This story appeared in Bank Digest.
The OCC is proposing to add a new part to its rules to address concerns relating to the exercise of default rights in certain financial contracts that could interfere with the orderly resolution of certain systemically important financial firms. Specifically, a covered bank would be required to ensure that a covered qualified financial contract (1) 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 (2) 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 Standards and the Liquidity Risk Measurement Standards in its regulations. According to the OCC, the requirements of its proposed rule are substantively identical to those contained in a proposed rule issued by the Federal Reserve Board on May 3, 2016. Comments on the OCC's proposed rule must be received by Oct. 18, 2016.