Treasury Adopts Substantially Revised Final QFC Recordkeeping Rule

Earlier today, the Secretary of the Treasury, as chairperson of the Financial Stability Oversight Council adopted a final rule (“Final Rule”) implementing recordkeeping requirements for qualified financial contracts (“QFCs”) in connection with Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Orderly Liquidation Authority (“OLA”).

The Final Rule requires large complex financial institutions to maintain and be capable of providing to regulators, within 24 hours of request, specified records related to QFCs.

Although the general structure of the Final Rule is similar to the Proposed Rule, the Secretary softened the Final Rule in a number of key respects in response to comments, including by narrowing the scope of entities subject to the Final Rule and providing for a staggered and extended compliance schedule.  These changes will reduce the burden of complying with the Final Rule, both for those entities directly subject to its requirements and their counterparties.  Unfortunately, the Secretary did not address certain suggested changes on key issues that could have focused the Final Rule more narrowly on entities and products that would be more likely to be relevant to the FDIC’s decisions under OLA.