Proposed Res Plan FBO Guidance - 85 FR 15449 (Mar 18 2020)

Federal Register / Vol. 85, No. 53 / Wednesday, March 18, 2020 / Notices
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and § 2706.160(d).
CONTACT PERSON FOR MORE INFO:
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Dated: March 16, 2020.
Sarah L. Stewart,
Deputy General Counsel.
[FR Doc. 2020–05760 Filed 3–16–20; 4:15 pm]
BILLING CODE 6735–01–P

FEDERAL DEPOSIT INSURANCE
CORPORATION
RIN 3064–ZA15

FEDERAL RESERVE SYSTEM
[Docket No. OP–1699]

Guidance for Resolution Plan
Submissions of Certain Foreign-Based
Covered Companies
Board of Governors of the
Federal Reserve System (Board) and
Federal Deposit Insurance Corporation
(FDIC).
ACTION: Proposed guidance; request for
comments.
AGENCY:

The Board and the FDIC
(together, the ‘‘agencies’’) are inviting
comments on proposed guidance for the
2021 and subsequent resolution plan
submissions by certain foreign banking
organizations (‘‘FBOs’’). The proposed
guidance is meant to assist these firms
in developing their resolution plans,
which are required to be submitted
pursuant to Section 165(d) of the DoddFrank Wall Street Reform and Consumer
Protection Act (the ‘‘Dodd-Frank Act’’).
The scope of application of the
proposed guidance would be FBOs that
are triennial full filers and whose
intermediate holding companies (‘‘U.S.
IHCs’’) have a score of 250 or more
under the second methodology
(‘‘method 2’’) of the global systemically
important bank (‘‘GSIB’’) surcharge
framework. The proposed guidance,
which is largely based on prior
guidance, describes the agencies’
expectations regarding a number of key
vulnerabilities in plans for a rapid and
orderly resolution under the U.S.
Bankruptcy Code (i.e., capital; liquidity;
governance mechanisms; operational;
legal entity rationalization and
separability; and derivatives and trading

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SUMMARY:

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activities). The proposed guidance also
updates certain aspects of prior
guidance based, in part, on the agencies’
review of certain FBOs’ most recent
resolution plan submissions and
changes to the resolution planning rule.
The agencies invite public comment on
all aspects of the proposed guidance.
DATES: Comments should be received on
or before May 5, 2020.
ADDRESSES: Interested parties are
encouraged to submit written comments
jointly to both agencies. Comments
should be directed to:
Board: You may submit comments,
identified by Docket No. OP–1699, by
any of the following methods:
• Agency website: http://
www.federalreserve.gov. Follow the
instructions for submitting comments at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
• Email: regs.comments@
federalreserve.gov. Include docket
number in the subject line of the
message.
• Fax: (202) 452–3819 or (202) 452–
3102.
• Mail: Ann E. Misback, Secretary,
Board of Governors of the Federal
Reserve System, 20th Street and
Constitution Avenue NW, Washington,
DC 20551.
All public comments will be made
available on the Board’s website at
http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfms as
submitted, unless modified for technical
reasons or to remove personal
information at the commenter’s request.
Accordingly, comments will not be
edited to remove any identifying or
contact information. Public comments
may also be viewed electronically or in
paper form in Room 146, 1709 New
York Avenue NW, Washington, DC
20006, between 9:00 a.m. and 5:00 p.m.
on weekdays.
FDIC: You may submit comments,
identified by RIN 3064–ZA15, by any of
the following methods:
• Agency website: https://
www.fdic.gov/regulations/laws/federal.
Follow the instructions for submitting
comments on the Agency website.
• Email: comments@fdic.gov. Include
‘‘RIN 3064–ZA15’’ on the subject line of
the message.
• Mail: Executive Secretary,
Attention: Comments, Federal Deposit
Insurance Corporation, 550 17th Street
NW, Washington, DC 20429.
• Hand Delivery/Courier: Guard
station at the rear of the 550 17th Street
NW Building (located on F Street) on
business days between 7 a.m. and 5 p.m.
• Public Inspection: All comments
received, including any personal

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15449

information provided, will be posted
generally without change to https://
www.fdic.gov/regulations/laws/federal.
FOR FURTHER INFORMATION CONTACT:
Board: Mona Elliot, Deputy Associate
Director, (202) 452–4688, Division of
Supervision and Regulation, Laurie
Schaffer, Deputy General Counsel, (202)
452–2272, Jay Schwarz, Special
Counsel, (202) 452–2970, Steve Bowne,
Senior Counsel, (202) 452–3900, or
Sarah Podrygula, Attorney (202) 912–
4658, Legal Division. Users of
Telecommunications Device for the Deaf
(TDD) may call (202) 263–4869.
FDIC: Alexandra Steinberg Barrage,
Associate Director, Policy and Data
Analytics, abarrage@fdic.gov;
Heidilynne Schultheiss, Chief,
Resolution Strategy Section,
hschultheiss@fdic.gov; Yan Zhou, Chief,
Supervisory Programs Section, yazhou@
fdic.gov; Ronald W. Crawley, Jr., Senior
Resolution Policy Specialist, rcrawley@
fdic.gov, Division of Complex
Institution Supervision and Resolution;
David N. Wall, Assistant General
Counsel, dwall@fdic.gov; Celia Van
Gorder, Supervisory Counsel,
cvangorder@fdic.gov; or Esther Rabin,
Counsel, erabin@fdic.gov, Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Overview of the Proposed Guidance
III. Proposed Changes From Prior Guidance
IV. Paperwork Reduction Act
V. Text of the Proposed Guidance

I. Background
Section 165(d) of the Dodd-Frank
Act 1 and the jointly issued
implementing regulation 2 require
certain financial companies, including
certain foreign-based firms, to report
periodically to the Board and the FDIC
their plans for rapid and orderly
resolution under the U.S. Bankruptcy
Code (the ‘‘Bankruptcy Code’’) in the
event of material financial distress or
failure. With respect to a covered
company 3 that is organized or
incorporated in a jurisdiction other than
the United States or that is an FBO, the
Rule requires that the firm’s U.S.
resolution plan include specified
information with respect to the
1 12

U.S.C. 5365(d).
CFR part 243 and 12 CFR part 381 (the
‘‘Rule’’), as amended.
3 The terms ‘‘covered company,’’ ‘‘material
entities,’’ ‘‘identified critical operations,’’ ‘‘core
business lines,’’ and similar terms used throughout
the proposal all have the same meaning as in the
Rule.
2 12

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subsidiaries, branches, and agencies,
and identified critical operations and
core business lines, as applicable, that
are domiciled in the United States or
conducted in whole or material part in
the United States.4 The Rule also
requires, among other things, each
financial company’s full resolution plan
to include a strategic analysis of the
plan’s components, a description of the
range of specific actions the company
proposes to take in resolution, and a
description of the company’s
organizational structure, material
entities, and interconnections and
interdependencies.5 In addition, the
Rule requires that all resolution plans
include a confidential section that
contains any confidential supervisory
and proprietary information submitted
to the Board and the FDIC and a section
that the agencies make available to the
public. Public sections of resolution
plans can be found on the agencies’
websites.6
Objectives of the Resolution Planning
Process
The goal of the Dodd-Frank Act
resolution planning process is to help
ensure that a covered company’s failure
would not have serious adverse effects
on financial stability in the United
States. Specifically, the resolution
planning process requires covered
companies to demonstrate that they
have adequately assessed the challenges
that their structures and business
activities pose to resolution and that
they have taken action to address those
issues. For FBOs, the resolution
planning process focuses on their U.S.
subsidiaries and operations.
The agencies believe that the
preferred resolution outcome for many
FBOs is a successful home country
resolution using a single point of entry
(‘‘SPOE’’) resolution strategy where U.S.
material entities are provided with
sufficient capital and liquidity resources
to allow them to stay out of resolution
proceedings and maintain continuity of
operations throughout the parent’s
resolution. However, since support from
the foreign parent in stress cannot be
ensured, the Rule provides that the U.S.
resolution plan for foreign-based
covered companies should specifically
4 12

CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i).
the Rule, all filers must submit a full
resolution plan, either every other time a resolution
plan submission is required or as a firm’s initial
resolution plan submission. See 12 CFR 243.4(a)(5)–
(6), (b)(4)–(5), and (c)(4)–(5); 12 CFR 381.4(a)(5)–(6),
(b)(4)–(5), and (c)(4)–(5).
6 The public sections of resolution plans
submitted to the agencies are available at https://
www.federalreserve.gov/supervisionreg/resolutionplans.htm and www.fdic.gov/regulations/reform/
resplans/.

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address a scenario where the U.S.
operations experience material financial
distress and not assume that the covered
company takes resolution actions
outside the United States that would
eliminate the need for any U.S.
subsidiaries to enter resolution
proceedings.7 Nonetheless, the Rule also
provides firms with appropriate
flexibility to construct a U.S. resolution
strategy in a way that is not inconsistent
with a firm’s global resolution strategy,
as long as those assumptions support
the firms’ U.S. resolution strategy and
adhere to the assumptions articulated in
the Rule.
Recent Developments
Implementation of the Rule has been
an iterative process aimed at
strengthening the resolution planning
capabilities of financial institutions
subject to the Rule. The agencies have
previously provided guidance and other
feedback on several occasions to certain
FBOs.8 In general, the guidance and
feedback were intended to assist the
recipients in their development of
future resolution plan submissions and
to provide additional clarity with
respect to the agencies’ expectations for
the filers’ future progress.
The agencies are now proposing to
update aspects of the Guidance for 2018
§ 165(d) Annual Resolution Plan
Submissions By Foreign-based Covered
Companies that Submitted Resolution
Plans in July 2015 (‘‘2018 FBO
guidance’’).9 The 2018 FBO guidance
was provided to four FBOs.10
Several developments inform the
proposed guidance:
• The agencies’ review of certain
FBOs’ most recent resolution plan
submissions and the issuance of
individual letters communicating the
agencies’ views on and shortcomings
contained in the 2018 resolution plans
filed by the firms subject to the 2018
FBO guidance (‘‘2018 feedback
letters’’); 11
• Revisions to the content related to
payment, clearing, and settlement
activities (‘‘PCS’’) and derivatives and
7 12 CFR 243.4(h)(3); 12 CFR 381.4(h)(3).
Presently, the U.S. resolution strategy of each firm
that would be subject to the proposed guidance is
a U.S. SPOE resolution strategy, which is designed
to have the U.S. IHC recapitalize and provide
financial resources to its material entity subsidiaries
prior to entering U.S. bankruptcy proceedings.
8 See infra III. Consolidation of Prior Guidance.
9 Available at www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20170324a21.pdf and www.fdic.gov/
resauthority/2018subguidance.pdf.
10 Barclays PLC, Credit Suisse Group AG,
Deutsche Bank AG, and UBS AG.
11 Available at www.federalreserve.gov/
newsevents/pressreleases/bcreg20181220c.htm.

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trading activities (‘‘DER’’) in the
updated guidance for the resolution
plan submissions by the eight largest,
most complex U.S. banking
organizations in February 2019 (‘‘2019
domestic guidance’’); 12 and
• The 2019 amendments to the Rule
(‘‘2019 revisions’’).13
In December 2018, the agencies issued
the 2018 feedback letters, which
communicated their views on and
identified shortcomings contained in
the 2018 resolution plans filed by the
firms subject to the 2018 FBO guidance.
These letters also described the
meaningful resolvability improvements
made by the FBOs. The FBOs that
received this feedback are expected to
address their shortcomings and
complete the enhancement initiatives
described in their 2018 resolution plans
by July 1, 2020, as provided in the 2018
feedback letters and confirmed by the
letters issued to the firms on July 26,
2019.14 The review of the resolution
plan submissions that resulted in the
2018 feedback letters helped to inform
changes to the 2018 FBO guidance, as
described below.
In February 2019, the agencies
released the 2019 domestic guidance,
which reiterated the agencies’
expectations for eight domestic firms
regarding several elements of their
resolution plans and made material
updates to guidance relating to PCS and
DER. As described below, the agencies
are proposing updates to the 2018 FBO
guidance regarding PCS and DER, which
will more closely align the agencies’
expectations in these areas with the
expectations described in the 2019
domestic guidance, taking into account
issues specific to FBOs. The 2019
domestic guidance also consolidated all
prior guidance applicable to the eight
firms to which it was directed. In the
consultation period for the 2019
domestic guidance, the agencies
received comments supporting the
consolidation efforts and subsequently
indicated their intent to similarly
consolidate and request public comment
on the 2018 FBO guidance. Accordingly,
the agencies are proposing to
consolidate and supersede all prior
12 Final Guidance for the 2019, 84 FR 1438
(February 4, 2019).
13 Resolution Plans Required, 84 FR 59194
(November 1, 2019). The amendments became
effective on December 31, 2019.
14 See https://www.federalreserve.gov/
newsevents/pressreleases/bcreg20190726a.htm. For
clarity, the shortcoming(s) and the remaining
project(s) identified for each firm that would be
subject to the proposed guidance in its 2018
feedback letter should be addressed as set forth in
each firm’s respective 2018 feedback letter,
notwithstanding the consolidation of all relevant
prior guidance into the proposed guidance.

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resolution planning guidance that has
been directed to the FBOs to which this
guidance is proposed to apply
(‘‘Specified FBOs’’ or ‘‘firms’’).
More recently, in November 2019, the
agencies finalized the 2019 revisions,
which amended the Rule to address
changes to the Dodd-Frank Act made by
the Economic Growth, Regulatory
Relief, and Consumer Protection Act
(‘‘EGRRCPA’’) 15 and improve certain
aspects of the Rule based on the
agencies’ experience implementing the
Rule since its adoption. Among other
things, the 2019 revisions modified the
scope of application of the resolution
planning requirement, the frequency of
resolution plan submissions,
informational content requirements
(primarily through the introduction of
new plan types), and the Rule’s
procedures for the identification of
critical operations. Consistent with
EGRRCPA, the 2019 revisions applied
the resolution planning requirement to
financial institutions that would be
subject to category I, II, or III standards
under the ‘‘domestic tailoring rule’’ or
the ‘‘foreign banking organization rule’’
(together with the domestic tailoring
rule, the ‘‘tailoring rules’’) 16 and certain
other covered companies.
Under the 2019 revisions and the
proposed scope of guidance, each
Specified FBO would be a triennial full
filer and will be required to submit a
resolution plan every three years,
alternating between a full resolution
plan and a targeted resolution plan. The
2019 revisions require all triennial full
filers to submit a targeted resolution
plan on or before July 1, 2021, followed
by a full resolution plan in 2024.
In addition, the agencies indicated in
the 2019 revisions that they would
strive to provide final general guidance
at least a year before the next resolution
plan submission date of firms to which
the general guidance is directed. The
2019 revisions also provided certain
technical changes, including the
clarification that FBOs should not
assume that the foreign parent company
takes resolution actions outside of the
United States that would eliminate the
need for any U.S. subsidiaries to enter
into resolution proceedings.
15 Public

Law 115–174 (2018).
Prudential Standards for Large Bank
Holding Companies, Savings and Loan Holding
Companies, and Foreign Banking Organizations, 84
FR 59032 (November 1, 2019); Changes to
Applicability Thresholds for Regulatory Capital and
Liquidity Requirements, 84 FR 59230 (November 1,
2019).
16 See

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International Cooperation on Resolution
Planning
The 2018 feedback letters also noted
the importance of the agencies’
engagement with non-U.S. regulators.
The Specified FBOs are subject to their
home country resolvability
expectations, in addition to section
165(d) of the Dodd-Frank Act and the
Rule. Resolution of the U.S. operations
of a firm domiciled outside the United
States with significant global activities
(i.e., the Specified FBOs) will require
substantial coordination between home
and host country authorities. The
agencies identified three areas in the
2018 feedback letters (legal entity
rationalization; PCS; and derivatives
booking practices) where enhanced
cooperation between the agencies and
each firm’s home regulatory authorities
would maximize resolvability under
both the U.S. and home country
resolution strategies.17 The agencies
will continue to coordinate with nonU.S. authorities regarding these and
other resolution matters (e.g., resources
in resolution, communications),
including developments in the U.S. and
home country resolution capabilities of
the Specified FBOs.
Capital and Liquidity
The agencies received several
comments on an array of resolution
capital and liquidity issues during
consideration of the 2019 domestic
guidance, but declined to adopt any
modifications in the final version.18
Instead, the agencies indicated that they
would continue to consider those
comments, coordinate with non-U.S.
regulators, and provide additional
information in the future on those
topics. The agencies continue to
evaluate the capital and liquidity
guidance and expect that any future
actions in these areas, whether guidance
or rules, would be adopted through
notice and comment procedures, which
would provide an opportunity for
public input. The agencies further
expect to collaborate in taking such
actions in a manner consistent with the
Board’s Total Loss-Absorbing Capacity
rule.19 Therefore, the capital and
liquidity sections of the proposed
17 Available at www.federalreserve.gov/
newsevents/pressreleases/bcreg20181220c.htm.
18 See 84 FR 1442–43 (discussing, among other
things, (i) tailoring liquidity flow assumptions; (ii)
avoiding false positive resolution triggers; and (iii)
other requests).
19 See generally Total Loss-Absorbing Capacity,
Long-Term Debt, and Clean Holding Company
Requirements for Systemically Important U.S. Bank
Holding Companies and Intermediate Holding
Companies of Systemically Important Foreign
Banking Organizations, 82 FR 8266 (January 24,
2017).

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guidance remain unchanged from the
2018 FBO guidance with the exception
of two minor clarifications to the capital
section.
II. Overview of the Proposed Guidance
The proposed guidance begins with a
description of the proposed scoping
methodology and is then organized into
eight substantive areas, consistent with
the 2018 FBO guidance. These areas are:
1. Capital
2. Liquidity
3. Governance mechanisms
4. Operational
5. Branches
6. Group resolution plan
7. Legal entity rationalization and
separability
8. Derivatives and trading activities

The proposed guidance is tailored for
the Specified FBOs as compared to the
U.S. GSIBs to account for differences
between U.S. GSIBs and FBOs’ U.S.
footprints and operations. Each
substantive area is important to firms in
implementing their U.S. resolution
strategy, as each plays a part in helping
to ensure that the firms can be resolved
in a rapid and orderly manner. The
proposed guidance would describe the
agencies’ expectations for each of these
areas.
The proposal is largely consistent
with the 2018 FBO guidance and the
2019 domestic guidance. Accordingly,
the agencies expect that the FBOs that
would be Specified FBOs under the
proposal have already incorporated
significant aspects of the proposed
guidance into their resolution planning.
With respect to the 2019 domestic
guidance, the proposed guidance differs
in certain respects, given the
circumstances under which a foreignbased covered company’s U.S.
resolution plan is most likely to be
relevant.
As noted above, the proposal would
update the PCS and DER areas of the
2018 FBO guidance to reflect the
agencies’ review of certain Specified
FBOs’ 2018 resolution plans and
revisions contained in the 2019
domestic guidance. It would also make
minor clarifications to certain areas of
the 2018 FBO guidance in light of the
2019 revisions. In general, the proposed
revisions to the guidance are intended
to streamline the firms’ submissions and
to provide additional clarity. In
addition, the proposed guidance would
consolidate all guidance applicable to
the Specified FBOs into a single
document, which would provide the
public with one source of applicable
guidance to which to refer. The
proposed guidance is not meant to limit
firms’ consideration of additional

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vulnerabilities or obstacles that might
arise based on a firm’s particular
structure, operations, or resolution
strategy and that should be factored into
the firm’s submission.

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Scope of Application
The agencies are proposing to apply
the guidance to FBOs whose material
financial distress or failure would
present the greatest potential to disrupt
U.S. financial stability. Specifically, the
agencies are proposing to use the
method 2 calculation of the GSIB
surcharge framework for determining
the applicability of this proposed
guidance. Accordingly, the proposed
guidance would apply to FBOs that are
triennial full filers 20 and whose U.S.
IHCs have a method 2 GSIB score of 250
or more.21 The agencies seek comment
on all aspects of the proposed scoping
methodology.
In proposing a scoping methodology,
the agencies seek to provide a
framework that is clear, predictable, and
based on publicly reported quantitative
data. Large bank holding companies,
including FBOs’ U.S. IHCs, already
submit to the Board periodic public
reports on their GSIB indicator scores.
Since relevant data has been collected
in comparable form for U.S. GSIBs,
FBOs, and other banking organizations
in the U.S., a small number of FBOs
(those FBOs that currently are expected
to be Specified FBOs) have had
consistently high method 2 GSIB scores
that persist both in comparison to U.S.
GSIBs and other FBOs during the
periods for which data is available.
These comparably high method 2
scores have largely been driven by a
reliance on short term wholesale
funding (STWF). The STWF factor
indicates the potential for significant
liquidity outflows and large-scale
funding runs associated with STWF in
times of stress. Such funding runs may
complicate the ability of an FBO to
undergo an orderly resolution in times
of stress, generating both safety and
soundness and financial stability risks.
While the agencies believe that there are
compelling justifications for using a
standalone risk-based measure of STWF
as a basis for having heightened
expectations for resolution planning, the
agencies also understand that a single
indicator may not account for other
factors that are relevant to the
resolvability of an FBO.
20 Currently, there are no FBOs that are triennial
reduced filers and whose IHCs have method 2
scores of 250 or more. The agencies do not intend
for the proposed guidance to apply to such an FBO.
21 The Specified FBOs as of the date of this
proposal would be Barclays PLC, Credit Suisse
Group AG, and Deutsche Bank AG.

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In contrast, method 2 of the GSIB
surcharge framework is designed to
provide a single, comprehensive,
integrated assessment of a large bank
holding company’s systemic footprint.
Specifically, the method 2 score
assesses a financial institution’s asset
size, interconnectedness, complexity
(including over-the-counter derivatives
trading), cross-jurisdictional activity,
and reliance on STWF—all important
factors in considering resolvability.
Thus, the agencies believe that this
methodology is an appropriate
mechanism for determining the scope of
applicability of the proposed guidance.
The agencies believe that a method 2
GSIB score of 250 or more indicates that
an FBO has certain characteristics that
could present barriers to a rapid and
orderly resolution. For example, a firm
that funds a large percentage of its assets
with STWF—as noted above, a measure
that suggests that a banking organization
is more vulnerable to large-scale
funding runs and thus increased
resolvability risk—would have a method
2 GSIB score of 250 or more. Moreover,
a substantial majority of U.S. GSIBs,
which are the subject of heightened
expectations regarding resolution
planning,22 have a GSIB method 2 score
of 250 or more, suggesting the need to
apply heightened resolution
expectations to FBOs that present
comparable resolvability challenges. In
addition, the proposed guidance would
only apply to FBOs with U.S. IHCs
because those are the FBOs with the
largest consolidated U.S. operations that
are subject to resolution under the
Bankruptcy Code.
The agencies are not proposing to use
the tailoring rules and the
accompanying framework for sorting
financial institutions into certain
tailoring categories, other than to
confirm that a firm is a triennial full
filer. Several factors for determining a
financial institution’s tailoring category
are important in the context of
resolution and the application of this
proposed guidance to the Specified
FBOs. However, the tailoring rules and
tailoring categories were developed to
determine application of a broad range
of enhanced prudential standards,
including the general operation of
resolution plan submissions, and were
not focused on determining which
covered companies should be subject to
more detailed resolution planning
guidance in light of longer resolution
planning cycles and the need for greater
coordination between home and host
regulators.
22 See

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Question [*]: Is the proposed scope of
applicability of the proposed guidance
appropriate? Should the agencies adopt a
different methodology for determining the
scope of the proposed guidance? For
example, should the proposed guidance
apply to FBOs whose U.S. operations have a
systemic risk profile (as assessed by the
method 1 GSIB score) that is similar to the
systemic risk profile of the U.S. financial
institutions that are assigned to Category I
under the Board’s tailoring rules? Should the
proposed guidance apply to FBOs that are
subject to Category II standards (based on the
firm’s combined U.S. operations) under the
Board’s tailoring rules? Should the proposed
guidance apply to FBOs that have exposure
of a certain level (in the range of $50 to $100
billion) in one or more of the risk-based
indicators identified in the Board’s tailoring
rules, such as nonbank assets and/or STWF?
If the agencies adopt a different scope of
application than what is being proposed,
should the agencies also modify the content
of the guidance, for example by removing
certain sections of the guidance?
Commenters are invited to explain in detail
the basis for their positions.
Question [*]: Should the agencies outline
in the final guidance their methodology and
process for determining the FBOs to which
the guidance should apply? Should the
agencies specify in the final guidance an
implementation period for any FBO that did
not receive the 2018 FBO guidance, but to
which the final guidance will apply? If so,
should the implementation period be fixed or
subject to adjustment by the agencies?

Capital: The ability to provide
sufficient capital to U.S. non-branch
material entities without disruption
from creditors is important to ensure
that such material entities can continue
to provide critical services and maintain
identified critical operations as the U.S.
IHC is resolved. The proposal describes
expectations concerning the appropriate
positioning of capital and other lossabsorbing instruments (e.g., debt that
the parent may forgive or convert to
equity) among the U.S. IHC and its
subsidiaries (resolution capital
adequacy and positioning or RCAP).23
The proposal also describes
expectations regarding a methodology
for periodically estimating the amount
of capital that may be needed to support
each U.S. IHC subsidiary after the U.S.
IHC’s bankruptcy filing (resolution
capital execution need or RCEN).
Liquidity: A firm’s ability to reliably
estimate and meet the liquidity needs of
the U.S. IHC and its subsidiaries prior
to, and in, resolution (resolution
liquidity execution need or RLEN) is
important to the execution of a
Specified FBO’s U.S. resolution strategy.
Maintaining sufficient and
appropriately-positioned liquidity also
23 The proposal also would make consistent with
the 2019 domestic guidance expectations about
intercompany debt.

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allows the U.S. IHC subsidiaries to
continue to operate while the U.S. IHC
is being resolved in accordance with the
firm’s U.S. resolution strategy. The
proposal also describes expectations
concerning a methodology for
measuring the stand-alone liquidity
position of each U.S. non-branch
material entity.
Governance Mechanisms: An
adequate governance structure with
triggers that identify the onset,
continuation, and increase of financial
stress is important to ensure that there
is sufficient time to communicate and
coordinate with the foreign parent
regarding the provision of financial
support and other key actions. The
governance mechanisms section
proposes expectations that firms have
playbooks that describe the board and
senior management actions of the U.S.
non-branch material entities necessary
to execute the firm’s U.S. resolution
strategy. In addition, the proposal
describes expectations that firms have
triggers that are linked to specific
actions outlined in these playbooks to
ensure the timely escalation of
information to both U.S. IHC and
foreign parent governing bodies. The
proposal also describes the expectations
that firms identify and analyze potential
legal challenges to planned U.S. IHC
support mechanisms, and any defenses
and mitigants to such challenges.
Currently, certain Specified FBOs
have relied on contractually binding
mechanisms (‘‘CBMs’’) to ensure that
sufficient capital and liquidity is timely
provided to material entity subsidiaries
prior to the U.S. IHC commencing a
bankruptcy case. These structures are
designed, in part, to mitigate potential
legal challenges to the provision of such
support.24 With respect to legal
challenges, the certain Specified FBOs
assume, therefore, that creditors in a
bankruptcy case of the U.S. IHC would
exist and would bring a creditor
challenge action in any bankruptcy case
of the U.S. IHC.
Certain Specified FBOs have
developed either (i) a secured support
agreement whereby the U.S. IHC binds
itself to provide pre-bankruptcy support
to material entity subsidiaries,
supported by perfected security
interests in collateral granted by the
U.S. IHC; 25 or (ii) an unsecured equity
24 The U.S. GSIBs previously adopted CBMs for
similar purposes.
25 FBOs operating in the United States with U.S.
non-branch assets of $50 billion or more, such as
the firms that would be Specified FBOs under the
proposed guidance, are required to consolidate
certain U.S. subsidiaries under a single, top-tier
intermediate holding company. 12 CFR 252.153. In
this circumstance, the U.S. IHC would be the entity

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purchase arrangement under which the
U.S. IHC enters into one or more
agreements with a material entity
subsidiary to purchase additional equity
from that subsidiary prior to the U.S.
IHC’s bankruptcy. Under this second
approach, the subsidiary would, using
the funds derived from the equity
investment, provide capital and
liquidity support to U.S. material
entities.
Neither the proposed guidance nor
the Rule recommend a specific strategy
for ensuring that support is timely
provided to material entity subsidiaries
and reducing the risk of a successful
legal challenge to pre-bankruptcy
resolution-related actions. The agencies
continue to evaluate the efficacy of
CBMs for the Specified FBOs as tools to
address each of these objectives. The
agencies seek comment on the benefits
and costs and relative advantages and
disadvantages of each CBM approach for
the Specified FBOs.

15453

facilitate or pose a potential conflict with a
Specified FBO’s home country global
resolution strategy? If so, are there alternative
approaches that would mitigate the conflict
while providing sufficient confidence that
appropriate levels of capital and liquidity
will be timely provided to material entity
subsidiaries?

Operational: The development and
maintenance of operational capabilities
is important to support and enable
successful execution of a firm’s U.S.
resolution strategy, including providing
for the continuation of identified critical
operations and preventing or mitigating
adverse impacts on U.S. financial
stability. The proposed operational
capabilities include:
• Developing a framework and
playbooks that consider contingency
actions and alternative arrangements to
be taken to maintain payment, clearing,
and settlement activities and to
maintain access to financial market
utilities (‘‘FMUs’’), as further discussed
below;
Question [*]: Is each CBM approach
• Possessing fully developed
described above effective as a potential
capabilities related to managing,
mitigant to potential legal challenges in the
identifying, and valuing the collateral
case of a U.S. IHC bankruptcy? Is each
that is received from, and posted to,
effective in ensuring the provision of capital
and liquidity support to material entities in
external parties and its affiliates;
periods of financial stress? What are the
• Having management information
benefits and costs and relative advantages
systems that readily produce key data
and disadvantages associated with each of
on financial resources and positions on
the CBM approaches?
a U.S. legal entity basis, and that ensure
Question [*]: Does each of the
data integrity and reliability; and
aforementioned CBM approaches
• Maintaining an actionable plan to
appropriately balance the certainty
associated with pre-positioning capital
ensure the continuity of all of the shared
directly at U.S. IHC subsidiaries with the
and outsourced services on which
flexibility provided by holding
identified critical operations rely.
recapitalization resources at the U.S. IHC
In addition, the proposed guidance
(contributable resources) to meet
outlines expectations that firms’ plans
unanticipated losses at the U.S. IHC
should reflect the current state of how
subsidiaries? Does each of the
the early termination of qualified
aforementioned CBM approaches provide
financial contracts could impact
sufficient confidence that appropriate levels
of capital and liquidity will be timely
resolution of the firm’s U.S. operations.
provided to material entity subsidiaries? Does
Branches: U.S. branches of FBOs,
the absence of a perfected security interest
while legally distinct from a U.S. IHC,
under the equity purchase arrangement
can play a critical role in a firm’s U.S.
materially affect the likelihood that resources
operations. Therefore, the proposal
would be available to material entity
describes expectations regarding the
subsidiaries under that approach? Why or
mapping of interconnections and
why not?
interdependencies between a U.S.
Question [*]: Are there alternative CBM
approaches that would provide equivalent or branch that is a material entity and
greater effectiveness in the provision of
other material entities, core business
capital and liquidity to material entities in
lines, or identified critical operations. In
periods of financial stress? Should the
addition, the Specified FBOs would be
agencies prescribe a specific CBM approach
expected to show how branches would
or provide additional guidance on the
continue to facilitate the firm’s FMU
subject, or neither?
access for identified critical operations
Question [*]: Does the existence of a CBM
and to meet funding needs. The
that follows either of the aforementioned
proposal also outlines expectations that
CBM approaches have the potential to
the Specified FBOs analyze the effects
that enters into a secured support agreement with
on the firm’s FMU access and identified
its U.S. subsidiaries. Separately, some U.S.-based
critical operations of the cessation of
financial institutions have established an
operations of any U.S. branch that is
intermediate holding company to facilitate the flow
significant to the activities of an
of capital and liquidity to material entities prior to
bankruptcy.
identified critical operation.

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Group Resolution Plan: As noted
above, the agencies recognize the
preferred resolution outcome for the
Specified FBOs is a successful home
country resolution. U.S. operations of an
FBO are often highly interconnected
with the broader, global operations of
the financial institution. The proposal
outlines expectations for these firms to
detail how resolution planning for U.S.
domiciled entities or activities is
integrated into the foreign-based
covered company’s overall resolution or
other contingency planning process.
Legal Entity Rationalization and
Separability: It is important that firms
maintain a structure that facilitates
orderly resolution. To achieve this, the
proposal states that a firm should
develop criteria supporting the U.S.
resolution strategy and integrate them
into day-to-day decision making
processes. The criteria would be
expected to consider the best alignment
of legal entities and business lines and
facilitate resolvability of U.S. operations
as a firm’s activities, technology,
business models, or geographic footprint
change over time. In addition, the
proposed guidance provides that the
firm should identify discrete U.S.
operations that could be sold or
transferred in resolution.
Derivatives and Trading Activities: It
is important that a firm’s derivatives
and trading activities can be stabilized
and de-risked during resolution without
causing significant market disruption.
As such, firms should have capabilities
to identify and mitigate the risks
associated with their U.S. derivatives
and trading activities (including those
activities originated from the U.S.
entities (as defined below) and booked
directly into a non-U.S. affiliate) and
with the implementation of their
preferred strategies, as further discussed
below.
III. Proposed Changes From Prior
Guidance
The proposed guidance contains
modifications and clarifications
informed by the agencies’ review of the
certain Specified FBOs’ 2018 plans,
particularly in the areas of DER and
PCS. Generally, the agencies’
expectations for the Specified FBOs’
resolution plan submissions are
consistent with their expectations for
the U.S. GSIBs’ resolution plan
submissions, with appropriate tailoring
to reflect the firms’ foreign parents and
their different organizational structures
and operations. In addition, the
proposed guidance would provide
certain clarifications to address the 2019
revisions and changes within the
financial industry. The following

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summarizes the changes relative to the
2018 FBO guidance to which the
agencies are seeking comment:
Scope
The agencies have eliminated from
the 2018 FBO guidance the paragraph
indicating that the expectations apply to
certain Specified FBOs. As indicated
above, the agencies are proposing to
scope application of the proposed
guidance by reference to a pre-existing
framework for determining systemic
risk. Specifically, the proposed
guidance would apply to FBOs that are
triennial full filers and whose U.S. IHCs
have a method 2 GSIB score of 250 or
more. The agencies also are considering
the appropriate implementation period
for any FBO that becomes subject to the
forthcoming final guidance and that was
not a recipient of the 2018 FBO
guidance.
Operational: Payment, Clearing, and
Settlement Activities
The provision of PCS services by
firms, FMUs, and agent banks is an
essential component of the U.S.
financial system, and maintaining the
continuity of access to PCS services is
important for the orderly resolution of
the Specified FBOs’ U.S. material
entities, identified critical operations,
and core business lines. Based upon the
review of recent resolution plan
submissions and the agencies’
engagement with the firms, the agencies
believe that the firms that would be
Specified FBOs under the proposed
guidance generally have continued to
develop capabilities to identify and
consider the risks associated with
continuity of access to PCS services in
a resolution under their U.S. resolution
strategies. These capabilities are
described in the firms’ resolution plan
methodologies and are included in
playbooks for key FMUs and key agent
banks.
The 2018 FBO guidance indicated
that the resolution plan submission of
an FBO to which the 2018 guidance
applied should describe arrangements to
facilitate continued access to PCS
services through those FBOs’ resolution.
The agencies are now proposing
guidance that clarifies the agencies’
expectations with respect to the
Specified FBOs’ capabilities to maintain
continued access to PCS services. First,
the proposal would state that firms
should develop frameworks that
articulate their strategies for continued
access to PCS services to focus the
firms’ consideration of this issue.
Second, the proposed guidance would
provide clarity regarding firms’
playbooks for retaining access to PCS

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services. Finally, the proposal would
distinguish between expectations
related to users and providers of PCS
services, to reflect the different financial
and operational considerations
associated with each activity. The
agencies believe that the firms that
would be Specified FBOs under the
proposed guidance generally have
methodologies and capabilities in place
to address the expectations in this
proposal.
Framework. The framework through
which a firm maintains continued
access to PCS services should
incorporate the identification of key
clients of a firm’s U.S. operations,26 as
well as key FMUs and key agent banks
for a firm’s U.S. material entities,
identified critical operations, and core
business lines, using both quantitative 27
and qualitative criteria, and playbooks
for each key FMU and key agent bank.
The proposed guidance builds upon
existing guidance by specifying that the
framework should consider key clients
of the firm’s U.S. operations (which may
include affiliates of the firm), key FMUs,
and key agent banks.28 The agencies
note that, while the 2018 FBO guidance
does not expressly suggest the
identification of and development of
playbooks for key agent banks, the firms
that would be Specified FBOs under the
proposed guidance generally considered
agent bank relationships in their most
recent resolution plan submissions,
with each providing a playbook for at
least one key agent bank. Because agent
26 A client is an individual or entity, including
affiliates of the firm, to whom the firm provides
PCS services and, if credit or liquidity is offered,
any related credit or liquidity offered in connection
with those services. In an effort to provide
additional clarity, the proposed guidance clarifies
that a firm should consider any related credit or
liquidity offered in connection with those services
only if credit or liquidity is offered. Although this
clarification is not expressly included in the 2019
domestic guidance, the agencies’ expectation
concerning the identification of key clients remains
the same for both those U.S. banking organizations
and the Specified FBOs.
27 In identifying entities as key, examples of
quantitative criteria may include: For a client,
transaction volume/value, market value of
exposures, assets under custody, usage of PCS
services, and if credit or liquidity is offered, any
extension of related intraday credit or liquidity; for
an FMU, the aggregate volumes and values of all
transactions processed through such FMU; and, for
an agent bank, assets under custody, the value of
cash and securities settled, and extensions of
intraday credit.
28 The agencies note that several footnotes have
been modified from the corresponding footnotes in
the 2019 domestic guidance. Compare 84 FR 1452
nn. 13–14 with V. Payment, Clearing, and
Settlement Activities nn. 19–20. These
modifications were made for clarification purposes
and do not reflect a difference in expectations
between Specified FBOs and the eight largest,
complex U.S. banking organizations regarding the
identification of key clients, key FMUs, and key
agent banks.

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bank relationships may replicate PCS
services provided by FMUs or facilitate
access to FMUs, the agencies are
proposing to expressly include the
development of playbooks for key agent
banks.
In applying the framework, a firm
would be expected to consider its role
as a user or a provider of PCS services.
The proposal refers to a user of PCS
services as a firm that accesses the
services of an FMU directly through its
own membership in that FMU or
indirectly through the membership of
another entity, including an affiliate,
that provides PCS services on an agency
basis. A firm is a provider of PCS
services under the proposed guidance if
it provides its clients with access to an
FMU or agent bank directly through the
firm’s membership in or relationship
with that service provider, or indirectly
through the firm’s relationship with
another entity, including a U.S. or nonU.S. affiliate or branch, that provides
the firm with PCS services on an agency
basis. A firm also would be a provider
if it delivers PCS services to a client
through the firm’s own operations in the
United States in a manner similar to an
FMU.
The proposal provides that a firm’s
framework should take into account
certain relevant relationships by
providing a mapping of U.S. material
entities, identified critical operations,
core business lines, and key clients of
the firm’s U.S. operations to key FMUs
and key agent banks. This framework
would be expected to consider both
direct relationships (e.g., a firm’s direct
membership in the FMU, a firm’s
provision of such key clients of the
firm’s U.S. operations with PCS services
through its own operations in the
United States, or a firm’s contractual
relationship with an agent bank) and
indirect relationships (e.g., a firm
indirectly accesses PCS services through
its relationship with another entity,
including U.S. and non-U.S. affiliates
and branches, that provides the firm
with PCS services on an agency basis).
The agencies are not proposing to limit
the framework to direct relationships
and non-affiliates, since continuity of
access in a resolution scenario to
directly accessed and indirectly
accessed PCS activities, including
through affiliates, is likely to be
essential to the rapid and orderly
resolution of a Specified FBO.
By developing and evaluating these
activities and relationships through a
framework that incorporates the
elements of the proposed guidance, a
firm should be able to consider the issue
of maintaining continuity of access to

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Playbooks for Continued Access to
PCS Services. Under the proposal, it is
expected that a firm would provide a
playbook for each key FMU and key
agent bank, whether there is a direct
relationship or an indirect relationship
(including indirect arrangements
through any U.S. or non-U.S. affiliate or
branch) between the firm and each key
FMU and key agent bank. A Specified
FBO also would be expected to provide
a playbook for each key FMU and key
agent bank that, among other things,
includes financial and operational detail
that would support continued access to
PCS services for the firm and key clients
of its U.S. operations under the firm’s
U.S. resolution strategy.29
The proposed guidance differentiates
the type of information to be included
in a firm’s key FMU and key agent bank
playbooks based on whether a firm is a
user of PCS services with respect to that
FMU or agent bank, a provider of PCS
services with respect to that FMU or
agent bank, or both. To the extent a firm
is both a user and a provider of PCS
services with respect to a particular
FMU or agent bank, the firm would be
expected to provide the described
content for both users and providers of
PCS services. A firm would be able to
do so either in the same playbook or in
separate playbooks included in its
resolution plan submission.
Content related to Users of PCS
Services. Each playbook for an
individual key FMU or key agent bank
should include a description of the

firm’s direct or indirect relationship as
a user with the key FMU or key agent
bank and an identification and mapping
of PCS services to the associated U.S.
material entities, identified critical
operations, and core business lines that
use those PCS services, as well as a
discussion of the potential range of
adverse actions that could be taken by
that key FMU or key agent bank when
the firm is in resolution under its U.S.
resolution strategy.30 Playbooks
submitted as part of the 2018 resolution
plan submissions generally mapped the
PCS services provided to U.S. material
entities, identified critical operations,
and core business lines at a granular
level, which enhanced the utility of
these playbooks.
In discussing the potential range of
adverse actions that a key FMU or key
agent bank could take, each playbook
would be expected to address the
operational and financial impact of such
actions on each U.S. material entity,
identified critical operation, and core
business line, and discuss contingency
arrangements that the firm could initiate
in response to such adverse actions by
the key FMU or key agent bank.
Operational impacts could include
effects on governance mechanisms or
resource allocation (including human
resources) of the Specified FBO’s U.S.
operations, as well as any expected
enhanced communication with key
stakeholders (e.g., regulators, FMUs,
agent banks). Financial impacts could
include those directly associated with
liquidity or any additional costs
incurred by the firm as a result of such
adverse actions and contingency
arrangements.
Content related to Providers of PCS
Services. Under the proposal, a firm that
is a direct or indirect provider of PCS
services would be expected to identify,
in its playbook for the relevant key FMU
or key agent bank, key clients of its U.S.
operations that rely upon PCS services
provided by the firm’s U.S. material
entities, identified critical operations,
and core business lines. Playbooks
would be expected to describe the scale
and way in which the firm’s U.S.
material entities, identified critical
operations, and core business lines
provide PCS services and any related
credit or liquidity that may be offered by
the firm in connection with such
services. Similar to the content expected
of users of PCS services, each playbook
would be expected to include a
mapping of the PCS services provided to

29 However, the firm is not expected to
incorporate a scenario in which it loses key FMU
or key agent bank access into its U.S. resolution
strategy or its RLEN and RCEN estimates.

30 Examples of potential adverse actions may
include increased collateral and margin
requirements and enhanced reporting and
monitoring.

Question [ ]. Is the proposed guidance
sufficiently clear with respect to the following
concepts: scope of PCS services, user vs.
provider, and direct vs. indirect
relationships? What additional clarifications
or alternatives concerning the proposed
framework or its elements, if any, should the
agencies consider? For instance, would
further examples of ways that a Specified
FBO may act as provider of PCS services be
useful? Should the agencies consider further
distinguishing between providers based on
the type of PCS service they provide?
Question [ ]. Is the proposed guidance
sufficiently clear concerning expectations
related to PCS services provided by a
Specified FBO’s U.S. material entities,
whether branches or non-branches? Should
the agencies consider applying different
expectations for U.S. material entities based
on whether they are branches or non-branch
entities? If so, what should be the basis for
such differing expectations, and what
additional clarifications or alternatives
should the agencies consider?

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each U.S. material entity, identified
critical operation, and core business
line, as well as key clients of the firm’s
U.S. operations. If a firm provides PCS
services through its own U.S.
operations, the firm would be expected
to produce a playbook for the U.S.
material entity that provides those
services, and the playbook would focus
on continuity of access for key clients of
the firm’s U.S. operations.
The proposal states that playbooks
should discuss the potential range of
contingency actions available to the firm
to minimize disruption to its provision
of PCS services to key clients of its U.S.
operations and the financial and
operational impacts of such
arrangements. Contingency
arrangements may include viable
transfer of client activity and any related
assets or any alternative arrangements
that would allow key clients of the
firm’s U.S. operations to maintain
continued access to PCS services. Each
playbook also would be expected to
describe the range of contingency
actions that the firm may take
concerning its provision of intraday
credit to key clients of its U.S.
operations and to provide analysis
quantifying the potential liquidity that
the firm could generate by taking each
such action in stress and in the
resolution period. To the extent a firm
would not take any such actions as part
of its U.S. resolution strategy, the firm
would be expected to describe its
reasons for not taking any contingency
action.
Under the proposal, a Specified FBO
should communicate the potential
impacts of implementation of any
identified contingency arrangements or
alternatives to key clients of its U.S.
operations, and playbooks should
describe the firm’s methodology for
determining whether it should provide
any additional communication to some
or all such key clients of its U.S.
operations (e.g., due to the client’s BAU
usage of that access or related
extensions of credit), as well as the
expected timing and form of such
communication. The agencies note that,
in the most recent submissions of the
firms that would be Specified FBOs
under the proposed guidance, these
firms generally addressed the issue of
client communications and provided
descriptions of planned or existing
client communications. A firm would be
expected to consider any benefit of
communicating this information in
multiple forms (e.g., verbal or written)
and at multiple time periods (e.g.,
business as usual, stress, or some point
in time in advance of taking
contingency actions) in order to provide

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adequate notice to key clients of its U.S.
operations of the action and the
potential impact on the client of that
action.
In making decisions concerning
communications to such key clients of
its U.S. operations, the proposal states
that the firm also should consider
tailoring communications to different
subsets of clients (e.g., based on levels
of activity or credit usage) in form,
timing, or both. Playbooks may include
sample client contracts or agreements
containing provisions related to the
firm’s provision, if any, of intraday
credit or liquidity.31 Such sample
contracts or agreements may be
important to the extent that the firm
believes those documents sufficiently
convey to clients the contingency
arrangements available to the firm and
the potential impacts of implementing
such contingency arrangements.
Question [ ]. Are the expectations with
respect to playbook content for firms that are
direct or indirect users or providers (or both)
of PCS services sufficiently clear? What
additional clarifications, alternatives, or
additional information, if any, should the
agencies consider?
Question [ ]. Should the guidance indicate
that providers of PCS activities are expected
to consider particular contingency
arrangements (e.g., methods to transfer client
activity to other firms with whom the clients
have relationships, alternate agent bank
relationships, etc.)? Should the guidance also
indicate that firms should consider particular
actions they may take concerning the
provision of intraday credit to affiliate and
third-party clients, such as requiring prefunding? If so, what particular actions should
these firms address?
Question [ ]. Specifically for direct and
indirect users of PCS activities, should the
guidance indicate that firms are expected to
include PCS-related liquidity sources and
uses, such as client pre-funding, or specific
abilities to control intraday liquidity inflows
and outflows, such as throttling or
prioritizing of payments? If so, what
particular sources and uses should firms be
expected to include?
Question [ ]. Specifically for providers of
PCS services, are the agencies’ expectations
concerning a firm’s communication to key
clients of its U.S. operations (including
affiliates, as applicable) of the potential
impacts of implementation of identified
contingency arrangements sufficiently clear?
What additional clarifications, if any, should
the agencies consider? Should the agencies
expect the firm to communicate this
information to key clients of the U.S.
operations at specific times or in specific
formats?

Capabilities. Similar to prior
guidance, the proposal includes
31 If these sample client contracts or agreements
are included separately as part of the firm’s
resolution plan submission, they may be
incorporated into the playbook by reference.

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expectations concerning a Specified
FBO’s capabilities for understanding
and tracking its obligations and
exposures associated with PCS
activities, including contractual
obligations and commitments. The
proposed guidance indicates that those
expectations would apply with respect
to the obligations and exposures
associated with PCS activities for each
U.S. material entity, whether a branch
or non-branch, as any such entity may
provide access to PCS services.
Question [ ]. Are the agencies’ expectations
concerning these capabilities sufficiently
clear? What additional clarifications, if any,
should the agencies consider?

Operational: Qualified Financial
Contracts
The 2018 FBO guidance indicated
that the FBOs that were the subject of
the 2018 FBO guidance could discuss in
their resolution plan submissions the
deployment and impact of certain
International Swaps and Derivatives
Association (‘‘ISDA’’) protocol
developments on their resolution plans.
The Specified FBOs may use those ISDA
protocols to comply with the qualified
financial contract stay rules of the
Board, Office of the Comptroller of the
Currency, and FDIC (‘‘QFC Stay
Rules’’).32 As firms may comply with
the QFC Stay Rules by amending
contracts directly, if desired, rather than
using the ISDA protocols, and because
those ISDA protocols are final and open
for adherence, the agencies are
proposing to remove language in the
guidance related to these developments.
The agencies propose to retain an
expectation that firms’ plans reflect the
current state of how the early
termination of qualified financial
contracts could impact the resolution of
the firm’s U.S. operations.
Legal Entity Rationalization and
Separability
The separability section of the
proposed guidance has been updated to
provide additional specificity on
actionability and generally aligns with
the agencies’ expectations as described
in the 2019 domestic guidance. A firm’s
separability options should be
actionable and should identify
impediments and related mitigation
strategies in advance. The proposed
guidance notes that the Specified FBOs
should consider potential consequences
to U.S. financial stability of executing
each separability option, while also
noting that detail and analysis should be
32 12 CFR part 47 (Office of the Comptroller of the
Currency); 12 CFR part 252, subpart I (Board); and
12 CFR part 382 (FDIC).

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commensurate with each Specified
FBO’s U.S. risk profile and operations.
The proposed guidance has also been
updated to reflect revised expectations
around maintaining active virtual data
rooms for separability options that
involve a sale of U.S. operations or
businesses (‘‘objects of sale’’).
Consistent with expectations described
in the 2019 domestic guidance, firms
would be expected to have the
capability to populate a data room with
information pertinent to a potential
divestiture in a timely manner, rather
than to maintain an active data room.
The agencies would expect to test this
capability by asking firms to produce
selected sale-related materials within a
certain timeframe as part of future
resolution plan reviews.

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Derivatives and Trading Activities
The size, scope, complexity, and
potential for opacity of a Specified
FBO’s U.S. derivatives and trading
activities 33 may present significant risk
to the resolvability of the firm’s U.S.
entities.34 Based on the agencies’ review
of these firms’ most recent resolution
plan submissions,35 the agencies have
observed that the firms that would be
Specified FBOs under the proposed
guidance are increasingly booking U.S.
derivatives and trading activities that
originate from U.S. entities 36 into nonU.S. affiliates. As a result, the booking
of U.S. derivatives and trading activities
regularly occurs across jurisdictions and
creates interconnections and
interdependencies among and between
33 ‘‘U.S. derivatives and trading activities’’, means
all derivatives and trading activities that are: (1)
Related to a firm’s identified critical operations or
core business lines, including any such activities
booked directly into a non-U.S. affiliate; (2)
conducted on behalf of the firm, its clients, or
counterparties that are originated from, booked into,
traded through, or otherwise conducted (in whole
or in material part) in a U.S. entity (as defined
below); or (3) both of the foregoing. A firm should
identify its U.S. derivatives and trading activities
pursuant to a methodology and justify the
methodology used.
34 ‘‘U.S. entities’’ means U.S. IHC subsidiaries and
material entity branches.
35 Each of the 2018 resolution plans of the firms
that would be Specified FBOs under the proposed
guidance identifies certain U.S. derivatives and
trading activities (including U.S. prime brokerage
services) as an identified critical operation or core
business line.
36 Activities ‘‘originated’’ from U.S. entities are
those activities transacted or arranged by, or on
behalf of those U.S. entities and their clients and
counterparties, including any such activity for
which the U.S. entity is compensated (directly or
indirectly) by a non-U.S. affiliate. These activities
also include, for example, those that are sourced or
executed through personnel employed by or acting
on behalf a U.S. entity. The agencies would expect
that a U.S. entity that is significant to the
origination of activities for an identified critical
operation or core business line would be designated
as a U.S. material entity.

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the U.S. entities and non-U.S. affiliates
of firms that would be Specified FBOs
under the proposed guidance.37 It can
be difficult for the agencies to evaluate
a firm’s U.S. derivatives and trading
activities, and related risks to U.S.
financial stability during the execution
of the firm’s U.S. resolution strategy,
without considering these activities on
a broader basis (e.g., a crossjurisdictional, business line basis). This
is particularly true for the firm’s U.S.
derivatives and trading activities
originated from U.S. entities that are
booked directly into a non-U.S. affiliate.
Greater transparency into these
activities is important because the U.S.
entities have ongoing responsibilities for
U.S. derivatives and trading activities
originated from U.S. entities such as
management of client relationships,
transaction settlement, management of
risk limits, and maintenance of access to
U.S. FMUs, in the period leading-up to
and during execution of the U.S.
resolution strategy.
Uncertainty about the execution risk,
allocation of losses, and impact on
clients and counterparties of the U.S.
entities could contribute to a loss of
confidence in the firm’s U.S. resolution
strategy. To facilitate an orderly
resolution of its U.S. entities, a
Specified FBO should be able to
demonstrate the ability to monitor and
manage its U.S. derivatives and trading
activities in the period leading-up to
and during execution of the U.S.
resolution strategy without risk of a
serious adverse effect on U.S. financial
stability. The firms that would be
Specified FBOs under the proposed
guidance have been developing certain
capabilities to identify and mitigate the
risks associated with their U.S.
derivatives and trading activities and
with the implementation of their U.S.
resolution strategies. These capabilities
seek to facilitate a firm’s planning,
preparedness, and execution of an
orderly resolution of its U.S. entities.
Notably, they also may facilitate a
home-country led strategy.38
The proposed guidance would clarify
the agencies’ expectations with respect
to such capabilities and a firm’s analysis
of its U.S. resolution strategy. The
37 The Rule requires a Specified FBO to identify,
describe in detail, and map to the legal entity the
interconnections and interdependencies among the
U.S. subsidiaries, branches and agencies, and
between those entities and the identified critical
operations and core business lines of the Specified
FBO, and any foreign-based affiliate. See 12 CFR
243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i).
38 An SPOE strategy has been identified as the
preferred group resolution strategy for each of the
firms that would be Specified FBOs under the
proposed guidance. See supra Objectives of the
Resolution Planning Process.

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proposed guidance also would eliminate
the expectations of the 2018 FBO
guidance that a firm’s U.S. resolution
plan include separate passive and active
wind-down scenario analyses, the
agency-specified data templates, and
rating agency playbooks, which is
consistent with the 2019 domestic
guidance. In addition, relative to the
2019 domestic guidance, the proposed
guidance would modify certain
expectations for the Specified FBOs to
reflect better the structures and business
activities of the firms that would be
Specified FBOs under the proposed
guidance, including the size and
complexity of their U.S. derivatives and
trading activities and the associated
risks to the orderly resolution of their
U.S. entities. In particular, the proposed
modifications would change the scope
of activities covered by the Booking
Practices subsection from derivatives
portfolios 39 to U.S. derivatives and
trading activities.40 The proposal would
also replace the Inter-Affiliate Risk
Monitoring and Controls subsection
with a new U.S. Activities Monitoring
subsection to place an appropriate focus
on the firm’s ability to provide timely
transparency into the U.S. derivatives
and trading activities, regardless of
where the transactions are booked.
Finally, in consideration of the
relatively smaller size and less complex
nature of the derivatives positions
booked directly into U.S. IHC
subsidiaries of the firms that would be
Specified FBOs under the proposed
guidance, the proposal would eliminate
the ‘‘ease of exit’’ position analysis,
‘‘application of exit cost methodology,’’
and ‘‘analysis of operational capacity’’
subsections.41 As described in more
detail below, the proposed derivatives
and trading activities guidance is
organized into five subsections.
Booking practices. To minimize
uncertainty, complexity, and opacity
around cross-jurisdictional booking
practices that could frustrate a firm’s
resolution preparedness, a firm’s
resolution capabilities should include
booking practices for its U.S. derivatives
39 A firm’s derivatives portfolios include its
derivatives positions and linked non-derivatives
trading positions.
40 This modification would extend the scope of
the booking practices beyond derivatives portfolios
to include, for example, securities financing
transactions originated from the firm’s U.S. prime
brokerage business on behalf of a U.S. client but
booked directly into a non-U.S. affiliate.
41 While this modification would eliminate the
more detailed expectations in subsections on
‘‘application of exit cost methodology’’ and
‘‘analysis of operational capacity,’’ similar
considerations specific to the analysis of a firm’s
derivatives strategy are still captured within the
‘‘derivatives stabilization and de-risking strategy’’
section.

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and trading activities that are
commensurate with the size, scope, and
complexity of a firm’s U.S. derivatives
and trading activities. A firm should
have booking practices that provide
timely and up-to-date information
regarding the structure of and risks
associated with the management of its
U.S. derivatives and trading activities.
In addition to providing transparency
with respect to those positions booked
into U.S. entities, the booking
framework should provide transparency
with respect to U.S. derivatives and
trading activities booked directly to
non-U.S. affiliates. As noted above, due
to the cross-border nature of these
activities, it can be difficult to evaluate
the activities and the related risk in the
period leading-up to and during the
execution of the firm’s U.S. resolution
strategy without considering certain
activities on a cross-jurisdictional,
business line basis.42 Therefore, the
proposed guidance would clarify the
capabilities a firm is expected to have
related to its booking practices,
including descriptions of its booking
model framework and demonstrations of
its ability to identify, assess, and report
on each U.S. entity that originates or
otherwise conducts (in whole or in
material part) any significant aspect of
the firm’s U.S. derivatives or trading
activities.
U.S. activities monitoring. The
booking, funding, and risk transfer
arrangements 43 underlying a firm’s U.S.
derivatives and trading activities create
interconnections and interdependencies
among and between a firm’s U.S.
entities and their non-U.S. affiliates
that, if disrupted, could affect materially
42 The scope of the proposed guidance is larger
and broader for a Specified FBO relative to the 2019
domestic guidance and includes, for example,
account balances and securities financing
transactions related to prime brokerage services and
other derivatives trading businesses because a
Specified FBO’s U.S resolution plan may not
provide a full (global) legal entity view of its U.S.
derivatives and trading activities originated from
U.S. entities. In order to understand better the
potential risk in resolution (e.g., potential impacts
on the stability of U.S. financial markets), the
agencies need to understand the material
interconnections and interdependencies among and
between the firm’s U.S. entities and its non-U.S.
affiliates that are created through its U.S.
derivatives and trading activities, including those
positions originated from the U.S. entities and
booked directly into a non-U.S. affiliate.
43 Risk transfer arrangements often apply to a
range of services and activities (e.g., trading,
management, sales, infrastructure) that are
provided, conducted, or used by U.S. entities. The
relevant services and activities include those
conducted in whole or in material part in the
United States. In some instances, risk transfer
arrangements may account for a material portion of
the U.S. IHC’s revenue. Disruption to these risk
transfer arrangements could result in unexpected
losses to or disruption of U.S. operations.

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the funding or operations of the U.S.
entities that conduct the U.S. derivative
and trading activities or their clients
and counterparties. As noted above, the
U.S. entities may maintain ongoing
responsibilities for U.S. derivatives and
trading activities originated from U.S.
entities in the period leading-up to and
during the execution of the firm’s U.S.
resolution strategy and a lack of
transparency into how these activities
are managed could create uncertainty
that may impact negatively the orderly
resolution of the firm’s U.S. entities.
For example, through their derivatives
and trading activities, the firms that
would be Specified FBOs under the
proposed guidance provide trade
execution, hedging, securities financing,
custody, clearing, and related services
for banking firms, hedge funds and
other institutional clients and
counterparties. Many of these clients
and counterparties rely on the firm’s
execution and financing services to
support their participation in U.S.
financial markets. The derivatives and
trading activities that are originated
from the firm’s U.S. entities, and then
booked to the firm’s non-U.S. affiliates,
create operational and financial
connectivity with the firm’s non-U.S.
entities; as a client’s assets, positions
and balances can be booked to or
utilized by numerous U.S. and non-U.S.
affiliates. In resolution, the U.S. entities
may continue to have responsibilities
for managing U.S. client relationships
and facilitating the unwind of client
positions, the settlement of client
liabilities, and the transfer of client
accounts, regardless of the entity within
the global firm to which those positions
or assets have been booked.
The rapid withdrawal of client
account balances, may have negative
impacts (e.g., loss of internalization) on
the funding or operations of the firm
and its affiliates. Yet, the untimely
transfer or other prolonged disruptions
in the clients’ ability to execute
transactions may have negative impacts
to those clients or the U.S. financial
markets in which they participate.
Therefore, the proposal clarifies the
agencies’ expectations that a firm
address this risk by being able to
provide timely transparency into the
management of its U.S. derivatives and
trading activities, including those
originated from U.S. entities and booked
directly into non-U.S. affiliates. A firm
also should be able to assess the
potential impact on the firm’s clients
and counterparties engaged in U.S.
derivatives and trading activities and
related risk transfer arrangements
among and between the U.S. entities
and non-U.S. affiliates.

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Prime brokerage customer account
transfers. The rapid withdrawal from a
firm by U.S. prime brokerage clients can
contribute to a disorderly resolution.
The firm’s resolution plan should
address the risk that during a resolution,
the firm’s U.S. prime brokerage clients
may seek to withdraw or transfer
customer accounts balances in rates
significantly higher than normal
business conditions. The proposed
guidance confirms that a firm should
have the capabilities to facilitate the
orderly transfer of U.S. prime brokerage
account balances 44 to peer prime
brokers and describes the agencies’
related expectations in greater detail. In
particular, the proposed guidance
clarifies that a firm’s U.S. resolution
plan should describe and demonstrate
its ability to segment and analyze the
quality and composition of such
account balances.
Portfolio segmentation. The ability to
identify quickly and reliably
problematic derivatives positions and
portfolios is critical to minimizing
uncertainty and estimating resource
needs to enable an orderly resolution of
the firm’s U.S. entities. The proposal
confirms that a firm should have the
capabilities to produce analyses that
reflect granular portfolio segmentation,
taking into account trade-level
characteristics and at an entity level, for
any derivatives portfolio of a U.S. entity.
Derivatives stabilization and derisking strategy. A key risk to the orderly
resolution of the firm’s U.S. entities is
a volatile and risky derivatives portfolio.
In the event of material financial
distress or failure, the resolvability risks
related to a firm’s U.S. derivatives and
trading activities could be a key obstacle
to the firm’s rapid and orderly
resolution of any U.S. IHC subsidiary
with a derivatives portfolio. The firms’
resolution plans should address this
obstacle. The proposed guidance
confirms that a firm’s plan should
provide a detailed analysis of its
strategy to stabilize and de-risk any
derivatives portfolio of any U.S. IHC
subsidiary that continues to operate
after the U.S. IHC enters into a U.S.
bankruptcy proceeding (U.S. derivatives
strategy) and provides additional detail
regarding the agencies’ expectations.45
44 ‘‘U.S. prime brokerage account’’ or ‘‘U.S. prime
brokerage account balances’’ should include the
account positions and balances of a client of the
U.S. prime brokerage business, regardless of where
the positions or balances are booked.
45 Subject to certain constraints, a firm’s U.S.
derivatives strategy may take the form of a going
concern strategy, an accelerated de-risking strategy
(e.g., active wind-down), or an alternative, third
strategy so long as the firm’s U.S. resolution plan
supports adequately the firm’s ability to execute the
chosen strategy.

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In particular, the proposed guidance
clarifies that a firm should incorporate
into its U.S. derivatives strategy
assumptions consistent with a lack of
access to the bilateral OTC derivatives
market at the start of its resolution
period. The proposed guidance also
confirms and clarifies expectations
related to other elements that should be
addressed in the firm’s analysis of its
U.S. derivatives strategy, including the
incorporation of resource needs into its
RLEN and RCEN estimates (forecasts of
resource needs); an analysis of any
potential derivatives portfolio remaining
after the resolution period (potential
residual derivatives portfolio); a method
to apply sensitivity analyses to the key
drivers of the derivatives-related costs
and liquidity flows under its U.S.
derivatives strategy (sensitivity
analysis); and the impact from the
assumed failure of a U.S. IHC subsidiary
with a derivatives portfolio (nonsurviving entity analysis).
Question [ ]: Should the proposed guidance
incorporate a set of criteria explaining the
circumstances under which the expectations
related to derivatives and trading activities
apply to firms that would be Specified FBOs
under the proposed guidance? If so, what
criteria would be the most relevant indicators
of a derivatives and trading portfolio that
may pose risks to the orderly resolution of a
firm? For example, should the agencies
consider some or all of the following indicia:
being a foreign GSIB subject to U.S. Internal
TLAC requirements, having an identified
critical operation or a core business line
related to U.S. derivatives and trading
activities, or other indicia?
Question [ ]: Is the proposed guidance
sufficiently clear with respect to the following
concepts: U.S. derivatives and trading
activities, activities originated from U.S.
entities, risk transfer arrangements, and U.S.
prime brokerage accounts? What additional
clarifications or alternatives concerning the
proposed derivatives and trading practices
framework or its elements, if any, should the
agencies consider?
Question [ ]: Is the proposed guidance
sufficiently clear concerning the scope of
expectations related to the Booking Practices
and U.S. Activities Monitoring subsections?
Should the agencies consider applying a
different scope of expectations for these
subsections? For instance, should the scope
of these subsections only include U.S.
derivatives activities, instead of both U.S.
derivatives and trading activities (e.g.,
securities financing transactions)? If so, what
should be the basis for such differing
expectations, and what additional
clarifications or alternatives should the
agencies consider?
Question [ ]: Is the proposed guidance
sufficiently clear concerning the scope of
expectations related to the Prime Brokerage
Customer Account Transfers subsection?
Should the agencies consider applying a
different scope of expectations for this
subsection? For instance, should the scope of

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this subsection only apply to account
positions and balances that are booked into
U.S. IHC subsidiaries? If so, what should be
the basis for such differing expectations, and
what additional clarifications or alternatives
should the agencies consider?
Question [ ]: Is the proposed guidance
sufficiently clear concerning the scope of
expectations related to the Portfolio
Segmentation subsection? Should the
agencies consider applying a different scope
of expectations for this subsection? For
instance, should the scope of this subsection
only apply to U.S. IHC subsidiaries with a
derivatives portfolio, instead of both U.S. IHC
subsidiaries and U.S. material entity
branches with a derivatives portfolio? If so,
what should be the basis for such differing
expectations, and what additional
clarifications or alternatives should the
agencies consider?

Format and Structure of Plans
This section has been added to the
proposed guidance as part of the
consolidation of the prior guidance with
the proposed guidance. The proposed
guidance states the agencies’ preferred
presentation regarding the format,
assumptions, and structure of resolution
plans. Plans should contain an
executive summary, a narrative of the
firm’s resolution strategy, relevant
technical appendices, and a public
section as detailed in the Rule. The
proposed format, structure, and
assumptions are similar to those
incorporated into the 2019 domestic
guidance.
Question [*]: Do the topics in the proposed
guidance discussed above represent the key
vulnerabilities of the Specified FBOs in
resolution? If not, what key vulnerabilities
are not captured?
Question [*]: The proposal incorporates
portions of, and is generally aligned with, the
2018 FBO guidance and components of the
2019 domestic guidance. Are there any
components of the proposal that should be
augmented or removed? If so, which
provisions? Are there any elements of the
proposed guidance that are not relevant to
the Specified FBOs? If such is the case,
commenters are invited to explain in detail
and provide evidence to support their views.

Consolidation of Prior Guidance
In addition to the 2018 FBO guidance,
the agencies have also issued and
provided to certain FBOs: The Guidance
for 2013 § 165(d) Annual Resolution
Plan Submissions by Foreign-Based
Covered Companies that Submitted
Initial Resolution Plans in 2012; firmspecific feedback letters issued in 2014
and 2018; the February 2015 staff
communication regarding the 2016 plan
submissions; and the July 2017
Resolution Plan Frequently Asked
Questions (taken together, ‘‘Prior
Guidance’’). The agencies are proposing
to consolidate all Prior Guidance into a

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single document, which would provide
the public with one source of applicable
guidance to which to refer. Under the
proposal, Prior Guidance would be
superseded to the extent not
incorporated in or appended to the
guidance.
Question [*]: The proposed guidance
reflects consolidation of all applicable Prior
Guidance. Should the Agencies consolidate
all applicable Prior Guidance? If so, are there
additional aspects of Prior Guidance that
warrant inclusion, additional clarification, or
modification?

Identified Critical Operations
In the 2019 revisions, the agencies
adopted a new definition, ‘‘identified
critical operations,’’ to clarify that
critical operations can be identified by
either a covered company or jointly
identified by the agencies.46 The
agencies are proposing to incorporate
this new definition throughout the
proposed guidance where, previously,
the term ‘‘critical operations’’ was used.
This modification does not change the
substance of the proposed guidance.
IV. Paperwork Reduction Act
Certain provisions of the proposal
contain ‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501–3521) (‘‘PRA’’). In
accordance with the requirements of the
PRA, the agencies may not conduct or
sponsor, and a respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
(‘‘OMB’’) control number.
As detailed above, the proposal is
largely consistent with the 2018 FBO
guidance. The proposed changes are
mainly in the areas of derivatives and
trading activities and payment, clearing
and settlement activities. After
considering these proposed changes and
any potential PRA impacts, the agencies
have determined that, generally, the
proposal would not revise the reporting
requirements that have been previously
cleared by the OMB under the Board’s
control number (7100–0346) and under
the FDIC’s control number (3064–0210).
However, as a result of the proposed
guidance, for purposes of the PRA
analysis, one covered company
currently categorized in the 2019
revisions as a triennial full complex
foreign filer would be re-categorized as
a triennial full foreign filer. Because of
the nature of the split in burden
between the Board and the FDIC, the
FDIC will make an adjustment to its
PRA clearance (3064–0210) to account
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for the one-firm shift in category. The
proposal would not add any
recordkeeping or third-party disclosure
requirements under the PRA. The
agencies invite public comment on this
assessment.
Comments are invited on:
(a) Whether the collections of
information are necessary for the proper
performance of the Board’s and the
FDIC’s functions, including whether the
information has practical utility;
(b) The accuracy of the estimate of the
burden of the information collections,
including the validity of the
methodology and assumptions used;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
information collections on respondents,
including through the use of automated
collection techniques or other forms of
information technology;
(e) Estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information; and
(f) Burden estimates for preparation of
the waiver request and the calculation
of any associated reduction in burden.
V. Text of the Proposed Guidance

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Guidance for Resolution Plan
Submissions of Certain Foreign-Based
Covered Companies
I. Introduction
II. Capital
a. Resolution Capital Adequacy and
Positioning (RCAP)
b. Resolution Capital Execution Need
(RCEN)
III. Liquidity
a. Capabilities
b. Resolution Adequacy and Positioning
(RLAP)
c. Resolution Liquidity Execution Need
(RLEN)
IV. Governance Mechanisms
a. Playbooks, Foreign Parent Support, and
Triggers
b. Support Within the United States
V. Operational
a. Payment, Clearing and Settlement
Activities
b. Managing, Identifying, and Valuing
Collateral
c. Management Information Systems
d. Shared and Outsourced Services
e. Qualified Financial Contracts
VI. Branches
VII. Group Resolution Plan
VIII. Legal Entity Rationalization and
Separability
IX. Derivatives and Trading Activities
X. Format and Structure of Plans
XI. Public Section
Appendix: Frequently Asked Questions

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Guidance for Resolution Plan
Submissions of Certain Foreignbased Covered Companies
I. Introduction
Section 165(d) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5365(d))
requires certain foreign-based financial
companies to report periodically to the
Board of Governors of the Federal
Reserve System (the Federal Reserve or
Board) and the Federal Deposit
Insurance Corporation (the FDIC)
(together the Agencies) their plans for
rapid and orderly resolution in the
event of material financial distress or
failure. On November 1, 2011, the
Agencies promulgated a joint rule
implementing the provisions of Section
165(d).1 Subsequently, in November
2019, the Agencies finalized
amendments to the joint rule addressing
amendments to the Dodd-Frank Act
made by the Economic Growth,
Regulatory Relief, and Consumer
Protection Act and improving certain
aspects of the joint rule based on the
Agencies’ experience implementing the
joint rule since its adoption.2 Financial
companies meeting criteria set out in
the Rule must file a resolution plan
(Plan) according to the schedule
specified in the Rule.
This document is intended to provide
guidance to certain foreign banking
organizations regarding development of
their respective U.S. resolution
strategies (Specified FBOs or firms).
Specifically, the guidance applies to
FBOs that are triennial full filers 3 and
whose intermediate holding companies
required to be formed pursuant to 12
CFR 252 have a method 2 GSIB score of
250 or more. The document is intended
to assist these firms in further
developing their U.S. resolution
strategies. The document does not have
the force and effect of law. Rather, it
describes the Agencies’ expectations
and priorities regarding these firms’
Plans and the Agencies’ general views
regarding specific areas where
additional detail should be provided
and where certain capabilities or
optionality should be developed and
maintained to demonstrate that each
firm has considered fully, and is able to
mitigate, obstacles to the successful
1 76 FR 67323 (November 1, 2011), codified at 12
CFR parts 243 and 381.
2 Resolution Plans Required, 84 FR 59194
(November 1, 2019). The amendments became
effective December 31, 2019. ‘‘Rule’’ means the joint
rule as amended in 2019. Capitalized terms not
defined herein have the meanings set forth in the
Rule.
3 See 12 CFR 243.4(b)(1); 12 CFR 381.4(b)(1).

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implementation of their U.S. resolution
strategy.4
The Agencies are providing guidance
to the Specified FBOs to assist their
further development of a resolution plan
for their U.S. operations for their July 1,
2021 and subsequent resolution plan
submissions.5 The guidance for
Specified FBOs differs in certain
respects from the guidance issued in
December 2018 for certain U.S.-based
covered companies given the
circumstances under which a U.S.
resolution plan is most likely to be
relevant. The U.S. resolution plan for a
Specified FBO would address a scenario
where the U.S. operations experience
material financial distress and the
foreign parent is unable or unwilling to
provide sufficient financial support for
the continuation of U.S. operations, and
at least the top tier U.S. Intermediate
Holding Company (U.S. IHC) files for
Chapter 11 bankruptcy. Under such a
scenario, the Plan should provide for
the rapid and orderly resolution of the
Specified FBO’s U.S. material entities
and operations.
In general, this document is organized
around a number of key vulnerabilities
in resolution (e.g., capital; liquidity;
governance mechanisms; operational;
legal entity rationalization and
separability; and derivatives and trading
activities) that apply across resolution
plans. Additional vulnerabilities or
obstacles may arise based on a firm’s
particular structure, operations, or
resolution strategy. Each firm is
expected to satisfactorily address these
vulnerabilities in its Plan—e.g., by
developing sensitivity analysis for
certain underlying assumptions,
enhancing capabilities, providing
detailed analysis, or increasing
optionality development, as indicated
below.
The Agencies will review the Plan to
determine if it satisfactorily addresses
4 This guidance consolidates the Guidance for
2018 § 165(d) Annual Resolution Plan Submissions
by Foreign-Based Covered Companies that
Submitted Resolution Plans in July 2015; the July
2017 Resolution Plan Frequently Asked Questions;
feedback letters issued to certain foreign-based
Covered Companies in December 2018 and in
August 2014; the communications the Agencies
made to certain foreign-based Covered Companies
in February 2015; and the Guidance for 2013
§ 165(d) Annual Resolution Plan Submissions by
Foreign-Based Covered Companies that Submitted
Initial Resolution Plans in 2012 (taken together,
prior guidance). To the extent not incorporated in
or appended to this guidance, prior guidance is
superseded.
5 Consistent with prior communications to the
firms that would be Specified FBOs under the
proposed guidance, they are required to submit
resolution plans on or before July 1, 2020 that may
be limited to describing changes that those FBOs
have made to their July 2018 resolution plans to
address shortcomings identified in those resolution
plans.

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key potential vulnerabilities, including
those detailed below. If the Agencies
jointly decide that these matters are not
satisfactorily addressed in the Plan, the
Agencies may determine jointly that the
Plan is not credible or would not
facilitate an orderly resolution under the
U.S. Bankruptcy Code.
II. Capital
Resolution Capital Adequacy and
Positioning (RCAP): In order to help
ensure that a firm’s U.S. non-branch
material entities 6 could be resolved in
an orderly manner, the firm’s U.S. IHC
should have an adequate amount of
loss-absorbing capacity to execute its
U.S. resolution strategy. Thus, a firm’s
U.S. IHC should hold total lossabsorbing capital, as well as long-term
debt, to help ensure that the firm has
adequate capacity to meet that need at
a consolidated level of the U.S. IHC
(IHC TLAC).7
A firm’s IHC TLAC should be
complemented by appropriate
positioning of that loss-absorbing
capacity between the U.S. IHC and the
U.S. IHC subsidiaries. The positioning
of a firm’s IHC TLAC should balance the
certainty associated with prepositioning internal TLAC directly at
U.S. IHC subsidiaries with the flexibility
provided by holding recapitalization
resources at the U.S. IHC (contributable
resources) to meet unanticipated losses
at the U.S. IHC subsidiaries. That
balance should take account of both prepositioning at U.S. IHC subsidiaries and
holding resources at the U.S. IHC, and
the obstacles associated with each. The
firm should not rely exclusively on
either full pre-positioning or U.S. IHC
contributable resources to execute its
U.S. resolution strategy, unless it has
only one U.S. IHC subsidiary that is an
operating subsidiary. The plan should
describe the positioning of internal
TLAC among the U.S. IHC and the U.S.
IHC subsidiaries, along with analysis
supporting such positioning.
Finally, to the extent that prepositioned internal TLAC at a U.S. IHC
subsidiary is in the form of

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6 The

terms ‘‘material entities,’’ ‘‘identified
critical operations,’’ and ‘‘core business lines’’ have
the same meaning as in the Rule. The term ‘‘U.S.
material entity’’ means any subsidiary, branch, or
agency that is a material entity and is domiciled in
the United States. The term ‘‘U.S. non-branch
material entity’’ means a material entity organized
or incorporated in the U.S. including, in all cases,
the U.S. IHC. The term ‘‘U.S. IHC subsidiaries’’
means all U.S. non-branch material entities other
than the U.S. IHC.
7 Total Loss-Absorbing Capacity, Long-Term Debt,
and Clean Holding Company Requirements for
Systemically Important U.S. Bank Holding
Companies and Intermediate Holding Companies of
Systemically Important Foreign Banking
Organizations, 82 FR 8266 (January 24, 2017).

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intercompany debt and there are one or
more entities between the lender and
the borrower, the firm should structure
the instruments so as to ensure that the
U.S. IHC subsidiary can be
recapitalized.
Resolution Capital Execution Need
(RCEN): To the extent required by the
firm’s U.S. resolution strategy, U.S. nonbranch material entities need to be
recapitalized to a level that allows for an
orderly resolution. The firm should
have a methodology for periodically
estimating the amount of capital that
may be needed to support each U.S. IHC
subsidiary after the U.S. IHC bankruptcy
filing (RCEN). The firm’s positioning of
IHC TLAC should be able to support the
RCEN estimates.
The firm’s RCEN methodology should
use conservative forecasts for losses and
risk-weighted assets and incorporate
estimates of potential additional capital
needs through the resolution period,8
consistent with the firm’s resolution
strategy for its U.S. operations. The
methodology is not required to produce
aggregate losses that are greater than the
amount of IHC TLAC that would be
required for the firm under the Board’s
final rule.9 The RCEN methodology
should be calibrated such that
recapitalized U.S. IHC subsidiaries have
sufficient capital to maintain market
confidence as required under the U.S
resolution strategy. Capital levels
should meet or exceed all applicable
regulatory capital requirements for
‘‘well-capitalized’’ status and meet
estimated additional capital needs
throughout resolution. U.S. IHC
subsidiaries that are not subject to
capital requirements may be considered
sufficiently recapitalized when they
have achieved capital levels typically
required to obtain an investment-grade
credit rating or, if the entity is not rated,
an equivalent level of financial
soundness. Finally, the methodology
should be independently reviewed,
consistent with the firm’s corporate
governance processes and controls for
the use of models and methodologies.
III. Liquidity
The firm should have the liquidity
capabilities necessary to execute its U.S
resolution strategy, including those
described below. For resolution
purposes, these capabilities should
include having an appropriate model
and process for estimating and
maintaining sufficient liquidity at—or
readily available from the U.S. IHC to—

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U.S. IHC subsidiaries, and a
methodology for estimating the liquidity
needed to successfully execute the U.S.
resolution strategy, as described below.
Capabilities: A firm is expected to
have a comprehensive understanding of
funding sources, uses, and risks at
material entities and identified critical
operations, including how funding
sources may be affected under stress.
For example, a firm should have and
describe its capabilities to:
• Evaluate the funding requirements
necessary to perform identified critical
operations, including shared and
outsourced services and access to
financial market utilities (FMUs); 10
• Monitor liquidity reserves and
relevant custodial arrangements by
jurisdiction and material entity; 11
• Routinely test funding and liquidity
outflows and inflows for U.S. nonbranch material entities at the legal
entity level under a range of adverse
stress scenarios, taking into account the
effect on intra-day, overnight, and term
funding flows between affiliates and
across jurisdictions;
• Assess existing and potential
restrictions on the transfer of liquidity
between U.S. non-branch material
entities; 12 and
• Develop contingency strategies to
maintain funding for U.S. non-branch
material entities and identified critical
operations in the event of a disruption
in the Specified FBO’s current funding
model.13
Resolution Liquidity Adequacy and
Positioning (RLAP): With respect to
RLAP, the firm should be able to
measure the stand-alone liquidity
position of each U.S. non-branch
material entity—i.e., the high-quality
liquid assets (HQLA) at the U.S. nonbranch material entity less net outflows
to third parties and affiliates—and
ensure that liquidity is readily available
to meet any deficits. The RLAP model
should cover a period of at least 30 days
and reflect the idiosyncratic liquidity
profile of the U.S. IHC and risk of each
U.S. IHC subsidiary. The model should
balance the reduction in frictions
associated with holding liquidity
directly at the U.S. IHC subsidiary with
the flexibility provided by holding
HQLA at the U.S. IHC or at a U.S. IHC
subsidiary available to meet
unanticipated outflows at other U.S.
IHC subsidiaries.14 The firm should not
10 12
11 12

CFR 252.156(g)(3).
CFR 252.156(g)(2).

12 Id.
13 12

8 The

resolution period begins immediately after
the U.S. IHC bankruptcy filing and extends through
the completion of the U.S. resolution strategy.
9 82 FR 8266 (January 24, 2017).

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CFR 252.156(e).
the extent HQLA is held at the U.S. IHC or
at a U.S. IHC subsidiary, the model must consider
whether such funds are freely available. To be
14 To

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rely exclusively on either full prepositioning or U.S. IHC contributable
resources to execute its U.S. resolution
strategy, unless it has only one U.S. IHC
subsidiary that is an operating
subsidiary.
The model 15 should ensure that on a
consolidated basis the U.S. IHC holds
sufficient HQLA to cover net liquidity
outflows of the U.S. non-branch
material entities. The model should also
measure the stand-alone net liquidity
positions of each U.S. non-branch
material entity. The stand-alone net
liquidity position of each U.S. nonbranch material entity (HQLA less net
outflows) should be measured using the
firm’s internal liquidity stress test
assumptions and should treat interaffiliate exposures in the same manner
as third-party exposures. For example,
an overnight unsecured exposure to a
non-U.S. affiliate should be assumed to
mature. Finally, the firm should not
assume that a net liquidity surplus at
any U.S. IHC subsidiary that is a
depository institution could be moved
to meet net liquidity deficits at an
affiliate, or to augment U.S. IHC
resources, consistent with Regulation
W.
Additionally, the RLAP methodology
should take into account for each of the
U.S. IHC, U.S. IHC subsidiaries, and any
branch that is a material entity (A) the
daily contractual mismatches between
their respective inflows and outflows;
(B) their respective daily flows from
movement of cash and collateral for all
inter-affiliate transactions; and (C) their
respective daily stressed liquidity flows
and trapped liquidity as a result of
actions taken by clients, counterparties,
key FMUs, and foreign supervisors,
among others.
In calculating its RLAP estimate, the
U.S. IHC should calculate its liquidity
position with respect to its foreign
parent, branches and agencies, and
other affiliates (together, affiliates)
separately from its liquidity position
with respect to third parties, and should
not offset inflows from affiliated parties
against outflows to external parties. In
addition, a U.S. IHC should use cashflow sources from its affiliates to offset
cash-flow needs of its affiliates only to
the extent that the term of the cash-flow
source from its affiliates is the same as,
freely available, the HQLA must be free of legal,
regulatory, contractual, and other restrictions on the
ability of the material entity to liquidate, sell, or
transfer the asset.
15 ‘‘Model’’ refers to the set of calculations
required by Regulation YY that estimate the U.S.
IHC’s liquidity position.

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or shorter than, the term of the cashflow need of its affiliates.16
Resolution Liquidity Execution Need
(RLEN): The firm should have a
methodology for estimating the liquidity
needed after the U.S. IHC’s bankruptcy
filing to stabilize any surviving U.S. IHC
subsidiaries and to allow those entities
to operate post-filing, in accordance
with the U.S. strategy.
The firm’s RLEN methodology should:
(A) Estimate the minimum operating
liquidity (MOL) needed at each U.S. IHC
subsidiary to ensure those entities could
continue to operate, to the extent relied upon
in the U.S. resolution strategy, after
implementation of the U.S. resolution
strategy and/or to support a wind-down
strategy;
(B) Provide daily cash flow forecasts by
U.S. IHC subsidiary to support estimation of
peak funding needs to stabilize each entity
under resolution;
(C) Provide a comprehensive breakout of
all inter-affiliate transactions and
arrangements that could impact the MOL or
peak funding needs estimates for the U.S.
IHC subsidiaries; and
(D) Estimate the minimum amount of
liquidity required at each U.S. IHC subsidiary
to meet the MOL and peak needs noted
above, which would inform the provision of
financial resources from the foreign parent to
the U.S. IHC, or if the foreign parent is
unable or unwilling to provide such financial
support, any preparatory resolution-related
actions.

The MOL estimates should capture
U.S. IHC subsidiaries’ intraday liquidity
requirements, operating expenses,
working capital needs, and inter-affiliate
funding frictions to ensure that U.S. IHC
subsidiaries could operate without
disruption during the resolution.
The peak funding needs estimates
should be projected for each U.S. IHC
subsidiary and cover the length of time
the firm expects it would take to
stabilize that U.S. IHC subsidiary. Interaffiliate funding frictions should be
taken into account in the estimation
process.
The firm’s forecasts of MOL and peak
funding needs should ensure that U.S.
IHC subsidiaries could operate through
resolution consistent with regulatory
requirements, market expectations, and
the firm’s post-failure strategy. These
forecasts should inform the RLEN
estimate, i.e., the minimum amount of
HQLA required to facilitate the
execution of the firm’s strategy for the
U.S. IHC subsidiaries.
For nonsurviving U.S. IHC
subsidiaries, the firm should provide
analysis and an explanation of how the
16 The U.S. IHC should calculate its cash-flow
sources from its affiliates consistent with the net
internal stressed cash-flow need calculation in
§ 252.157(c)(2)(iv) of Regulation YY.

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material entity’s resolution could be
accomplished within a reasonable
period of time and in a manner that
substantially mitigates the risk of
serious adverse effects on U.S. financial
stability. For example, if a U.S. IHC
subsidiary that is a broker-dealer is
assumed to fail and enter resolution
under the Securities Investor Protection
Act (SIPA), the firm should provide an
analysis of the potential impacts on
funding and asset markets and on prime
brokerage clients, bearing in mind the
objective of an orderly resolution.
IV. Governance Mechanisms
A firm should identify the governance
mechanisms that would ensure that
communication and coordination occurs
between the boards of the U.S. IHC or
a U.S. IHC subsidiary and the foreign
parent to facilitate the provision of
financial support, or if not forthcoming,
any preparatory resolution-related
actions to facilitate an orderly
resolution.
Playbooks, Foreign Parent Support,
and Triggers: Governance playbooks
should detail the board and senior
management actions of U.S. non-branch
material entities that would be needed
under the firm’s U.S. resolution strategy.
The governance playbooks should also
include a discussion of (A) the firm’s
proposed U.S. communications strategy,
both internal and external; 17 (B) the
fiduciary responsibilities of the
applicable board(s) of directors or other
similar governing bodies and how
planned actions would be consistent
with such responsibilities applicable at
the time actions are expected to be
taken; (C) potential conflicts of interest,
including interlocking boards of
directors; (D) any employee retention
policy; and (E) any other limitations on
the authority of the U.S. IHC and the
U.S. IHC subsidiary boards and senior
management to implement the U.S.
resolution strategy. All responsible
parties and timeframes for action should
be identified. Governance playbooks
should be updated periodically for each
entity whose governing body would
need to act under the firm’s U.S.
resolution strategy.
In order to meet liquidity needs at the
U.S. non-branch material entities, the
firm may either fully pre-position
liquidity in the U.S. non-branch
material entities or develop a
mechanism for planned foreign parent
support, of any amount not prepositioned, for the successful execution
of the U.S. strategy. Mechanisms to
17 External communications include those with
U.S. and foreign authorities and other external
stakeholders.

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support readily available liquidity may
include a term liquidity facility between
the U.S. IHC and the foreign parent that
can be drawn as needed and as
informed by the firm’s RLEN estimates
and liquidity positioning. The plan
should include analysis of how the U.S.
IHC/foreign parent facility is funded or
buffered for by the foreign parent. The
sufficiency of the liquidity should be
informed by the firm’s RLAP and RLEN
estimates for the U.S. non-branch
material entities. Additionally, the plan
should include analysis of the potential
challenges to the planned foreign parent
support mechanism and associated
mitigants. Where applicable, the
analysis should discuss applicable nonU.S. law and cross-border legal
challenges (e.g., challenges related to
enforcing contracts governed by foreign
law). The analysis should identify the
mitigant(s) to such challenges that the
firm considers most effective.
The firm should be prepared to
increase communication and
coordination at the appropriate time in
order to mitigate financial, operational,
legal, and regulatory vulnerabilities. To
facilitate this communication and
coordination, the firm should establish
clearly identified triggers linked to
specific actions for:

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(A) The escalation of information to U.S.
senior management, U.S. risk committee and
U.S. governing bodies to potentially take the
corresponding actions as the U.S. operations
experience material financial distress,
leading eventually to the decision to
implement the U.S. resolution strategy.
i. Triggers should identify when and under
what conditions the U.S. material entities
would transition from business-as-usual
conditions to a stress period.
ii. Triggers should also take into
consideration changes in the foreign parent’s
condition from business-as-usual conditions
through resolution.
(B) The escalation of information to and
discussions with the appropriate governing
bodies to confirm whether the governing
bodies are able and willing to provide
financial resources to support U.S.
operations.
i. Triggers should be based on the firm’s
methodology for forecasting the liquidity and
capital needed to facilitate the U.S. strategy.
For example, triggers may be established that
reflect U.S. non-branch material entities’
financial resources approaching RCEN/RLEN
estimates, with corresponding actions to
confirm the foreign parent’s financial
capability and willingness to provide
sufficient support.

Corresponding escalation procedures,
actions, and timeframes should be
constructed so that breach of the triggers
will allow prerequisite actions to be
completed. For example, breach of the
triggers needs to occur early enough to
provide for communication,

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coordination, and confirmation of the
provision of resources from the foreign
parent.
Support Within the United States: If
the plan provides for the provision of
capital and liquidity by a U.S. material
entity (e.g., the U.S. IHC) to its U.S.
affiliates prior to the U.S. IHC’s
bankruptcy filing (Support), the plan
should also include a detailed legal
analysis of the potential state law and
bankruptcy law challenges and
mitigants to providing the Support.
Specifically, the analysis should
identify potential legal obstacles and
explain how the firm would seek to
ensure that Support would be provided
as planned. Legal obstacles include
claims of fraudulent transfer,
preference, breach of fiduciary duty,
and any other applicable legal theory
identified by the firm. The analysis also
should include related claims that may
prevent or delay an effective
recapitalization, such as equitable
claims to enjoin the transfer (e.g.,
imposition of a constructive trust by the
court). The analysis should apply the
actions contemplated in the plan
regarding each element of the claim, the
anticipated timing for commencement
and resolution of the claims, and the
extent to which adjudication of such
claim could affect execution of the
firm’s U.S. resolution strategy. The
analysis should include mitigants to the
potential challenges to the planned
Support. The plan should identify the
mitigant(s) to such challenges that the
firm considers most effective.
Furthermore, the plan should describe
key motions to be filed at the initiation
of any bankruptcy proceeding related to
(as appropriate) asset sales and other
non-routine matters.
V. Operational
Payment, Clearing, and Settlement
Activities
Framework. Maintaining continuity of
payment, clearing, and settlement (PCS)
services is critical for the orderly
resolution of firms that are either users
or providers,18 or both, of PCS services.
A firm should demonstrate capabilities
for continued access to PCS services
essential to an orderly resolution under
18 A firm is a user of PCS services if it accesses
PCS services through an agent bank or it uses the
services of an FMU through its membership in that
FMU or through an agent bank. A firm is a provider
of PCS services if it provides PCS services to clients
as an agent bank or it provides clients with access
to an FMU or agent bank through the firm’s
membership in or relationship with that service
provider. A firm is also a provider if it provides
clients with PCS services through the firm’s own
operations in the United States (e.g., payment
services or custody services).

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its U.S. resolution strategy through a
framework to support such access by:
• Identifying clients,19 FMUs, and
agent banks as key from the firm’s
perspective for the firm’s U.S. material
entities, identified critical operations,
and core business lines, using both
quantitative (volume and value) 20 and
qualitative criteria;
• Mapping U.S. material entities,
identified critical operations, core
business lines, and key clients of the
firm’s U.S. operations to both key FMUs
and key agent banks; and
• Developing a playbook for each key
FMU and key agent bank essential to an
orderly resolution under its U.S.
resolution strategy that reflects the
firm’s role(s) as a user and/or provider
of PCS services.
The framework should address both
direct relationships (e.g., a firm’s direct
membership in an FMU, a firm’s
provision of clients with PCS services
through its own operations in the
United States, or a firm’s contractual
relationship with an agent bank) and
indirect relationships (e.g., a firm’s
provision of clients with access to the
relevant FMU or agent bank through the
firm’s membership in or relationship
with that FMU or agent bank, or a firm’s
U.S. and non-U.S. affiliate and branch
provision of U.S. material entities and
key clients of the firm’s U.S. operations
with access to an FMU or agent bank).
The framework also should address the
potential impact of any disruption to,
curtailment of, or termination of such
direct and indirect relationships on the
firm’s U.S. material entities, identified
critical operations, and core business
lines, as well as any corresponding
impact on key clients of the firm’s U.S.
operations.
Playbooks for Continued Access to
PCS Services. The firm is expected to
provide a playbook for each key FMU
and key agent bank that addresses
considerations that would assist the
firm and key clients of the firm’s U.S.
operations in maintaining continued
access to PCS services in the period
leading up to and including the firm’s
resolution under its U.S. resolution
19 For purposes of this section V, a client is an
individual or entity, including affiliates of the firm,
to whom the firm provides PCS services and, if
credit or liquidity is offered, any related credit or
liquidity offered in connection with those services.
20 In identifying entities as key, examples of
quantitative criteria may include: for a client,
transaction volume/value, market value of
exposures, assets under custody, usage of PCS
services, and if credit or liquidity is offered, any
extension of related intraday credit or liquidity; for
an FMU, the aggregate volumes and values of all
transactions processed through such FMU; and for
an agent bank, assets under custody, the value of
cash and securities settled, and extensions of
intraday credit.

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strategy. Each playbook should provide
analysis of the financial and operational
impact of adverse actions that may be
taken by a key FMU or a key agent bank
and contingency actions that may be
taken by the firm. Each playbook also
should discuss any possible alternative
arrangements that would allow
continued access to PCS services for the
firm’s U.S. material entities, identified
critical operations and core business
lines, and key clients of the firm’s U.S.
operations, while the firm is in
resolution under its U.S. resolution
strategy. The firm is not expected to
incorporate a scenario in which it loses
key FMU or key agent bank access into
its U.S. resolution strategy or its RLEN
and RCEN estimates. The firm should
continue to engage with key FMUs, key
agent banks, and key clients of the
firm’s U.S. operations, and playbooks
should reflect any feedback received
during such ongoing outreach.
Content Related to Users of PCS
Services. Individual key FMU and key
agent bank playbooks should include:
• Descriptions of the firm’s
relationship as a user, including through
indirect access, with the key FMU or
key agent bank and the identification
and mapping of PCS services to the
firm’s U.S. material entities, identified
critical operations, and core business
lines that use those PCS services;
• Discussion of the potential range of
adverse actions that may be taken by
that key FMU or key agent bank when
the firm is in resolution under its U.S.
resolution strategy,21 the operational
and financial impact of such actions on
the firm’s U.S. material entities,
identified critical operations, and core
business lines, and contingency
arrangements that may be initiated by
the firm in response to potential adverse
actions by the key FMU or key agent
bank; and
• Discussion of PCS-related liquidity
sources and uses in business-as-usual
(BAU), in stress, and in the resolution
period, presented by currency type
(with U.S. dollar equivalent) and by
U.S. material entity.
Æ PCS Liquidity Sources: These may
include the amounts of intraday
extensions of credit, liquidity buffer,
inflows from FMU participants, and
prefunded amounts of key clients of the
firm’s U.S. operations in BAU, in stress,
and in the resolution period. The
playbook also should describe intraday
credit arrangements (e.g., facilities of the
key FMU, key agent bank, or a central
21 Examples of potential adverse actions may
include increased collateral and margin
requirements and enhanced reporting and
monitoring.

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bank) and any similar custodial
arrangements that allow ready access to
a firm’s funds for PCS-related key FMU
and key agent bank obligations
(including margin requirements) in
various currencies, including
placements of firm liquidity at central
banks, key FMUs, and key agent banks.
Æ PCS Liquidity Uses: These may
include margin and prefunding by the
firm and key clients of the firm’s U.S.
operations, and intraday extensions of
credit, including incremental amounts
required during resolution.
Æ Intraday Liquidity Inflows and
Outflows: The playbook should describe
the firm’s ability to control intraday
liquidity inflows and outflows and to
identify and prioritize time-specific
payments. The playbook also should
describe any account features that might
restrict the firm’s ready access to its
liquidity sources.
Content Related to Providers of PCS
Services.22 Individual key FMU and key
agent bank playbooks should include:
• Identification and mapping of PCS
services to the firm’s U.S. material
entities, identified critical operations,
and core business lines that provide
those PCS services, and a description of
the scale and the way in which each
provides PCS services;
• Identification and mapping of PCS
services to key clients of the firm’s U.S.
operations to whom the firm’s U.S.
material entities, identified critical
operations, and core business lines
provide such PCS services and any
related credit or liquidity offered in
connection with such services;
• Discussion of the potential range of
firm contingency arrangements available
to minimize disruption to the provision
of PCS services to key clients of the
firm’s U.S. operations, including the
viability of transferring activity and any
related assets of key clients of the firm’s
U.S. operations, as well as any
alternative arrangements that would
allow the key clients of the firm’s U.S.
operations continued access to PCS
services if the firm could no longer
provide such access (e.g., due to the
firm’s loss of key FMU or key agent
bank access), and the financial and
operational impacts of such
arrangements from the firm’s
perspective;
22 Where a firm is a provider of PCS services
through the firm’s own operations in the United
States, the firm is expected to produce a playbook
for the U.S. material entities that provide those
services, addressing each of the items described
under ‘‘Content Related to Providers of PCS
Services,’’ which include contingency arrangements
to permit the firm’s key clients of the firm’s U.S.
operations to maintain continued access to PCS
services.

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• Descriptions of the range of
contingency actions that the firm may
take concerning its provision of intraday
credit to key clients of the firm’s U.S.
operations, including analysis
quantifying the potential liquidity the
firm could generate by taking such
actions in stress and in the resolution
period, such as (i) requiring key clients
of the firm’s U.S. operations to designate
or appropriately pre-position liquidity,
including through prefunding of
settlement activity, for PCS-related key
FMU and key agent bank obligations at
specific material entities of the firm
(e.g., direct members of key FMUs) or
any similar custodial arrangements that
allow ready access to funds for such
obligations in various currencies of key
clients of the firm’s U.S. operations; (ii)
delaying or restricting PCS activity of
key clients of the firm’s U.S. operations;
and (iii) restricting, imposing conditions
upon (e.g., requiring collateral), or
eliminating the provision of intraday
credit or liquidity to key clients of the
firm’s U.S. operations; and
• Descriptions of how the firm will
communicate to key clients of the firm’s
U.S. operations the potential impacts of
implementation of any identified
contingency arrangements or
alternatives, including a description of
the firm’s methodology for determining
whether any additional communication
should be provided to some or all key
clients of the firm’s U.S. operations (e.g.,
due to BAU usage of that access and/or
related intraday credit or liquidity of the
key client of the firm’s U.S. operations),
and the expected timing and form of
such communication.
Capabilities. Firms are expected to
have and describe capabilities to
understand, for each U.S. material
entity, its obligations and exposures
associated with PCS activities,
including contractual obligations and
commitments. For example, firms
should be able to:
• Track the following items by U.S.
material entity and, with respect to
customers, counterparties, and agents
and service providers, by location/
jurisdiction:
Æ PCS activities, with each activity
mapped to the relevant material entities
and core business lines;23
Æ Customers and counterparties for
PCS activities, including values and
volumes of various transaction types, as
well as used and unused capacity for all
lines of credit; 24
23 12

CFR 243.5(e)(12); 12 CFR 381.5(e)(12).

24 Id.

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Æ Exposures to and volumes
transacted with FMUs, Nostro agents,
and custodians; and 25
Æ Services provided and service level
agreements for other current agents and
service providers (internal and
external).26
• Assess the potential effects of
adverse actions by FMUs, Nostro agents,
custodians, and other agents and service
providers, including suspension or
termination of membership or services,
on the firm’s U.S. operations and
customers and counterparties of those
U.S. operations; 27
• Develop contingency arrangements
in the event of such adverse actions; 28
and
• Quantify the liquidity needs and
operational capacity required to meet all
PCS obligations, including any change
in demand for and sources of liquidity
needed to meet such obligations.
Managing, Identifying, and Valuing
Collateral: The firm is expected to have
and describe its capabilities to manage,
identify, and value the collateral that
the U.S. non-branch material entities
receive from and post to external parties
and affiliates. Specifically, the firm
should:
• Be able to query and provide
aggregate statistics for all qualified
financial contracts concerning crossdefault clauses, downgrade triggers, and
other key collateral-related contract
terms—not just those terms that may be
impacted in an adverse economic
environment—across contract types,
business lines, legal entities, and
jurisdictions;
• Be able to track both firm collateral
sources (i.e., counterparties that have
pledged collateral) and uses (i.e.,
counterparties to whom collateral has
been pledged) at the CUSIP level on at
least a t+1 basis;
• Have robust risk measurements for
cross-entity and cross-contract netting,
including consideration of where
collateral is held and pledged;
• Be able to identify CUSIP and asset
class level information on collateral
pledged to specific central
counterparties by legal entity on at least
a t+1 basis;
• Be able to track and report on interbranch collateral pledged and received
on at least a t+1 basis and have clear
policies explaining the rationale for
such inter-branch pledges, including
any regulatory considerations; and
• Have a comprehensive collateral
management policy that outlines how
25 12

CFR 252.156(g).
CFR 243.5(f)(l)(i); 12 CFR 381.5(f)(1)(i).
27 12 CFR 252.156(e).
28 Id.
26 12

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the firm as a whole approaches
collateral and serves as a single source
for governance.29
In addition, as of the conclusion of
any business day, the firm should be
able to:
• Identify the legal entity and
geographic jurisdiction where
counterparty collateral is held;
• Document all netting and rehypothecation arrangements with
affiliates and external parties, by legal
entity; and
• Track and manage collateral
requirements associated with
counterparty credit risk exposures
between affiliates, including foreign
branches.
At least on a quarterly basis, the firm
should be able to:
• Review the material terms and
provisions of International Swaps and
Derivatives Association Master
Agreements and the Credit Support
Annexes, such as termination events, for
triggers that may be breached as a result
of changes in market conditions;
• Identify legal and operational
differences and potential challenges in
managing collateral within specific
jurisdictions, agreement types,
counterparty types, collateral forms, or
other distinguishing characteristics; and
• Forecast changes in collateral
requirements and cash and non-cash
collateral flows under a variety of stress
scenarios.
Management Information Systems:
The firm should have the management
information systems (MIS) capabilities
to readily produce data on a U.S. legal
entity basis (including any U.S. branch)
and have controls to ensure data
integrity and reliability, as described
below.30 The firm also should perform
a detailed analysis of the specific types
of financial and risk data that would be
required to execute the U.S. resolution
strategy and how frequently the firm
would need to produce the information,
with the appropriate level of
granularity.
A firm is expected to have and
describe capabilities to produce the
following types of information by
material entity on a timely basis:
• Financial statements for each
material entity (at least monthly);
• External and inter-affiliate credit
exposures, both on- and off-balance
sheet, by type of exposure, counterparty,
maturity, and gross payable and
receivable;

• Gross and net risk positions with
internal and external counterparties;
• Guarantees, cross holdings,
financial commitments and other
transactions between material entities;
• Data to facilitate third-party
valuation of assets and businesses,
including risk metrics;
• Key third party contracts, including
the provider, provider’s location,
service(s) provided, legal entities that
are a party to or a beneficiary of the
contract, and key contractual rights (for
example, termination and change in
control clauses);
• Legal agreement information,
including parties to the agreement and
key terms and interdependencies (for
example, change in control,
collateralization, governing law,
termination events, guarantees, and
cross-default provisions);
• Service level agreements between
affiliates, including the service(s)
provided, the legal entity providing the
service, legal entities receiving the
service, and any termination/
transferability provisions;
• Licenses and memberships to all
exchanges and value transfer networks,
including FMUs;
• Key management and support
personnel, including dual hatted
employees, and any associated retention
agreements;
• Agreements and other legal
documents related to property,
including facilities, technology systems,
software, and intellectual property
rights. The information should include
ownership, physical location, where the
property is managed and names of legal
entities and lines of business that the
property supports; and
• Updated legal records for domestic
and foreign entities, including entity
type and purpose (for example, holding
company, bank, broker dealer, and
service entity), jurisdiction(s),
ownership, and regulator(s).
Shared and Outsourced Services: The
firm should maintain a fully actionable
implementation plan to ensure the
continuity of shared services that
support identified critical operations 31
and robust arrangements to support the
continuity of shared and outsourced
services, including, without limitation,
appropriate plans to retain key
personnel relevant to the execution of
the firm’s strategy. If a material entity
provides shared services that support

29 The policy may reference subsidiary or related
policies already in place, as implementation may
differ based on business line or other factors.
30 MIS infrastructure projects were expected to be
completed by 2018.

31 ‘‘Shared services that support identified critical
operations’’ or ‘‘critical shared services’’ are those
that support identified critical operations
conducted in whole or in material part in the
United States.

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identified critical operations,32 and the
continuity of these shared services relies
on the assumed cooperation,
forbearance, or other non-intervention
of regulator(s) in any jurisdiction, the
Plan should discuss the extent to which
the resolution or insolvency of any other
group entities operating in that same
jurisdiction may adversely affect the
assumed cooperation, forbearance, or
other regulatory non-intervention. If a
material entity providing shared
services that support identified critical
operations is located outside of the
United States, the Plan should discuss
how the firm will ensure the operational
continuity of such shared services
through resolution.
The firm should (A) maintain an
identification of all shared services that
support identified critical operations;
(B) maintain a mapping of how/where
these services support U.S. core
business lines and identified critical
operations; (C) incorporate such
mapping into legal entity rationalization
criteria and implementation efforts; and
(D) mitigate identified continuity risks
through establishment of service-level
agreements (SLAs) for all critical shared
services.
SLAs should fully describe the
services provided, reflect pricing
considerations on an arm’s-length basis
where appropriate, and incorporate
appropriate terms and conditions to (A)
prevent automatic termination upon
certain resolution-related events and (B)
achieve continued provision of such
services during resolution.33 The firm
should also store SLAs in a central
repository or repositories located in or
immediately accessible from the U.S. at
all times, including in resolution (and
subject to enforceable access
arrangements) in a searchable format. In
addition, the firm should ensure the
financial resilience of internal shared
service providers by maintaining
working capital for six months (or
through the period of stabilization as
required in the firm’s U.S. resolution
strategy) in such entities sufficient to
cover contract costs, consistent with the
U.S. resolution strategy. The firm
should demonstrate that such working
capital is held in a manner that ensures
its availability for its intended purpose.
The firm should identify all service
providers and critical outsourced
services that support identified critical
operations and identify any that could
not be promptly substituted. The firm

should (A) evaluate the agreements
governing these services to determine
whether there are any that could be
terminated upon commencement of any
resolution despite continued
performance; and (B) update contracts
to incorporate appropriate terms and
conditions to prevent automatic
termination upon commencement of
any resolution proceeding and facilitate
continued provision of such services.
Relying on entities projected to survive
during resolution to avoid contract
termination is insufficient to ensure
continuity. In the Plan, the firm should
document the amendment of any such
agreements governing these services.
The Plan must also discuss
arrangements to ensure the operational
continuity of shared services that
support identified critical operations in
resolution in the event of the disruption
of those shared services.
A firm is expected to have robust
arrangements in place for the continued
provision of shared or outsourced
services needed to maintain identified
critical operations. For example, firms
should:
• Evaluate internal and external
dependencies and develop documented
strategies and contingency arrangements
for the continuity or replacement of the
shared and outsourced services that are
necessary to maintain identified critical
operations.34 Examples may include
personnel, facilities, systems, data
warehouses, and intellectual property;
and
• Maintain current cost estimates for
implementing such strategies and
contingency arrangements.
Qualified Financial Contracts: The
plan should reflect the current state of
how the early termination of qualified
financial contracts could impact the
resolution of the firm’s U.S. operations.
Specifically, the plan is expected to
reflect the firm’s progress in
implementing the applicable domestic
and foreign requirements regarding
contractual stays in qualified financial
contracts as of the date the firm submits
its plan or as of a specified earlier date.
VI. Branches 35
Mapping: For each U.S. branch that is
a material entity, the Plan should
identify and map the financial and
operational interconnections to
identified critical operations, core
34 12

CFR 243.5(g); 12 CFR 381.5(g).
that the PCS framework guidance in
Section V. is not limited to U.S. branches, since
continuity of access to PCS activities, including
through non-U.S. branches, is likely to be essential
to the orderly resolution of a firm’s U.S. material
entities, identified critical operations, and core
business lines.
35 Note

32 This should be interpreted to include data
access and intellectual property rights.
33 The firm should consider whether these SLAs
should be governed by the laws of a U.S. state and
expressly subject to the jurisdiction of a court in the
U.S.

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business lines, and other material
entities. The mapping should also
identify any interconnections that, if
disrupted, would materially affect
identified critical operations, core
business lines, or U.S. non-branch
material entities, or the U.S. resolution
strategy.
Continuity of Operations: If the Plan
assumes that federal or state regulators,
as applicable, do not take possession of
any U.S. branch that is a material entity,
the Plan must support that assumption.
For any U.S. branch that is significant
to the activities of an identified critical
operation, the Plan should describe and
demonstrate how the branch would
continue to facilitate FMU access for
identified critical operations and meet
funding needs. Such a U.S. branch
would also be required to describe how
it would meet supervisory requirements
imposed by state regulators or the
appropriate Federal banking agency, as
appropriate, including maintaining a net
due to position and complying with
heightened asset maintenance
requirements.36 In addition, the plan
should describe how such a U.S.
branch’s third-party creditors would be
protected such that the state regulator or
appropriate Federal banking agency
would allow the branch to continue
operations.
To maintain appropriate liquidity for
the purposes of resolution planning, a
firm should maintain a liquidity buffer
sufficient to meet the net cash outflows
for its U.S. branches and agencies on an
aggregate basis for the first 14 days of a
30-day stress horizon. In determining
the aggregate need of the branches and
agencies, the firm should calculate its
liquidity position with respect to its
foreign parent, U.S. IHC, and other
affiliates separately from its liquidity
position with respect to external parties,
and cannot offset inflows from affiliated
parties against outflows to external
parties. In addition, a firm may use
cash-flow sources from its affiliates to a
branch or agency to offset cash-flow
needs of its affiliates from a branch or
agency only to the extent that the term
of the cash-flow source from the
affiliates is the same as, or shorter than,
the term of the cash-flow need of the
affiliate. This assumption addresses the
scenario where the head office may be
unable or unwilling to return funds to
the branch or agency when those funds
are most needed.
Impact of the Cessation of Operations:
The firm must provide an analysis of the
impact of the cessation of operations of
36 Firms should take into consideration historical
practice, by applicable regulators, regarding asset
maintenance requirements imposed during stress.

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any U.S. branch that is significant to the
activities of an identified critical
operation on the firm’s FMU access and
identified critical operations, even if
such scenario is not contemplated as
part of the U.S. resolution strategy. The
analysis should include a description of
how identified critical operations could
be transferred to a U.S. IHC subsidiary
or sold in resolution, the obstacles
presented by the cessation of shared
services that support identified critical
operations provided by any U.S. branch
that is a material entity, and mitigants
that could address such obstacles in a
timely manner.

(C) Facilitate the sale, transfer, or winddown of certain discrete operations within a
timeframe that would meaningfully increase
the likelihood of an orderly resolution in the
United States, including provisions for the
continuity of associated services and
mitigation of financial, operational, and legal
challenges to separation and disposition;
(D) Adequately protect U.S. subsidiary
insured depository institutions from risks
arising from the activities of any nonbank
U.S. subsidiaries (other than those that are
subsidiaries of an insured depository
institution); and
(E) Minimize complexity that could
impede an orderly resolution in the United
States and minimize redundant and dormant
entities.

VII. Group Resolution Plan
Consistent with the Rule, a firm’s
resolution plan should include a
detailed explanation of how resolution
planning for the subsidiaries, branches
and agencies, and identified critical
operations and core business lines of the
firm that are domiciled in the United
States or conducted in whole or material
part in the United States is integrated
into the firm’s overall resolution or
other contingency planning process. In
particular, the plan should describe the
impact on U.S. operations of executing
the global plan.

These criteria should be built into the
firm’s ongoing process for creating,
maintaining, and optimizing the firm’s
U.S. structure and operations on a
continuous basis.
Separability: The firm should identify
discrete U.S. operations that could be
sold or transferred in resolution, which
would provide optionality in resolution
under different market conditions. A
firm’s separability options should be
actionable, and impediments to their
projected mitigation strategies should be
identified in advance. Firms should
consider potential consequences for
U.S. financial stability of executing each
option, taking into consideration
impacts on counterparties, creditors,
clients, depositors, and markets for
specific assets. The level of detail and
analysis should vary based on a firm’s
risk profile and scope of operations.
Additionally, information systems
should be robust enough to produce the
required data and information needed to
execute separability options.
Further, the firm should have, and be
able to demonstrate, the capability to
populate in a timely manner a data
room with information pertinent to a
potential divestiture of the business
(including, but not limited to, carve-out
financial statements, valuation analysis,
and a legal risk assessment). Within the
plan, the firm should demonstrate how
the firm’s LER Criteria and
implementation efforts meet the
guidance above. The plan should also
provide the separability analysis noted
above. Finally, the plan should include
a description of the firm’s legal entity
rationalization governance process.

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VIII. Legal Entity Rationalization And
Separability
Legal Entity Rationalization Criteria
(LER Criteria): A firm should develop
and implement legal entity
rationalization criteria that support the
firm’s U.S. resolution strategy and
minimize risk to U.S. financial stability
in the event of resolution. LER Criteria
should consider the best alignment of
legal entities and business lines to
improve the resolvability of U.S.
operations under different market
conditions. LER Criteria should govern
the corporate structure and
arrangements between the U.S.
subsidiaries and U.S. branches in a way
that facilitates resolvability of the firm’s
U.S. operations as the firm’s U.S.
activities, technology, business models,
or geographic footprint change over
time.
Specifically, application of the criteria
should:
(A) Ensure that the allocation of activities
across the firm’s U.S. branches and U.S. nonbranch material entities support the firm’s
U.S. resolution strategy and minimize risk to
U.S. financial stability in the event of
resolution;
(B) Facilitate the recapitalization and
liquidity support of U.S. IHC subsidiaries, as
required by the firm’s U.S. resolution
strategy. Such criteria should include clean
lines of ownership and clean funding
pathways between the foreign parent, the
U.S. IHC, and U.S. IHC subsidiaries;

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IX. Derivatives And Trading Activities
A Specified FBO’s plan should
address the following areas.
Booking Practices
A firm should have booking practices
commensurate with the size, scope, and
complexity of its U.S. derivatives and

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trading activities,37 including systems
capabilities to track and monitor any
such activities booked directly into a
non-U.S. affiliate. The following
booking practices-related capabilities
should be addressed in a firm’s
resolution plan:
Derivatives and trading booking
framework. A firm should have a
comprehensive booking model
framework that articulates the
principles, rationales, and approach to
implementing its booking practices for
all of its U.S. derivatives and trading
activities, including derivatives and
trading activities originated from U.S.
entities 38 that are booked directly into
a non-U.S. affiliate.39 The framework
and its underlying components should
be documented and adequately
supported by internal controls (e.g.,
procedures, systems, processes). Taken
together, the booking framework and its
components should provide
transparency with respect to (i) what is
being booked (e.g., product,
counterparty), (ii) where it is being
originated and booked (e.g., legal entity,
geography), (iii) by whom it is
originated and booked (e.g., business or
trading desk), (iv) why it is booked that
way (e.g., drivers or rationales for that
arrangement), and (v) what controls the
firm has in place to monitor and manage
those practices (e.g., governance or
information systems).40
The firm’s resolution plan should
include detailed descriptions of the
framework and each of its material
components. In particular, a firm’s
resolution plan should include
37 ‘‘U.S. derivatives and trading activities’’, means
all derivatives and trading activities that are: (1)
Related to a firm’s identified critical operations or
core business lines, including any such activities
booked directly into a non-U.S. affiliate; (2)
conducted on behalf of the firm, its clients, or
counterparties that are originated from, booked into,
traded through, or otherwise conducted (in whole
or in material part) in a U.S. entity (as defined
below); or (3) both of the foregoing. A firm should
identify its U.S. derivatives and trading activities
pursuant to a methodology and justify the
methodology used.
38 ‘‘U.S. entities’’ means U.S. IHC subsidiaries and
material entity branches.
39 Activities ‘‘originated’’ from U.S. entities are
those activities transacted or arranged by, or on
behalf of those U.S. entities and their clients and
counterparties, including any such activity for
which the U.S. entity is compensated (directly or
indirectly) by a non-U.S. affiliate. These activities
also include, for example, those that are sourced or
executed through personnel employed by or acting
on behalf of a U.S. entity. The agencies would
expect that a U.S. entity that is significant to the
origination of activities for an identified critical
operation or core business line would be designated
as a U.S. material entity.
40 The description of controls should include any
components of any firm-wide market, credit, or
liquidity risk management framework that is
material to the management of the firm’s U.S.
derivatives and trading activities.

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descriptions of documented booking
models covering the full range of its
U.S. derivatives and trading activities.41
These descriptions should provide
clarity with respect to the underlying
booking flows (e.g., the mapping of
trade flows based on multiple trade
characteristics as decision points that
determine on which entity a trade is
directly booked and the applicability of
any risk transfer arrangements).
Furthermore, a firm’s resolution plan
should describe its end-to-end booking
and reporting processes, including a
description of the current scope of
automation (e.g., automated trade flows,
detective monitoring) of the systems
controls applied to the firm’s
documented booking models. The plan
should also discuss why the firm
believes its current (or planned) scope
of automation is sufficient for managing
its U.S. derivatives and trading activities
during the execution of its U.S.
resolution strategy.42
Derivatives and trading entity analysis
and reporting. A firm should have the
ability to identify, assess, and report on
each U.S. entity that originates or
otherwise conducts (in whole or in
material part) any significant aspect of
the firm’s U.S. derivatives and trading
activities (a ‘‘derivatives or trading
entity’’). First, the firm’s resolution plan
should describe its method (which may
include both qualitative and
quantitative criteria) for evaluating the
significance of each derivatives or
trading entity both with respect to the
firm’s current U.S. derivatives and
trading activities and its U.S. resolution
strategy.43 Second, a firm’s resolution

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41 The

booking models should represent the vast
majority (e.g., 95 percent) of a firm’s U.S.
derivatives and trading activities, including U.S.
derivatives and trading transactions that are
originated from U.S. entities and booked directly
into a non-U.S. affiliate, measured by, for example,
trade notional and gross market value (for
derivatives) and client positions and balances (for
prime brokerage client accounts).
42 Effective preventative (up-front) and detective
(post-booking) controls embedded in a firm’s
booking processes can help avoid and/or timely
remediate trades that do not align with a
documented booking model or related risk limit.
Firms typically use a combination of manual and
automated control functions. Although automation
may not be best suited for all control functions, as
compared to manual methods, it can improve
consistency and traceability with respect to booking
practices. However, non-automated methods also
can be effective when supported by other internal
controls (e.g., robust detective monitoring,
escalation protocols).
43 The firm should leverage any existing methods
and criteria it uses for other entity assessments (e.g.,
legal entity rationalization or the prepositioning of
internal loss-absorbing resources). The firm’s
method for determining the significance of
derivatives or trading entities may diverge from the
parameters for material entity designation under the
Rule (i.e., entities significant to the activities of an
identified critical operation or core business line);

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plan should demonstrate (including
through use of illustrative samples) the
firm’s ability to readily generate current
derivatives or trading entity profiles that
(i) cover all derivatives or trading
entities, (ii) are reportable in a
consistent manner, and (iii) include
information regarding current legal
ownership structure, business activities
and volume, and risk profile of the
entity (including relevant risk transfer
arrangements).
U.S. Activities Monitoring
A firm should be able to assess how
the management of U.S. derivatives and
trading activities could be affected in
the period leading up to and during the
execution of its U.S. resolution strategy,
including disruptions that could affect
materially the funding or operations of
the U.S. entities that conduct the U.S.
derivatives and trading activities or
their clients and counterparties.
Therefore, a firm should have
capabilities to provide timely
transparency into the management of its
U.S. derivatives and trading activities,
including such activities booked
directly into a non-U.S. affiliate, in the
period leading up to and during the
execution of its U.S. resolution strategy
by maintaining a monitoring framework
for U.S. derivatives and trading
activities, which consists of at least the
following two components:
1. A method for identifying U.S.
derivatives and trading activities, and
measuring, monitoring, and reporting on
those activities on a business line and legal
entity basis; and
2. A method for identifying, assessing, and
reporting the potential impact on (i) clients
and counterparties of U.S. entities that
conduct the U.S. derivatives and trading
activities and (ii) any related risk transfer
arrangements 44 among and between U.S.
entities and their non-U.S. affiliates.

Prime Brokerage Customer Account
Transfers
A firm should have the operational
capacity to facilitate the orderly transfer
of U.S. prime brokerage accounts,45
including account positions of a client
of the firm’s U.S. prime brokerage
business that are booked directly into a
non-U.S. affiliate, to peer prime brokers
in periods of material financial distress
and during the execution of its U.S.
however, any differences should be adequately
supported and explained.
44 For

example, risk transfer arrangements might
include transfer pricing, profit sharing, loss
limiting, or intragroup hedging arrangements.
45 ‘‘U.S. prime brokerage account’’ or ‘‘U.S. prime
brokerage account balances’’ should include the
account positions and balances of a client of the
firm’s U.S. prime brokerage business, regardless of
where those positions or balances are booked.

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resolution strategy. The firm’s plan
should include an assessment of how it
would transfer such accounts. This
assessment should be informed by
clients’ relationships with other prime
brokers, the use of automated and
manual transaction processes, clients’
overall long and short positions as
facilitated by the firm, and the liquidity
of clients’ portfolios. The assessment
should also analyze the risks and loss
mitigants of customer-to-customer
internalization (e.g., the inability to
fund customer longs with customer
shorts) and operational challenges
(including insufficient staffing) that the
firm may experience in effecting the
scale and speed of prime brokerage
account transfers envisioned under the
firm’s U.S. resolution strategy.
In addition, a firm should describe
and demonstrate its ability to segment
and analyze the quality and
composition of U.S. prime brokerage
account balances based on a set of welldefined and consistently applied
segmentation criteria (e.g., size, singleprime, platform, use of leverage, nonrehypothecatable securities, liquidity of
underlying assets). The capabilities
should cover U.S. prime brokerage
account balances and the resulting
segments should represent a range in
potential transfer speed (e.g., from
fastest to longest to transfer, from most
liquid to least liquid). The selected
segmentation criteria should reflect
characteristics 46 that the firm believes
could affect the speed at which the U.S.
prime brokerage account would be
transferred to an alternate prime broker.
Portfolio Segmentation
A firm should have the capabilities to
produce analysis that reflects
derivatives portfolio 47 segmentation
and differentiation of assumptions,
taking into account trade-level
characteristics. More specifically, a firm
should have systems capabilities that
would allow it to produce a spectrum of
derivatives portfolio segmentation
analysis using multiple segmentation
dimensions for each U.S. entity with a
derivatives portfolio—namely, (1)
trading desk or product, (2) cleared vs.
clearable vs. non-clearable trades, (3)
counterparty type, (4) currency, (5)
maturity, (6) level of collateralization,
and (7) netting set.48 A firm should also
46 For example, relevant characteristics might
include product, size, clearability, currency,
maturity, level of collateralization, and other risk
characteristics.
47 A firm’s derivatives portfolios include its
derivatives positions and linked non-derivatives
trading positions.
48 The enumerated segmentation dimensions are
not intended as an exhaustive list of relevant

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Derivatives Stabilization and De-Risking
Strategy
To the extent the U.S. resolution
strategy assumes the continuation of a
U.S. IHC subsidiary with a derivatives
portfolio after the entry of the U.S. IHC
into a U.S. bankruptcy proceeding
(surviving derivatives subsidiary), the
firm’s plan should provide a detailed
analysis of the strategy to stabilize and
de-risk any derivatives portfolio of the
surviving derivatives subsidiary (U.S.
derivatives strategy) that has been
incorporated into its U.S. resolution
strategy.49 In developing its U.S.
derivatives strategy, a firm should apply
the following assumption constraints:
• OTC derivatives market access: At
or before the start of the resolution
period, each surviving derivatives
subsidiary should be assumed to lack an
investment grade credit rating (e.g.,
unrated or downgraded below
investment grade). Each surviving
derivatives subsidiary also should be
assumed to have failed to establish or
reestablish investment grade status for
the duration of the resolution period,
unless the plan provides well-supported
analysis to the contrary. As the
subsidiary is not investment grade, it
further should be assumed that each
surviving derivatives subsidiary has no
access to bilateral OTC derivatives
markets and must use exchange-traded
or centrally cleared instruments for any
new hedging needs that arise during the
resolution period. Nevertheless, a firm

may assume the ability to engage in
certain risk-reducing derivatives trades
with bilateral OTC derivatives
counterparties during the resolution
period to facilitate novations with third
parties and to close out inter-affiliate
trades.50
• Early exits (break clauses): A firm
should assume that counterparties (both
external and affiliates) will exercise any
contractual termination or other right,
including any rights stayed by contract
(including amendments) or in
compliance with the rules establishing
restrictions on qualified financial
contracts of the Board, the FDIC, or the
Office of the Comptroller of the
Currency 51 or any other regulatory
requirements, (i) that is available to the
counterparty at or following the start of
the resolution period; and (ii) if
exercising such right would
economically benefit the counterparty
(counterparty-initiated termination).
• Time horizon: The duration of the
resolution period should be between 12
and 24 months. The resolution period
begins immediately after the U.S. IHC
bankruptcy filing and extends through
the completion of the U.S. resolution
strategy.52
A firm’s analysis of its U.S.
derivatives strategy should take into
account (i) the starting profile of any
derivatives portfolio of each surviving
derivatives subsidiary (e.g., nature,
concentration, maturity, clearability,
liquidity of positions); (ii) the profile
and function of any surviving
derivatives subsidiary during the
resolution period; (iii) the means,
challenges, and capacity of the
surviving derivatives subsidiary to
manage and de-risk its derivatives
portfolios (e.g., method for timely
segmenting, packaging, and selling the
derivatives positions; challenges with
novating less liquid positions; rehedging strategy); (iv) the financial and
operational resources required to effect

dimensions. With respect to any product or asset
class, a firm may have reasons for not capturing
data on (or not using) one or more of the
enumerated segmentation dimensions. In that case,
however, the firm should explain those reasons.
49 Subject to the relevant constraints, a firm’s U.S.
derivatives strategy may take the form of a goingconcern strategy, an accelerated de-risking strategy
(e.g., active wind-down) or an alternative, third
strategy so long as the firm’s resolution plan
adequately supports the execution of the chosen
strategy. For example, a firm may choose a goingconcern scenario (e.g., surviving derivatives
subsidiary reestablishes investment grade status
and does not enter any wind-down) as its
derivatives strategy. Likewise, a firm may choose to
adopt a combination of going-concern and
accelerated de-risking scenarios as its U.S.
derivatives strategy. For example, the U.S.
derivatives strategy could be a stabilization scenario
for the U.S. bank entity and an accelerated derisking scenario for U.S. broker-dealer entities.

50 A firm may engage in bilateral OTC derivatives
trades with, for example, (i) external counterparties,
to effect the novation of the firm’s side of a
derivatives contract to a new, acquiring
counterparty; and (ii) inter-affiliate counterparties,
where the trades with inter-affiliate counterparties
do not materially increase either the credit exposure
of any participating counterparty or the market risk
of any such counterparty on a standalone basis,
after taking into account any hedging with
exchange-traded and centrally-cleared instruments.
The firm should provide analysis to support the risk
of the trade on the basis of information that would
be known to the firm at the time of the transaction.
51 See 12 CFR part 47 (OCC); 252, subpart I
(Board); 382 (FDIC).
52 The firm may consider a resolution period of
less than 12 months as long as the length of the
resolution period is adequately supported by the
firm’s analysis of the size, composition, complexity,
and maturity profile of the derivatives portfolios in
its U.S. IHC subsidiaries.

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have the capabilities to segment and
analyze the full contractual maturity
(run-off) profile of the derivatives
portfolios in its U.S. entities. The firm’s
resolution plan should describe and
demonstrate the firm’s ability to
segment and analyze the derivatives
portfolios booked into its U.S. entities
using the relevant segmentation
dimensions and to report the results of
such segmentation and analysis.

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the derivatives strategy; and (v) any
potential residual portfolio (further
discussed below). In addition, the firm’s
resolution plan should address the
following areas in the analysis of its
derivatives strategy:
Forecasts of resource needs. The
forecasts of capital and liquidity
resource needs of U.S. IHC subsidiaries
required to support adequately the
firm’s U.S. derivatives strategy should
be incorporated into the firm’s RCEN
and RLEN estimates for its overall U.S.
resolution strategy. These include, for
example, the costs and liquidity flows
resulting from (i) the close-out of OTC
derivatives, (ii) the hedging of
derivatives portfolios, (iii) the
quantified losses that could be incurred
due to basis and other risks that would
result from hedging with only exchangetraded and centrally cleared instruments
in a severely adverse stress
environment, and (iv) operational
costs.53
Sensitivity analysis. A firm should
have a method to apply sensitivity
analyses to the key drivers of the
derivatives-related costs and liquidity
flows under its U.S. resolution strategy.
A firm’s resolution plan should describe
its method for (i) evaluating the
materiality of assumptions and (ii)
identifying those assumptions (or
combinations of assumptions) that
constitute the key drivers for its
forecasts of derivatives-related
operational and financial resource needs
under the U.S. resolution strategy. In
addition, using its U.S. resolution
strategy as a baseline, the firm’s
resolution plan should describe and
demonstrate its approach to testing the
sensitivities of the identified key drivers
and the potential impact on its forecasts
of resource needs.54
Potential residual derivatives
portfolio. A firm’s resolution plan
should include a method for estimating
the composition of any potential
residual derivatives portfolio
transactions booked in a U.S. IHC
subsidiary remaining at the end of the
resolution period under its U.S.
53 A firm may choose not to isolate and separately
model the operational costs solely related to
executing its derivatives strategy. However, the firm
should provide transparency around operational
cost estimation at a more granular level than
material entity (e.g., business line level within a
material entity, subject to wind-down).
54 For example, key drivers of derivatives-related
costs and liquidity flows might include the timing
of derivatives unwind, cost of capital-related
assumptions (e.g., target return on equity, discount
rate, weighted average life, capital constraints, tax
rate), operational cost reduction rate, and
operational capacity for novations. Other examples
of key drivers likely also include central
counterparty margin flow assumptions and riskweighted asset forecast assumptions.

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resolution strategy. The firm’s plan also
should provide detailed descriptions of
the trade characteristics used to identify
such potential residual portfolio and of
the resulting trades (or categories of
trades).55 A firm should assess the risk
profile of such potential residual
portfolio (including its anticipated size,
composition, complexity, and
counterparties), and the potential
counterparty and market impacts of
non-performance by the firm on the
stability of U.S. financial markets (e.g.,
on funding markets, on underlying asset
markets, on clients and counterparties).
Non-surviving entity analysis. To the
extent the U.S. resolution strategy
assumes a U.S. IHC subsidiary with a
derivatives portfolio enters its own
resolution proceeding after the entry of
the U.S. IHC into a U.S. bankruptcy
proceeding (a non-surviving derivatives
subsidiary), the firm should provide a
detailed analysis of how the nonsurviving derivatives subsidiary’s
resolution can be accomplished within
a reasonable period of time and in a
manner that substantially mitigates the
risk of serious adverse effects on U.S.
financial stability and on the orderly
execution of the firm’s U.S. resolution
strategy. In particular, the firm should
provide an analysis of the potential
impacts on funding markets, on
underlying asset markets, on clients and
counterparties (including affiliates), and
on the firm’s U.S. resolution strategy.

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X. Format and Structure of Plans
Format of Plan
Executive Summary. The Plan should
contain an executive summary
consistent with the Rule, which must
include, among other things, a concise
description of the key elements of the
firm’s U.S. strategy for an orderly
resolution. In addition, the executive
summary should include a discussion of
the firm’s assessment of any
impediments to the firm’s U.S.
resolution strategy and its execution, as
well as the steps it has taken to address
any identified impediments.
Narrative. The Plan should include a
strategic analysis consistent with the
Rule. This analysis should take the form
of a concise narrative that enhances the
readability and understanding of the
firm’s discussion of its U.S. strategy for
rapid and orderly resolution in
bankruptcy or other applicable
insolvency regimes (Narrative). The
55 If, under the firm’s U.S. resolution strategy, any
derivatives portfolios are transferred during the
resolution period by way of a line of business sale
(or similar transaction), then those portfolios
nonetheless should be included within the firm’s
potential residual portfolio analysis.

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Narrative also should include a highlevel discussion of how the firm is
addressing key vulnerabilities jointly
identified by the Agencies. This is not
an exhaustive list and does not preclude
identification of further vulnerabilities
or impediments.
Appendices. The Plan should contain
a sufficient level of detail and analysis
to substantiate and support the strategy
described in the Narrative. Such detail
and analysis should be included in
appendices that are distinct from and
clearly referenced in the related parts of
the Narrative (Appendices).
Public Section. The Plan must be
divided into a public section and a
confidential section consistent with the
requirements of the Rule.
Other Informational Requirements.
The Plan must comply with all other
informational requirements of the Rule.
The firm may incorporate by reference
previously submitted information as
provided in the Rule.
Guidance Regarding Assumptions
1. The Plan should be based on the
current state of the applicable legal and
policy frameworks. Pending legislation
or regulatory actions may be discussed
as additional considerations.
2. The firm must submit a plan that
does not rely on the provision of
extraordinary support by the United
States or any other government to the
firm or its subsidiaries to prevent the
failure of the firm.
3. The firm should not assume that it
will be able to sell identified critical
operations or core business lines, or that
unsecured funding will be available
immediately prior to filing for
bankruptcy.
4. The Plan should assume the DoddFrank Act Stress Test (DFAST) severely
adverse scenario for the first quarter of
the calendar year in which the Plan is
submitted is the domestic and
international economic environment at
the time of the firm’s failure and
throughout the resolution process.
5. The resolution strategy may be
based on an idiosyncratic event or
action. The firm should justify use of
that assumption, consistent with the
conditions of the economic scenario.
6. Within the context of the applicable
idiosyncratic scenario, markets are
functioning and competitors are in a
position to take on business. If a firm’s
Plan assumes the sale of assets, the firm
should take into account all issues
surrounding its ability to sell in market
conditions present in the applicable
economic condition at the time of sale
(i.e., the firm should take into
consideration the size and scale of its

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operations as well as issues of
separation and transfer.)
7. The firm should not assume any
waivers of section 23A or 23B of the
Federal Reserve Act in connection with
the actions proposed to be taken prior
to or in resolution.
8. The firm may assume that its
depository institutions will have access
to the Discount Window only for a few
days after the point of failure to
facilitate orderly resolution. However,
the firm should not assume its
subsidiary depository institutions will
have access to the Discount Window
while critically undercapitalized, in
FDIC receivership, or operating as a
bridge bank, nor should it assume any
lending from a Federal Reserve credit
facility to a non-bank affiliate.
Financial Statements and Projections
The Plan should include the actual
balance sheet for each material entity
and the consolidating balance sheet
adjustments between material entities as
well as pro forma balance sheets for
each material entity at the point of
failure and at key junctures in the
execution of the resolution strategy. It
should also include projected
statements of sources and uses of funds
for the interim periods. The pro forma
financial statements and accompanying
notes in the Plan must clearly evidence
the failure trigger event; the Plan’s
assumptions; and any transactions that
are critical to the execution of the Plan’s
preferred strategy, such as
recapitalizations, the creation of new
legal entities, transfers of assets, and
asset sales and unwinds.
Material Entities
Material entities should encompass
those entities, including subsidiaries,
branches and agencies (collectively,
Offices), which are significant to the
activities of an identified critical
operation or core business line. If the
abrupt disruption or cessation of a core
business line might have systemic
consequences to U.S. financial stability,
the entities essential to the continuation
of such core business line should be
considered for material entity
designation. Material entities should
include the following types of entities:
a. Any Office, wherever located, that
is significant to the activities of an
identified critical operation.
b. Any Office, wherever located,
whose provision or support of global
treasury operations, funding, or
liquidity activities (inclusive of
intercompany transactions) is
significant to the activities of an
identified critical operation.

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c. Any Office, wherever located, that
would provide material operational
support in resolution (key personnel,
information technology, data centers,
real estate or other shared services) to
the activities of an identified critical
operation.
d. Any Office, wherever located, that
is engaged in derivatives booking
activity that is significant to the
activities of an identified critical
operation, including those that conduct
either the internal hedge side or the
client-facing side of a transaction.
e. Any Office, wherever located,
engaged in asset custody or asset
management that are significant to the
activities of an identified critical
operation.
f. Any Office, wherever located,
holding licenses or memberships in
clearinghouses, exchanges, or other
FMUs that are significant to the
activities of an identified critical
operation.
For each material entity (including a
branch), the Plan should enumerate, on
a jurisdiction-by-jurisdiction basis, the
specific mandatory and discretionary
actions or forbearances that regulatory
and resolution authorities would take
during resolution, including any
regulatory filings and notifications that
would be required as part of the U.S.
resolution strategy, and explain how the
Plan addresses the actions and
forbearances. The Plan should describe
the consequences for the firm’s U.S.
resolution strategy if specific actions in
each jurisdiction were not taken,
delayed, or forgone, as relevant.
XI. Public Section
The purpose of the public section is
to inform the public’s understanding of
the firm’s resolution strategy and how it
works.
The public section should discuss the
steps that the firm is taking to improve
resolvability under the U.S. Bankruptcy
Code. The public section should
provide background information on
each material entity and should be
enhanced by including the firm’s
rationale for designating material
entities. The public section should also
discuss, at a high level, the firm’s intragroup financial and operational
interconnectedness (including the types
of guarantees or support obligations in
place that could impact the execution of
the firm’s strategy). There should also be
a high-level discussion of the liquidity
resources and loss-absorbing capacity of
the U.S. IHC.
The discussion of strategy in the
public section should broadly explain
how the firm has addressed any
deficiencies, shortcomings, and other

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key vulnerabilities that the Agencies
have identified in prior Plan
submissions. For each material entity, it
should be clear how the strategy
provides for continuity, transfer, or
orderly wind-down of the entity and its
operations. There should also be a
description of the resulting organization
upon completion of the resolution
process.
The public section may note that the
resolution plan is not binding on a
bankruptcy court or other resolution
authority and that the proposed failure
scenario and associated assumptions are
hypothetical and do not necessarily
reflect an event or events to which the
firm is or may become subject.
Appendix: Frequently Asked Questions
In March 2017, the Agencies issued
guidance for use in developing the 2018
resolution plan submissions by certain
foreign banking organizations.
In response to frequently asked questions
regarding that guidance from the recipients of
that guidance, Board and FDIC staff jointly
developed answers and provided those
answers to the guidance recipients in 2017 so
that they could take this information into
account in developing their next resolution
plan submissions.56
The questions in this Appendix:
• Comprise common questions asked by
different covered companies. Not every
question is applicable to every firm; not
every aspect of the proposed guidance
applies to each firm’s preferred strategy/
structure; and
• Reflect updated references to correspond
to this proposed guidance for the Specified
FBOs (Proposed Guidance).
As indicated below, those questions and
answers that are deemed to be no longer
meaningful or relevant have not been
consolidated in this Appendix and are
superseded.
Capital
CAP 1. Capital Pre-Positioning and Balance
Q. How should a firm determine the
appropriate balance between resources prepositioned at the U.S. IHC subsidiaries and
held at the U.S. IHC?
A. The Proposed Guidance addresses this
issue in the Capital section. The Agencies are
not prescribing a specific percentage
allocation of resources pre-positioned at the
U.S. IHC subsidiaries versus resources held
at the U.S. IHC. In considering the balance
between certainty and flexibility, the
Agencies note that the risk profile of each
U.S. IHC subsidiary should inform the
‘‘unanticipated losses’’ at the entity, which
should be taken into account in determining
the appropriate balance.
56 The FAQs represent the views of staff of the
Board of Governors of the Federal Reserve System
and the Federal Deposit Insurance Corporation and
do not bind the Board or the FDIC.

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CAP 2. Definition of ‘‘Well-Capitalized’’
Status
Q. How should firms apply the term ‘‘wellcapitalized’’?
A. U.S. non-branch material entities must
comply with the capital requirements and
expectations of their primary regulator. U.S.
non-branch material entities should be
recapitalized to meet jurisdictional
requirements and to maintain market
confidence as required under the U.S.
resolution strategy.
CAP 3. RCEN Relationship to DFAST
Severely Adverse Scenario
Q. How should the firm’s RCEN and RLEN
estimates relate to the DFAST Severely
Adverse scenario? Can those estimates be
recalibrated in actual stress conditions?
A. For resolution plan submission
purposes, the estimation of RLEN and RCEN
should assume macroeconomic conditions
consistent with the DFAST Severely Adverse
scenario. However, the RLEN and RCEN
methodologies should have the flexibility to
incorporate macroeconomic conditions that
may deviate from the DFAST Severely
Adverse scenario in order to facilitate
execution of the U.S. resolution strategy.
CAP 4. Not Consolidated
Liquidity
LIQ 1. Inter-Company ‘‘Frictions’’
Q. Can the Agencies clarify what kinds of
frictions might occur between affiliates
beyond regulatory ring-fencing?
A. Frictions are any impediments to the
free flow of funds, collateral and other
transactions between material entities.
Examples include regulatory, legal, financial
(i.e., tax consequences), market, or
operational constraints or requirements.
LIQ 2. Distinction Between Liquidity
Forecasting Periods
Q1. How long is the stabilization period?
A1. The stabilization period begins
immediately after the U.S. IHC bankruptcy
filing and extends until each material entity
reestablishes market confidence. The
stabilization period may not be less than 30
days. The reestablishment of market
confidence may be reflected by the
maintaining, reestablishing, or establishing of
investment grade ratings or the equivalent
financial condition for each entity. The
stabilization period may vary by material
entity, given differences in regulatory,
counterparty, and other stakeholder interests
in each entity.
Q2. How should we distinguish between
the runway, resolution, and stabilization
periods on the one hand, and RLAP and
RLEN on the other, in terms of their length,
sequencing, and liquidity thresholds?
A2. The Agencies have not specified a
direct mathematical relationship between the
runway period, the RLAP model, and RLEN
model. As noted in prior guidance, firms may
assume a runway period of up to 30 days
prior to entering bankruptcy provided the
period is sufficient for management to
contemplate the necessary actions preceding
the filing of bankruptcy. The RLAP model
should provide for the adequate sizing and
positioning of HQLA at material entities for

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anticipated net liquidity outflows for a
period of at least 30 days. The RLEN model
estimates the liquidity needed after the U.S.
IHC’s bankruptcy filing to stabilize the
surviving material entities and to allow those
entities to operate post-filing. See ‘‘LIQ 4.
RLEN and Minimum Operating Liquidity
(MOL),’’ Question 1, for further detail on the
components of the RLEN model.
Q3. What is the resolution period?
A3. The resolution period begins
immediately after the U.S. IHC’s bankruptcy
filing and extends through the completion of
the U.S. strategy. After the stabilization
period (see ‘‘LIQ 2. Distinction between
Liquidity Forecasting Periods,’’ Question 1,
regarding ‘‘stabilization period’’), financial
statements and projections may be provided
at quarterly intervals through the remainder
of the resolution period.
LIQ 3. Inter-Affiliate Transaction
Assumptions
Q. Does inter-affiliate funding refer to all
kinds of intercompany transactions,
including both unsecured and secured?
A. Yes.
LIQ 4. RLEN and Minimum Operating
Liquidity (MOL)
Q1. How should firms distinguish between
the minimum operating liquidity (MOL) and
peak funding needs during the RLEN period?
A1. The peak funding needs represent the
peak cumulative net out-flows during the
stabilization period. The components of peak
funding needs, including the monetization of
assets and other management actions, should
be transparent in the RLEN projections. The
peak funding needs should be supported by
projections of daily sources and uses of cash
for each U.S. IHC subsidiary, incorporating
inter-affiliate and third-party exposures. In
mathematical terms, RLEN = MOL + peak
funding needs during the stabilization
period. RLEN should also incorporate
liquidity execution needs of the U.S.
resolution strategy for derivatives (see
Derivatives and Trading Activities section).
Q2. Should the MOL per entity make
explicit the allocation for intraday liquidity
requirements, inter-affiliate and other
funding frictions, operating expenses, and
working capital needs?
A2. Yes, the components of the MOL
estimates for each surviving U.S. IHC
subsidiary should be transparent and
supported.
Q3. Can MOLs decrease as surviving U.S.
IHC subsidiaries wind down?
A3. MOL estimates can decline as long as
they are sufficiently supported by the firm’s
methodology and assumptions.
LIQ 5. Not Consolidated
LIQ 6. Inter-Affiliate Transactions With
Optionality
Q. How should firms treat an inter-affiliate
transaction with an embedded option that
may affect the contractual maturity date?
A. For the purpose of calculating a firm’s
net liquidity position at a material entity,
RLAP and RLEN models should assume that
these transactions mature at the earliest
possible exercise date; this adjusted maturity
should be applied symmetrically to both
material entities involved in the transaction.

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LIQ 7. Stabilization and Regulatory Liquidity
Requirements
Q. As it relates to the RLEN model and
actions necessary to re-establish market
confidence, what assumptions should firms
make regarding compliance with regulatory
liquidity requirements?
A. Firms should consider the applicable
regulatory expectations for each U.S. IHC
subsidiary to achieve the stabilization needed
to execute the U.S. resolution strategy. Firms’
assumptions in the RLEN model regarding
the actions necessary to reestablish market
confidence during the stabilization period
may vary by U.S. IHC subsidiary, for
example, based on differences in regulatory,
counterparty, other stakeholder interests, and
based on the U.S. resolution strategy for each
U.S. IHC subsidiary. See also ‘‘LIQ 2.
Distinction between Liquidity Forecasting
Periods.’’
LIQ 8. HQLA and Assets Not Eligible as
HQLA in RLAP and RLEN Models
Q. The Proposed Guidance states that
HQLA should be used to meet estimated net
liquidity deficits in the RLAP model and that
the RLEN estimate should be based on the
minimum amount of HQLA required to
facilitate the execution of the firm’s U.S.
resolution strategy. How should firms
incorporate any expected liquidity value of
assets that are not eligible as HQLA (nonHQLA) into RLAP and RLEN models?
A. A firm’s RLAP model should assume
that only HQLA are available to meet net
liquidity deficits at U.S. IHC subsidiaries. For
a firm’s RLEN model, firms may incorporate
conservative estimates of potential liquidity
that may be generated through the
monetization of non-HQLA. The estimated
liquidity value of non-HQLA should be
supported by thorough analysis of the
potential market constraints and asset value
haircuts that may be required. Assumptions
for the monetization of non-HQLA should be
consistent with the U.S. resolution strategy
for each U.S. IHC subsidiary.
LIQ 9. Components of Minimum Operating
Liquidity
Q. Do the agencies have particular
definitions of the ‘‘intraday liquidity
requirements,’’ ‘‘operating expenses,’’ and
‘‘working capital needs’’ components of
minimum operating liquidity (MOL)
estimates?
A. No. A firm may use its internal
definitions of the components of MOL
estimates. The components of MOL estimates
should be well-supported by a firm’s internal
methodologies and calibrated to the specifics
of each U.S. IHC subsidiary.
LIQ 10. RLEN Model and Net Revenue
Recognition
Q. Can firms assume in the RLEN model
that cash-based net revenue generated by
U.S. IHC subsidiaries after the U.S. IHC’s
bankruptcy filing is available to offset
estimated liquidity needs?
A. Yes. Firms may incorporate cash
revenue generated by U.S. IHC subsidiaries
in the RLEN model. Cash revenue projections
should be conservatively estimated and
consistent with the operating environment
and the U.S. strategy for each U.S. IHC
subsidiary.

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LIQ 11. RLEN Model and Inter-Affiliate
Frictions
Q. Can a firm modify its assumptions
regarding one or more inter-affiliate frictions
during the stabilization or post-stabilization
period in the RLEN model?
A. Once a U.S. IHC subsidiary has
achieved market confidence necessary for
stabilization consistent with the U.S.
resolution strategy, a firm may modify one or
more inter-affiliate frictions, provided the
firm provides sufficient analysis to support
this assumption.
LIQ 12. RLEN Relationship to DFAST
Severely Adverse Scenario
(See ‘‘CAP 3. RCEN Relationship to DFAST
Severely Adverse Scenario’’ in the Capital
section.)
LIQ 13. Liquidity Positioning and Foreign
Parent Support
Q1. May firms consider available liquidity
at the foreign parent for meeting RLAP and
RLEN estimates for U.S. non-branch material
entities?
A1. For a 30-day RLAP model, firms
should use the requirements of Regulation
YY in estimating the standalone liquidity
position of each U.S. non-branch material
entities. Firms should not rely on available
liquidity at the foreign parent to meet net
liquidity outflows of U.S. non-branch
material entities. The firm’s RLAP model
should ensure that the consolidated U.S. IHC
holds sufficient HQLA to cover net liquidity
outflows of the U.S. non-branch material
entities. For an RLAP model that extends
beyond 30 days, firms may consider (after 30
days) available liquidity at the foreign parent
to meet the needs for U.S. non-branch
material entities.
To meet the liquidity needs informed by
the RLEN methodology, firms may either
fully pre-position liquidity in the U.S. nonbranch material entities or develop a
mechanism for planned foreign parent
support of any amount not pre- positioned
for the successful execution of the U.S.
strategy. Mechanisms to support readily
available liquidity may include a term
liquidity facility between the U.S. IHC and
the foreign parent that can be drawn as
needed. If a firm’s plan relies on foreign
parent support, the plan should include
analysis of how the U.S. IHC/foreign parent
facility is funded or buffered for by the
foreign parent.
LIQ 14. RLAP Model Time Horizon and InterAffiliate Transactions
Q. How should firms treat cash flow
sources from affiliates in the RLAP model for
models that use time periods in excess of 30
days, given the affiliate cash flow calculation
requirements in section 252.157(c)(2)(iv) of
Regulation YY?
A. An RLAP model that includes time
periods beyond 30 days is not required to
adopt the affiliate cash flow calculation
requirements in section 252.157(c)(2)(iv) of
Regulation YY for inter-affiliate cash flows
beyond 30 days. However, beyond 30 days,
the RLAP methodology still should take into
account for each of the U.S. IHC, U.S. IHC
subsidiaries, and any branch that is a
material entity the considerations detailed in

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(A), (B), and (C) in the RLAP subsection of
the Proposed Guidance. See Resolution
Liquidity Adequacy and Positioning (RLAP)
section.
LIQ 15. U.S. Branches and Agencies
Liquidity Modeling
Q1. Are firms required to develop a RLAP
model for U.S. branches and agencies?
A1. Firms are not required to develop a
RLAP model for material U.S. branches and
agencies; however, as described in the
Liquidity section of the Proposed Guidance,
a firm should maintain a liquidity buffer
sufficient to meet the net cash outflows for
its U.S. branches and agencies on an
aggregate basis for the first 14 days of a 30day stress horizon. These expectations are
consistent with the stress testing and
liquidity buffer requirements in section
252.157(c)(3) of Regulation YY.
Q2. The Proposed Guidance states that in
calculating RLAP estimates the U.S. IHC
should calculate its liquidity position with
respect to its foreign parent, branches and
agencies, and other affiliates separately from
its liquidity position with respect to third
parties. How should firms interpret the RLAP
requirements since RLAP is not required for
U.S. branches and agencies?
A2. The RLAP estimates for U.S. nonbranch material entities should take into
account how cash flows and the stand-alone
liquidity profile may be affected by all interaffiliate transactions, which may include the
impact on the U.S. non-branch material
entities from flows transacted with U.S.
branches and agencies.
LIQ 16. Material Service Entity Liquidity
Q. Is a standalone liquidity position
estimate needed for material service entities?
A. For material service entities with no
other operations other than providing
services only to their affiliates and having no
third-party debt obligations, a standalone
liquidity position estimate is not required.
Operational: Shared Services
OPS SS 1. Not Consolidated

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OPS SS 2. Working Capital
Q1. Must working capital be maintained
for third party and internal shared service
costs?
A1. Where a firm maintains shared service
companies to provide services to affiliates,
working capital should be maintained in
those entities sufficient to permit those
entities to continue to provide services for six
months or through the period of stabilization
as required in the firm’s U.S. resolution
strategy.
Costs related to third-party vendors and
inter-affiliate services should be captured
through the working capital element of the
MOL estimate (RLEN).
Q2. When does the six month working
capital requirement period begin?
A2. The measurement of the six month
working capital expectation begins upon the
bankruptcy filing of the U.S. IHC. The
expectation for maintaining the working
capital is effective upon the July 2018
submission.

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OPS SS 3. Not Consolidated
OPS SS 4. Not Consolidated
Operations: Payments, Clearing and
Settlement
To the extent relevant, the PCS FAQs have
been consolidated into the updated section of
the Proposed Guidance.
Legal Entity Rationalization and Separability
LER 1. Data Room
Q. What information should be in the data
room?
A. The Proposed Guidance addresses the
data room in the section regarding Legal
Entity Rationalization and Separability. The
data room should contain the necessary
information on discrete sales options to
facilitate buyer due diligence. Including only
a table of contents of information that could
be provided when needed would not be
sufficient.
Q2. Are firms expected to include in a data
room described in the Proposed Guidance
lists of individual employee names and
compensation levels?
A2. The firm should include the necessary
information to facilitate buyer due diligence.
In the circumstance where employee
information would be important to buyer due
diligence the firm should demonstrate the
capability to provide such information in a
timely manner. For individual employee
names and compensation, the data room may
include a representative sample and may
have personally identifiable information
redacted.
LER 2. Legal Entity Rationalization Criteria
Q. Is it acceptable to take into account
business-related criteria, in addition to the
resolution requirements, so that the LER
Criteria can be used for both resolution
planning and business operations purposes?
A. Yes, LER criteria may incorporate both
business and resolution considerations. In
determining the best alignment of legal
entities and business lines to improve the
firm’s resolvability under different market
conditions, business considerations should
not be prioritized over resolution needs.
LER 3. Creation of Additional Legal Entities
Q. Is the addition of legal entities
acceptable, so long as it is consistent with the
LER criteria?
A. Yes.
LER 4. Clean Funding Pathways
Q1. Can you provide additional context
around what is meant by clean lines of
ownership and clean funding pathways in
the legal entity rationalization criteria?
Additionally, what types of funding are
covered by the requirements?
A1. The funding pathways between the
foreign parent, U.S. IHC, and U.S. IHC
subsidiaries should minimize uncertainty in
the provision of funds and facilitate
recapitalization. Also, the complexity of
ownership should not impede the flow of
funding to a U.S. non-branch material entity
under the firm’s U.S. resolution strategy.
Potential sources of additional complexity
could include, for example, multiple
intermediate holding companies, tenor
mismatches, or complicated ownership

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structures (including those involving
multiple jurisdictions or fractional
ownerships). Ownership should be as clean
and simple as practicable, supporting the
U.S. strategy and actionable sales, transfers,
or wind-downs under varying market
conditions. The clean funding pathways
expectation applies to all funding provided
to a U.S. non-branch material entity
regardless of type and should not be viewed
solely to apply to internal TLAC.
Q2. The Proposed Guidance regarding
legal entity rationalization criteria discusses
‘‘clean lines of ownership’’ and ‘‘clean
funding pathways.’’ Does this statement
mean that firms’ legal entity rationalization
criteria should require funding pathways and
recapitalization to always follow lines of
ownership?
A2. No. However, the firm should identify
and address or mitigate any legal, regulatory,
financial, operational, and other factors that
could complicate the recapitalization and/or
liquidity support of U.S. non-branch material
entities.
LER 5. Separability Options Information
Q. How should a firm approach inclusion
of legal risk assessments and other buyer due
diligence information into separability
options?
A. The legal assessment should consider
both buyer and seller legal aspects that could
impede the timely or successful execution of
the divestiture option. Where impediments
are identified, mitigation strategies should be
developed.
LER 6. Market Conditions
Q. What is meant by the phrase ‘‘under
different market conditions’’ in the Legal
Entity Rationalization and Separability
section of the Proposed Guidance?
A. The phrase ‘‘under different market
conditions’’ is meant to ensure that a firm has
a menu of divestiture options from which at
least some could be executed under different
market stresses.
LER 7. Application of Legal Entity
Rationalization Criteria
Q1. Which legal entities should be covered
under the LER framework?
A1. The scope of a firm’s LER criteria
should apply to the entire U.S. operations.
Q2. To the extent a firm has a large
number of similar U.S. non-material entities
(such as single-purpose entities formed for
Community Reinvestment Act purposes),
may a firm apply its legal entity
rationalization criteria to these entities as a
group, rather than at the individual entity
level?
A2. Yes.
LER 8. Application of LER Criteria.
Q. Under the Proposed Guidance, is there
an expectation that the LER criteria be
applied to the legal structure outside of the
U.S. operations (e.g., outside of the U.S. IHC
or U.S. branch)?
A. The LER criteria serve to govern the
corporate structure and arrangements
between U.S. subsidiaries and U.S. branches
in a manner that facilitates the resolvability
of U.S. operations. The Proposed Guidance is
not intended to govern the corporate
structure in jurisdictions outside the U.S.

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The application of the LER criteria should,
among other things, ensure that the
allocation of activities across the firm’s U.S.
branches and U.S. non-branch material
entities support the firm’s U.S. resolution
strategy and minimize risk to U.S. financial
stability in the event of resolution.
Moreover, LER works with other
components to improve resolvability. For
example, with regard to shared services the
firm should identify all shared services that
support identified critical operations,
maintain a mapping of how/where these
services support core business lines and
identified critical operations, and include
this mapping into the legal rationalization
criteria and implementation efforts.

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Derivatives and Trading Activities
To the extent relevant, the derivatives and
trading FAQs have been consolidated into
the updated section of the Proposed
Guidance.
Legal
LEG 1. Support Within the United States
Q. Could the Agencies clarify what further
legal analysis would be expected regarding
the impact of potential state law and
bankruptcy law challenges and mitigants to
the planned provision of Support?
A. The firms should address developments
from the firm’s own analysis of potential
legal challenges regarding the Support and
should also address any additional potential
legal challenges identified by the Agencies in
the Support within the United States section
of the Proposed Guidance. A legal analysis
should include a detailed discussion of the
relevant facts, legal challenges, and Federal
or State law and precedent. The analysis also
should evaluate in detail the legal challenges
identified in the Support within the United
States section of the Proposed Guidance, any
other legal challenges identified by the firm,
and the efficacy of potential mitigants to
those challenges. Firms should identify each
factual assumption underlying their legal
analyses and discuss how the analyses and
mitigants would change if the assumption
were not to hold. Moreover, the analysis need
not take the form of a legal opinion.
LEG 2. Contractually Binding Mechanisms
The Proposed Guidance states that the
legal analysis described under the heading
‘‘Support Within the United States’’ should
include mitigants to the potential challenges
to the planned Support and that the plan
should identify the mitigant(s) to such
challenges that the firm considers most
effective. The Proposed Guidance does not
specifically reference consideration of a
contractually binding mechanism. However,
the following questions and answers may be
useful to a firm that chooses to consider a
contractually binding mechanism as a
mitigant to the potential challenges to the
planned Support.
Q1. Do the Agencies have any preference
as to whether capital is down-streamed to
key subsidiaries (including an IDI subsidiary)
in the form of capital contributions vs.
forgiveness of debt?
A1. No. The Agencies do not have a
preference as to the form of capital
contribution or liquidity support.

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Q2. Should a contractually binding
mechanism relate to the provision of capital
or liquidity? What classes of assets would be
deemed to provide capital vs. liquidity?
A2. Contractually binding mechanism is a
generic term and includes the downstreaming of capital and/or liquidity as
contemplated by the U.S. resolution strategy.
Furthermore, it is up to the firm, as informed
by any relevant guidance of the Agencies, to
identify what assets would satisfy a U.S.
affiliate’s need for capital and/or liquidity.
Q3. Is there a minimum acceptable
duration for a contractually binding
mechanism? Would an ‘‘evergreen’’
arrangement, renewable on a periodic basis
(and with notice to the Agencies), be
acceptable?
A3. To the extent a firm utilizes a
contractually binding mechanism, such
mechanism, including its duration, should be
appropriate for the firm’s U.S. resolution
strategy, including adequately addressing
relevant financial, operational, and legal
requirements and challenges.
Q4. Not consolidated.
Q5. Not consolidated.
Q6. The firm may need to amend its
contractually binding mechanism from time
to time resulting potentially from changes in
relevant law, new or different regulatory
expectations, etc. Is a firm able to do this as
long as there is no undue risk to the
enforceability (e.g., no signs of financial
stress sufficient to unduly threaten the
agreement’s enforceability as a result of
fraudulent transfer)?
A6. Yes, however the Agencies should be
informed of the proposed duration of the
agreement, as well as any terms and
conditions on renewal and/or amendment.
Any amendments should be identified and
discussed as part of the firm’s next U.S.
resolution plan submission.
Q7. Not consolidated.
Q8. Should firms include a formal
regulatory trigger by which the Agencies can
directly trigger a contractually binding
mechanism?
A8. No
General
None of the general FAQs were
consolidated.
By order of the Board of Governors of the
Federal Reserve System, March 11, 2020.
Margaret McCloskey Shanks,
Deputy Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on March 5,
2020.
Annmarie H. Boyd,
Assistant Executive Secretary.
[FR Doc. 2020–05513 Filed 3–17–20; 8:45 am]
BILLING CODE 6210–01–P

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FEDERAL RESERVE SYSTEM
Change in Bank Control Notices;
Acquisitions of Shares of a Bank or
Bank Holding Company
The notificants listed below have
applied under the Change in Bank
Control Act (Act) (12 U.S.C. 1817(j)) and
§ 225.41 of the Board’s Regulation Y (12
CFR 225.41) to acquire shares of a bank
or bank holding company. The factors
that are considered in acting on the
applications are set forth in paragraph 7
of the Act (12 U.S.C. 1817(j)(7)).
The applications listed below, as well
as other related filings required by the
Board, if any, are available for
immediate inspection at the Federal
Reserve Bank indicated. The
applications will also be available for
inspection at the offices of the Board of
Governors. Interested persons may
express their views in writing on the
standards enumerated in paragraph 7 of
the Act.
Comments regarding each of these
applications must be received at the
Reserve Bank indicated or the offices of
the Board of Governors, Ann E.
Misback, Secretary of the Board, 20th
and Constitution Avenue NW,
Washington, DC 20551–0001, not later
than April 1, 2020.
A. Federal Reserve Bank of San
Francisco (Gerald C. Tsai, Director,
Applications and Enforcement) 101
Market Street, San Francisco, California
94105–1579:
1. The Rahman Family Trust Dated
August 7, 1997, Altadena, California,
Yahia Abdul Rahman and Madga
Rahman, Trustees, both of Altadena,
California; American Finance House
Lariba, Whittier, California; Maie St.
John, Los Angeles, California; Richard
St. John, Los Angeles, California; and
Marwa Abdul Rahman, Altadena,
California; to retain voting shares of
Greater Pacific Bancshares, and thereby
indirectly retain shares of Bank of
Whittier, National Association, both of
Whittier, California.
2. Sang Young Lee and Chun Young
Lee, both of La Canada, California, and
Lee’s Gold & Diamond Import, Inc., Los
Angeles, California; to acquire the
voting shares of PCB Bancorp and
thereby indirectly acquire shares of
Pacific City Bank, both of Los Angeles,
California.
Board of Governors of the Federal Reserve
System, March 12, 2020.
Yao-Chin Chao,
Assistant Secretary of the Board.
[FR Doc. 2020–05535 Filed 3–17–20; 8:45 am]
BILLING CODE P

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