The Office of the Comptroller of the Currency ("OCC") requested comment on a proposal concerning the exercise of default rights of certain financial contracts that could interfere with the orderly resolution of certain systemically important financial firms. The proposal was published in the Federal Register.
The proposal would require a covered bank to ensure that a covered qualified financial contract:
- contains a contractual stay-and-transfer provision analogous to the statutory stay-and-transfer provision imposed under Title II of the Dodd-Frank Act and in the Federal Deposit Insurance Act; and
- limits the exercise of default rights based on the insolvency of an affiliate of the covered bank.
In addition, the proposed rule would make conforming amendments to the OCC's Capital Adequacy and Liquidity Risk Measurement Standards in its regulations.
The OCC stated that the proposed requirements are "substantively identical to those contained in a notice of proposed rulemaking issued by the Board of Governors of the Federal Reserve System on May 3, 2016."
Comments on the proposal must be submitted by October 18, 2016.
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