National Banks Notified of Dodd-Frank Proposals

This story appeared in Bank Digest.

The Office of the Comptroller of the Currency has alerted national banks of two regulatory proposals that would implement provisions of the Dodd-Frank Act.

Incentive-Based Compensation.

The first proposed rulemaking, issued jointly by  the banking and securities regulators, would implement the incentive-based compensation provisions of Section 956 of the Act. The joint proposed rule is intended to prohibit incentive based compensation arrangements that encourage inappropriate risk taking by covered financial institutions, described as compensation that is excessive or that may lead to material losses. The specific requirements of the proposal would vary based on the size of the affected institution, although institutions with total assets that do not exceed $1 billion would be exempt.

Retail Forex Transactions

The OCC also alerted national banks to a second proposed rulemaking that would authorize national banks, federal branches and agencies of foreign banks, and their operating subsidiaries to engage in certain off-exchange transactions in foreign currency with retail customers. The proposed rule also describes various requirements with which national banks must comply to conduct such transactions. The proposed rulemaking implements amendments made to the Commodity Exchange Act which will forbid national banks from engaging in certain off-exchange transactions in foreign currency with retail customers  except pursuant to an OCC rule authorizing the transaction.