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Recordkeeping Readiness: Are Your Qualified Financial Contracts Compliant?

Whether your institution is facing challenges from meeting initial compliance requirements to exam preparation, Sia Partners can help.

Recordkeeping Readiness: Are Your Qualified Financial Contracts Compliant?

Whether your institution is facing challenges from meeting initial compliance requirements to exam preparation, Sia Partners can help. 

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“The Dodd-Frank Act”) developed the concept of Qualified Financial Contracts (“QFC”).  QFCs are broadly defined under §382.2 of The Dodd-Frank Act to include certain financial contracts across specific products (i.e., securities contracts, swap agreements, repurchase agreements, forward contracts and commodity contracts). In the years after the Dodd-Frank Act was passed, QFCs continue to be the subject of more detailed rules and requirements concerning how financial institutions document and maintain records or transactions (e.g., QFC Stay Rules and QFC Recordkeeping Rules). Each rule and subsequent amendment continue to present functional challenges for in-scope entities. 

 

Finalized in 2016 by the US Treasury with amendments approved later that same year, the QFC Recordkeeping Rules require most systemically important US financial institutions (“SIFI”) and Intermediate Holding Companies (“IHC”) of foreign banks to maintain standardized information related to their end-of-day QFC positions. The rule requires information such as counterparty details, collateral agreements, and QFC-related legal documentation to be updated and readily available to regulators within 24 hours of being requested. The QFC recordkeeping rule was originally introduced in January of 2015, however, some compliance dates are still in the future. The chart in the following column shows the most recently reconciled compliance dates for the QFC rules. The compliance sunset has yet to arrive for financial institutions with less than $500 billion in total assets or financial institutions who have submitted claims for exemption or extension.

 

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