Reflecting the role of the Treasury Secretary as chair of the Financial Stability Oversight Council (FSOC), Treasury has issued final rules required by the Dodd-Frank Act laying out how U.S.-regulated financial institutions are to report on qualified financial contract (QFCs).  The final standards continue the proposed approach of requiring extensive QFC reporting from any company that might require systemic resolution, but sharply narrows the scope of companies considered likely to pose this risk.  As a result, regional BHCs have won another exemption from Dodd-Frank rules they consider unnecessary for companies that, while large, are not complex ones engaged in extensive cross-border or capital-markets operations.  However, the new rules govern not only U.S. GSIBs, but also large asset managers and other major financial companies regardless of systemic designation, essentially extending to them a regulatory requirement related to data likely to lead over time to additional FSOC designations and efforts to ensure that covered entities also adhere to QFC contractual provisions providing for automatic stays. Increased understanding of QFC exposures should enhance resolution planning as well as FRB/FDIC scrutiny of GSIB living wills, possibly leading to more restrictions on large exposures, less rehypothecation, or other safeguards.

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