[Federal Register Volume 86, Number 82 (Friday, April 30, 2021)]
[Rules and Regulations]
[Pages 22843-22844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09011]


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FEDERAL RESERVE SYSTEM

12 CFR Part 252

[Docket R-1603]
RIN 7100-AF02


Regulation YY: Stress Test Rules; Correction

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Final rule; correcting amendment.

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SUMMARY: The Board is issuing this final rule to correct an error in 
its Regulation YY (Enhanced Prudential Standards) relating to the 
company-run stress test requirements for certain large banking 
organizations.

DATES: This final rule is effective April 30, 2021.

FOR FURTHER INFORMATION CONTACT: Benjamin McDonough, Associate General 
Counsel, (202) 452-2036; Julie Anthony, Senior Counsel, (202) 475-6682; 
Asad Kudiya, Senior Counsel, (202) 475-6358; Jonah Kind, Counsel, 202-
452-2045, or Jasmin Keskinen, Attorney, (202) 475-6650, Legal Division, 
Board of Governors of the Federal Reserve System, 20th Street and 
Constitution Avenue NW, Washington, DC 20551. Users of 
Telecommunications Device for the Deaf (TDD) only, call (202) 263-4869.

SUPPLEMENTARY INFORMATION: The Board is making a technical correction 
to a provision of its rules regarding company-run stress test 
requirements for certain U.S. bank holding companies, certain U.S. 
intermediate holding companies of foreign banking organizations, and 
nonbank financial companies supervised by the Board.\1\ In a final rule 
published in March 2020 (SCB final rule),\2\ the Board adopted a 
proposal \3\ (SCB proposal) to amend its capital rule, capital plan 
rule, and stress testing rules \4\ in order to integrate the capital 
rule with the Board's Comprehensive Capital Analysis and Review by 
introducing the stress capital buffer (SCB) requirement.\5\ Also in the 
SCB final rule, the Board amended its stress testing rules to 
incorporate a definition of ``significant trading activity'' into the 
Board's company-run stress test requirements in order to increase 
transparency regarding the application of an additional trading and 
counterparty scenario component. In doing so, the Board inadvertently 
deleted from these rules language regarding the timing of certain 
aspects of the trading and counterparty component of the company-run 
stress test. The deletion of this language did not reflect the 
amendments to the rule described in the Supplementary Information 
section of the SCB final rule and was not included or described in the 
SCB proposal.
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    \1\ 12 CFR 252.54(b)(2)(i).
    \2\ Regulations Q, Y, and YY: Regulatory Capital, Capital Plan, 
and Stress Test Rules, 85 FR 15576 (March 18, 2020). The SCB final 
rule took effect on May 18, 2020.
    \3\ 80 FR 18160 (April 25, 2018).
    \4\ 12 CFR part 217 (Regulation Q); 12 CFR part 225 (Regulation 
Y); and 12 CFR part 252 (Regulation YY), respectively.
    \5\ 85 FR 15576 (March 18, 2020).
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    This final rule corrects the Board's stress testing rules by 
restoring the inadvertently deleted regulatory text. Specifically, the 
technical correction revises these rules by adding to section 
252.54(b)(2)(i) of Regulation YY language indicating that the data used 
in the trading and counterparty component of the company-run stress 
test must be as of a date selected by the Board between October 1 of 
the previous calendar year and March 1 of the

[[Page 22844]]

calendar year in which the stress test is performed pursuant to this 
section, and that the Board will communicate the as-of date and a 
description of the component to the company no later than March 1 of 
the calendar year in which the stress test is performed.

Administrative Law

A. Administrative Procedure Act

    The Board is issuing this final rule without prior notice and the 
opportunity for public comment and the 30-day delayed effective date 
ordinarily prescribed by the Administrative Procedure Act (APA).\6\ 
Pursuant to section 553(b)(B) of the APA, general notice and the 
opportunity for public comment are not required with respect to a 
rulemaking when an ``agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefor in the rules issued) 
that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' \7\
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    \6\ 5 U.S.C. 553.
    \7\ 5 U.S.C. 553(b)(B).
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    The Board believes that the public interest is best served by 
implementing the final rule as soon as possible. Public comment is 
unnecessary, as the SCB final rule was previously issued for comment, 
and the technical edits discussed here merely correct drafting errors 
in the SCB final rule.
    The corrections made by this final rule will reduce ambiguity and 
ensure that banking organizations implement the company-run stress test 
in a consistent manner and as described in the Supplementary 
Information section of the SCB final rule and other final rules adopted 
by the Board.
    The APA also requires a 30-day delayed effective date, except for 
(1) substantive rules which grant or recognize an exemption or relieve 
a restriction; (2) interpretative rules and statements of policy; or 
(3) as otherwise provided by the agency for good cause.\8\ The Board 
finds good cause to publish the final rule correction with an immediate 
effective date for the same reasons set forth above under the 
discussion of section 553(b)(B) of the APA.
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    \8\ 5 U.S.C. 553(d).
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B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
states that no agency may conduct or sponsor, nor is the respondent 
required to respond to, an information collection unless it displays a 
currently valid OMB control number. This final rule does not contain 
any collections of information, and therefore no submissions will be 
made by the Board to OMB in connection with this final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \9\ requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a substantial number of small entities.\10\ The RFA applies 
only to rules for which an agency publishes a general notice of 
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed 
previously, consistent with section 553(b)(B) of the APA, the Board has 
determined for good cause that general notice and opportunity for 
public comment is unnecessary and contrary to the public's interest, 
and therefore the Board is not issuing a notice of proposed rulemaking. 
Accordingly, the Board has concluded that the RFA's requirements 
relating to an initial and final regulatory flexibility analysis do not 
apply.
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    \9\ 5 U.S.C. 601 et seq.
    \10\ Under regulations issued by the Small Business 
Administration, a small entity includes a depository institution, 
bank holding company, or savings and loan holding company with total 
assets of $600 million or less and trust companies with average 
annual receipts of $41.5 million or less. See 13 CFR 121.201.
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D. Plain Language

    Section 722 of the Gramm-Leach-Bliley Act \11\ requires the Federal 
banking agencies to use ``plain language'' in all proposed and final 
rules published after January 1, 2000. In light of this requirement, 
the Board has sought to present the final rule in a simple and 
straightforward manner.
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    \11\ 12 U.S.C. 4809.
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List of Subjects in 12 CFR Part 252

    Administrative practice and procedure, Banks, Banking, Capital 
planning, Federal Reserve System, Holding companies, Reporting and 
recordkeeping requirements, Securities, Stress testing.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the preamble, chapter II of title 12 
of the Code of Federal Regulations is amended as follows:

PART 252--ENHANCED PRUDENTIAL STANDARDS (REGULATION YY)

0
1. The authority citation for part 252 continues to read as follows:

    Authority:  12 U.S.C. 321-338a, 481-486, 1467a, 1818, 1828, 
1831n, 1831o, 1831p-1, 1831w, 1835, 1844(b), 1844(c), 3101 et seq., 
3101 note, 3904, 3906-3909, 4808, 5361, 5362, 5365, 5366, 5367, 
5368, 5371.

Subpart F--Company-Run Stress Test Requirements for Certain U.S. 
Bank Holding Companies and Nonbank Financial Companies Supervised 
by the Board

0
2. In Sec.  252.54 by revise paragraph (b)(2)(i) introductory text to 
read as follows:


Sec.  252.54   Stress test.

* * * * *
    (b) * * *
    (2) * * *
    (i) The Board may require a covered company with significant 
trading activity to include a trading and counterparty component in its 
severely adverse scenario in the stress test required by this section. 
The data used in this component must be as of a date selected by the 
Board between October 1 of the previous calendar year and March 1 of 
the calendar year in which the stress test is performed pursuant to 
this section, and the Board will communicate the as-of date and a 
description of the component to the company no later than March 1 of 
the calendar year in which the stress test is performed pursuant to 
this section. A covered company has significant trading activity if it 
has:
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System.
Ann Misback,
Secretary of the Board.
[FR Doc. 2021-09011 Filed 4-29-21; 8:45 am]
BILLING CODE P