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Financial Services Law Insights and Observations

OCC exempts certain QFCs from express recognition requirements

Agency Rule-Making & Guidance OCC Of Interest to Non-US Persons

Agency Rule-Making & Guidance

On November 2, the OCC issued Bulletin 2020-95, which announced a September 30 order granting an exemption from the express recognition requirements of 12 CFR 47.4 for certain categories of qualified financial contracts (QFC). According to the OCC, the order is intended to relieve the burdens faced by financial institutions and is consistent with the purpose of the express recognition requirements of 12 C.F.R. § 47.4 “in achieving uniform cross-border application of the U.S Special Resolution Regimes to contracts subject to such authorities.” Specifically, the order states that “non-U.S. non-linked contracts” that are entered into by foreign subsidiaries of covered banks—large, systemically important banks—are exempt from the express recognition requirements of 12 C.F.R. § 47.4.