Final FBO Guidance - 85 FR 83557 (Dec 22 2020)

Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices
FEDERAL RESERVE SYSTEM

FEDERAL RESERVE SYSTEM

Change in Bank Control Notices;
Acquisitions of Shares of a Bank or
Bank Holding Company

[Docket No. OP–1699]

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 public portions of 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(s) indicated below and at
the offices of the Board of Governors.
This information may also be obtained
on an expedited basis, upon request, by
contacting the appropriate Federal
Reserve Bank and from the Board’s
Freedom of Information Office at
https://www.federalreserve.gov/foia/
request.htm. 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
Street and Constitution Avenue NW,
Washington, DC 20551–0001, not later
than January 6, 2021.
A. Federal Reserve Bank of St. Louis
(David L. Hubbard, Senior Manager)
P.O. Box 442, St. Louis, Missouri
63166–2034. Comments can also be sent
electronically to
[email protected]:
1. Charles Taff Cross and John Fuller
Cross, Jr., both of Eureka Springs,
Arkansas; to acquire additional voting
shares of Eureka Bancshares, Inc., and
thereby indirectly acquire voting shares
of CS Bank (fka Cornerstone Bank), all
of Eureka Springs, Arkansas.

RIN 3064–ZA15

FEDERAL DEPOSIT INSURANCE
CORPORATION

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Board of Governors of the Federal Reserve
System, December 17, 2020.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
[FR Doc. 2020–28186 Filed 12–21–20; 8:45 am]
BILLING CODE 6210–01–P

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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: Final guidance.
AGENCY:

The Board and the FDIC
(together, the agencies) are adopting this
final guidance for the 2021 and
subsequent resolution plan submissions
by certain foreign banking organizations
(FBOs). The final 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 Dodd-Frank Wall Street Reform
and Consumer Protection Act (DoddFrank Act). The final guidance reflects
a number of changes to the proposal in
response to comments received by the
agencies and further analysis by the
agencies. The scope of application of the
final guidance is FBOs that are Category
II firms according to their combined
U.S. operations under the Board’s
tailoring ruleand are required to have a
U.S. intermediate holding company
(IHC) under the Board’s Regulation YY
(the Specified FBOs) as published in 84
FR 59032 (November 1, 2019). In
addition to the three firms(Barclays
PLC, Credit Suisse Group AG, and
Deutsche Bank AG (the Proposed FBOs)
that would have been within the scope
of application under the methodology
utilized in the proposal, one additional
firm, Mitsubishi UFJ Financial Group,
Inc. (MUFG), is within the scope for
application of the final guidance at the
time of its issuance. Consequently,
MUFG will have a transition period to
consider the application of the final
guidance to its resolution plan
submission, as further described below.
The final guidance describes the
agencies’ expectations regarding a
number of key vulnerabilities in plans
for an orderly resolution under the U.S.
Bankruptcy Code (i.e., capital, liquidity,
governance mechanisms, operational,
branches, legal entity rationalization,
and derivatives and trading activities).
The final guidance modifies and
clarifies certain aspects of the proposed
guidance based on the agencies’
consideration of comments to the
proposal, additional analysis, and

SUMMARY:

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further assessment of the business and
risk profiles of the U.S. operations of
large and complex FBOs.
DATES: The final guidance is available
on December 22, 2020.
FOR FURTHER INFORMATION CONTACT:
Board: Mona Elliot, Deputy Associate
Director, (202) 452–4688, Catherine
Tilford, Deputy Associate Director, (202)
452–5240, 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; Board of Governors of the
Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
FDIC: Alexandra Steinberg Barrage,
Associate Director, Policy and Data
Analytics, [email protected]; Yan
Zhou, Acting Associate Director, Data
Analytics, [email protected]; Catherine
Needham, Advisor, [email protected];
Ronald W. Crawley, Jr., Senior
Resolution Policy Specialist, rcrawley@
fdic.gov, Division of Complex
Institution Supervision and Resolution;
David N. Wall, Assistant General
Counsel, [email protected]; Celia Van
Gorder, Senior Counsel, 202–898–6749,
[email protected]; or Esther Rabin,
Counsel, [email protected], Legal
Division, Federal Deposit Insurance
Corporation, 550 17th Street NW,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
a. Background
b. Proposed Guidance
II. Overview of Comments
III. Final Guidance
a. Scope of Application
b. Transition Period
c. Consolidation of Prior Guidance and
Format and Structure of Plans
d. Capital and Liquidity
e. Governance Mechanisms
f. Operational
g. Branches
h. Group Resolution Plan
i. Legal Entity Rationalization and
Separability
j. Derivatives and Trading Activities
k. Additional Comments
IV. Paperwork Reduction Act
V. Final Guidance

I. Introduction
a. Background
Section 165(d) of the Dodd-Frank
Act 1 and the jointly issued
implementing regulation (the Rule) 2
1 12

U.S.C. 5365(d).
CFR part 243 and 12 CFR part 381, as
amended.
2 12

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require certain financial companies,
including certain foreign-based firms, to
report periodically to the agencies 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
(other than a bank holding company) or
that is an FBO, the Rule requires that
the firm’s U.S. resolution plan include
specified information with respect to
the 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
covered company’s full resolution plan
to include a strategic analysis of the
plan’s components, a description of the
range of specific actions the covered
company proposes to take in resolution,
and a description of the covered
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 agencies as part of the resolution
plan and a separate section that the
agencies make available to the public.
Public sections of resolution plans can
be found on the agencies’ websites.6

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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 an orderly resolution
and that they have taken action to
3 The terms ‘‘covered company,’’ ‘‘material
entities,’’ ‘‘identified critical operations,’’ ‘‘core
business lines,’’ and similar terms used throughout
this guidance all have the same meaning as in the
Rule. See generally 12 CFR 243.2; 12 CFR 381.2.
4 12 CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i).
5 Under 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 those issues. For FBOs, the
resolution planning process focuses on
their U.S. subsidiaries and operations.
The agencies recognize 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, because 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
address a scenario where the U.S.
operations experience material financial
distress, and the plan should 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 assumptions consistent with
the firm’s global strategy support the
firm’s U.S. resolution strategy and
adhere to the required and prohibited
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 final guidance
is based on 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).8 The 2018 FBO guidance was
provided to four FBOs.9 The agencies
also have previously provided feedback
on several occasions to the four FBOs
that at present are in scope for the final
guidance.10 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 2018 FBO
7 12

CFR 243.4(h)(3); 12 CFR 381.4(h)(3).
at www.federalreserve.gov/
newsevents/pressreleases/files/
bcreg20170324a21.pdf and www.fdic.gov/
resauthority/2018subguidance.pdf.
9 Barclays PLC, Credit Suisse Group AG, Deutsche
Bank AG, and UBS AG.
10 See infra Section III.c (Consolidation of Prior
Guidance).
8 Available

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guidance and the feedback letters were
made available to the public.
Several developments inform the final
guidance:
• The agencies’ consideration of
comments to the proposed guidance (as
defined below);
• The agencies’ review of certain
FBOs’ 2018 resolution plans 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 (PCS)
activities and derivatives and trading
activities 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
• The 2019 amendments to the Rule
(2019 Rule revisions), which included
the clarification that FBOs should not
assume that its 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; 13 and
• An analysis of the current risk
profiles of the large, complex FBOs
subject to resolution planning
requirements.
The preamble to the 2019 Rule
revisions indicated that the agencies
would make any future resolution
guidance available for comment,14 and
in March 2020 the agencies invited
comments on proposed guidance for the
2021 and subsequent resolution plan
submissions by certain FBOs (proposed
guidance).15
Under the 2019 Rule revisions, each
Specified FBO will 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 Rule 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 Rule revisions that they would
strive to provide final general guidance
at least a year before the next resolution
11 Available at www.federalreserve.gov/
newsevents/pressreleases/bcreg20181220c.htm.
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 84 FR 59204.
15 Guidance for Resolution Plan Submissions of
Certain Foreign-Based Covered Companies, 85 FR
15449 (March 18, 2020).

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plan submission date of firms to which
the general guidance is directed.
On May 6, 2020, the agencies
extended the 2021 resolution plan
submission date for Category II and III
firms, including those firms who are
currently Specified FBOs, from July 1 to
September 29.16 In accordance with the
expectation set out in the preamble to
the 2019 Rule revisions, the agencies are
further extending the 2021 resolution
plan submission deadline for the firms
that are currently Specified FBOs and
were previously subject to the 2018 FBO
guidance to December 17, 2021, to
provide the firms with sufficient time to
develop their targeted resolution plans
in light of the final guidance. In
addition, as discussed in more detail
below, a Specified FBO that was not
subject to the 2018 FBO guidance for its
most recent resolution plan submission
will not be expected to have taken the
final guidance into consideration in
developing its targeted plan submission
due in 2021. Instead, such a firm should
consider the final guidance in
connection with developing its next full
resolution plan submission due in 2024.

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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 frameworks,
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
(e.g., the Specified FBOs) will require
substantial coordination between home
and host country authorities, just as
resolution of the foreign operations of a
U.S. G–SIB would. 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 country regulatory
authorities would maximize
resolvability under both the U.S. and
home country resolution strategies.17
The agencies will continue to
coordinate with non-U.S. authorities
regarding these and other resolution
matters (e.g., resources in resolution,
communications), including
developments in the U.S. and home
16 See https://www.federalreserve.gov/
newsevents/pressreleases/bcreg20200506a.htm and
https://www.fdic.gov/news/news/press/2020/
pr20057.html.
17 Available at www.federalreserve.gov/
newsevents/pressreleases/bcreg20181220c.htm.

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country resolution capabilities of the
Specified FBOs.

and whether the proposed guidance was
sufficiently clear.

b. Proposed Guidance
In March 2020, the agencies invited
public comment on the proposed
guidance, which was proposed to apply
beginning with the subject firms’ 2021
resolution plan submissions. The
proposed guidance began with a
description of the proposed scoping
methodology and was then organized
into eight substantive areas, consistent
with the 2018 FBO guidance. These
areas were: Capital, liquidity,
governance mechanisms, operational,
branches, group resolution plan, legal
entity rationalization and separability,
and derivatives and trading activities.
The proposed guidance described the
agencies’ proposed expectations for
each of these areas.
The proposal was largely consistent
with the 2018 FBO guidance and the
2019 domestic guidance. Accordingly,
the agencies expected that the Proposed
FBOs had already incorporated
significant aspects of the proposed
guidance into their resolution planning.
With respect to the 2019 domestic
guidance, the proposed guidance
differed in certain respects, given the
circumstances under which a foreignbased covered company’s U.S.
resolution plan is most likely to be
relevant. The proposal was tailored for
large, complex FBOs as compared to the
U.S. global systemically important
banks (G–SIBs) to account for
differences between U.S. G–SIBs’ and
FBOs’ U.S. footprints and operations.
The proposal updated the PCS and
derivatives and trading activities areas
of the 2018 FBO guidance to reflect the
agencies’ review of certain FBOs’ 2018
resolution plans and revisions
contained in the 2019 domestic
guidance. It also made minor
clarifications to certain areas of the 2018
FBO guidance in light of the 2019 Rule
revisions. In general, the proposed
revisions to the guidance were intended
to streamline the firms’ submissions and
to provide additional clarity. In
addition, the proposed guidance would
have consolidated all guidance
applicable to the Proposed FBOs into a
single document, which would provide
the industry and public with one source
of applicable guidance to which to refer.
The agencies invited comments on all
aspects of the proposed guidance. The
agencies also specifically requested
comments on a number of issues,
including whether the topics in the
proposed guidance represented the key
vulnerabilities of the covered companies
in resolution, whether the proposed
scope of applicability was appropriate,

II. Overview of Comments
The agencies received and reviewed
seven comment letters on the proposed
guidance. Commenters included various
financial services trade associations, a
financial market utility, and two FBOs.
In addition, the agencies met with
industry representatives and FBOs at
their request to discuss issues relating to
the proposed guidance.18 This section
provides an overview of the general
themes raised by commenters. The
comments received on the proposed
guidance are further discussed below in
the sections describing the final
guidance, including any changes that
the agencies have made to the proposed
guidance in response to comments.

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Further Tailoring of Proposal Due to
Reduced Size and Risk
Most commenters suggested that the
proposed guidance should be further
tailored for the Proposed FBOs. They
asserted that these firms have reduced
the size and systemic risk profiles of
their U.S. operations since resolution
guidance was originally issued, and the
guidance should be commensurately
streamlined. Therefore, commenters
questioned the appropriateness of
issuing guidance to the Proposed
FBOs—which they noted were Category
III firms, as calculated using the assets
and activities of each firm’s top tier U.S.
intermediate holding company—that
would be similar to the guidance
provided to the U.S. G–SIBs, which are
Category I covered companies.
Commenters argued that, in some cases,
the proposed guidance was even more
expansive than the guidance issued to
the U.S. G–SIBs. Certain commenters
also stated that the proposal failed to
articulate a clear distinction in the
expectations applicable to Category I
firms and to Category II/III firms. In
addition, commenters asserted that the
proposal, if finalized, would have
resulted in disparate treatment among
firms in Category II and Category III.
Home Country Considerations
Some commenters disagreed with the
proposal’s view on resolution planning
for the Proposed FBOs, which these
commenters described as narrowly
focused on the resolution of U.S.
operations independent of home
country measures or foreign parent
support. The commenters noted that
these firms have been subject to
extensive home country frameworks,
18 Summaries of those meetings and copies of the
comments can be found on each agency’s website.

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which include global SPOE strategies.
These commenters asserted that the
resolution plans for the U.S. operations
of these firms should be considered in
this context and should not have
requirements equivalent to the U.S. G–
SIBs.
Some commenters cited prior
comments by the Vice Chair for
Supervision of the Board in which he
encouraged host regulators to recognize
their interests in the success of the
foreign parent company’s SPOE strategy
and to provide further flexibility for the
parent to move resources as necessary
within the organization. The
commenters offered resource preplacement requirements for FBOs,
which exceed those required by
similarly sized U.S. firms, as an
example of how the proposed guidance
would be inconsistent with these
principles.

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Scoping Methodology
The commenters generally opposed
the proposed use of the second
methodology (method 2) of the G–SIB
surcharge framework as the scoping
methodology for the proposal. The
commenters made a number of
assertions about the proposed scoping
methodology, including:
• Method 2 does not accurately
reflect the reduced systemic risk of the
Proposed FBOs due to shortcomings in
the metric as applied to firms other than
the U.S. G–SIBs. As a result, the method
2 scores for the Proposed FBOs are
inappropriately inflated.
• Method 2 was not intended to be
applied to FBOs as a scoping
methodology, but rather was designed to
calculate the G–SIB capital surcharge.
• Using method 2 as the scoping
methodology for the guidance would be
inconsistent with the approach taken by
the agencies to use the tailoring
framework to determine resolution plan
submission requirements, especially
since the agencies previously rejected
using the G–SIB surcharge framework
for that purpose.
Some commenters suggested a
number of alternatives to method 2 as
the scoping methodology. One
suggestion was to use the tailoring
categories established for enhanced
prudential standards, specifically
having the proposal only apply to
Category II firms, as calculated using the
assets and activities of each firm’s top
tier U.S. intermediate holding company.
Two commenters suggested, as an
alternative, that the agencies use a
modified version of method 2 or method
1 G–SIBs’ surcharge scores.

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Payment, Clearing, and Settlement
Services
Several commenters asserted that the
proposed guidance for PCS services
raised issues of extraterritoriality. They
argued that the PCS guidance regarding
non-U.S. affiliates should be addressed
as part of the group resolution planning
process or supervision and any related
information request would be outside
the scope of the Title I resolution plan
requirements. They also proposed that
the agencies obtain this information
through home-host supervisor
cooperation. Commenters also argued
that the proposed PCS expectations
were even more extensive than the
guidance provided to the U.S. G–SIBs
on this topic.
One commenter supported certain
portions of the PCS services section, but
also suggested changes, including
aligning the guidance with certain
expectations of the European Banking
Union’s resolution authority, enhancing
communication strategies, and
clarifying terms used in the proposed
guidance.
Derivatives and Trading Activities
A number of comments concerning
the proposed derivatives guidance were
similar to those made for the PCS
section in asserting that the proposed
information requests presented concerns
of extraterritoriality and were outside
the scope of the Title I resolution plan
requirements. Commenters argued that
the proposal called for strategies
regarding and data on the activities of
non-U.S. affiliates and non-U.S.
transactions. They noted that these
items are generally addressed in home
country resolution plans or supervision
and suggested that the related
information could be requested from
home country regulators. Some
commenters maintained that the
proposed guidance on derivatives was
broader than the guidance issued to the
U.S. G–SIBs and should be tailored for
the Proposed FBOs. For example, the
proposal would have established
expectations for non-derivatives trading
activities, such as securities financing
transactions.
Contractually Binding Mechanisms
A few commenters provided views
concerning contractually binding
mechanisms (CBMs), which are
intended to ensure that sufficient capital
and liquidity are provided to material
entity subsidiaries in a timely manner.
These commenters generally agreed that
the agencies should continue to allow
firms flexibility to create support
arrangements that work best for their

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structures and global and U.S.
resolution plans. They asserted that,
accordingly, the guidance should
continue to focus on the need to
mitigate the risks of creditor challenges
and on how well the strategy selected by
the firm satisfies the policy objectives of
the agencies, rather than specifying a
particular mechanism.
Capital and Liquidity
The agencies received a number of
comments on the capital and liquidity
sections of the proposed guidance. With
regard to the capital section of the
proposed guidance, commenters argued
that the proposal included expectations
that are duplicative of existing capital
requirements and suggested removing
the guidance on resolution capital
adequacy and positioning (RCAP) from
the final guidance. Most of these
commenters asserted that streamlining
the multiple capital measures would
reduce burden on the firms. Further,
two commenters asserted that the
proposal would have reduced the
flexibility for firms to position their
capital most effectively in stress. With
regard to the liquidity section of the
proposed guidance, commenters
suggested there is redundancy between
the proposal and existing regulatory
requirements and also recommended
removing the guidance on resolution
liquidity adequacy and positioning
(RLAP) from the final guidance.
III. Final Guidance
After considering the comments,
conducting additional analysis, and
further assessing the business and risk
profiles of the U.S. operations of large
and complex FBOs, the agencies are
issuing final guidance that includes
certain modifications and clarifications.
In particular, the scope, capital,
liquidity, governance mechanisms, PCS,
and derivatives and trading activities
sections of the final guidance reflect
changes from the proposed guidance.
Other sections, such as group resolution
plan, and sub-sections such as
management information systems,
qualified financial contracts (QFCs), and
mapping of branch activities, were
determined to be duplicative of existing
regulatory requirements and
accordingly, have been eliminated from
the guidance. The intent of these
changes is to clarify expectations, more
closely align expectations with the
current business and risk profiles of the
Specified FBOs’ U.S. operations, and
recognize that the preferred resolution
strategy for the Specified FBOs is a
successful home country resolution. The
agencies are also eliminating
expectations that relate to information

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that, in the agencies’ experience, may be
obtained through other existing and
effective mechanisms, such as home/
host coordination and supervisory
information sharing. In addition, the
final guidance consolidates all prior
resolution planning guidance for the
firms in one document and clarifies that
any prior guidance not included in the
final guidance has been superseded.
These changes are discussed in more
detail below.
The final guidance is not meant to
limit firms’ consideration of additional
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. Moreover, the
final guidance does not contain certain
expectations in the proposed guidance
and in the 2018 FBO guidance,
including certain expectations relating
to capital, liquidity, governance
mechanisms, PCS, and derivatives and
trading activities. The agencies do not
expect that the Specified FBOs’
resolution plans will continue to
address the elements that have been
removed from the guidance. However,
the agencies note that the Specified
FBOs’ resolution plans, like the plans
for all covered companies, are still
required to meet all of the informational
requirements of the Rule
notwithstanding these changes to the
guidance.19
The agencies note that commenters
described certain expectations that are
set forth in the guidance as
‘‘requirements.’’ The agencies are
clarifying that the final guidance does
not have the force and effect of law.
Rather, the final guidance outlines the
agencies’ supervisory expectations
regarding each subject area covered by
the final guidance.20
a. Scope of Application.

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The agencies received numerous
comments objecting to the scope of
application of the proposed guidance,
which proposed using the method 2 G–
SIB surcharge framework 21 to
determine the Proposed FBOs.
Specifically, commenters argued that
the proposed scope of application
appeared to be inconsistent with the
principles of tailoring established in the
19 See 12 CFR 243.5 and 243.6; 12 CFR 381.5 and
381.6.
20 See generally, Interagency Statement Clarifying
the Role of Supervisory Guidance (Sept. 11, 2018),
available at https://www.federalreserve.gov/
supervisionreg/srletters/sr1805a1.pdf. See also Role
of Supervisory Guidance, 85 FR 70512 (Nov. 5,
2020).
21 12 CFR 217.405.

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Board’s tailoring rule.22 In addition,
commenters asserted that the method 2
G–SIB framework was not designed to
be a scoping mechanism outside of
certain requirements for U.S. G–SIBs,
has never been applicable to IHCs, and
inappropriately weights the short-term
wholesale funding (STWF) factor.
Commenters also questioned the
proposal’s justification for why a
method 2 score of 250 was chosen as the
threshold for purposes of scope of
application. Furthermore, several
commenters asserted that the proposed
guidance did not adequately recognize
that the Proposed FBOs have reduced
risk at their U.S. operations, are smaller
and less systemically important than the
U.S. G–SIBs, and are subject to robust
global resolution planning
requirements, and so should not be
subject to similar expectations as the
U.S. G–SIBs.
Commenters suggested that the
agencies consider alternative scoping
methodologies, including those that
were discussed in the proposal’s
preamble. Some commenters suggested
that the agencies adopt a scope based on
the Board’s tailoring categories, with
some commenters recommending that
the guidance apply only to firms subject
to Category II standards while others
recommended that the final guidance
should be similar to expectations for
domestic firms subject to Category II
and III standards. Other commenters
suggested different potential options to
modify or replace the proposed method
2 G–SIB surcharge framework, such as
using method 1 G–SIB surcharge scores,
that the commenters asserted would
more appropriately balance the
agencies’ guidance expectations with
the actual risk profile of the Proposed
FBOs. Even if an alternative scoping
methodology were adopted, some
commenters asked the agencies to
consider tailoring the guidance to what
they viewed as the Proposed FBOs’
reduced risk and stronger capital and
liquidity positions, and recommended
that the final guidance not introduce
new expectations beyond those already
in effect.
In their consideration of the
commenters’ feedback, the agencies
have sought to align resolution plan
supervisory expectations with the
current business and risk profiles of the
Specified FBOs’ U.S. operations through
the simple, transparent, and predictable
mechanism of the Board’s tailoring
framework. The agencies also
22 Prudential Standards for Large Bank Holding
Companies, Savings and Loan Holding Companies,
and Foreign Banking Organizations, 84 FR 59032
(November 1, 2019).

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acknowledge that relevant resolution
plan information can be obtained via
other means, such as through
engagement with home country
regulators and supervisory information
sharing. The agencies appreciate the
analyses provided by the commenters
that compared the operations of U.S. G–
SIBs to the reduced U.S. footprint of
Proposed FBOs with large U.S.
operations. The agencies continue to
believe that the scope of heightened
resolution planning expectations
applicable to FBOs should align with
the Specified FBOs’ systemic risk
profile and relevant resolution
challenges, and the final guidance
should be consistent with the principles
of national treatment and equality of
competitive opportunity.
The agencies acknowledge
commenters’ meaningful input on
certain methodological traits in the
method 2 G–SIB surcharge framework,
in particular the STWF factor weight,
which could distort the liquidity risk
and systemic relevance of FBOs relative
to U.S. G–SIBs. Liquidity risk is just one
of several important factors in a
resolution scenario, and the measure of
liquidity risk should not solely
determine scoping of the guidance;
rather, scoping should be determined
holistically. Therefore, the final
guidance applies to FBOs that are
subject to Category II standards
according to their combined U.S.
operations pursuant to the Board’s
tailoring rule 23 and that are also
required to form IHCs.24
Using the tailoring categories in this
context also will promote uniform
scoping between resolution expectations
and regulatory requirements. As stated
in the preamble to the Rule, the agencies
believe that the risk-based indicators
identified in the Board’s tailoring rule
are an effective means of dividing firms
into groups for the purposes of
determining the frequency and
informational content of resolution
plans. The indicators-based approach
for application of Category II, III, and IV
standards provides a simple framework
23 Category II FBOs are defined as those with (1)
≥$700 billion average combined U.S. assets or (2)
≥$100 billion average combined U.S. assets with
≥$75b in average cross-jurisdictional activity.
24 The formula defining Category II in the Board’s
tailoring rule does not include formation of an IHC
as a requirement. The final guidance diverges from
the Board’s tailoring rule in this respect because an
IHC formed pursuant to the Board’s Regulation YY
indicates the materiality of the FBO’s U.S.
operations that would go through bankruptcy under
the Bankruptcy Code or other ordinary U.S.
resolution regime. The agencies note that Category
II is not limited to FBOs. The final guidance,
however, is directed only to FBOs that meet the
criteria noted above and not to domestic banking
organizations.

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that supports the objectives of risk
sensitivity and transparency and thus is
an appropriate mechanism for scoping
the application of the final guidance.
Size and operational complexity are
also factors in the decision to apply the
guidance to FBOs subject to Category II
standards. As indicated in the preamble
to the Board’s tailoring rule, the failure
or distress of the U.S. operations of a
FBO that is subject to Category II
standards could impose significant costs
on the U.S. financial system and
economy. In addition, increased levels
of cross-jurisdictional activity, an
indicator for Category II firms, could
increase the operational complexity of a
resolution, as it may be more difficult to
resolve or unwind a firm’s positions due
to the involvement of multiple
jurisdictions and regulatory authorities.
As such, FBOs subject to Category II
standards merit the application of more
detailed expectations than those FBOs
that are smaller or that do not share the
same indicators of operational risk. The
agencies also believe this modification
to the scope appropriately focuses on
the largest and most complex FBOs with
U.S. IHCs without losing the focus on
cross-jurisdictional activities.
While the proposal relied only to a
limited extent on the Board’s tailoring
rule for scoping the proposed
guidance—noting that the tailoring
categories were developed to determine
application of a broad range of
enhanced prudential standards and
were not explicitly focused on
determining which covered companies
should be subject to more detailed
resolution planning guidance—the
agencies have concluded that the
benefits of employing the tailoring
categories—clear, predictable scoping
based on publicly reported quantitative
data—outweigh any concerns related to
using them for this purpose.
Consistent with the Rule, the final
guidance takes into account a Specified
FBO’s entire U.S operations, including
branches and agencies (i.e., combined
U.S. operations), when determining
scope of applicability. As discussed in
the preamble to the 2019 Rule revisions,
reference to combined U.S. operations is
appropriate as the resolution planning
requirement applies to a firm’s entire
U.S. operations. Moreover, U.S.
branches, agencies, and offices
constitute a significant share of these
foreign banking organizations’ presence
in the United States and the agencies’
experience reviewing resolution plans
demonstrates that there are
interconnections and dependencies
between a foreign firm’s U.S. branches,
agencies, and offices and its U.S.
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critical operations. Thus, the inclusion
of U.S. branches, agencies, and offices
in determining the scope of application
of the final guidance is not only
consistent with the Rule, but it is also
appropriate in order to measure the
operational complexity and full scope of
potential risks to U.S. financial stability
that a FBO may pose.
Finally, while the method 1 G–SIB
surcharge score methodology could
potentially address the concerns raised
on STWF, the agencies believe the riskbased indicator approach in the Board’s
tailoring rule further simplifies
application of the guidance.
b. Transition Period
The proposed guidance did not
describe how the guidance would be
applied to FBOs that become covered by
its scope, but it did request comment on
the methodology and process for
determining the FBOs to which the
guidance should apply, including
whether the agencies should specify an
implementation period for any FBOs
that are designated as Specified FBOs
under the final guidance. Some
commenters requested that the agencies
provide clarity on a transition period for
firms that may newly fall under the
scope of the guidance, and, conversely,
on an exit process for firms that may no
longer be covered.
To provide certainty to FBOs, the
final guidance includes transition
periods for Specified FBOs that were
not previously within the scope of the
2018 FBO guidance and for firms that
become Specified FBOs after December
22, 2020. A firm that is currently a
Specified FBO, but was not previously
the subject of guidance for its most
recent resolution plan, will not be
expected to have taken the final
guidance into consideration in
developing its targeted plan submission
due in 2021. Rather, such a firm will be
expected to consider the final guidance
in developing its next full resolution
plan submission, so long as the firm is
a Specified FBO as of the submission
date for that plan.
The final guidance also states that
when an FBO becomes a Specified FBO,
the final guidance will apply to the
firm’s next resolution plan submission
with a submission date that is at least
12 months after the time the firm
becomes a Specified FBO.25 If a
Specified FBO ceases to be subject to
Category II standards or to the Board’s
requirement to form an intermediate
holding company, it will no longer be
25 The plan type for that next submission remains
as specified by the Rule, i.e., a full or targeted
resolution plan. See 12 CFR 243.4; 12 CFR 381.4.

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considered a Specified FBO, and the
guidance will no longer be applicable to
that firm as of the date the firm ceases
to be subject to Category II standards.
c. Consolidation of Prior Guidance and
Format and Structure of Plans
One commenter supported, and no
commenters opposed, the agencies’
proposal to consolidate prior guidance.
Accordingly, the final guidance
includes, as proposed, a section
regarding the format, assumptions, and
structure of resolution plans, which
includes the aspects of previous
guidance that remain applicable to
resolution planning. In light of the
changes in the final guidance to the
areas of capital, liquidity, governance
mechanisms, and separability, the
agencies have reviewed the Frequently
Asked Questions (FAQs) contained in
the proposed guidance. The FAQs
appended to the final guidance contain
those FAQs that continue to be
applicable to resolution planning, with
appropriate modifications to reflect the
changes to the final guidance.
Consistent with the proposal, to the
extent not incorporated in or appended
to the final guidance, prior guidance 26
is superseded.
d. Capital and Liquidity
While the proposed guidance would
have maintained substantially all of the
expectations in the capital and liquidity
sections that were included in the 2018
FBO guidance,27 the final guidance, in
contrast to the proposal, does not
include expectations for RCAP, RLAP,
and certain liquidity capabilities. These
changes were made to more closely
align guidance expectations with the
current business and risk profiles of the
Specified FBOs’ U.S. operations and in
recognition of the overlap between those
concepts and certain other regulatory
provisions, as discussed below. As
noted in the proposed guidance, the
agencies continue to evaluate the
relationship between the capital and
liquidity sections of the final guidance
and other capital and liquidity
regulatory provisions. The agencies
expect that any further changes to the
26 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; the February 2015 staff
communication regarding the 2016 plan
submissions; the July 2017 Resolution Plan
Frequently Asked Questions; and feedback letters
issued to Barclays PLC, Credit Suisse Group AG,
Deutsche Bank AG, and UBS AG in December 2018
and in August 2014 and feedback letters issued to
Mitsubishi UFJ Financial Group in July 2019,
January 2018, and July 2015.
27 Section II and Section III of the proposal.

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remaining guidance in these areas
would be adopted following notice and
comment.
i. Capital
The final guidance does not include
expectations for RCAP but retains
proposed expectations for resolution
capital execution need (RCEN). Several
commenters requested that the agencies
remove RCAP expectations from the
guidance because of the reduced U.S.
systemic risk of the Proposed FBOs and
the potential redundancy with other
regulatory provisions, such as the
Board’s rule on total loss absorbing
capacity (TLAC). Commenters also
suggested that RCAP expectations are
redundant with TLAC requirements for
local, bail-in-able resources to
recapitalize an FBO’s U.S. operations,
and one commenter further asserted that
RCAP constrains a firm’s ability to
position capital within the U.S. IHC
entities in a manner that allows for the
most flexibility and efficiency in a stress
scenario. One commenter expressed
support for maintaining expectations for
RCEN. Some commenters also suggested
that the guidance should take into
account the positioning of financial
resources in the United States in light of
the positioning of resources in the firm’s
non-U.S. operations and that the
agencies should reconsider expectations
for resource preplacement within the
United States to encourage more
flexibility at the international level.
The final guidance does not include
RCAP expectations concerning the
appropriate positioning of capital and
other loss-absorbing instruments among
the U.S. IHC and its subsidiaries
because existing TLAC requirements
applicable to the U.S. IHC provide a
backstop of resources that is appropriate
to the size and complexity of the
Specified FBOs. The final guidance,
consistent with one commenter’s
recommendation, maintains the RCEN
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. RCEN helps the
firm and the agencies determine when
the U.S. IHC is approaching a situation
where it will not have sufficient
resources to conduct a successful
resolution.
Several commenters requested that
the agencies reconsider requirements
and expectations for resource
preplacement within the United States,
such as internal TLAC requirements
applicable to the U.S. IHC, that are not
set by the guidance. As these
requirements and expectations are
outside the scope of the guidance, the

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final guidance does not address these
requests.
ii. Liquidity
The final guidance retains the
proposed expectations for resolution
liquidity execution need (RLEN) but
does not include expectations for
liquidity capabilities and RLAP. Several
commenters requested that the agencies
remove RLAP expectations from the
guidance, in consideration of factors
including the reduced U.S. systemic risk
of the Proposed FBOs and potential
redundancy with other regulatory
provisions, such as the Net Stable
Funding Ratio (NSFR) and internal
liquidity stress testing. One commenter
suggested that the agencies conduct an
assessment of the cumulative effect of
liquidity and capital expectations and
requirements, specifically between
RLEN and NSFR and between RLAP and
TLAC. Another commenter suggested
integrating the RLAP liquidity
expectations in the proposal into
regulatory liquidity requirements via the
rulemaking process. This commenter
also expressed concern about the
potential additive requirements and
expectations of RLAP relative to the
NSFR. Finally, one commenter
expressed support for maintaining
RLEN expectations.
Like the rationale for eliminating
RCAP from the final guidance, because
of the Specified FBOs’ relatively simple
U.S. legal entity structures and reduced
risk profiles, the final guidance does not
include RLAP expectations concerning
the appropriate positioning of liquidity
among the U.S. IHC and its subsidiaries.
However, 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 remains important
to the execution of a Specified FBO’s
U.S. resolution strategy, as reflected in
the Rule.28 The final guidance therefore
incorporates only expectations for
RLEN. The final guidance also
eliminates references to RLAP.
The agencies do not believe there will
be significant overlap between RLEN
expectations and the NSFR rule because
the regulation implicates long-term
liquidity risks and stability of funding
sources, while the guidance focuses on
liquidity needs during a resolution
scenario, which are shorter-term in
nature. Further, liquidity needs in a
resolution scenario may be driven by
highly idiosyncratic factors. These
factors can be incorporated into a firm’s
RLEN framework, but would not
necessarily be addressed in a
28 See 12 CFR 243.5(c)(1)(iii); 12 CFR
381.5(c)(1)(iii).

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standardized measure like the NSFR.
The agencies’ decision not to include
expectations for RLAP in the final
guidance obviates the need to analyze
interaction between RLAP and TLAC.
Separately, the suggestion to incorporate
liquidity expectations into existing
regulatory requirements is outside the
scope of the current guidance-making.
e. Governance Mechanisms
i. Playbooks
The proposed guidance outlined an
expectation for Proposed FBOs to
develop governance playbooks that
detail specific actions that the board of
directors and senior management of U.S.
non-branch material entities would take
under the firm’s U.S. resolution strategy.
The expectations related to
communication and escalation protocols
were contingent on triggers, which are
firm-defined financial metrics reflecting
the U.S. IHC’s financial condition. In
addition, the proposed guidance called
for playbooks to address, among other
things, the fiduciary responsibilities of
boards of directors, potential conflicts of
interest, and employee retention
policies. One commenter suggested that
the agencies streamline playbook
expectations to focus only on
governance and escalation procedures
as well as capabilities to produce key
information and data that support
timely and informed decision-making.
The commenter argued that outlining
details about specific decisions
management would have to make would
be of limited value given that
resolution-related actions would be
driven by the circumstances and market
conditions present at the time of
financial stress. The agencies are
finalizing this aspect of the guidance as
proposed as the agencies believe that
the suggested additional information
would have important value in a
resolution scenario.
ii. Triggers
The agencies received no comments
about the expectations in the proposed
guidance regarding triggers. That said,
recognizing that the preferred resolution
outcome for the Specified FBOs is a
successful home country resolution, the
final guidance does not include
expectations regarding triggers or
escalation protocols based on the U.S.
IHC’s financial condition. The final
guidance, however, retains the broader
expectation that firms have in place
mechanisms to ensure that timely
communication and coordination occurs
between and among the boards of the
U.S. IHC, U.S. IHC subsidiaries, and the

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foreign parent to facilitate the provision
of financial support.
iii. Potential Mechanisms for Parent
Support
Having a structure in place that
facilitates the transmission of resources
to an FBO’s U.S. material entity
subsidiaries and mitigates against
potential legal challenges is an
important component for resolution
plans that contemplate the provision of
such support. Neither the proposed
guidance nor the Rule endorses a
specific strategy for the provision of
such support. Rather, under the
proposal, firms would have been
expected to (i) develop a mechanism for
planned foreign parent support of U.S.
non-branch material entities to meet
those entities’ liquidity needs and (ii)
include in their resolution plan
submissions analysis of potential
challenges to planned foreign parent
support and associated mitigants.
Further, the proposal provided that if a
plan anticipates 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,
the plan should also include a detailed
legal analysis of the potential state law
and bankruptcy law challenges and
mitigants to the provision of resources.
To date, some Specified FBOs have
relied on CBMs for the timely provision
of capital and liquidity from a U.S.
material entity (e.g., the U.S. IHC) to its
U.S. affiliates prior to the U.S. IHC
commencing a bankruptcy case and to
mitigate potential legal challenges to the
provision of such support. In addition,
the agencies solicited comment on the
benefits and costs and the relative
advantages and disadvantages of two
approaches currently used by FBOs to
assist the agencies in deciding whether
to endorse a specific approach in
finalizing the guidance.
Commenters urged against imposing
specific requirements or expectations
regarding CBMs and supported
maintaining flexibility for firms to
determine the particular form and
structure of CBMs based on a firm’s
structure, resolution strategy, and global
capital and liquidity planning needs.
Commenters further recommended that
the agencies evaluate CBMs based on
their effectiveness in mitigating creditor
challenges. One commenter suggested
that the agencies’ assessment of the
effectiveness of various CBMs should
take into consideration the nature of the
Proposed FBOs, specifically that: (i) All
of the Proposed FBOs in the proposed
guidance have global SPOE strategies
that do not contemplate the insolvency
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(ii) internal TLAC requirements have
been complied with and incentivize the
firms to recapitalize their U.S.
operations to avoid the costs,
operational burdens, and other
consequences associated with
bankruptcy proceedings; and (iii) the
Board has the authority to trigger the
conversion of internal TLAC in the form
of long-term debt into equity to
recapitalize an IHC without the need for
a U.S. bankruptcy proceeding. This
commenter also argued that the agencies
should provide a threshold for
determining whether a CBM sufficiently
mitigates the risk of creditor challenges
that is materially lower than for U.S.
BHCs for which a bankruptcy
proceeding is a primary resolution
strategy. This commenter also stated
that the agencies had already been
provided with substantial legal analyses
supporting the workability of existing
CBMs and urged the agencies to engage
with the Proposed FBOs prior to
providing specific requirements
regarding CBMs.
One commenter cautioned that the
proposed CBM guidance may impede
capital and liquidity placed in the U.S.
IHC from being returned to the parent
for efficient deployment globally, and
that a CBM developed only to support
a U.S. resolution may trap financial
resources in the IHC. Separately,
another commenter requested that the
agencies engage with the Proposed
FBOs and consider alternative
approaches to ensure the timely
availability of capital and liquidity
support. Suggestions included reducing
or amending internal TLAC
requirements, allowing use of internal
TLAC to satisfy the demands of
Comprehensive Capital Analysis and
Review, and eliminating the
requirement in the Rule that firms must
assume the bankruptcy of a U.S. entity.
Consistent with the comments
received, and to maintain flexibility for
firms, the agencies are finalizing the
guidance without including additional
expectations regarding the use and
structure of CBMs. This lack of specific,
additional expectations related to CBMs
should not be interpreted as an
expression of the agencies’ view on the
feasibility of current support
mechanisms. Additionally, no revisions
have been made in response to a
comment that urged the agencies to
describe, ex ante, a particular threshold
for what constitutes an effective CBM.
Furthermore, the agencies have not
made changes in response to the
comment recommending amendments
to various rules, as revisions to
regulatory requirements are outside the
scope of the present guidance. The

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agencies refer to the above discussion
about capital and liquidity in response
to concerns about the placement and
availability of capital and liquidity.29
In addition, the final guidance
removes the expectation for the
resolution plan to include an analysis of
the potential challenges to the planned
foreign parent support to U.S. nonbranch material entities, and the
planned provision of capital and
liquidity by a U.S. material entity to its
U.S. affiliates prior to the U.S. IHC’s
bankruptcy filing. This approach gives
due consideration to the arguments put
forth by commenters that the Specified
FBOs should have flexibility to
determine the particular form and
structure of the framework developed to
support its particular resolution strategy
and needs, that the preferred resolution
outcome for the Specified FBOs is a
successful home country resolution, and
that internal TLAC resources are
available for conversion to support IHC
recapitalization outside of bankruptcy.
f. Operational
i. Payment, Clearing and Settlement
Activities
Scope of PCS Activities: Most
commenters requested that the scope of
the guidance be limited to U.S. material
entities, core business lines, and critical
operations domiciled in the U.S. and
resolved under the U.S. Bankruptcy
Code, and that guidance should not
include indirect PCS relationships
through non-U.S. affiliates. Commenters
contended that the proposal would
subject the Proposed FBOs to
expectations that are essentially the
same as, and in some ways more
extensive than, the expectations for PCS
activities applicable to U.S. G–SIBs.
Commenters also claimed that the
proposal would be potentially
extraterritorial in its coverage of nonU.S. branches and affiliates and contrary
to the Rule and Title I of the DoddFrank Act. These commenters also
asserted that because non-U.S. affiliate
relationships were covered under home
country regulatory frameworks,
inclusion of information about these
relationships in U.S. resolution
planning would be duplicative and the
information should be obtained via
home-host supervisor cooperation. One
commenter suggested that indirect
access to PCS services through non-U.S.
affiliates does not raise significant U.S.
resolution concerns. Another
commenter claimed that a U.S. material
entity would not have the ability to
distinguish activity specific to its clients
29 See

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or counterparties with the indirect
financial market utility (FMU), as this
activity is typically subject to netting by
the non-U.S. affiliate, and that a U.S.
material entity of a Proposed FBO
would not have the authority to make
decisions on contingency actions
involving an FMU that is accessed via
a non-U.S. affiliate. These commenters
suggested that the guidance be tailored
to fit the Proposed FBOs’ reduced U.S.
footprint and their limited role in this
space, relative to U.S. G–SIBs.
As a preliminary matter, the agencies
note that the Rule requires full
resolution plan submissions by foreignbased covered companies to include
information on ‘‘the interconnections
and interdependencies among the U.S.
subsidiaries, branches, and agencies,
and between those entities and . . .
[a]ny foreign-based affiliate.’’ 30 In
addition, each full resolution plan is
required to ‘‘identify each trading,
payment, clearing, or settlement system
of which the covered company, directly
or indirectly, is a member and on which
the covered company conducts a
material number or value amount of
trades or transactions.’’ 31 These
provisions, together, provide the
agencies the authority to set forth the
expectation that a firm’s PCS framework
address its indirect access to PCS
services through non-U.S. affiliates. The
proposed guidance was therefore
consistent with the Rule and Title I of
the Dodd-Frank Act. The agencies
reiterate that continuity of access
arrangements provided indirectly by
non-U.S. affiliates to support a Specified
FBO’s U.S. operations and key clients
are an important part of a Specified
FBO’s U.S. resolution planning.
The agencies acknowledge, however,
that commenters’ feedback that a nonU.S. affiliate’s ability to maintain access
to key FMUs and key agent banks to
support indirect PCS relationships
through non-U.S. affiliates may be
addressed in the firm’s group resolution
plan or in other information provided to
home country regulators. As such,
expectations that Specified FBOs submit
detailed information related to non-U.S.
affiliates’ support of their U.S.
operations may be duplicative. In
recognition of this feedback and in an
effort to more closely align expectations
with the business and risk profiles of
the Specified FBOs’ U.S. operations, the
final guidance does not include
expectations that firms provide
information regarding indirect access to
key FMUs and agent banks provided by
non-U.S. branches and affiliates. As
30 12
31 12

CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i).
CFR 243.5(e)(12); 12 CFR 381.5(e)(12).

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further suggested by commenters and
consistent with prior statements by the
agencies, the agencies expect to engage
with the Specified FBOs and their home
country authorities.
Providers of PCS Services: Two
commenters recommended clarifying
the term ‘‘provider of PCS services’’ to
include other key roles in which a firm
may act, and to provide further
examples where a firm may act as
provider (or recipient) of PCS services.
One commenter also recommended that
the term ‘‘agent bank’’ should be
clarified to specifically include ‘‘nostro
banks.’’ One commenter also suggested
that firms be encouraged to amend their
bilateral contracts with agent banks,
including contracts with nostro agents,
to facilitate continuity of access to PCS
services. The final guidance does not
include additional clarification or
examples as the agencies do not intend
the guidance to be prescriptive. Rather,
the final guidance is intended to
provide a firm with flexibility to define
and identify PCS services, as well as the
instances where the firm is a provider
of such PCS services to its clients.
Regarding the amendment of bilateral
contracts, the agencies believe that the
expectations regarding establishment of
service-level agreements (SLAs) in the
Shared and Outsourced Services section
of the final guidance address the
commenter’s suggestions.
One commenter also recommended
that the proposal recognize that many
FMUs and agent banks do not
implement bilateral SLAs for core
clearing and custody services. The
agencies have clarified the final
guidance by adding ‘as applicable’ to
the relevant capability in the guidance
text.
Playbooks for Continued Access to
PCS Services: One commenter stated
that FMU playbooks should be
streamlined to include only critical
information necessary to facilitate an
orderly resolution (e.g., management
information, liquidity considerations,
key governance, and responsible parties)
and that firms should not be expected
to include information regarding FMU
membership rules or expected behavior.
Another commenter stated that to the
extent such critical information had
already been provided to the agencies
through prior exam processes, firms
should be able to reference such items
instead of including them in playbooks.
Separately, another commenter
recommended that the final guidance
direct firms to maintain lists of key
resolution contacts for their key FMUs
and key agent banks and provide
equivalent contact information to key
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commenter also suggested that the
guidance put additional emphasis on
the importance of continued firm
engagement with key external
stakeholders and that the agencies
consider adding expectations for firm
communication with key FMUs and key
agent banks during stress and
resolution. The agencies also were
encouraged by this commenter to
develop their own communication
strategies for key stakeholders and vet
them with relevant firms and FMUs.
The commenter further suggested that
firms should identify, ex ante, services
they would likely cease to provide in a
resolution and plan for actions they
would take to mitigate any resulting
adverse systemic impact. Finally, a
commenter stated that the guidance
should recognize that there is specific,
industry-wide default guidance already
in place for certain FMUs (e.g., central
counterparties) that would apply to a
Proposed FBO’s activities in a
resolution.
The agencies are finalizing these
elements of the guidance as proposed.
The expectations in the final guidance
call for playbooks that address
specifically how firms would maintain
access to PCS services but that do not
necessarily include a discussion of FMU
rules around a member firm’s default.
The final guidance aims to provide
firms flexibility in determining how
they would best maintain access to PCS
services in a stress scenario and to
clarify that playbooks are not expected
to include a scenario in which the firm
loses access to an agent bank or FMU.
The proposed guidance contained
expectations for firms to engage with
key external stakeholders and reflect
any feedback received during such
ongoing outreach, and the agencies are
retaining those expectations in the final
guidance. To the extent that certain
playbook information may be addressed
in other sections of the firm’s
submission, the firm may include a
specific cross-reference to that content
in the appropriate playbook. While the
agencies are not expecting firms to
model expected FMU behaviors, firms
are expected to consider operational and
financial resources that would be
needed to respond to adverse actions
and execute any contingency
arrangement. In addition, given the joint
nature of the resolution plan process,
the final guidance, like the Rule,
provides for incorporation of previously
submitted resolution plan information
by reference.
The comment suggesting that the
agencies develop their own
communication strategies for key
stakeholders is not applicable to the

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content in a firm’s resolution plan;
therefore, no changes have been made to
address the comment. The agencies
already proactively engage with firms
and key stakeholders through various
fora, including direct engagement, crisis
management groups, and international
working groups focused on crisis
management under the Financial
Stability Board. The agencies also
encourage firms and their agent banks to
continue engaging and communicating
with each other, key FMUs, agent banks,
and clients, and other stakeholders to
identify possible ways to support
continued access to PCS services.
While expressing general support for
the expectations in the proposed
guidance related to PCS-related
Liquidity Sources and Uses, a
commenter suggested that the sentence
related to ‘‘PCS Liquidity Sources’’ be
revised from ‘‘various currencies’’ to
‘‘all currencies relevant to banks’
participation’’ in FMUs, to be consistent
with international expectations. The
agencies are adopting this suggestion in
the final guidance. The commenter also
suggested that the final guidance clarify
that firms should assess their key FMU
and key agent bank liquidity needs in
the aggregate so that firms account for
the availability of funds across more
than one key FMU or agent bank.
Regarding intraday liquidity, this
commenter suggested that the final
guidance be amended to include
additional specific expectations for
playbooks beyond describing
capabilities to control intraday liquidity
inflows and outflows, and to identify
and prioritize time-specific payments.
The agencies are not adopting these
suggestions in the final guidance to
allow the Specified FBOs flexibility to
tailor and streamline playbook content
based on the actual profile of their PCS
activities relevant to their U.S.
operations.
Key Client Contingency
Arrangements: Two commenters
questioned the benefit of expectations
related to the identification and
mapping of PCS services to key clients
and the description of contingency
actions that the firm may take
concerning provision of intraday credit
to key clients since most clients have
other relationships. Another commenter
suggested that the final guidance
contain examples of particular actions
and arrangements that the agencies
expect the firms to consider around the
provision of intraday credit to affiliate
and third-party clients. The agencies are
not modifying the final guidance in
response to these comments. The final
guidance contains expectations that
firms maintain continuity of access to

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PCS services for key clients in the
Unites States. The final guidance is not
prescriptive, and each firm is expected
to determine the relevant contingency
actions and arrangements that are
specific to maintaining continuity of
access to its PCS activities. Firms have
the discretion to tailor the discussion to
client impacts specific to the PCS
services provided by such firms. The
agencies are not modifying provisions
related to the identification and
mapping of PCS services to key clients
as this information helps the agencies
understand the ecosystem of provision
of PCS services.
Adverse Actions: A commenter
expressed support for the expectation
for playbooks to assess the range of
adverse actions that may be taken by
key FMUs or key agent banks but
indicated that the term ‘‘adverse
actions’’ may be incorrectly interpreted
and suggested using ‘‘risk-mitigating
actions,’’ which would be more
consistent with a home country
authority’s guidance. The agencies are
not making any changes to the final
guidance because ‘‘adverse actions’’
includes not only ‘‘risk mitigating
actions,’’ but also a broader set of
actions that could be taken by key FMUs
or key agent banks.
Loss of Access: One commenter
suggested that there was a contradiction
in the proposed guidance and requested
clarification about whether there was an
expectation for a firm to contemplate a
scenario where it loses access to a key
FMU or key agent bank. The agencies
are finalizing the guidance as proposed.
The final guidance specifies that a firm
is not expected to incorporate a scenario
in which it loses FMU or agent bank
access into its U.S. resolution strategy.
However, in support of maintaining
continuity of access to PCS services,
playbooks should provide analysis of
the financial and operational impacts to
the firm’s material entities and key
clients due to adverse actions that may
be taken by an FMU or agent bank, and
the contingency actions that may be
taken by the filer.
ii. Management Information Systems
The agencies received no comments
regarding the management information
systems (MIS) section of the proposed
guidance. The expectations contained in
the proposed guidance articulate general
expectations for firms to have the
requisite MIS capabilities to produce
timely, accurate financial and risk data
on a U.S. legal entity basis. The agencies
determined that the expectations and
capabilities are addressed in the Rule 32
32 See

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and thus the final guidance does not
include a section on MIS.
iii. Managing, Identifying, and Valuing
Collateral
The agencies received no comments
regarding the managing, identifying, and
valuing collateral section of the
proposed guidance and are finalizing
the section as proposed.
iv. Shared and Outsourced Services
The agencies received no comments
regarding the shared and outsourced
services section of the proposed
guidance and are finalizing the section
as proposed.
v. Qualified Financial Contracts
The agencies received no comments
regarding the QFC section of the
proposed guidance, which sets forth
expectations for firms to articulate their
progress in implementing requirements
regarding contractual stays in qualified
financial contracts. However, the
agencies are not including this subsection in the final guidance due to the
progress made by the Specified FBOs in
complying with the QFC stay rules of
the Board, the Office of the Comptroller
of the Currency, and the FDIC.33
g. Branches
The agencies received no comments
regarding the branches section of the
proposed guidance. However, the
agencies are removing expectations from
the final guidance that are viewed as
duplicative to existing rules or repeat,
without elaboration, components of the
Rule. Specifically, mapping
expectations for U.S. branches that are
material entities are specified in the
Rule.34 In addition, expectations for a
liquidity buffer are addressed in the
Board’s Regulation YY.35 Neither
subsection of the proposed guidance
was intended to expand upon or clarify
existing rules and thus it is appropriate
to remove them from the final guidance.
The remaining parts of the Branches
section regarding expectations for
supporting assumptions on continuity
of operations and analyzing the impact
of cessation of operations remain
unchanged from the proposed guidance.
h. Group Resolution Plan
The agencies received no comments
regarding the group resolution section of
the proposed guidance, which set forth
expectations for firms to address how
33 12 CFR part 47 (Office of the Comptroller of the
Currency); 12 CFR part 252, subpart I (Board); and
12 CFR part 382 (FDIC).
34 See 12 CFR 243.5(a)(2), (g); 12 CFR 381.5(a)(2),
(g).
35 See 12 CFR 252.

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resolution planning in the U.S. is
integrated into the group resolution
plan. However, in recognition that the
preferred resolution outcome for many
Specified FBOs is a successful home
country resolution using an SPOE
resolution strategy, the agencies expect
to supplement their understanding of
the impact on U.S. operations of
executing a firm’s group resolution plan
through international collaboration with
home country regulators and therefore
such a section is unnecessary. The
agencies determined that as this item is
addressed by the Rule,36 the final
guidance does not include a section on
group resolution.

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i. Legal Entity Rationalization and
Separability
The agencies received no comments
regarding the legal entity rationalization
and separability section of the proposed
guidance. However, consistent with
agencies’ efforts to more closely align
guidance expectations with the current
business and risk profiles of the
Specified FBOs’ U.S. operations, the
final guidance does not include the
separability expectations, which would
have suggested that firms identify
discrete U.S. operations that would be
sold or transferred in a resolution
scenario. Given that the U.S. operations
of the Specified FBOs are a
subcomponent of a larger FBO, for
which the preferred resolution approach
is a home-country SPOE resolution, the
agencies have found that the
separability options within the United
States are few and that their inclusion
in resolution plans has yielded limited
new insights. Moreover, the agencies
expect that such information is
obtainable through international
collaboration with home country
regulators. As such, the agencies have
eliminated these expectations from the
final guidance.
j. Derivatives and Trading Activities
The agencies received a number of
comments on the Derivatives and
Trading Activities section of the
proposed guidance. Overall,
commenters supported the proposed
elimination of the active and passive
wind-down scenario analyses and rating
agency playbooks, and recommended
certain additional modifications and
clarifications to streamline the
resolution plan submissions and
provide further clarity.
After reviewing the comments, the
agencies have adopted final guidance
that includes several adjustments to
36 See 12 CFR 243.5(a)(2)(ii); 12 CFR
381.5(a)(2)(ii).

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address matters raised by the
commenters. Specifically, the final
guidance does not include elements
from the proposal related to derivatives
and trading activities originated in the
U.S. and booked directly to non-U.S.
affiliates. Commenters argued that the
derivatives guidance should not include
U.S. derivatives and trading activities or
prime brokerage customer account
balances booked directly to non-U.S.
affiliates because they are beyond the
scope of the Rule and the information is
better gathered through collaboration
with home country regulators.
Commenters suggested that the
derivatives guidance focus solely on
derivatives and trading activities and
prime brokerage customer account
balances that are booked to U.S.
material entities and related to core
business lines and critical operations.37
Further, commenters suggested that the
guidance should not include the
identification, assessment, or reporting
on risk transfer arrangements with nonU.S. affiliates and also argued that the
proposed guidance would result in
firms having to create reporting
processes for activities booked in nonU.S. affiliates. Commenters also
suggested that the proposed guidance
would subject the Proposed FBOs to
expectations greater than, or similar to,
those imposed on U.S. G–SIBs and that
transactions booked outside the U.S. fall
under the purview of home country
authorities, are best addressed in the
global resolution plan, and are outside
the scope of the Rule and Title I of the
Dodd-Frank Act.
As a preliminary matter, similar to the
discussion in the PCS section of this
preamble, the agencies note that the
Rule requires full resolution plan
submissions by foreign-based covered
companies to include information ‘‘with
respect to the 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.’’ 38
37 The agencies note that based on the Specified
FBOs’ most recent resolution plans, each of the
Specified FBOs identifies certain U.S. derivatives
and trading activities (including U.S. prime
brokerage services) as an identified critical
operation or core business line.
38 12 CFR 243.5(a)(2)(i); 12 CFR 381.5(a)(2)(i). See
also 12 CFR 243.5(a)(2)(ii); 12 CFR 381.5(a)(2)(i)
(requiring each full resolution plan to include a
‘‘detailed explanation of how resolution planning
for the subsidiaries, branches and agencies, and
identified critical operations and core business
lines of the foreign-based covered company that are
domiciled in the United States or conducted in
whole or material part in the United States is
integrated into the foreign-based covered company’s
overall resolution or other contingency planning
process.’’).

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This provision provides the agencies the
authority to set forth the expectation
that a resolution plan include
information about the firm’s derivatives
and trading activities, including
derivatives and trading activities
originated from U.S. entities that are
booked directly into a non-U.S. affiliate,
because those activities occur in
material part in the United States.
Accordingly, the proposed guidance
was consistent with the Rule and Title
I of the Dodd-Frank Act.
However, after considering
commenters’ views, and in an effort to
more closely align expectations with the
current business and risk profiles of the
Specified FBOs, the final guidance does
not include expectations concerning
derivatives and trading activities that
originate from U.S. entities but are
booked into non-U.S. affiliates. Because
the booking of U.S. derivatives and
trading activities regularly occurs across
jurisdictions and creates
interconnections and interdependencies
among and between a firm’s U.S.
entities and its non-U.S. affiliates, the
agencies expect to coordinate with
home country authorities to collect
information about derivatives booking
activities that occur across jurisdictions
in order to understand any related risks
to the execution of the firm’s U.S.
resolution strategy. This approach is
consistent with the 2018 Title I feedback
letters to some Specified FBOs, in
which the agencies indicated their
intent to engage with the FBO and home
authorities regarding derivatives
booking practices.
The agencies also have made several
adjustments and clarifications in the
final guidance to address other matters
raised by the commenters. Commenters
argued that the proposal inappropriately
applied the derivatives guidance to nonderivatives trading activities (e.g.,
securities financing transactions). The
agencies acknowledge that the Specified
FBOs have drastically decreased their
exposures to securities financing
transactions, while the U.S. G–SIBs
have increased their exposures.
Therefore, the final guidance only
covers derivatives and linked nonderivatives.
Commenters also suggested that a
Proposed FBO should be allowed to
define linked non-derivatives trading
positions based on its overall business
and resolution strategy trading
positions. The agencies agree with this
comment, and the final guidance allows
for linked non-derivatives trading
positions to be defined based on the
Specified FBO’s overall business and
resolution strategy. Finally, some
commenters suggested that the scope for

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the prime brokerage subsection of the
proposal was either unclear or overly
broad. As suggested, the final guidance
clarifies that a U.S. prime brokerage
client should be a client who signs a
prime brokerage agreement with a U.S.
material entity. Further, the agencies are
not finalizing aspects of the proposed
guidance regarding requests for
information and reporting related to
prime brokerage activities that are
booked to non-U.S. entities, as stated
above.
Some commenters recommended the
agencies adjust certain expectations that
are not specified in the proposed
guidance. The agencies have determined
not to modify the guidance in these
instances. For example, commenters
stated that development of a plan for
resolution of positions of non-U.S.
affiliates is beyond the scope of the
Rule. The agencies note, as described
above, that the proposed guidance did
not set out expectations that the
Proposed FBOs develop a plan for the
resolution of derivatives and trading
activities booked to non-U.S. entities.
The scope of the stabilization and derisking strategy subsection applies only
to U.S. derivatives portfolios booked to
U.S. entities.
The agencies received comments
related to tailoring derivatives
expectations. For example, commenters
suggested the segmentation analysis and
analysis of de-risking strategy
provisions of the proposal were neither
warranted nor sufficiently clear for
Proposed FBOs because their
derivatives exposures are significantly
smaller than those of U.S. G–SIBs. After
considering multiple relevant factors,
the agencies have not modified the
guidance in response to these
comments. The ability to identify,
quickly and reliably, problematic
derivatives positions and portfolios is
foundational to minimizing uncertainty
and estimating resource needs for an
orderly resolution of a firm’s U.S.
entities. Further, 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
orderly resolution of any U.S. IHC
subsidiary with a derivatives portfolio.
As a result, the final 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. The agencies also note that
the portfolio segmentation subsection
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positions that are booked to U.S.
entities.
Finally, commenters suggested
tailoring the scope of applicability of the
derivatives section using a threshold,
such as the Volcker Rule’s proprietary
trading categories. The agencies do not
believe that the compliance thresholds
and the associated calculation
methodology (total trading assets and
liabilities) established under the Volcker
Rule accurately capture the size and
complexity of a firm’s derivatives
activities for resolution purposes and
thus are an inappropriate scoping
mechanism for the guidance. Therefore,
the final guidance does not incorporate
compliance thresholds, such as those
established by the Volcker Rule.
k. Additional Comments
i. Comments About the Development of
the Proposal
The agencies received several general
comments about the development of the
proposed guidance. The agencies have
considered these commenters’ input but
have made no modifications to the final
guidance.
One commenter claimed that the
agencies’ proposed guidance did not
reflect internationally agreed upon
approaches to home and host authority
responsibility with regard to resolution
planning, with the proposal’s continued
emphasis on a separate U.S. strategy,
which the commenter argued is largely
duplicative of home country
requirements. Other commenters
criticized the proposed guidance for not
reflecting any reliance on supervisory
colleges and crisis management groups,
or on the capital markets and resolution
rules and requirements of the Securities
and Exchange Commission, Financial
Industry Regulatory Authority, or the
Commodity Futures Trading
Commission.
The agencies do not agree with these
comments. Since the enactment of
section 165(d) of the Dodd-Frank Act,
the agencies have worked bilaterally
and multilaterally with relevant
domestic and foreign authorities and in
various international fora to understand
risks to the firms’ orderly resolution
under the U.S. Bankruptcy Code, as well
as to share resolution planning
expertise. In addition, the agencies have
established resolution-related
information-sharing arrangements with
both domestic and foreign authorities in
an effort to enhance the prospects for a
successful cross-border resolution of the
Specified FBOs. Moreover, the agencies
note that both section 165(d) of the
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large bank holding companies,
including FBOs, to file resolution plans.
Another commenter encouraged the
agencies to consider aligning their
guidance with the resolution-related
guidance issued by the European Single
Resolution Board. The agencies
recognize that international
coordination in resolution-related
matters is important to ensuring that
home and host country regulators have
sufficient understanding of the
resolvability of internationally active
financial companies. The purpose and
general subject matter of the final
guidance are generally consistent with
those of the Single Resolution Board’s
Expectations for Banks. Both the final
guidance and the Single Resolution
Board document describe the respective
authorities’ expectations regarding a
number of key vulnerabilities in
resolution (e.g., governance
mechanisms, operational, capital,
liquidity, and legal entity
rationalization). The agencies will
continue to work with international
counterparts to build a shared
understanding around resolution-related
matters through participation in firmspecific, cross-border crisis management
groups, as both home authorities and
host authorities.
Other commenters suggested that the
proposed guidance did not adequately
recognize foreign parents as sources of
strength to the U.S. operations of
Proposed FBOs, but instead appeared to
treat the non-U.S. parent and affiliates
only as sources of risk for U.S. material
entities. The agencies understand that
the preferred resolution outcome for
many Specified FBOs is a successful
home country resolution using a 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. The Rule balances this
recognition with the concern that
support from a foreign parent in stress
cannot be ensured. The final guidance,
in turn, lays out expectations that reflect
a number of key vulnerabilities
associated with an orderly resolution
under the U.S. Bankruptcy Code.
Certain commenters suggested that
the agencies streamline plan
submissions to make the documents
more actionable and reduce the time the
agencies may need to review and
challenge the submissions. These
commenters also encouraged the
agencies to leverage information
provided by firms through existing bank
supervision and exam processes to
collect information relevant to the

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agencies’ review of resolution planning.
The agencies note that the scope and
informational content of resolution plan
submissions are dictated by the Rule.
That said, the agencies have endeavored
in this final guidance to tailor
expectations for the Specified FBOs’
resolution plans to be commensurate to
and address risks posed by key
vulnerabilities of the Specified FBOs in
resolution. The agencies also have made
a number of modifications to the final
guidance with the express purpose of
streamlining plan expectations and,
where appropriate, leveraging existing
supervisory relationships with home
and host country authorities to
collaboratively obtain information about
the resolution planning and
resolvability of the firms.

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ii. Comments About General Concerns
With the Proposal
Some commenters asserted that the
proposed guidance exceeded the scope
of the Rule or Title I of the Dodd-Frank
Act, introduced definitions and
expectations that were inconsistent with
the Rule, and created issues of
extraterritoriality and duplication of
information that may already be covered
under home country regulations. Some
commenters also objected to
expectations pertaining to the
identification, assessment, or reporting
of indirect relationships through nonU.S. affiliates, or risk transfer
arrangements with non-U.S. affiliates.
These comments are addressed in the
individual sections of this preamble to
which they relate.
Another commenter recommended
modifying resolution guidance and
requirements to emphasize firms
maintaining resolution capabilities that
remain available during business as
usual. This comment generally aligns
with the agencies’ approach to
resolution planning expectations, and
the final guidance emphasizes that the
Specified FBOs should have effective
capabilities and well-developed plans.
That said, the agencies do not believe
that any specific revisions are necessary
to respond to this comment; rather, the
agencies will continue to deliberate how
to ensure that resolution planning can
be facilitated by and integrated into the
firm’s business-as-usual practices.
iii. Comments About Resolution
Planning Generally
The agencies received several
comments about the broader
supervisory landscape related to
resolution planning. Certain
commenters recommended that the
agencies, in addition to deepening home
and host country regulatory

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relationships, engage bilaterally with
the Proposed FBOs to clarify
outstanding concerns about the
resolvability of the firms’ U.S.
operations, as well as any concerns
about the firms’ reliance on home
country resolution strategies.
These comments do not directly relate
to the guidance and, as a result, the
agencies are not making any changes to
the final guidance. Relatedly, one
commenter asked the agencies to clearly
identify residual concerns with respect
to each Proposed FBO and then tie
resolution planning guidance to those
concerns. The agencies expect that
overall engagement and ongoing dialog
and feedback with each of the Specified
FBOs will continue to provide clarity on
any outstanding concerns with respect
to resolution capabilities. The agencies
also note that the final guidance takes
into consideration the agencies’
experience in reviewing prior resolution
plan submissions. No specific changes
have been made to the final guidance in
response to this comment.
iv. Comments Outside the Scope of
Guidance-Making
One commenter requested that the
agencies also incorporate that
commenter’s thoughts into future
changes to guidance for U.S. G–SIBs,
while another commenter argued for the
removal of the Proposed FBOs from the
Board’s Large Institution Supervision
Coordinating Committee (LISCC)
portfolio. The final guidance does not
apply to U.S. G–SIBs, who remain
subject to heightened resolution plan
supervisory expectations given their
size and risk profile, and the
composition of the LISCC portfolio of
firms is similarly outside the scope of
this final guidance. Accordingly, the
agencies have not made any changes to
the guidance to address these
comments.39
IV. Paperwork Reduction Act
Certain provisions of the guidance
contain ‘‘collection of information’’
provisions 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. The agencies
reviewed the final guidance and
39 The agencies note that, on November 6, 2020,
the Board announced that it is updating the list of
firms supervised by the LISCC Program. See https://
www.federalreserve.gov/newsevents/pressreleases/
bcreg20201106a.htm.

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determined that it would revise the
reporting provisions that have been
previously approved by OMB under the
Board’s OMB control number 7100–
0346 (Reporting Requirements
Associated with Regulation QQ; FR QQ)
and the FDIC’s control number 3064–
0210 (Reporting Requirements
Associated with Resolution Planning).
The Board has reviewed the final
guidance under the authority delegated
to the Board by OMB. The agencies’
information collections will be extended
for three years, with revision.
Current Actions
The proposed guidance stated that the
proposed changes to the 2018 FBO
guidance would not revise the reporting
provisions that have been previously
cleared by the OMB under the Board’s
control number 7100–0346 and the
FDIC’s control number 3064–0210. The
agencies did not receive any comments
on the PRA determination in the
proposed guidance.
However, as indicated above, the final
guidance includes certain modifications
and clarifications to the proposed
guidance. In particular, the scope,
capital, liquidity, governance
mechanisms, PCS, and derivatives and
trading activities sections of the final
guidance reflect changes from the
proposal. Other sections or sub-sections,
such as group resolution plan,
management information systems,
QFCs, separability, and mapping of
branch activities, were determined not
to be necessary as they are duplicative
of existing regulatory requirements or
not reflective of the Specified FBOs’
current business models and
accordingly have been eliminated from
the guidance. The intent of these
changes is to clarify expectations, more
closely align expectations with the
current business and risk profiles of the
Specified FBOs’ U.S. operations, and
recognize that the preferred resolution
strategy for the Specified FBOs is a
successful home country resolution. The
final guidance also eliminates
expectations for information that, in the
agencies’ experience, may be obtained
through other existing and effective
mechanisms.
As a result of these changes, the final
guidance reduces the existing estimated
burden for a triennial full complex filer
from 13,135 hours to 9,916 hours per
year. This reduction is driven mainly by
significant reductions in the burdens
related to capital, liquidity, separability,
and governance mechanisms. These
burden savings are borne by the
Proposed FBOs.
One FBO is no longer classified as a
triennial full complex filer and thus

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saves the total burden associated with
filing a triennial full complex resolution
plan. However, another FBO is newly
classified as a triennial full complex
filer and must bear the burden. The
agencies estimate the annual burden for
this new triennial full complex filer as
9,767 hours per year. This estimate
differs from the burden for the Proposed
FBOs for primarily two reasons: (1) The
agencies estimate that the new triennial
full complex filer will incur some startup costs in preparing its first full
resolution plan that is subject to the
final guidance; and (2) the agencies
estimate that the burden for the new
triennial full complex filer’s 2021
targeted resolution plan will be less
than the burdens for the three Proposed
FBOs because the new triennial
complex filer will not be expected to
consider the final guidance for its 2021
targeted resolution plan (unlike the
three other covered companies).

Historically, the Board and the FDIC
have split the respondents for purposes
of PRA clearances. As such, the agencies
will split the change in burden as well.
The FDIC has agreed to take the burden
of the new triennial full complex filer
and one Proposed FBO whereas the
Board will take the burden for the
remaining two Proposed FBOs.
Specially, as a result of this split and
these revisions, there will be a net
decrease in the overall estimated burden
of 6,438 hours for the Board and 6,587
hours for the FDIC. Therefore, the total
Board estimated burden for its entire
information collection (7100–0346) is
209,168 hours and the total FDIC
estimated burden for its entire
information collection (3064–0210) is
203,332 hours.
Proposed Information Collection
Title of Information Collection:
Reporting Requirements Associated
with Resolution Planning.

Agency Form Number: FR QQ.
Frequency of Response: Biennially,
Triennially.
Respondents: Bank holding
companies (including any foreign bank
or company that is, or is treated as, a
bank holding company under section
8(a) of the International Banking Act of
1978, and meets the relevant total
consolidated assets threshold) with total
consolidated assets of $250 billion or
more, bank holding companies with
$100 billion or more in total
consolidated assets with certain
characteristics, and nonbank financial
firms designated by the Financial
Stability Oversight Council for
supervision by the Board.
The following table presents only the
change in the estimated burden hours,
as amended by this final guidance,
broken out by agency. The table does
not include a discussion of the
remaining estimated burden hours,
which remain unchanged.

TABLE 1—BURDEN HOUR ESTIMATES UNDER CURRENT REGULATIONS AND UNDER THE FINAL GUIDANCE
Number of
respondents

FR QQ

Annual
frequency

Estimated average
hours per response *

Estimated
annual burden
hours

Board Burdens
2019 Rule Revisions:
Triennial Full Complex Foreign ......................................

2

1

13,135 ......................................

26,270

Board Total ..............................................................
Final Guidance:
Triennial Full Complex Foreign ......................................

........................

........................

..................................................

26,270

2

1

9,916 ........................................

19,832

Board Total ..............................................................

........................

........................

..................................................

19,832

FDIC Burdens
2019 Rule Revisions:
Triennial Full Complex Foreign ......................................

2

1

13,135 ......................................

26,270

FDIC Total ...............................................................
Final Guidance:
Triennial Full Complex Foreign ......................................
Triennial Full Complex Foreign (new) ............................

........................

........................

..................................................

26,270

1
1

1
1

9,916 ........................................
** 9,767 ....................................

9,916
9,767

FDIC Total ...............................................................

........................

........................

..................................................

19,683

* Hours are calculated as the hours to prepare and submit one full resolution plan and one targeted resolution plan, annualized over 6 years.
** Includes one-time start-up burdens for new triennial full complex foreign filers and excludes guidance-based burdens for the new triennial full
complex filer’s 2021 targeted resolution plan, as the filer is not expected to consider the guidance for that plan.

V. Final Guidance

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Guidance for Resolution Plan
Submissions of Certain Foreign-Based
Covered Companies
I. Introduction
II. Capital
III. Liquidity
IV. Governance Mechanisms
a. Playbooks
V. Operational
a. Payment, Clearing and Settlement
Activities

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b. Managing, Identifying, and Valuing
Collateral
c. Shared and Outsourced Services
VI. Branches
VII. Legal Entity Rationalization
VIII. Derivatives and Trading Activities
IX. Format and Structure of Plans
X. Public Section
Appendix: Frequently Asked Questions

I. Introduction
Section 165(d) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5365(d))

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requires certain 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

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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 (FBOs) that are required to
submit Plans regarding development of
their respective U.S. resolution
strategies (Specified FBOs or firms).
Specifically, the guidance applies to any
FBO that is subject to Category II
standards according to its combined
U.S. operations in accordance with the
Board’s tailoring rule 3 and that is
required to form an intermediate
holding company.4
When an FBO first becomes a
Specified FBO,5 this document will
apply to the firm’s next resolution plan
submission that is due at least 12
months after the date the firm becomes
a Specified FBO. If a Specified FBO
ceases to be subject to Category II
standards or to the Board’s requirement
to form an intermediate holding
company, it will no longer be a
Specified FBO, and this document will
no longer apply to that firm.
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 Prudential Standards for Large Bank Holding
Companies, Savings and Loan Holding Companies,
and Foreign Banking Organizations, 84 FR 59032
(Nov. 1, 2019).
4 See 12 CFR part 252.
5 See 12 CFR 252.5(c).

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implementation of their U.S. resolution
strategy.6
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 2021
and subsequent resolution plan
submissions. This guidance for
Specified FBOs builds upon the
guidance issued in December 2018 for
certain U.S.-based covered companies,
taking into account the circumstances
under which a U.S. resolution plan is
most likely to be relevant for an FBO.
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
bankruptcy under Title 11, United
States Code. Under such a scenario, the
Plan should provide for the orderly
resolution of the Specified FBO’s U.S.
material entities 7 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
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,
6 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 Barclays PLC, Credit
Suisse Group AG, Deutsche Bank AG, and UBS AG
in December 2018 and in August 2014 and feedback
letters issued to Mitsubishi UFJ Financial Group in
July 2019, January 2018, and July 2015; 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.
7 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.

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enhancing capabilities, providing
detailed analysis, or increasing
optionality development, as indicated
below.
Under the Rule, the Agencies will
review the Plan to determine if it
satisfactorily addresses key potential
vulnerabilities, including those
specified 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
The firm should have the capital
capabilities necessary to execute its U.S.
resolution strategy, including the model
and estimation process described below.
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 (Resolution Capital Execution
Need or RCEN). The firm’s positioning
of IHC total loss absorbing capacity
(TLAC) 8 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,9
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.10 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
8 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).
9 The resolution period begins immediately after
the U.S. IHC bankruptcy filing and extends through
the completion of the U.S. resolution strategy.
10 82 FR 8266 (January 24, 2017).

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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. In particular, 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 postfiling, in accordance with the U.S.
strategy (Resolution Liquidity Execution
Need or RLEN).
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

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requirements, market expectations, and
the firm’s post-failure strategy. These
forecasts should inform the RLEN
estimate, i.e., the minimum amount of
high-quality liquid assets (HQLA)
required to facilitate the execution of
the firm’s strategy for the U.S. IHC
subsidiaries.
For non-surviving U.S. IHC
subsidiaries, the firm should provide
analysis and an explanation of how the
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, 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.

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
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 RLEN estimate
for the U.S. non-branch material
entities.

IV. Governance Mechanisms

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,12 or both, of PCS services.
A firm should demonstrate capabilities
for continued access to PCS services
essential to an orderly resolution under
its U.S. resolution strategy through a
framework to support such access by:
• Identifying clients,13 financial
market utilities (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) 14 and qualitative
criteria;

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: 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; 11 (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
11 External communications include those with
U.S. and foreign authorities and other external
stakeholders.

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V. Operational

12 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).
13 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.
14 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

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• 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 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. 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
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
cash and securities settled, and extensions of
intraday credit.

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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,15 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
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 all
currencies relevant to the firm’s
participation, 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
15 Examples of potential adverse actions may
include increased collateral and margin
requirements and enhanced reporting and
monitoring.

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describe any account features that might
restrict the firm’s ready access to its
liquidity sources.
Content Related to Providers of PCS
Services.16 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;
• 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 all relevant currencies of
key clients of the firm’s U.S. operations;
(ii) delaying or restricting PCS activity
16 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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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; 17
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; 18
Æ Exposures to and volumes
transacted with FMUs, nostro agents,
and custodians; and 19
Æ Services provided and service level
agreements, as applicable, for other
current agents and service providers
(internal and external).20
• 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; 21
• Develop contingency arrangements
in the event of such adverse actions; 22
and
• Quantify the liquidity needs and
operational capacity required to meet all
17 12

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

18 Id.

CFR 252.156(g).
CFR 243.5(f)(l)(i); 12 CFR 381.5(f)(1)(i).
21 12 CFR 252.156(e).
22 Id.

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
the firm as a whole approaches
collateral and serves as a single source
for governance.23
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

19 12
20 12

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23 The policy may reference subsidiary or related
policies already in place, as implementation may
differ based on business line or other factors.

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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.
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 24
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
identified critical operations,25 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
24 ‘‘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.
25 This should be interpreted to include data
access and intellectual property rights.

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appropriate terms and conditions to (A)
prevent automatic termination upon
certain resolution-related events and (B)
achieve continued provision of such
services during resolution.26 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
26 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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operations.27 Examples may include
personnel, facilities, systems, data
warehouses, and intellectual property;
and
• Maintain current cost estimates for
implementing such strategies and
contingency arrangements.
VI. Branches
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.28 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.
Impact of the Cessation of Operations:
The firm must provide an analysis of the
impact of the cessation of operations of
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.
VII. Legal Entity Rationalization
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
CFR 243.5(g); 12 CFR 381.5(g).
should take into consideration historical
practice, by applicable regulators, regarding asset
maintenance requirements imposed during stress.

83575

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. 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;
(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;
(C) Facilitate the sale, transfer, or
wind-down 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.
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.
VIII. 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
trading activities.29 The following

27 12

28 Firms

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29 ‘‘U.S. derivatives and trading activities’’, means
all derivatives and linked non-derivatives trading

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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. 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), (iii) by whom it is 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).30
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
descriptions of documented booking
models covering its U.S. derivatives and
trading activities.31 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 endto-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
activities conducted on behalf of the firm, its
clients, or its counterparties that are booked into the
firm’s U.S. IHC subsidiaries and material entity
branches (U.S. entities). The firm may define linked
non-derivatives trading activities based on its
overall business and resolution strategy.
30 The description of controls should include any
components of any market, credit, or liquidity risk
management framework that is material to the
management of the firm’s U.S. derivatives and
trading activities.
31 The booking models should represent the vast
majority (e.g., 95 percent) of a firm’s U.S.
derivatives and trading activities, measured by, for
example, trade notional and gross market value (for
derivatives) and client positions and balances (for
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its U.S. derivatives and trading activities
during the execution of its U.S.
resolution strategy.32
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.33 Second, a firm’s resolution
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,
32 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).
33 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);
however, any differences should be adequately
supported and explained.

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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 34
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,35 to
peer prime brokers in periods of
material financial distress and during
the execution of its U.S. 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-tocustomer 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
34 For example, risk transfer arrangements might
include transfer pricing, profit sharing, loss
limiting, or intragroup hedging arrangements.
35 ‘‘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 who signs a
prime brokerage agreement with a U.S. material
entity.

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potential transfer speed (e.g., from
fastest to longest to transfer, from most
liquid to least liquid). The selected
segmentation criteria should reflect
characteristics 36 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 37 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.38 A firm should also
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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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.39 In developing its U.S.
36 For example, relevant characteristics might
include product, size, clearability, currency,
maturity, level of collateralization, and other risk
characteristics.
37 A firm’s derivatives portfolios include its
derivatives positions and linked non-derivatives
trading positions.
38 The enumerated segmentation dimensions are
not intended as an exhaustive list of relevant
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.
39 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

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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.40
• 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 41 or any other regulatory
requirements, (i) that is available to the
counterparty at or following the start of
(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.
40 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.
41 See 12 CFR part 47 (OCC); part 252, subpart I
(Board); part 382 (FDIC).

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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.42
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
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.43
Sensitivity analysis. A firm should
have a method to apply sensitivity
42 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.
43 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).

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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.44
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.
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).45 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
44 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.
45 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
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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.
IX. 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
orderly resolution in bankruptcy or
other applicable insolvency regimes
(Narrative). The Narrative also should
include a high-level 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

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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
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

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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.
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
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the consequences for the firm’s U.S.
resolution strategy if specific actions in
each jurisdiction were not taken,
delayed, or forgone, as relevant.
X. 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
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.46
46 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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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 guidance
applies to each firm’s preferred strategy/
structure; and
• Reflect updated references to
correspond to this final guidance for the
Specified FBOs (Final 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. Not consolidated
CAP 2. Definition of ‘‘Well-Capitalized’’
Status
Q. How should firms apply the term
‘‘well-capitalized’’?
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 ringfencing?
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

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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. Not Consolidated.
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 interaffiliate 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?

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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 interaffiliate 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, the RLEN model 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.
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 the RLEN Model
Q. The Final Guidance states 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
(non-HQLA) into the RLEN model?
A. 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

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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.
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 poststabilization 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 RLEN estimates for U.S. nonbranch material entities?
A1. To meet the liquidity needs
informed by the RLEN methodology,
firms 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 pre-

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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. Not consolidated
LIQ 15. Not consolidated
LIQ 16. Not consolidated
Operational: Shared Services
OPS SS 1. Not Consolidated
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.
OPS SS 3. Not Consolidated
OPS SS 4. Not Consolidated

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Operations: Payments, Clearing and
Settlement
To the extent relevant, the PCS FAQs
have been consolidated into the updated
section of the Final Guidance.
Legal Entity Rationalization
LER 1. Not consolidated
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.

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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
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 winddowns 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 Final 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. Not consolidated
LER 6. Not consolidated
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

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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 Final 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 Final Guidance is not
intended to govern the corporate
structure in jurisdictions outside the
U.S. 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. nonbranch material entities support the
firm’s US resolution strategy and
minimize risk to US 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.
Derivatives and Trading Activities
To the extent relevant, the derivatives
and trading FAQs have been
consolidated into the updated section of
the Final Guidance.
Legal
LEG 1. Not consolidated.
LEG 2. Contractually Binding
Mechanisms
The Final 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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Federal Register / Vol. 85, No. 246 / Tuesday, December 22, 2020 / Notices

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
down-streaming 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

[FR Doc. 2020–28155 Filed 12–21–20; 8:45 am]
BILLING CODE 6210–01– 6714–01–P

FEDERAL RESERVE SYSTEM
Change in Bank Control Notices;
Acquisitions of Shares of a Bank or
Bank Holding Company

None of the general FAQs were
consolidated.

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 public portions of 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(s) indicated below and at
the offices of the Board of Governors.
This information may also be obtained
on an expedited basis, upon request, by
contacting the appropriate Federal
Reserve Bank and from the Board’s
Freedom of Information Office at
https://www.federalreserve.gov/foia/
request.htm. 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
Street and Constitution Avenue NW,
Washington, DC 20551–0001, not later
than January 6, 2021.
A. Federal Reserve Bank of
Minneapolis (Chris P. Wangen,
Assistant Vice President) 90 Hennepin
Avenue, Minneapolis, Minnesota
55480–0291:
1. Steven and Laurel Klefstad,
Forman, North Dakota; to join the
McLaen family shareholder group, a
group acting in concert, to retain voting
shares of Napoleon Bancorporation,
Inc., Napoleon, North Dakota, and
thereby indirectly retain voting shares of
Stock Growers Bank, Forman, North
Dakota.

By order of the Board of Governors of the
Federal Reserve System.
Ann Misback,
Secretary of the Board.

Board of Governors of the Federal Reserve
System, December 17, 2020.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.

Federal Deposit Insurance Corporation.
By order of the Board of Directors.

[FR Doc. 2020–28199 Filed 12–21–20; 8:45 am]

General

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Dated at Washington, DC, on or about
December 7, 2020.
James P. Sheesley,
Assistant Executive Secretary.

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GENERAL SERVICES
ADMINISTRATION
[Notice-PBS–2020–11; Docket No. 2020–
0002; Sequence No. 41]

Notice of Intent To Prepare an
Environmental Impact Statement for
the Proposed Master Plan for the U.S.
Food and Drug Administration Muirkirk
Road Campus (Prince George’s
County, Laurel, MD)
National Capital Region,
General Services Administration (GSA).
ACTION: Notice of Intent to prepare an
Environmental Impact Statement (EIS).
AGENCY:

Pursuant to the requirements
of the National Environmental Policy
Act of 1969 (NEPA), the Council on
Environmental Quality Regulations,
GSA Order, ADM 1095.1F,
Environmental Considerations in
Decision Making, dated October 19,
1999, and the GSA Public Buildings
Service NEPA Desk Guide, GSA plans to
prepare an EIS for a proposed Master
Plan for the U.S. Food and Drug
Administration’s (FDA) Muirkirk Road
Campus (MRC), in Laurel, Maryland,
located in Prince George’s County. The
Master Plan will provide FDA with a
structured framework for developing the
MRC over the next 20 years.
DATES: Applicable: December 22, 2020.
FOR FURTHER INFORMATION CONTACT:
Marshall Popkin, Office of Planning and
Design Quality, Public Buildings
Service, GSA, National Capital Region,
at 202–919–0026.
SUPPLEMENTARY INFORMATION: The GSA
intends to prepare an EIS to analyze the
potential impacts resulting from the
proposed Master Plan to support the
FDA MRC, in Laurel, Maryland, located
in Prince George’s County. GSA will
analyze four alternatives for the
proposed MRC Master Plan: (1) No
Action Alternative; (2) Development at
the Mod 1/Mod 2 site; (3) Hybrid of
Alternatives 2 and 4; and (4)
Development at the Beltsville Research
Facility site. The proposed action is
anticipated to impact soils and
topography; traffic and transit; water
resources; vegetation; wildlife; air
quality; greenhouse gases and climate;
utilities; and waste management. No
permits are required to adopt the Master
Plan. Implementation of the Master Plan
in the future could require the following
permits and authorizations:
• Dredge or fill permit under Section
404 of the Clean Water Act
• Coastal Zone Management
Consistency Determination
• State and local permits, including
water and wastewater permits,
SUMMARY:

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