The FDIC and SEC have turned to an important issue left unaddressed since the 2010 Dodd-Frank Act established the orderly liquidation authority (OLA) in Title II not only for banks, but also for other financial institutions, laying out in this NPR an OLA procedure for broker-dealers. It generally follows the single-point-of-entry approach to using bridge corporations for OLA laid out in a 2013 FDIC concept release on bank resolutions providing not only an approach to resolving systemic broker-dealers, but also insight on how bridge entities might be structured for large banking organizations and how resolutions of broker-dealers within BHCs will be handled. The NPR interprets Dodd-Frank as permitting OLA resolutions that are not SIPC liquidations, thus allowing use of the bridge structures and a receivership, allowing more time that results in less customer risk than a straightforward SIPC liquidation. The process also addresses broker-dealer claims (e.g., those to custodians, clearing agents) not covered by SIPC, generally treating them in the same manner as in bank OLA resolutions. However, many of the issues challenging bank resolutions under active consideration by U.S. and global regulators – e.g., preventing resolutions, ensuring adequate data upon failure to promote orderly resolution, cross-border situations – are not addressed in this proposal and no SEC rules yet address them.
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