Revisions to Certain Definitions. Section 1 of the Agreement is hereby modified by deleting, adding and modifying certain definitions as follows:
Revisions to Certain Definitions in the FDIC’s Capital and Liquidity Rules This proposal would also amend several definitions in the FDIC’s capital and liquidity rules to help ensure that the proposal would not have unintended effects for the treatment of covered FSIs’ netting agreements under those rules, consistent with the proposed amendments contained in the FRB NPRM and the OCC NPRM.101 The FDIC’s regulatory capital rules permit a banking organization to measure exposure from certain types of financial contracts on a net basis and recognize the risk-mitigating effect of 101 On September 20, 2016, the FDIC adopted a separate final rule (the Final QMNA Rule), following the earlier notice of proposed rulemaking issued in January 2015, see 80 FR 5063 (Jan. 30, 2015), covering amendments to the definition of “qualifying master netting agreement” in the FDIC’s capital and liquidity rules and related definitions in its capital rules. The Final QMNA Rule is designed to prevent similar unintended effects from implementation of special resolution regimes in non-U.S. jurisdictions, or by parties’ adherence to the ISDA Protocol. The amendments contained in the Final QMNA Rule also are similar to revisions that the FRB and the OCC made in their joint 2014 interim final rule to ensure that the regulatory capital and liquidity rules’ treatment of certain financial contracts is not affected by the implementation of special resolution regimes in foreign jurisdictions. See 79 FR 78287 (Dec. 30, 2014). financial collateral for other types of exposures, provided that the contracts are subject to a “qualifying master netting agreement” or agreement that provides for certain rights upon the default of a counterparty.102 The FDIC has defined “qualifying master netting agreement” to mean a netting agreement that permits a banking organization to terminate, apply close-out netting, and promptly liquidate or set-off collateral upon an event of default of the counterparty, thereby reducing its counterparty exposure and market risks.103 On the whole, measuring the amount of exposure of these contracts on a net basis, rather than on a gross basis, results in a lower measure of exposure and thus a lower capital requirement. The current definition of “qualifying master netting agreement” recognizes that default rights may be stayed if the financial company is in resolution under the Xxxx-Xxxxx Act, the FDI Act, a substantially similar law applicable to government-sponsored enterprises, or a substantially similar f...
