collateral 
held by the custodian, except that cash collateral may be held in a 
general deposit account with the custodian if the funds in the account 
are used to purchase an asset held in compliance with Sec.  349.7, and 
such purchase takes place within a time period reasonably necessary to 
consummate such purchase after the cash collateral is posted as initial 
margin and (2) is a legal, valid, binding, and enforceable agreement 
under the laws of all relevant jurisdictions, including in the event of 
bankruptcy, insolvency, or a similar proceeding. A custody agreement 
may permit the posting party to substitute or direct any reinvestment 
of posted collateral held by the custodian under certain conditions. 
With respect to collateral collected by a covered swap entity pursuant 
to Sec.  349.3(a) or posted by a covered swap entity pursuant to Sec.  
349.3(b), the agreement must require the posting party to substitute 
only funds or other property that would qualify as eligible collateral 
under Sec.  349.6 and for which the amount net of applicable discounts 
described in Appendix B would be sufficient to meet the requirements of 
Sec.  349.3 and direct reinvestment of funds only in assets that would 
qualify as eligible collateral under Sec.  349.6. Section 349.8 
establishes standards for the use of initial margin models. These 
standards include: (1) A requirement that the covered swap entity 
receive prior approval from the relevant Agency based on demonstration 
that the initial margin model meets specific requirements (Sec. Sec.  
349.8(c)(1) and 349.8(c)(2)); (2) a requirement that a covered swap 
entity notify the relevant Agency in writing 60 days before extending 
use of the model to additional product types, making certain changes to 
the initial margin model, or making material changes to modeling 
assumptions (Sec.  349.8(c)(3)); and (3) a variety of quantitative 
requirements, including requirements that the covered swap entity 
validate and demonstrate the reasonableness of its process for modeling 
and measuring hedging benefits, demonstrate to the satisfaction of the 
relevant Agency that the omission of any risk factor from the 
calculation of its initial margin is appropriate, demonstrate to the 
satisfaction of the relevant Agency that incorporation of any proxy or 
approximation used to capture the risks of the covered swap entity's 
non-cleared swaps or noncleared security-based swaps is appropriate, 
periodically review and, as necessary, revise the data used to 
calibrate the initial margin model to ensure that the data incorporate 
an appropriate period of significant financial stress (Sec. Sec.  
349.8(d)(5), 349.8(d)(10), 349.8(d)(11), 349.8(d)(12), and 
349.8(d)(13)). Also, if the validation process reveals any material 
problems with the initial margin model, the covered swap entity must 
promptly notify the Agency of the problems, describe to the Agency any 
remedial actions being taken, and adjust the initial margin model to 
ensure an appropriately conservative amount of required initial margin 
is being calculated (Sec.  349.8(f)(3)). Section 349.8 also establishes 
requirements for the ongoing review and documentation of initial margin 
models. These standards include: (1) A requirement that a covered swap 
entity review its initial margin model annually (Sec.  349.8(e)); (2) a 
requirement that the covered swap entity validate its initial margin 
model at the outset and on an ongoing basis, describe to the relevant 
Agency any remedial actions being taken, and report internal audit 
findings regarding the effectiveness of the initial margin model to the 
covered swap entity's board of directors or a committee thereof 
(Sec. Sec.  349.8(f)(2), 349.8(f)(3), and 349.8(f)(4)); (3) a 
requirement that the covered swap entity adequately document all 
material aspects of its initial margin model (Sec.  349.8(g)); and (4) 
that the covered swap entity must adequately document internal 
authorization procedures, including escalation procedures, that require 
review and approval of any change to the initial margin calculation 
under the initial margin model, demonstrable analysis that any basis 
for any such change is consistent with the requirements of this 
section, and independent review of such demonstrable analysis and 
approval (Sec.  349.8(h)). Section 349.9 addresses the treatment of 
cross-border transactions and, in certain limited situations, will 
permit a covered swap entity to comply with a foreign regulatory 
framework for

[[Page 57874]]

noncleared swaps (as a substitute for compliance with the prudential 
regulators' rule) if the prudential regulators jointly determine that 
the foreign regulatory framework is comparable to the requirements in 
the prudential regulators' rule. Section 349.9(e) allows a covered swap 
entity to request that the prudential regulators make a substituted 
compliance determination and must provide the reasons therefore and 
other required supporting documentation. A request for a substituted 
compliance determination must include: (1) A description of the scope 
and objectives of the foreign regulatory framework for non-cleared 
swaps and non-cleared security-based swaps; (2) the specific provisions 
of the foreign regulatory framework for non-cleared swaps and security-
based swaps (scope of transactions covered; determination of the amount 
of initial and variation margin required; timing of margin 
requirements; documentation requirements; forms of eligible collateral; 
segregation and rehypothecation requirements; and approval process and 
standards for models); (3) the supervisory compliance program and 
enforcement authority exercised by a foreign financial regulatory 
authority or authorities in such system to support its oversight of the 
application of the non-cleared swap and security-based swap regulatory 
framework; and (4) any other descriptions and documentation that the 
prudential regulators determine are appropriate. A covered swap entity 
may make a request under this section only if directly supervised by 
the authorities administering the foreign regulatory framework for non-
cleared swaps and non-cleared security-based swaps. Section 349.10 
requires a covered swap entity to execute trading documentation with 
each counterparty that is either a swap entity or financial end user 
regarding credit support arrangements that: (1) Provides the 
contractual right to collect and post initial margin and variation 
margin in such amounts, in such form, and under such circumstances as 
are required and (2) specifies the methods, procedures, rules, and 
inputs for determining the value of each non-cleared swap or noncleared 
security-based swap for purposes of calculating variation margin 
requirements and the procedures for resolving any disputes concerning 
valuation. Section 349.11(b)(1) provides that the requirement for a 
covered swap entity to post initial margin under Sec.  349.3(b) does 
not apply with respect to any noncleared swap or non-cleared security 
based swap with a counterparty that is an affiliate. A covered swap 
entity shall calculate the amount of initial margin that would be 
required to be posted to an affiliate that is a financial end user with 
material swaps exposure pursuant to Sec.  349.3(b) and provide 
documentation of such amount to each affiliate on a daily basis.
    There is no change in the method or substance of the collection. 
The FDIC currently does not supervise any institutions that are subject 
to this information collection but is reporting one respondent as a 
placeholder to preserve the burden estimates. For clarity, the burden 
presentation has been changed to correspond to the burden presentation 
made by the other agencies in their respective information collections. 
There is no change in the total estimated annual burden.

Request for Comment

    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the FDIC's functions, 
including whether the information has practical utility; (b) the 
accuracy of the estimates of the burden of the information collection, 
including the validity of the methodology and assumptions used; (c) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. All 
comments will become a matter of public record.

Federal Deposit Insurance Corporation.

    Dated at Washington, DC, on October 23, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2019-23527 Filed 10-28-19; 8:45 am]
 BILLING CODE 6714-01-P