Triennial Full FBO SPOE

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Signed in Washington, DC, on January 4,
2019.
Christopher Lawrence,
Management and Program Analyst,
Transmission Permitting and Technical
Assistance, Office of Electricity.
[FR Doc. 2019–00883 Filed 2–1–19; 8:45 am]
BILLING CODE 6450–01–P

Conclusion of the 2021 Resource Pool

DEPARTMENT OF ENERGY
Western Area Power Administration
2021 Resource Pool, Pick-Sloan
Missouri Basin Program—Eastern
Division
Western Area Power
Administration, Department of Energy.
ACTION: Notice to conclude the 2021
Resource Pool.
AGENCY:

Western Area Power
Administration (WAPA) announces the
conclusion of the 2021 Resource Pool
provided for in a Notice of procedures
and call for 2021 Resource Pool
applications published in the Federal
Register on May 29, 2018. WAPA
determined there were no eligible new
preference customers in the 2021
Resource Pool. Therefore, no allocations
will be made as part of the 2021
Resource Pool.
DATES: The conclusion of the 2021
Resource Pool is effective March 6,
2019.
ADDRESSES: Information about the
conclusion of the 2021 Resource Pool,
including letters and other supporting
documents made or kept by WAPA
during the 2021 Resource Pool process,
is available for public inspection and
copying at the Upper Great Plains
Region, Western Area Power
Administration, 2900 4th Avenue North,
Billings, MT 59101–1266.
FOR FURTHER INFORMATION CONTACT: Ms.
Nancy Senitte, Public Utilities
Specialist, Upper Great Plains Customer
Service Region, Western Area Power
Administration, 2900 4th Avenue North,
Billings, MT 59101, telephone (406)
255–2933, email senitte@wapa.gov.
SUPPLEMENTARY INFORMATION: WAPA
published the Notice of procedures and
call for 2021 Resource Pool applications
in the Federal Register (83 FR 24467,
May 29, 2018) in accordance with the
2021 Power Marketing Initiative (2021
PMI) (76 FR 71015, Nov. 16, 2011).
Applications for power were accepted
until 4 p.m. Mountain Daylight Time on
July 30, 2018. The procedures used to
determine new preference customer
eligibility were carried forward from the
Post-2010 Resource Pool Procedures as
published in the Federal Register (74

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FR 20697, May 5, 2009). Specifically,
these procedures included the General
Eligibility Criteria, General Allocation
Criteria, and General Contract
Principles.
This Federal Register notice is to
conclude the 2021 Resource Pool.

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I. Review of Applicants Under 2021
Resource Pool
WAPA received and reviewed seven
(7) applications from entities interested
in an allocation of power from the 2021
Resource Pool. Review of the
applications indicated that none of the
applicants qualified under the
procedures.
II. Conclusion of the 2021 Resource
Pool
WAPA determined that there were no
eligible new preference customers in the
2021 Resource Pool. Therefore, no
allocations will be made under the 2021
Resource Pool. This Federal Register
notice hereby concludes the 2021
Resource Pool.
III. Regulatory Procedure Requirements
Determination Under Executive Order
12866
WAPA has an exemption from
centralized regulatory review under
Executive Order 12866; accordingly, no
clearance of this Federal Register notice
by the Office of Management and
Budget is required.

Management and Administrative
Matters
CONTACT PERSON FOR MORE INFORMATION:

Judith Ingram, Press Officer, Telephone:
(202) 694–1220.
Individuals who plan to attend and
require special assistance, such as sign
language interpretation or other
reasonable accommodations, should
contact Dayna C. Brown, Secretary and
Clerk, at (202) 694–1040, at least 72
hours prior to the meeting date.
Dayna C. Brown,
Secretary and Clerk of the Commission.
[FR Doc. 2019–01167 Filed 1–31–19; 4:15 pm]
BILLING CODE 6715–01–P

FEDERAL RESERVE SYSTEM
FEDERAL DEPOSIT INSURANCE
CORPORATION
[FRB Docket No. OP–1644]

Final Guidance for the 2019
Board of Governors of the
Federal Reserve System (Board) and
Federal Deposit Insurance Corporation
(FDIC).
ACTION: Final guidance.
AGENCY:

The Board and the FDIC
(together, the ‘‘Agencies’’) are adopting
this final guidance for the 2019 and
subsequent resolution plan submissions
by the eight largest, complex U.S.
banking organizations (‘‘Covered
Companies’’ or ‘‘firms’’). The final
Dated: December 19, 2018.
guidance is meant to assist these firms
Mark A. Gabriel,
in developing their resolution plans,
Administrator.
which are required to be submitted
[FR Doc. 2019–00884 Filed 2–1–19; 8:45 am]
pursuant to the Dodd-Frank Wall Street
BILLING CODE 6450–01–P
Reform and Consumer Protection Act
(‘‘Dodd-Frank Act’’). The final guidance,
which is largely based on prior guidance
FEDERAL ELECTION COMMISSION
issued to these Covered Companies,
describes the Agencies’ expectations
Sunshine Act Meeting
regarding a number of key
vulnerabilities in plans for an orderly
TIME AND DATE: Thursday, February 7,
resolution under the U.S. Bankruptcy
2019 at 10:00 a.m.
Code (i.e., capital; liquidity; governance
PLACE: 1050 First Street NE,
mechanisms; operational; legal entity
Washington, DC (12th Floor).
STATUS: This meeting will be open to the rationalization and separability; and
derivatives and trading activities). The
public.
final guidance also updates certain
MATTERS TO BE CONSIDERED:
aspects of prior guidance based on the
Welcoming Remarks by Chair Ellen L.
Agencies’ review of these firms’ most
Weintraub
recent resolution plan submissions.
Draft Notice of Availability on REG
FOR FURTHER INFORMATION CONTACT:
2018–05 (Size of Disclaimers in TV
Board: Michael Hsu, Associate
Ads)
Director, (202) 452–4330, Division of
Audit Division Recommendation
Supervision and Regulation, Jay
Memorandum on Tony Cardenas for
Schwarz, Special Counsel, (202) 452–
Congress (A17–01)
Proposed Final Audit Report on Friends 2970, or Steve Bowne, Counsel, (202)
452–3900, Legal Division. Users of
of Erik Paulsen (A17–06)
Proposed Final Audit Report on Marsha Telecommunications Device for the Deaf
Blackburn for Congress, Inc. (A17–02) (TDD) may call (202) 263–4869.

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Federal Register / Vol. 84, No. 23 / Monday, February 4, 2019 / Notices
FDIC: Mike J. Morgan, Corporate
Expert, mimorgan@fdic.gov, CFI
Oversight Branch, Division of Risk
Management Supervision; Alexandra
Steinberg Barrage, Associate Director,
Resolution Strategy and Policy, Office of
Complex Financial Institutions,
abarrage@fdic.gov; David N. Wall,
Assistant General Counsel, dwall@
fdic.gov; Pauline E. Calande, Senior
Counsel, pcalande@fdic.gov; or Celia
Van Gorder, Supervisory Counsel,
cvangorder@fdic.gov, Legal Division,
Federal Deposit Insurance Corporation,
550 17th Street NW, Washington, DC
20429.
SUPPLEMENTARY INFORMATION:

Table of Contents
I. Introduction
a. Background
b. Proposed Guidance
II. Overview of Comments
III. Final Guidance
a. Consolidation of Prior Guidance
b. Single Point of Entry Resolution Strategy
c. Engagement With Non-U.S. Regulators
d. Capital and Liquidity
e. Operational: Payment, Clearing, and
Settlement Activities
f. Legal Entity Rationalalization and
Separability
g. Derivatives and Trading Activities
h. Cross References to Supervisory Letters
i. Additional Comments
IV. Paperwork Reduction Act

I. Introduction

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a. Background
Section 165(d) of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5365(d)) and
the jointly issued implementing
regulation, 12 CFR part 243 and 12 CFR
part 381 (‘‘the Rule’’), requires certain
financial companies to report
periodically to the Board and the FDIC
their plans for rapid and orderly
resolution under the U.S. Bankruptcy
Code 1 in the event of material financial
distress or failure.
Among other requirements, the Rule
requires each financial company’s
resolution plan to include a strategic
analysis of the plan’s components, a
description of the range of specific
actions the company proposes to take in
resolution, and a description of the
company’s organizational structure,
material entities, and interconnections
and interdependencies. The Rule also
requires that resolution plans include a
confidential section that contains
confidential supervisory and proprietary
information submitted to the Agencies,
and a section that the Agencies make
available to the public. Public sections
1 11

U.S.C. 101 et seq.

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of resolution plans can be found on the
Agencies’ websites.2
Objectives of the Resolution Planning
Process
The goal of the Dodd-Frank Act
resolution planning process is to help
ensure that a firm’s failure would not
have serious adverse effects on financial
stability in the United States.
Specifically, the resolution planning
process requires firms to demonstrate
that they have adequately assessed the
challenges that their structure and
business activities pose to resolution
and that they have taken action to
address those issues. Management
should also consider resolvability as
part of day-to-day decision making,
particularly in connection with
decisions related to structure, business
activities, capital and liquidity
allocation, and governance. In addition,
firms are expected to maintain a
meaningful set of options for selling
operations and business lines to
generate resources and to allow for
restructuring under stress, including
through the sale or wind down of
discrete businesses that could further
minimize the direct impact of distress or
failure on the broader financial system.
While these measures cannot guarantee
that a firm’s resolution would be simple
or smoothly executed, these
preparations can help ensure that the
firm could be resolved under
bankruptcy without government support
or imperiling the broader financial
system.
The guidance describes an iterative
process aimed at strengthening the
resolution planning capabilities of each
financial institution. With respect to the
eight largest, complex U.S. banking
organizations (‘‘Covered Companies’’ or
‘‘firms’’),3 the Agencies have previously
provided guidance and other feedback.4
In general, the feedback was intended to
2 See the public sections of resolution plans
submitted to the Agencies at
www.federalreserve.gov/bankinforeg/
resolutionplans.htm and www.fdic.gov/regulations/
reform/resplans/.
3 Bank of America Corporation, The Bank of New
York Mellon Corporation, Citigroup Inc., The
Goldman Sachs Group, Inc., JPMorgan Chase & Co.,
Morgan Stanley, State Street Corporation, and Wells
Fargo & Company.
4 This includes Guidance for 2013 § 165(d)
Annual Resolution Plan Submissions by Domestic
Covered Companies that Submitted Initial
Resolution Plans in 2012; firm-specific feedback
letters issued in August 2014 and April 2016; the
February 2015 staff communication; and Guidance
for 2017 § 165(d) Annual Resolution Plan
Submissions by Domestic Covered Companies that
Submitted Resolution Plans in July 2015, including
the frequently asked questions that were published
in response to the Guidance for the 2017 resolution
plan submissions (taken together, ‘‘prior
guidance’’).

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assist firms in their development of
future resolution plan submissions and
to provide additional clarity with
respect to the expectations against
which the Agencies will evaluate the
resolution plan submissions. The
Agencies reviewed the firms’ 2017
resolution plans and issued a letter to
each firm indicating that it had taken
important steps to enhance its
resolvability and facilitate its orderly
resolution in bankruptcy.5 As a result of
those reviews and following the
Agencies’ joint decisions in December
2017, the Agencies identified four areas
where more work may need to be done
to improve the resolvability of the
firms.6 As described below, the
Agencies have updated aspects of the
prior guidance based on their review of
the firms’ 2017 resolution plans,7
including two areas of the guidance
regarding payment, clearing, and
settlement services, and derivatives and
trading activities.
While the capital and liquidity
sections of the final guidance remain
largely unchanged from the proposed
guidance and the 2016 Guidance, the
Agencies intend to provide additional
information on resolution liquidity and
internal loss absorbing capacity in the
future. Accordingly, while certain
concerns raised by commenters in
connection with the proposed guidance
have not resulted in changes to the
capital and liquidity sections of the final
guidance, the Agencies will consider
these comments as they determine what
future actions should be taken in these
areas. The Agencies expect that any
future actions in these areas, whether
guidance or rules, would be adopted
through notice and comment
procedures, which would provide an
additional opportunity for public input.
The Agencies further expect to
collaborate in taking such actions in a
manner consistent with the Board’s
TLAC rule.8 Until any such future
actions are taken, the final guidance sets
5 See Letters dated December 19, 2017, from the
Board and FDIC to Bank of America Corporation,
The Bank of New York Mellon Corporation,
Citigroup Inc., The Goldman Sachs Group, Inc.,
JPMorgan Chase & Co., Morgan Stanley, State Street
Corporation, and Wells Fargo & Company, available
at https://www.federalreserve.gov/supervisionreg/
resolution-plans.htm.
6 Id.
7 Currently, each firm’s resolution strategy is
designed to have the parent company recapitalize
and provide liquidity resources to its material entity
subsidiaries prior to entering bankruptcy
proceedings. This single point of entry (‘‘SPOE’’)
strategy calls for material entities to be provided
with sufficient capital and liquidity resources to
allow them to avoid multiple competing
insolvencies and maintain continuity of operations
throughout resolution.
8 See 82 FR 8266.

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forth the Agencies’ supervisory
expectations regarding development of
the firms’ resolution strategies. As noted
below and in the final guidance, the
final guidance is not a regulation but
represents the Agencies’ supervisory
expectations for how the firms’
resolution plans should address key
vulnerabilities in resolution.
b. Proposed Guidance
In July 2018, the Agencies invited
public comment on proposed resolution
plan guidance for the eight largest, most
complex U.S. banking organizations, to
apply beginning with the firms’ July 1,
2019 resolution plan submissions.9 The
proposed guidance described the
Agencies’ expectations in six
substantive areas: Capital, liquidity,
governance mechanisms, operational,
legal entity rationalization and
separability, and derivatives and trading
activities. The proposed guidance was
largely consistent with the guidance
provided by the Agencies in April 2016
to assist in the development of their
2017 resolution plans, Guidance for
2017 § 165(d) Annual Resolution Plan
Submissions by Domestic Covered
Companies that Submitted Resolution
Plans in July 2015 (‘‘2016 Guidance’’).10
Accordingly, the firms have already
incorporated significant aspects of the
proposed guidance into their resolution
planning. The proposal updated the
derivatives and trading activities, and
payment, clearing, and settlement
(‘‘PCS’’) activities areas of the 2016
Guidance based on the Agencies’ review
of the Covered Companies’ 2017
resolution plans. It also made minor
clarifications to certain areas of the 2016
Guidance. In general, the proposed
revisions to the guidance were intended
to streamline the firms’ submissions and
to provide additional clarity. The
proposed guidance was not meant to
limit a firm’s consideration of additional
vulnerabilities or obstacles that might
arise based on the firm’s particular
structure, operations, or resolution
strategy and that should be factored into
the firm’s submission.
The Agencies invited comments on all
aspects of the proposed guidance. The
Agencies also specifically requested
comments on a number of issues,
including whether the topics in the
proposed guidance represent the key
vulnerabilities of the Covered
Companies in resolution, whether the
proposed guidance was sufficiently
clear, and whether the Agencies should
9 83

FR 32856.
10 Available at: https://www.federalreserve.gov/
newsevents/pressreleases/files/bcreg201
60413a1.pdf and at https://www.fdic.gov/news/
news/press/2016/pr16031b.pdf.

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consolidate all applicable guidance that
covers expectations for resolution
planning.
II. Overview of Comments
The Agencies received and reviewed
six 11 comments on the proposed
guidance. Commenters included various
financial services trade associations, a
financial market utility (‘‘FMU’’), a
foreign banking organization (‘‘FBO’’),
and several individuals. A number of
commenters strongly supported efforts
by the Agencies to consolidate existing
resolution plan guidance. One
commenter stated that consolidating
prior guidance in one document would
help streamline the resolution planning
process while increasing clarity and
transparency.
Various commenters urged the
Agencies to acknowledge that an
effective SPOE resolution strategy is a
credible means of resolving a global
systemically important bank (‘‘GSIB’’) in
an orderly manner. These commenters
also requested that elements of the
guidance unrelated to an SPOE strategy
be eliminated so firms can focus on
issues tailored to address an SPOE
resolution. Further, these commenters
stated that acknowledging SPOE as a
credible resolution strategy should lead
to a reconsideration of the FDIC’s
resolution plan requirements for certain
insured depository institutions
(‘‘IDIs’’).12 These commenters
recommended that IDI plans be
eliminated for firms adopting SPOE as
a resolution strategy since SPOE focuses
on the resolution of the parent holding
company and not material subsidiaries.
Commenters also suggested that the
resolution planning process be further
streamlined by adopting a two-year
cycle for submission of resolution plans
under Section 165(d) of the Dodd-Frank
Act and for submission of IDI plans if
IDI plan requirements were not
eliminated for SPOE filers. Commenters
also suggested that the Agencies engage
more proactively with non-U.S.
regulators to improve efficiency of
resolution planning and enhance
information sharing, including with
respect to reducing ex ante ring-fencing.
The Agencies received specific
responses to questions raised in the
proposed guidance related to key
vulnerabilities, PCS services, and
derivatives and trading activities. Two
commenters agreed that the proposed
guidance generally addresses the
11 The Board received two additional comments
that were not directed to the FDIC.
12 See FDIC, Resolution Plans Required for
Insured Depository Institutions with $50 Billion or
More in Total Assets, 77 FR 3075 (Jan. 23, 2012),
codified at 12 CFR 360.10.

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vulnerabilities of Covered Companies in
resolution (although one of the
commenters suggested that the guidance
should be refined to more explicitly
encourage an analysis of certain
concentration risks).
PCS. One commenter recommended
that the PCS analysis should be limited
to matters relevant to the successful
execution of a filer’s particular
resolution strategy and offered general
topical themes and specific
recommendations for clarifying the PCS
guidance and streamlining the
resolution planning process. Another
commenter suggested that the final
guidance should highlight more clearly
the importance of firms’ continued
engagement with key external
stakeholders, including FMUs and agent
banks. Two commenters provided
specific recommendations with respect
to: The scope of PCS services that would
be analyzed in resolution plans; the
extent to which the PCS guidance
should be consistent with the Financial
Stability Board’s (‘‘FSB’s’’) Guidance on
Continuity of Access to Financial
Market Infrastructures (FMIs) for a Firm
in Resolution, published in July 2017;
distinctions between different types of
providers of PCS services; the content
that would be presented in FMU, agent
bank, and PCS service provider
playbooks; the extent to which
contingency analysis would be
discussed in resolution plans; and
expectations concerning communication
of potential impacts of contingency or
alternative arrangements on key clients.
Derivatives. One commenter
supported the elimination in the
proposed guidance of the expectation
for a dealer firm to provide separate
active and passive wind-down analyses.
However, the commenter requested that
the Agencies further eliminate other
aspects of the guidance that may retain
elements of a passive wind-down
analysis. The commenter also
recommended that the Agencies should
allow firms to tailor capabilities and
analysis to those supporting a firm’s
SPOE resolution strategy and
incorporate reasonable alternative
assumptions consistent with a firm’s
resolution strategy. In addition, this
commenter stated that the Agencies
should limit the development of
derivatives capabilities and related
analyses to material entities, eliminate
modeling of operational costs at the
level of specific derivatives activities,
and clarify that ‘‘linked’’ nonderivatives trading positions should be
defined by dealer firms in light of their
overall business model and resolution
strategies.

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Capital and Liquidity. Commenters
offered recommendations on resolution
capital and liquidity that primarily
covered four areas: (i) Secured support
agreements; (ii) tailoring liquidity flow
assumptions; (iii) avoiding false positive
resolution triggers; and (iv) other
requests.
Qualified Financial Contract (‘‘QFC’’)
Stay Rules. One commenter criticized
the proposed guidance requesting that
additional resolution plan information
be provided for firms who do not adhere
to the International Swaps and
Derivatives Association 2015 Universal
Resolution Stay Protocol (or similar
provisions of the U.S. protocol),13
including explaining the firm’s
alternative method of complying with
the QFC stay rules. The same
commenter also recommended that the
Agencies clarify the final guidance
regarding the impact of bankruptcy
claims status of guarantees of QFCs if a
firm were to pursue the elevation
alternative described in the guidance.
Foreign Banking Organizations. Two
commenters provided recommendations
with respect to enhancing the resolution
planning process applicable to FBOs
under Section 165(d) of the Dodd-Frank
Act. The final guidance does not apply
to FBOs, and the appropriate
expectations for resolution plans of
FBOs would be better considered in the
context of guidance applicable to those
firms. Accordingly, these comments are
not addressed in this Supplementary
Information section.
The comments received on the
proposed guidance are further discussed
below.
III. Final Guidance
After carefully considering the
comments and conducting further
analysis, the Agencies are issuing final
guidance that includes certain
modifications and clarifications to the
proposed guidance. In particular, the
PCS and the derivatives and trading
activities sections of the final guidance
contain several changes based on
commenters’ suggestions, while
retaining the same key principles
embodied in the proposed guidance.
These principles include: (i)
Streamlining the firms’ submissions; (ii)
facilitating continuity of PCS services in
resolution; and (iii) helping ensure that
a firm’s derivatives and trading
activities can be stabilized and de-risked
during resolution without causing
significant market disruption that could
cause risks to the financial stability of
13 U.S.

protocol has the same meaning as it does
at 12 CFR 252.85(a). See also 12 CFR 382.5(a)
(including a substantively identical definition).

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the United States. In addition, the final
guidance consolidates all prior
resolution planning guidance for the
firms in one document and clarifies that
any prior guidance not included in the
final guidance has been superseded.
These changes are discussed in more
detail below.
The final guidance is intended to
assist firms in mitigating risks to the
financial stability of the United States
that could arise from their material
financial distress or failure, consistent
with Section 165 of the Dodd-Frank Act.
a. Consolidation of Prior Guidance
Commenters favored consolidating
and making public the relevant aspects
of all existing guidance into a single
document. One commenter provided a
list of examples of how prior guidance
could be consolidated and
recommended principles for the
Agencies to follow. Accordingly, the
final guidance includes a new section
regarding the format, assumptions, and
structure of resolution plans, which
includes the aspects of previous
guidance that remain applicable to
resolution planning. In addition,
because commenters found the
Agencies’ previously issued Frequently
Asked Questions (‘‘FAQs’’) to the
guidance to be helpful, those FAQs that
remain relevant have been appended to
the final guidance. To the extent not
incorporated in or appended to the final
guidance, prior guidance 14 is
superseded.
Consistent with recommendations
made by the commenters, the Agencies
have updated the final guidance to
maintain certain key concepts contained
in prior firm-specific feedback letters.
For example, the final guidance deletes
the cross-reference to SR 14–1 15 as the
Agencies believe the relevant elements
and associated capabilities contained in
SR 14–1 have been consolidated into the
final guidance. In addition, the final
guidance clarifies the content of a firm’s
external communications strategy
contained in the firm’s governance
playbooks and the scope of actionable
implementation plans to ensure
continuity of shared services. The final
guidance also provides that firms
discuss compliance with the QFC stay
rules (as defined below) and the
potential impact of such compliance on
a firm’s resolution strategy.
Additionally, as recommended by a
14 See

footnote 5.
Letter 14–1, ‘‘Heightened Supervisory
Expectations for Recovery and Resolution
Preparedness for Certain Large Bank Holding
Companies—Supplemental Guidance on
Consolidated Supervision Framework for Large
Financial Institutions’’ (Jan. 24, 2014).
15 SR

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commenter, certain FAQs that are no
longer meaningful or relevant have not
been consolidated and are excluded,
such as FAQ LIQ 7.
A number of comments were directed
at streamlining the resolution plan
submission process. These comments
included suggestions to formalize a twoyear submission cycle and to allow
firms to provide updates to quantitative
analyses, while relying on references to
previously submitted material where
capabilities remain unchanged.
Implementation of the changes
proposed by these comments would
require changes to the Rule.
Accordingly, these comments would be
better considered in connection with a
future rulemaking proposal. The
Agencies note, however, that the Rule
provides that firms may incorporate by
reference certain informational elements
from previously submitted resolution
plans to the extent such information
remains accurate.
One commenter noted that, to the
extent filers have adequately addressed
deficiencies and shortcomings
identified in prior firm-specific
feedback, the Agencies should explicitly
provide in the final guidance that the
expectations set forth in that feedback
do not continue to alter the expectations
in the final guidance. This commenter
noted that the final guidance should
govern where it contains expectations
similar to, or that directly supersede,
expectations in prior feedback letters or
similar communications. As stated
above, prior guidance not incorporated
in or appended to the final guidance is
superseded. The Agencies note that in
the future, firm-specific weaknesses and
applicable remediation will continue to
be addressed in firm-specific feedback
communications in a manner that is
consistent with applicable guidance.
The Agencies note that commenters
described certain expectations that are
set forth in the guidance as
‘‘requirements.’’ The Agencies are
clarifying that the final guidance does
not have the force and effect of law.
Rather, the final guidance outlines the
Agencies’ supervisory expectations and
priorities for the firms’ resolution plans
and articulates the Agencies’ general
views regarding appropriate practices
for each subject area covered by the
final guidance.16
b. Single Point of Entry (SPOE)
Resolution Strategy
Some commenters suggested that the
Agencies acknowledge the SPOE
16 See generally, Interagency Statement Clarifying
the Role of Supervisory Guidance (Sept. 11, 2018)
at https://www.federalreserve.gov/supervisionreg/
srletters/sr1805a1.pdf.

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strategy as a credible means of resolving
a GSIB in an orderly manner.
Commenters cited SPOE as a basis for
eliminating various aspects of the
Guidance they contend are relevant to
non-SPOE resolution strategies.
The Agencies do not prescribe
specific resolution strategies for any
firm, nor do the Agencies identify a
preferred strategy. Firms may submit
resolution plans using the resolution
strategies they believe would be most
effective in achieving an orderly
resolution of their firms, but must
address the key vulnerabilities and
support the underlying assumptions
required to successfully execute their
chosen resolution strategy. The final
guidance is not intended to favor one
strategy or another. It is flexible enough
to allow firms to address the resolution
obstacles that are relevant to their
chosen strategy.
The Agencies have acknowledged the
significant progress U.S. GSIBs have
made in addressing key vulnerabilities
and mitigants associated with SPOE.
While significant progress has been
made, like any resolution strategy for
large bank holding companies, SPOE is
untested and there remain inherent
challenges and uncertainties associated
with the resolution of a systemically
important financial institution under
any specific resolution strategy. In light
of this uncertainty, the final guidance
provides that the firms should develop
and maintain capabilities to address
situations where their selected strategy
presents vulnerabilities.
Some commenters offered
recommendations about IDI Plan
requirements for filers that have
adopted SPOE in their 165(d) Plans.17
IDI Plans are outside of the scope of the
guidance and have a unique objective
from Title I ensuring least-cost
resolution to the Deposit Insurance
Fund in an IDI receivership. The FDIC
plans to address proposed IDI Plan
requirements through an advanced
notice of public rulemaking in 2019.
c. Engagement With Non-U.S.
Regulators
Certain commenters recommended
the Agencies engage more proactively
with non-U.S. regulators to improve the
efficiency of resolution planning
requirements. Additionally, certain
commenters recommended the Agencies
enhance information-sharing across
jurisdictions in a manner that would
17 One commenter stated that the FDIC should
finalize its public notice using SPOE as the strategy
for resolution of GSIBs under Title II of the DoddFrank Act. Because Title II of the Dodd-Frank Act
is outside the scope of this guidance, the FDIC does
not address such comment at this time.

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expand and clarify the type of
information that firms may share with
cooperating regulatory authorities.
The Agencies acknowledge that
engagement with non-U.S. regulators is
critical. The Agencies already engage
proactively with non-U.S. regulators
related to resolution planning, and have
established frameworks and
information-sharing arrangements for
effective cross-border resolution
cooperation with counterparts in key
foreign jurisdictions. This includes
leading, as home authority Co-Chairs,
the work of firm-specific cross-border
Crisis Management Groups (‘‘CMGs’’)
for U.S. GSIBs as well as entering into
firm-specific cooperation agreements
with CMG members. In furtherance of
its resolution authority responsibilities,
the FDIC also has concluded bilateral
Resolution Memoranda of
Understanding with foreign authorities
that address cooperation and
information sharing for cross-border
resolution planning and crisis
management preparedness.
In addition, the Agencies work on a
bilateral and multilateral basis on crossborder resolution planning matters with
authorities from other jurisdictions that
regulate GSIBs, including by
participating in joint working groups
and interagency financial regulatory
dialogues (such as the Joint U.S.European Union Financial Regulatory
Forum and the U.S.-UK Financial
Regulatory Working Group) and by
contributing to the development and
ongoing implementation of standards
for cross-border resolution by the FSB’s
Resolution Steering Group and its
committees, including implementing
the Key Attributes of Effective
Resolution Regimes for Financial
Institutions.18 The Agencies will
continue to coordinate with non-U.S.
regulators regarding resolution matters.
d. Capital and Liquidity
Like the proposed guidance, the
capital and liquidity sections (Sections
II and Section III) of the final guidance
remain materially unchanged from the
2016 Guidance, including the
expectations to model resolution capital
and liquidity needs for each material
entity and to hold and pre-position
sufficient resources to meet those needs.
The only change to the capital section
is to eliminate a superfluous reference
to creditor challenge mitigation. The
proposed guidance carried forward an
unintentional reference to creditor
18 ‘‘Key Attributes of Effective Resolution
Regimes for Financial Institutions’’ (October 15,
2014), http://www.fsb.org/wp-content/uploads/r_
141015.pdf.

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challenge in the Resolution Capital
Adequacy and Positioning (‘‘RCAP’’)
discussion, which if left unedited
suggests that pre-positioning of
intercompany debt that is indirectly
issued to a parent through one or more
intermediate entities needs to be
structured in a manner that ‘‘mitigates
uncertainty related to potential creditor
challenge.’’ The need to address creditor
challenges is addressed in the PreBankruptcy Parent Support section of
the guidance. The relevant point
regarding the firm’s structuring of the
internal debt is that it should ‘‘ensure
that the entity can be recapitalized.’’
Although the Agencies received a
number of written comments on
resolution capital and liquidity, the
commenters noted that the Agencies
intend to issue information addressing
issues relating to intra-group liquidity
and internal loss absorbing capacity in
resolution. These commenters therefore
did not presume that the intra-group
liquidity and internal loss-absorbing
capacity recommendations would be
addressed in this guidance. The
Agencies have reviewed and considered
the commenters’ recommendations, and
have responded to specific
recommendations below, but have not
adopted any modifications in the final
guidance in response to those
recommendations. The Agencies will
continue to consider these comments as
they assess the additional information
they intend to provide in these areas.
Commenters offered
recommendations on resolution capital
and liquidity that primarily covered
four areas: (i) Secured support
agreements; (ii) tailoring liquidity flow
assumptions; (iii) avoiding false positive
resolution triggers; and (iv) other
requests. Ultimately, the result of these
recommendations would be to allow
firms to, among other things, reduce the
amount of resolution liquidity and
capital resources (e.g., Resolution
Liquidity Adequacy and Positioning
(‘‘RLAP’’) and RCAP) that would
otherwise be positioned at a material
entity.
Secured Support Agreements.
Commenters recommended that as a
result of the development (and
adoption) of support agreements by
filers, the Agencies should reconsider
the pre-positioning expectations and
legal entity friction assumptions (e.g.,
ring fencing of surplus liquidity)
articulated in the Agencies’ prior
guidance. Commenters noted the design
objectives and intended benefits of
secured support agreements for
addressing the Agencies’ expectation
that firms balance the flexibility
provided by holding contributable

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resources at support providers with the
certainty provided by pre-positioning
resources at material subsidiaries. The
legally binding features and
enforceability of the secured support
agreements, commenters asserted,
maximize the firm’s ability to direct
capital and liquidity where and when it
is needed, while maintaining a degree of
certainty that contributable resources
will be available to the material entities
when needed. Similarly, commenters
suggested that the Agencies should
engage with non-U.S. regulators to
establish support agreements as a key
tool for meeting the capital and liquidity
needs of material subsidiaries of a U.S.
GSIB in a resolution scenario.
Commenters believe that secured
support agreements are complementary
to the objectives of internal total lossabsorbing capacity (‘‘TLAC’’) and other
gone-concern standards designed to
provide host authorities comfort that
non-locally positioned resources—or
surplus resources moved out of a local
material entity—will be available to the
local material entity if and when needed
in resolution.
The Agencies continue to consider the
merits and limitations of secured
support agreements. A successful SPOE
resolution requires a balancing of the
tradeoffs between the certainty provided
by locally pre-positioned resources and
the flexibility provided by a pool of
globally available resources. A key
objective of pre-positioning of
resolution resources (e.g., prepositioned internal TLAC) is to delay
the need for host authorities to take selfprotective actions that disrupt the group
SPOE resolution. However, overcalibration of pre-positioned internal
TLAC can prove self-defeating, if excess
resources are trapped in local
jurisdictions when they are needed
elsewhere within the group. The
Agencies acknowledge that balancing
these trade-offs successfully will require
shared understandings between home
and host authorities, and firms, about
the expected allocation during a group
resolution of resources held at the
parent or other support entity.
However, secured support agreements
remain an imperfect substitute for the
certainty (and transparency) provided
by pre-prepositioned resources. First,
the Agencies note that secured support
agreements are untested. While secured
support agreements may offer a measure
of assurance that available contributable
resources within the firm will be
allocated in a pre-determined manner,
on their own, the agreements do not
provide the same certainty as prepositioned resources. More prepositioned resources increase host

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comfort and cross-border cooperation
during a group resolution because the
host is in control of a known and
quantifiable amount of emergency
capital and liquidity, and not dependent
on the potential delivery of
contributable resources. Second, the
availability and sufficiency of
contributable resources for group
resolution purposes may be unclear.
The Agencies’ resolution resource
estimation and positioning expectations,
including many of the assumptions that
restrict the flow of liquidity among
affiliates for resolution planning
purposes, support the broader goal of
increasing host authority confidence
through straightforward assumptions
about the movement of liquidity within
groups and transparency of resolution
resource needs and resource locations.
For example, enhancing clarity with
respect to the size, location, and
composition of pre-positioned
resources, can provide authorities with
the necessary comfort that resources are
not being double-counted, and that they
can be reasonably relied on to be
available locally, when needed. The
Agencies acknowledge that engagement
with non-U.S. regulators is critical
because the effectiveness of secured
support agreements could be reduced if
they do not provide key host regulators
a sufficient level of comfort during
stress. To that end, the Agencies will
continue to coordinate with the nonU.S. regulators regarding resolution
matters, including developments in the
resolution capabilities of U.S. GSIBs and
in existing secured support agreements.
Tailoring Liquidity Flow
Assumptions. Commenters
recommended that firms be permitted to
make more idiosyncratic assumptions
about flows of liquidity in their
resolution planning liquidity estimates
and methodologies for RLAP.19 More
specifically, commenters argued for the
relaxation of various enumerated
assumptions, which they assert reflect
unrealistic assumptions about the
generation of liquidity and the flows of
liquidity between affiliates. Commenters
further asserted that these restrictive
assumptions are rendered less realistic
and less necessary in light of the
secured support agreements’ framework
for ensuring the timely allocation of
resolution resources. The Agencies
continue to evaluate the liquidity
guidance for opportunities to enhance
19 For Resolution Liquidity Execution Need
(‘‘RLEN’’), the Agencies’ guidance does not
prescribe specific modeling assumptions for intraaffiliate flows.

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the efficiency of the resolution planning
process.
Avoiding False Positive Resolution
Triggers. One commenter requested that
the Agencies clarify whether firms are
permitted to tailor their resolution
planning capital and liquidity estimates
and methodologies based on specific
factual circumstances concerning their
material entities, as well as modify these
assumptions during an actual stress
scenario. According to the commenter,
expressly providing firms with the
ability to tailor and modify these
estimates and methodologies would
serve as a safeguard against premature
bankruptcy filings.
The guidance provides firms with the
flexibility to tailor their RLEN and
Resolution Capital Execution Need
(‘‘RCEN’’) methodologies. For the
purposes of the resolution plan
submissions, firms should assume
conditions consistent with the DFAST
Severely Adverse scenario.20 In an
actual stress environment, however,
methodologies for estimating RLEN and
RCEN should have the flexibility to
incorporate actual stress conditions that
may deviate from the DFAST Severely
Adverse scenario. Firms’ capabilities to
calibrate and alter assumptions in their
RLEN and RCEN methodologies to
reflect actual stress conditions is a
meaningful safeguard against false
positive resolution triggers.
Other Requests. Commenters also
sought modification of certain
definitional issues. More specifically,
commenters suggested that forthcoming
guidance reconsider two additional
aspects of the resolution planning
capital and liquidity standards: (i)
Whether firms can turn off restrictive
market access assumptions postrecapitalization and (ii) whether
investment grade status can substitute
for the level of recapitalization
necessary to achieve market confidence
in stabilization for material entities not
subject to ‘‘well-capitalized’’ standards
or bank regulatory capital regimes. The
two requests relate to definitional issues
addressed in existing FAQs and would
primarily impact a firm’s assumptions
regarding resolution capital and
liquidity resource need estimates.
Therefore, the Agencies will continue to
consider these recommendations when
they provide additional information in
these areas in the future.
e. Operational: Payment, Clearing, and
Settlement Activities
The Agencies received a number of
comment letters regarding the proposed
20 See final guidance, Section VIII, Guidance
Assumption 4.

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PCS guidance. Commenters generally
recommended certain modifications and
clarifications to the proposed guidance
in order to streamline the resolution
plan submissions and to provide further
clarity. The Agencies have modified the
final guidance to address certain matters
raised by the commenters consistent
with the Agencies’ overall objective of
facilitating continuity of PCS services in
resolution.
i. PCS Terminology
The Agencies received several
comments regarding the scope of the
proposed guidance and requesting
clarity and/or modification of certain
terms and PCS-related concepts, such as
‘‘PCS services providers,’’ ‘‘key clients,’’
‘‘critical PCS services,’’ and the scope of
direct and indirect PCS activities. These
clarifications in the final guidance also
address several related comments,
which are discussed in further detail
below.
Providers of PCS Services: Under the
final guidance, a firm is a provider of
PCS services if it provides PCS services
to clients as an agent bank or it provides
clients with access to an FMU or agent
bank through the firm’s membership in
or relationship with that service
provider. A firm also is a provider if it
provides clients with PCS services
through the firm’s own operations (e.g.,
payment services or custody services).
One commenter recommended that a
firm’s contingency plans should cover
its relationships with the Society for
Worldwide Interbank Financial
Telecommunication (‘‘SWIFT’’), realtime gross settlement (‘‘RTGS’’) systems,
and nostro-agents in the identification
of key PCS providers. The Agencies note
that the guidance is not prescriptive
regarding the inclusion of specific
providers and that a firm retains the
discretion to identify SWIFT, RTGS,
and/or certain nostro-agents as key PCS
providers.
The Agencies note that, to the extent
a firm addresses all items noted in the
final PCS guidance section on Content
Related to Users and/or Providers of
PCS Services in other areas of the firm’s
submission (e.g., the discussion of
material entities and/or critical
operations in its resolution plan), the
firm may include a specific crossreference to that PCS content
accordingly, and a separate playbook
need not be provided.
Key Client Identification: Some
commenters requested that the guidance
either adopt a more limited scope for
the concept of key clients or clarify that
a provider of PCS services may identify
and describe its key clients by category
or in a manner consistent with the

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services it provides. Commenters argued
that consideration of a wider scope of
key clients could be burdensome to
administer and result in a list of key
clients that may fluctuate over time. In
response to these comments, the final
guidance clarifies that firms should
identify clients as key from the firm’s
perspective, rather than from the client’s
perspective. The final guidance further
clarifies that a firm is expected to use
both quantitative and qualitative criteria
to identify key clients. Qualitative
criteria may include categories of clients
associated with PCS activities and
business lines,21 while quantitative
criteria may include transaction
volume/value, market value of
exposures, market value of assets under
custody, usage of PCS services, and
availability/usage of intraday credit or
liquidity. Commenters were also
concerned that the list of key clients
could fluctuate over time. The Agencies
recognize that information provided in
a firm’s resolution plan, including a list
of key clients, may change with each
submission. Some commenters
requested that the scope of key clients
should be limited to GSIBs, arguing that
such limitation would be more
consistent with the limited scope of the
FSB’s July 2017 Guidance on Continuity
of Access To Financial Market
Infrastructures (FMI) for a Firm in
Resolution, including the corresponding
Annex, which provides a list of
information requirements relevant to
facilitating continuity of access
(together, the ‘‘FSB FMI Guidance’’).
The Agencies have not limited the scope
of key clients to GSIBs, since key clients
may include entities other than GSIBs,
and continuity of access to services
provided to all key clients supports a
key objective of the guidance.
PCS Services: Commenters argued
that a concept of critical PCS services
that depended on the criticality of PCS
services to a particular client would be
impractical and difficult to administer.
Commenters also argued that a concept
of critical PCS services that hinged on
the criticality of such services to a
particular client would be an overlybroad standard. The final guidance
replaces references to ‘‘critical PCS
services’’ with ‘‘PCS services,’’ focuses
on key clients, and clarifies that a firm
21 Commenters also suggested that a firm should
consider the degree of interconnectedness among its
clients and evaluate concentration risk from its
perspective as a provider of PCS services (including
where a firm is the sole provider or one of only a
few providers for a particular service). The
Agencies note that a firm may consider
interconnectedness or concentration risk presented
by a particular client as qualitative criteria when
identifying key clients.

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should identify clients, FMUs, and
agent banks as key from its perspective
rather than its clients’ perspective.
Further, the final guidance modifies the
definition of client by deleting the
reference to ‘‘reliance upon continued
access’’ such that a client is defined as
‘‘an individual or entity, including
affiliates of the firm, to whom the firm
provides PCS services.’’ As noted above,
firms are expected to identify clients as
key from the firm’s perspective using
both quantitative and qualitative criteria
and have flexibility to tailor their
identification methodologies and
criteria. These clarifications are not
expected to result in consideration of
any additional PCS services provided by
the firm.
Direct and Indirect Relationships:
With respect to the scope of PCS
providers, certain commenters sought to
narrow the concept to those instances in
which a firm that has a direct
relationship with an FMU or agent bank
provides indirect access to an FMU or
agent bank through its membership or
contractual relationship. The Agencies
have not limited this concept, as
continuity of PCS activities in
resolution remains essential both with
respect to the provision of PCS services
to a firm’s affiliates and where the firm
is a provider of PCS services through its
own operations.
In addition, one commenter stated
that firms should be expected to
understand which of an FMU’s tools are
most likely to be utilized in resolution,
and to differentiate mitigating actions
from adverse actions. The Agencies note
that the guidance provides firms with
discretion to identify such tools and
contingency arrangements in their
resolution plan submissions, including
whether the arrangements are likely to
be used by a PCS provider in resolution.
One commenter also focused on the
need, to the extent possible, for firms to
update contracts with agent banks to
incorporate appropriate terms and
conditions to prevent automatic
termination and facilitate continued
provision of critical outsourced services
during resolution. The Agencies note
that this comment is addressed under
the Shared and Outsourced Services
section of the final guidance.
Notwithstanding the foregoing, the
Agencies understand that in certain
cases, PCS providers may not be
permitted to provide continued access
by an entity that has not met either its
financial or contractual obligations. In
addition, one commenter noted that
firms should consider including
continuity of access to key FMUs and
key agent banks in their legal entity
rationalization (‘‘LER’’) criteria. In order

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to enhance resolvability, firms have
included continuity of critical
operations in their LER criteria and
certain firms also considered mitigation
of continuity risk regarding FMU access
in applying their LER criteria. The final
guidance provides all firms with the
flexibility, as appropriate, to consider
continuity of access to key FMUs and
key agent banks.
ii. Playbooks for Continued Access to
PCS Services
The provision of PCS services by
firms, FMUs, and agent banks is an
essential component of the U.S.
financial system, and maintaining the
continuity of PCS services is important
for the orderly resolution of firms. Prior
guidance from the Agencies indicated
that a firm’s resolution plan submission
should describe arrangements to
facilitate continued access to PCS
services through the firm’s resolution.
Firms have developed capabilities to
identify and consider the risks
associated with continuity of access to
PCS services in resolution, including
playbooks for key FMUs and key agent
banks that describe potential adverse
actions and possible contingency
arrangements.
Some commenters suggested that
filers could update certain discussions
in the PCS playbooks for material
changes only and not resubmit the
complete discussion as part of the
resolution plan submission. The
Agencies acknowledge that the Rule
generally allows for incorporation by
reference of previously submitted
information that remains accurate.
However, certain PCS-related content
may be more likely to change between
submissions (such as provider
rulebooks, key clients, volume and
value of activity, exposure
quantifications, and key PCS providers)
and therefore would be expected to be
provided in each submission. To the
extent that certain updated information
may be addressed in other sections of
the firm’s submission, the firm may
include a specific cross-reference to that
content in the appropriate playbook.
In addition, the Agencies have
clarified the expectations for playbook
content for both users and providers of
PCS services. Firms are expected to
provide a playbook for each key FMU
and key agent bank that addresses
financial and operational considerations
that would assist the firm in
maintaining continued access to PCS
services for itself and its clients during
stress and in resolution.
Form and Content: Some commenters
suggested that playbooks for agent bank
relationships might be different than

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those produced for FMUs, and as a
result, analysis in playbooks for agent
banks generally would be different from
the analysis for FMUs in terms of
content, organization, and level of
detail. Another commenter suggested
that firms should consider discussing
whether contingency arrangements and/
or analyses in playbooks would change
depending on which entity enters into
resolution. The final guidance sets out
the expectations for PCS playbooks for
FMUs and agent banks, and allows
flexibility for a firm to tailor the
contents of its PCS playbooks to the
specific relationships of the firms with
its key FMUs and key agent banks.
Together with financial resources, a firm
should consider operational resources
(including critical services, MIS
reporting, communications, and internal
and external contacts) that would be
needed to respond to adverse actions
and execute any contingency
arrangements.
Some commenters suggested that
separate playbooks should not be
expected for a firm’s role as provider of
PCS services. If the firm is both a user
and provider of PCS services, content
related to user and provider of PCS
services may be provided in the same
playbook, with appropriate and specific
cross-references to other sections.
Where a firm is a provider of PCS
services through the firm’s own
operations, the firm is expected to
produce a playbook for the material
entities that provide those services,
addressing each of the items described
in the section on Content related to
Provider of PCS Services.
Mapping: The final guidance specifies
that each playbook should identify and
map the PCS services provided by each
material entity and critical operation to
its key clients, and describe the scale
and manner in which each provides
PCS services and any related credit or
liquidity offered in connection with
such services.
Commenters focused on the issue of
identification and mapping key clients
to the firm’s PCS activities. Comments
concerning identification of key clients
were discussed in connection with the
definition of ‘‘key client.’’ The Agencies
expect a firm to map each of its key
clients to the firm’s key FMUs and key
agent banks. The Agencies note that a
firm is expected to track PCS activities,
map them to the relevant material
entities and core business lines, and
track customers and counterparties for
PCS activities, including values and
volumes of various transaction types,
and used and unused capacity for all
lines of credit. Firms are expected to
report on the individual key clients to

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whom the firm provides PCS services.
Some commenters argued that this
mapping of key clients would require
the development of new information
and monitoring systems. However,
based on the Agencies’ engagement with
firms, the Agencies have observed that
firms already have the capability to
identify and report these relationships
on an individual basis.
Funding and Liquidity Analysis:
Commenters recommended that PCS
playbooks be consistent with the
expectations in other parts of the final
guidance, and that any PCS-related
liquidity expectations should be factors
incorporated into a filer’s overall
resolution liquidity models. Another
commenter noted that firms should
clarify further the extent to which they
would rely on committed credit lines as
liquidity resources in resolution. The
final guidance clarifies that firms are
expected to include a discussion of
liquidity sources and uses of funds in
business as usual (‘‘BAU’’), in stress,
and in the resolution period. The final
guidance is not prescriptive, and each
firm is expected to determine the
relevant PCS-related liquidity analysis
that is specific to its PCS activities.
There is no expectation for such
liquidity analysis to include stresstesting or multiple scenario analysis. To
the extent that specific FMU and agent
bank information is provided, firms may
include the information in the relevant
FMU and agent bank playbooks or
provide appropriate, specific crossreferences to other sections of the
resolution plan in the playbook.
Key Client Contingency
Arrangements: Some commenters
argued that if a filer’s resolution strategy
is designed to maintain client access to
key FMUs and key agent banks, then
contingency analysis regarding client
loss of access to PCS services is not
relevant to the successful execution of a
firm’s particular resolution strategy and
should not be expected to be included
in a firm’s resolution plan submission.
The Agencies consider the need to
address contingencies (e.g., the potential
for loss of access to PCS services, FMUs,
or agent banks) as supplemental to those
in the firm’s preferred resolution
strategy, and maintain that the
preparation of a loss of access
contingency analysis is appropriate as
the successful execution of a firm’s
preferred resolution strategy is not
guaranteed. To minimize disruption to
the provision of PCS services to clients,
a filer should describe the potential
range of contingency arrangements that
the firm may take, including the
viability of transferring client activity
and related assets, as well as any

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alternative arrangements that would
allow the firm’s key clients continued
access to critical PCS services, in the
event the firm could no longer provide
such access.
Commenters also noted that filers
should have flexibility to provide
analysis that recognizes the different
types and scope of PCS services offered
by each PCS provider. The Agencies
note that the guidance distinguishes
between FMUs and agent banks and is
not prescriptive, providing firms with
discretion under the existing guidance
to tailor analysis consistent with varied
types of PCS services and PCS
providers.
Commenters also indicated that a filer
is not in the best position to understand
the financial and operational impacts to
its key clients, and suggested that any
contingency arrangements for clients
should be at a higher level and not be
provided on a per-client basis. The
Agencies are clarifying that the
discussion of potential financial and
operational impacts to key clients is
from the perspective of the filer, and not
from the clients’ perspectives. The
Agencies note that the final guidance is
not prescriptive and that firms have the
discretion to tailor the discussion to
client impacts specific to the PCS
services provided.22
Loss of Access: Several commenters
requested additional clarity around loss
of access to an FMU or agent bank, and
the potential financial and operational
impacts to a filer’s material entities and
key clients. The final guidance
maintains that a firm is not expected to
incorporate a scenario in which it loses
FMU or agent bank access into its
preferred resolution strategy or into its
RLEN/RCEN analysis. In support of
maintaining the continuity of PCS
services, each playbook should provide
analysis of the financial and operational
impacts to the filer’s material entities
and key clients due to adverse actions
that may be taken by an FMU or agent
bank, and contingency actions that may
be taken by the filer. Each playbook also
should include considerations of any
substitutes and/or any possible
alternative arrangements, if available,
that would allow the firm and its key
22 Examples of financial and operational impacts
to key clients may include considerations such as
intraday or uncommitted credit lines that a firm
provides to key clients, settlement volumes/value,
or market value of the activity that is processed for
its key clients. To the extent certain key client
relationships or PCS services to key clients are
unique, firms are expected to address potential
contingency arrangements for those instances on an
individual client basis.

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clients to maintain continued access to
PCS services in resolution.23
Client Communication: One
commenter suggested that firms engage
with users and clients and communicate
the range of risk management actions
and requirements that may be imposed
on a user when a firm is in resolution,
setting out a common set of expectations
and processes across users to the extent
possible. The Agencies recognize the
importance of firms’ engagement and
communication with clients and the
final guidance allows firms to determine
the method, form, and timing of such
engagement and communication with
clients. Firms are best positioned to
make decisions regarding common
expectations and processes across users
because the facts and circumstances of
client relationships vary, which in turn
informs the specific content in the
playbooks.
The final guidance specifies that a
firm should communicate to its key
clients the potential impacts of
implementation of any identified
contingency arrangements or
alternatives, and that playbooks should
describe the firm’s methodology for
determining whether additional
communication should be provided to
some or all key clients (e.g., due to the
client’s BAU usage of that access and/
or related intraday credit or liquidity),
and the expected timing and form of
such communication. A firm is expected
to consider the benefits of client
communications in multiple forms (e.g.,
verbal, written, and electronic), and at
multiple times (e.g., in BAU, stress
events, and some point in advance of
taking contingency actions) in order to
provide adequate notice to key clients of
the action and the potential impact on
the client of that action. Firms should
consider the benefits of tailoring client
communications to different segments
of clients in form, timing, or both, and
providing sample client contracts or
agreements containing provisions
related to the firm’s provision of
intraday credit or liquidity in its
resolution plan submission.24
23 Impact analysis in the final guidance is
consistent with the FSB FMI Guidance regarding
impact analysis of discontinuity of access that
complements mitigation measures for dealing with
a termination or suspension of access to FMI
services. See FSB FMI Guidance, Section 2.5 (p. 17),
and Annex, Items #17 and 18 (p. 27).
24 In their most recent resolution plan
submissions, all of the firms addressed the issue of
client communications and provided descriptions
of planned or existing client communications, with
some firms submitting specific samples of such
communication.

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iii. Other PCS Comments (FSB FMI
Guidance, International Coordination,
and Agency Communication)
Consistency with FSB FMI Guidance:
Commenters recommended greater
consistency with the FSB FMI
Guidance. The final guidance remains
consistent with the FSB FMI Guidance,
focusing on the identification of
providers, mapping of contractual
relationships, continuity analysis (e.g.,
adverse actions and contingency
arrangements), communications, and
discontinuity of access. Another
commenter suggested that the Agencies
should consider coordinating with
firms’ foreign resolution authorities
with respect to content and the
submission process for resolutionrelated reporting templates. The
Agencies recognize that international
coordination in resolution-related
matters is important, and will continue
to work with domestic and international
counterparts through various forums,
including CMGs. The final guidance is
also consistent with FSB FMI Guidance
in this respect, as it broadly addresses
all information aspects contained in the
FSB FMI Guidance, including those
informational requirements specified in
the FSB Annex. In addition, the final
guidance provides a firm with the
flexibility to provide playbooks that are
tailored to the circumstances relevant to
that firm and therefore does not adopt
standardized resolution-related
reporting templates.
Agency Communication: One
commenter suggested that the Agencies
engage ex ante with key market
stakeholders, including PCS providers
both in BAU and leading up to and
during a firm’s resolution. The Agencies
proactively engage with firms and PCS
providers through various forums
including CMGs. As this comment is not
applicable to the content contained in a
firm’s plan submissions, the Agencies
did not make any modification to final
guidance in response to this comment.
f. Legal Entity Rationalization and
Separability
One commenter argued that the costbenefit analysis does not justify
requiring filers to maintain active
virtual data rooms for each object of sale
identified in their separability analysis.
In order to reduce the burden on the
firms, the Agencies have modified the
Guidance to provide that firms should
have the capability to populate a data
room with information pertinent to a
potential divestiture in a timely manner,
rather than maintain an active data
room. The Agencies expect to test this
capability by asking firms to produce

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selected sale-related materials within a
certain timeframe as part of future
resolution plan reviews.
g. Derivatives and Trading Activities
The Agencies received a number of
comments on Section VII (Derivatives
and Trading Activities) of the proposed
guidance. Commenters supported the
proposed elimination of the active and
passive wind-down scenario analyses
and rating agency playbooks, but
recommended certain modifications and
clarifications to the proposed guidance
in order to streamline the resolution
plan submissions and provide further
clarity.
After reviewing the comments on the
proposed guidance, the Agencies have
adopted final guidance that includes
several adjustments and clarifications to
address matters raised by the
commenters. For example, commenters
argued that having a dealer firm provide
information on compression strategies
that it would not expect to use in
resolution would have limited
regulatory purpose and distract
resources away from developing other
capabilities and analyses. The final
guidance clarifies that this expectation
only applies when a dealer firm expects
to rely upon compression strategies for
executing its preferred strategy.
Commenters suggested a dealer firm
should not have to model the
operational costs necessary to execute
its derivatives strategy by separating out
and specifying costs at the level of
specific derivatives activities, as a firm
would have included those costs in the
material entity cost analyses provided as
part of its resolution plan. The final
guidance clarifies that a dealer firm may
choose not to model its operational
costs for executing its derivatives
strategy at the level of specific
derivatives activities; however, a firm’s
cost analyses should provide
operational cost estimates at a more
granular level than the material entity
level (e.g., business line level within a
material entity, subject to wind-down).
The Agencies also have made a
number of changes to clarify the scope,
intent, and terminology of the final
guidance. For example, commenters
recommended the Agencies confirm that
the term ‘‘material derivatives entities’’
means a dealer firm’s material entities
that engage in derivatives activities. The
final guidance confirms the definition of
the term. Commenters suggested that a
dealer firm should be expected only to
incorporate capital and liquidity needs
associated with derivatives activities
into its RCEN and RLEN estimates with
respect to its material entities. The final
guidance includes this clarification.

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Commenters urged the Agencies to
clarify that dealer firms may define
linked non-derivatives trading positions
based on their overall business and
resolution strategy. The final guidance
includes this clarification.
Some commenters recommended the
Agencies adjust certain expectations
that are not specified in the proposed
guidance. The Agencies have
determined not to modify the guidance
in these instances. For example,
commenters suggested the Agencies
eliminate certain remnants of the
passive wind-down analysis (e.g.,
potential residual portfolio analysis
under a scenario involving the sale of a
line of business). The Agencies do not
expect a dealer firm to include a
separate wind-down or run-off analysis
in its plan. Instead, a dealer firm is
expected to assess the risk profile of any
derivatives portfolios that would be
included in the sale of a line of business
and analyze the potential counterparty
and market impacts of non-performance
on these contracts upon the stability of
U.S. financial markets. Commenters
advocated for allowing a dealer firm to
assume that inter-affiliate transactions
may be unwound at lower costs than
transactions with external
counterparties. The Agencies confirm
that the guidance would permit a dealer
firm to make such an assumption as
long as the firm provides adequate
support for that assumption.
Commenters recommended dealer firms
should not be expected to replicate
detailed information in their resolution
plans to the extent that a firm is
required to make the information
available to regulators pursuant to other
regulatory requirements or that
information is provided elsewhere in
the firm’s resolution plan. The Agencies
clarify that, consistent with the Rule, a
dealer firm may cross-reference or
incorporate by reference information
that the firm has provided in its current
plan submission in another section or
has previously provided in a specific
section of a past resolution plan
submission. However, consistent with
the Rule, the Agencies expect a dealer
firm to submit all relevant information
as part of a formal plan submission.
Commenters suggested tailoring
certain capability expectations and
resolution-specific assumptions in the
guidance. The Agencies developed
those expectations and resolutionspecific assumptions in order to
facilitate a dealer firm’s planning and
preparedness for an orderly resolution.
A dealer firm’s capabilities should
demonstrate flexibility to account for
alternative outcomes and permit
sensitivity analysis, as it is difficult to

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predict precisely how a firm’s untested
resolution strategy may operate in an
actual resolution scenario. As a result,
the Agencies have not revised the
guidance to include certain
modifications recommended by
commenters. For instance, commenters
suggested the Agencies eliminate the
expectation to provide timely
transparency into management of risk
transfers between material entities and
non-material entities. The Agencies
maintain expectations related to risk
transfers between affiliates, as material
exposures could exist outside material
entities. In addition, commenters argued
that a dealer firm that adopts an SPOE
strategy should not be expected to
demonstrate its capabilities with respect
to the management of risk transfers
between material entities that survive
under its preferred resolution strategy.
The Agencies maintain the expectations
related to risk transfers between
material entities, including surviving
entities, because those capabilities
would help facilitate a dealer firm’s
planning and preparedness for
alternative outcomes that may arise in
the context of an actual resolution.
Commenters advocated for allowing a
dealer firm to present reasonable
alternative assumptions on counterparty
behavior in relation to early exits and
break clauses if the assumed actions
would benefit both parties. To establish
a baseline, the Agencies expect a dealer
firm to assume that counterparties will
exercise any contractual termination
rights, if exercising that right would
economically benefit the counterparty.
A dealer firm may perform additional
sensitivity analysis around the baseline
assumption by assessing the impact
from alternative assumptions regarding
counterparty actions that could deviate
from the baseline assumption.
Commenters argued that a dealer firm
should be permitted to assume it could
enter into or unwind bilateral interaffiliate transactions in resolution, even
if they are not strictly ‘‘risk-reducing’’ to
both parties, as long as the firm provides
a reasonable justification. The final
guidance maintains this constraint
related to market risk exposure, but
clarifies that a firm may assume it could
enter into or unwind inter-affiliate
trades in resolution as long as those
trades do not materially increase credit
exposure to any participating entity.
The Agencies believe that this provides
firms with sufficient flexibility with
respect to inter-affiliate trades in
resolution. Commenters suggested a
dealer firm should not be constrained to
a 12–24 month timeline for its
stabilization and resolution periods. The

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Agencies continue to believe that the
timeline to be reasonable for unwinding
a dealer firm’s derivatives portfolios,
based on the firms’ preferred winddown strategy in their past submissions;
therefore, that expectation remains
unchanged.
The Agencies received comments
related to the scope of derivatives
portfolios defined in the guidance. After
considering multiple relevant factors,
the Agencies have not modified the
guidance in these instances. For
example, commenters recommended
that the final guidance apply the
capabilities specified in the Portfolio
Segmentation and Forecasting section
only to material entities of a dealer firm.
While a dealer firm’s capabilities may
be commensurate with the size, scope,
and complexity of its derivatives
portfolio, the Agencies maintain that a
dealer firm should have the capability to
identify and report basic metrics on all
of its derivatives positions, if only to
confirm the portion of the firm’s
exposures exist outside its material
entities. The final guidance further
clarifies that a dealer firm’s firm-wide
derivatives portfolio should represent
the vast majority (for example, 95
percent) of a dealer firm’s derivatives
transactions measured by the notional
and gross market value of the firm’s
total derivatives transactions.
Commenters also suggested that the
potential residual portfolio analysis
should consider only the derivatives
transactions of a dealer firm’s material
entities. The Agencies expect a dealer
firm to include the derivatives portfolios
of both material and non-material
entities in its potential residual portfolio
analysis, as the composition of the
firm’s potential residual portfolio may
be impacted by exposures in nonmaterial entities.
h. Cross References to Supervisory
Letters
Some commenters advocated
eliminating the cross-references
contained in the Board’s SR letter 14–
1 (which covers both recovery and
resolution preparedness) and SR letter
14–8 (which is limited to recovery),25
directly incorporating the relevant
expectations in the guidance, and
rescinding the SR letters. Commenters
maintained that recovery planning
guidance should remain separate from
resolution planning guidance.
The Agencies have omitted the crossreferences, which is consistent with the
aim of consolidating expectations for
25 SR Letter 14–8, ‘‘Consolidated Recovery
Planning for Certain Large Domestic Bank Holding
Companies’’ (Sept. 25, 2014).

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resolution plan submissions. In the case
of SR 14–8, the relevant resolution plan
expectations have been incorporated
into the Separability section of the
guidance. In the case of SR 14–1, the
resolution-related expectations and
associated capabilities contained in SR
14–1 are also addressed by the final
guidance. The Board will continue to
rely on SR letters 14–1 and 14–8 for
assessing firms’ recovery planning.
i. Additional Comments
i. QFC Stay Rules
One commenter expressed that by
requiring the production of additional
plan content related to a firm’s method
of complying with the QFC stay rules
only from those firms that do not adhere
to the International Swaps and
Derivatives Association 2015 Universal
Resolution Stay Protocol (‘‘ISDA
Protocol’’), the guidance may have the
effect of discouraging such firms from
complying with the QFC stay rules
through any means other than ISDA
Protocol adherence.
The QFC stay rules seek to improve
the resolvability of U.S. GSIBs by
mitigating the risk of potentially
destabilizing closeouts of QFCs that
could occur upon the entry of a GSIB or
one or more of its affiliates into
resolution. In connection with
promulgating the QFC stay rules, the
Agencies have recognized that the
ability to comply with the QFC stay
rules by adhering to the ISDA Protocol
may be a desirable alternative to
implementing the rules’ restrictions on
a counterparty-by-counterparty basis.
Through their consideration of the ISDA
Protocol in connection with
promulgating the QFC stay rules, the
Agencies have already assessed whether
adherence to the ISDA Protocol
addresses the risks that can arise from
QFC closeouts. For firms that choose to
adhere to the ISDA Protocol through
other means, any additional plan
content they provide can assist the
Agencies in understanding how a firm’s
chosen alternative compliance method
addresses these risks.
Notably, prior to the effective date of
the QFC stay rules, all eight U.S. GSIBs
elected to adhere to the ISDA Protocol
and incur any fees associated with
adhering to the ISDA Protocol.
Therefore, as long as the U.S. GSIBs
continue to adhere, the Agencies will
not expect these firms to submit
additional plan content related to
compliance with the QFC stay rules
through a method other than adherence
to the ISDA Protocol.

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ii. Bankruptcy Claims
The Agencies recognize that a firm’s
compliance with the ISDA Protocol may
have an effect on various creditor
constituencies, and that actions taken by
these constituencies may have an effect
on the prospect of the firm conducting
an orderly resolution under the U.S.
Bankruptcy Code. One commenter
suggested that the Agencies provide
additional guidance on the material
impact on their resolution plans and
communications plans with respect to
all unsecured claimants, as well as
depositors of an insured depository
institution, that could arise from a firm
choosing to satisfy the ISDA Protocol’s
stay conditions for credit enhancements
(i.e., a parent company acting as a
guarantor of its subsidiary’s QFCs) by
pursuing the elevation alternative
wherein the firm files a motion with the
bankruptcy court asking that QFC
counterparties’ claims receive
administrative priority status. The
guidance expressly recommends that
firms both address legal issues
associated with the implementation of
the ISDA Protocol,26 and also develop
external communications strategies.27
This commenter also stated that,
specifically in relation to the elevation
alternative and QFC counterparties’
claims in bankruptcy, the proposed
guidance failed to address two
vulnerabilities associated with those
claims receiving administrative priority
under Section 507 of Bankruptcy Code.
First, the commenter asserted that a firm
that elects in its resolution plan to
pursue the elevation alternative may be
exposed to civil liability to bondholders
both immediately as a consequence of
incorporating such a strategy into its
plan, and in the future if the strategy is
actually implemented through a
bankruptcy court granting the firm’s
motion. The commenter asserted that a
firm pursuing the elevation alternative
may be required to make disclosures
under Section 10(b) if the Securities Act
of 1933 28 prior to resolution to indicate
to bondholders that its resolution
strategy contemplates a bankruptcy
court providing QFC counterparties’
claims higher payment priority than the
unsecured claims of bondholders. A
firm’s disclosure obligations, if any,
under the Securities Act or other
regulations during BAU that relate to
adherence to the ISDA Protocol are
beyond the scope of the guidance.
Second, with regard to liability to
bondholders, the commenter also
asserted that implementation of the
26 83

F.R. 32867 (July 16, 2018).
F.R. 32864 (July 16, 2018).
28 15 U.S.C. 77a et seq.
27 83

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elevation alternative may result in a
creditor of the firm violating its
indenture obligations regarding
fiduciary duties and conflicts of interest
where the creditor is a GSIB that is both
a QFC counterparty of the firm, and an
indenture trustee for bonds issued by
the firm. For a GSIB that is a creditor of
a firm in bankruptcy, its obligations to
uphold its fiduciary duties or avoid
conflicts of interest may affect the
actions it takes during the course of the
bankruptcy of a firm. The guidance
focuses on firms addressing potential
risks to their resolvability, which does
not include discrete legal liabilities of
the type discussed by the commenter
that a third party may encounter upon
a firm’s entry into resolution. The
Agencies expect firms to consider and
address the dynamics of relationships
with creditors to the extent any
creditor’s potential course of action
could present legal obstacles in the
bankruptcy court’s consideration of a
motion to seeking to implement the
elevation alternative.
The commenter also suggested that
further clarification is needed in the
final guidance with respect to the
impact of the elevation alternative on
firms’ relationships with secured
borrowers. Specifically, the commenter
contended that a firm’s proposal in its
resolution plan to comply with the
ISDA Protocol by adopting the elevation
alternative may compel any firms that
provide secured loans or residential
mortgages to direct borrowers during
business as usual to seek administrative
priority for such prepetition obligations
in the event the borrowers file for
bankruptcy. Similarly, the commenter
noted that the possibility of a firm
implementing the elevation alternative
could motivate secured creditors in the
ordinary course of business with GSIBs
to seek contractual provisions that
would designate their claims as
administrative expenses in any future
bankruptcy case. However, the extent to
which a firm’s adherence to the ISDA
Protocol might impact its relationships
with external stakeholders during BAU,
including its adoption of the elevation
alternative for emergency motions, is
beyond the scope of the guidance.
The commenter also asked that the
Agencies clarify whether there is legal
support for a creditor obtaining priority
status for its claim. The guidance
provides that firms’ resolution plans
should address legal issues associated
with the implementation of the stay
pursuant to the ISDA Protocol,
including if a firm pursues the elevation
strategy.
The commenter also asked the
Agencies to address whether the

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recovery in bankruptcy for depositors
holding funds in accounts that exceed
the amount of deposit insurance
provided by the FDIC would be
negatively impacted by a firm pursuing
the elevation alternative. The extent of
depositors’ recoveries is an issue that
may arise in the resolution of an insured
depository institution under the Federal
Deposit Insurance Act and, therefore, is
beyond the scope of the guidance.
IV. Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 through 3521),
the Agencies may not conduct or
sponsor, and a respondent is not
required to respond to, an information
collection unless it displays a currently
valid Office of Management and Budget
control number. The proposed guidance
stated that the Agencies believed that
the proposed changes to the 2016
Guidance would not result in an
increase in information collection
burden to the Covered Companies, and
the Agencies invited public comment on
this assessment. The Agencies received
no comments regarding this assessment
or the PRA more generally.
GUIDANCE FOR § 165(D)
RESOLUTION PLAN SUBMISSIONS
BY DOMESTIC COVERED
COMPANIES.
I. Introduction
II. Capital
a. Resolution Capital Adequacy and
Positioning (RCAP)
b. Resolution Capital Execution Need
(RCEN)
III. Liquidity
a. Resolution Liquidity Adequacy and
Positioning (RLAP)
b. Resolution Liquidity Execution Need
(RLEN)
IV. Governance Mechanisms
a. Playbooks and Triggers
b. Pre-Bankruptcy Parent Support
V. Operational
a. Payment, Clearing, and Settlement
Activities
b. Managing, Identifying, and Valuing
Collateral
c. Management Information Systems
d. Shared and Outsourced Services
e. Legal Obstacles Associated with
Emergency Motions
VI. Legal Entity Rationalization and
Separability
a. Legal Entity Rationalization Criteria
(LER Criteria)
b. Separability
VII. Derivatives and Trading Activities
a. Booking Practices
b. Inter-Affiliate Risk Monitoring and
Controls
c. Portfolio Segmentation and Forecasting
d. Prime Brokerage Customer Account
Transfers
e. Derivatives Stabilization and De-risking
Strategy

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VIII. Format and Structure of Plans
IX. Public Section

I. INTRODUCTION
Resolution Plan Requirement: Section
165(d) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act
(12 U.S.C. 5365(d)) requires certain
financial companies (Covered
Companies) to report periodically to the
Board of Governors of the Federal
Reserve System (the Federal Reserve or
Board) and the Federal Deposit
Insurance Corporation (the FDIC)
(together the Agencies) the Companies’ 1
Plans for Rapid and Orderly Resolution
in the event of Material Financial
Distress or failure. On November 1,
2011, the Agencies promulgated a joint
rule (the Rule) implementing the
provisions of Section 165(d), 12 CFR
parts 243 and 381.2 Certain Covered
Companies meeting criteria set out in
the Rule must file a resolution plan
(Plan) annually or at a different time
period specified by the Agencies.
Overview of Guidance Document:
This document is intended to assist the
eight current U.S. Global Systemically
Important Banks (GSIBs or firms) 3 in
further developing their preferred
resolution strategies. The document
does not have the force and effect of
law. Rather, it describes the Agencies’
supervisory expectations regarding
these firms’ resolution plans and the
Agencies’ general views regarding
specific areas where additional detail
should be provided and where certain
capabilities or optionality should be
developed and maintained to
demonstrate that each firm has
considered fully, and is able to mitigate,
obstacles to the successful
implementation of the preferred
strategy.4
This document is organized around a
number of key vulnerabilities in
resolution (i.e., capital; liquidity;
governance mechanisms; operational;
1 Capitalized terms not defined herein have the
meaning set forth in the Rule.
2 76 Fed. Reg. 67323 (November 1, 2011).
3 Bank of America Corporation, The Bank of New
York Mellon Corporation, Citigroup Inc., The
Goldman Sachs Group, Inc., JPMorgan Chase & Co.,
Morgan Stanley, State Street Corporation, and Wells
Fargo & Company.
4 This guidance consolidates the Guidance for
2013 § 165(d) Annual Resolution Plan Submissions
by Domestic Covered Companies that Submitted
Initial Resolution Plans in 2012; firm-specific
feedback letters issued in August 2014 and April
2016; the February 2015 staff communication; and
Guidance for 2017 § 165(d) Annual Resolution Plan
Submissions by Domestic Covered Companies that
Submitted Resolution Plans in July 2015, including
the frequently asked questions that were published
in response to the Guidance for the 2017 Plan
Submissions (taken together, prior guidance). To
the extent not incorporated in or appended to this
guidance, prior guidance is superseded.

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legal entity rationalization and
separability; and derivatives and trading
activities) that apply across resolution
plans. Additional vulnerabilities or
obstacles may arise based on a firm’s
particular structure, operations, or
resolution strategy. Each firm is
expected to satisfactorily address these
vulnerabilities in its Plan—e.g., by
developing sensitivity analysis for
certain underlying assumptions,
enhancing capabilities, providing
detailed analysis, or increasing
optionality development, as indicated
below.
The Agencies will review the Plan to
determine if it satisfactorily addresses
key potential vulnerabilities, including
those detailed below. If the Agencies
jointly decide that these matters are not
satisfactorily addressed in the Plan, the
Agencies may determine jointly that the
Plan is not credible or would not
facilitate an orderly resolution under the
U.S. Bankruptcy Code.

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II. CAPITAL
Resolution Capital Adequacy and
Positioning (RCAP): To help ensure that
a firm’s material entities 5 could operate
while the parent company is in
bankruptcy, the firm should have an
adequate amount of loss-absorbing
capacity to recapitalize those material
entities. Thus, a firm should have
outstanding a minimum amount of total
loss-absorbing capital, as well as a
minimum amount of long-term debt, to
help ensure that the firm has adequate
capacity to meet that need at a
consolidated level (external TLAC).6
A firm’s external TLAC should be
complemented by appropriate
positioning of additional loss-absorbing
capacity within the firm (internal
TLAC). The positioning of a firm’s
internal TLAC should balance the
certainty associated with prepositioning internal TLAC directly at
material entities with the flexibility
provided by holding recapitalization
resources at the parent (contributable
resources) to meet unanticipated losses
at material entities. That balance should
take account of both pre-positioning at
material entities and holding resources
at the parent, and the obstacles
associated with each. Accordingly, the
firm should not rely exclusively on
either full pre-positioning or parent
contributable resources to recapitalize
any material entity. The plan should
describe the positioning of internal
5 The terms ‘‘material entities,’’ ‘‘critical
operations,’’ and ‘‘core business lines’’ have the
same meaning as in the Agencies’ Rule.
6 82 Fed. Reg. 8266 (January 24, 2017).

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TLAC within the firm, along with
analysis supporting such positioning.
Finally, to the extent that prepositioned internal TLAC at a material
entity is in the form of intercompany
debt and there are one or more entities
between that material entity and the
parent, the firm should structure the
instruments so as to ensure that the
material entity can be recapitalized.
Resolution Capital Execution Need
(RCEN): To support the execution of the
firm’s resolution strategy, material
entities need to be recapitalized to a
level that allows them to operate or be
wound down in an orderly manner
following the parent company’s
bankruptcy filing. The firm should have
a methodology for periodically
estimating the amount of capital that
may be needed to support each material
entity after the bankruptcy filing
(RCEN). The firm’s positioning of
internal TLAC should be able to support
the RCEN estimates. In addition, the
RCEN estimates should be incorporated
into the firm’s governance framework to
ensure that the parent company files for
bankruptcy at a time that enables
execution of the preferred strategy.
The firm’s RCEN methodology should
use conservative forecasts for losses and
risk-weighted assets and incorporate
estimates of potential additional capital
needs through the resolution period,7
consistent with the firm’s resolution
strategy. However, the methodology is
not required to produce aggregate losses
that are greater than the amount of
external TLAC that would be required
for the firm under the Board’s rule.8 The
RCEN methodology should be calibrated
such that recapitalized material entities
have sufficient capital to maintain
market confidence as required under the
preferred resolution strategy. Capital
levels should meet or exceed all
applicable regulatory capital
requirements for ‘‘well-capitalized’’
status and meet estimated additional
capital needs throughout resolution.
Material entities that are not subject to
capital requirements may be considered
sufficiently recapitalized when they
have achieved capital levels typically
required to obtain an investment-grade
credit rating or, if the entity is not rated,
an equivalent level of financial
soundness. Finally, the methodology
should be independently reviewed,
consistent with the firm’s corporate
7 The resolution period begins immediately after
the parent company bankruptcy filing and extends
through the completion of the preferred resolution
strategy.
8 See 12 CFR 252.60–.65; 82 Fed. Reg. 8266
(January 24, 2017).

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governance processes and controls for
the use of models and methodologies.
III. LIQUIDITY
The firm should have the liquidity
capabilities necessary to execute its
preferred resolution strategy. For
resolution purposes, these capabilities
should include having an appropriate
model and process for estimating and
maintaining sufficient liquidity at or
readily available to material entities and
a methodology for estimating the
liquidity needed to successfully execute
the resolution strategy, as described
below.
Resolution Liquidity Adequacy and
Positioning (RLAP): With respect to
RLAP, the firm should be able to
measure the stand-alone liquidity
position of each material entity
(including material entities that are nonU.S. branches)—i.e., the high-quality
liquid assets (HQLA) at the material
entity less net outflows to third parties
and affiliates—and ensure that liquidity
is readily available to meet any deficits.
The RLAP model should cover a period
of at least 30 days and reflect the
idiosyncratic liquidity profile and risk
of the firm. The model should balance
the reduction in frictions associated
with holding liquidity directly at
material entities with the flexibility
provided by holding HQLA at the parent
available to meet unanticipated
outflows at material entities. Thus, the
firm should not rely exclusively on
either full pre-positioning or the parent.
The model 9 should ensure that the
parent holding company holds
sufficient HQLA (inclusive of its
deposits at the U.S. branch of the lead
bank subsidiary) to cover the sum of all
stand-alone material entity net liquidity
deficits. The stand-alone net liquidity
position of each material entity (HQLA
less net outflows) should be measured
using the firm’s internal liquidity stress
test assumptions and should treat interaffiliate exposures in the same manner
as third-party exposures. For example,
an overnight unsecured exposure to an
affiliate should be assumed to mature.
Finally, the firm should not assume that
a net liquidity surplus at one material
entity could be moved to meet net
liquidity deficits at other material
entities or to augment parent resources.
Additionally, the RLAP methodology
should take into account (A) the daily
contractual mismatches between
inflows and outflows; (B) the daily
9 ‘‘Model’’ refers to the set of calculations
estimating the net liquidity surplus/deficit at each
legal entity and for the firm in aggregate based on
assumptions regarding available liquidity, e.g.,
HQLA, and third-party and interaffiliate net
outflows.

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flows from movement of cash and
collateral for all inter-affiliate
transactions; and (C) the daily stressed
liquidity flows and trapped liquidity as
a result of actions taken by clients,
counterparties, key FMUs, and foreign
supervisors, among others.
Resolution Liquidity Execution Need
(RLEN): The firm should have a
methodology for estimating the liquidity
needed after the parent’s bankruptcy
filing to stabilize the surviving material
entities and to allow those entities to
operate post-filing. The RLEN estimate
should be incorporated into the firm’s
governance framework to ensure that
the firm files for bankruptcy in a timely
way, i.e., prior to the firm’s HQLA
falling below the RLEN estimate.
The firm’s RLEN methodology should:
(A) Estimate the minimum operating
liquidity (MOL) needed at each material
entity to ensure those entities could
continue to operate post-parent’s
bankruptcy filing and/or to support a
wind-down strategy;
(B) Provide daily cash flow forecasts
by material entity to support estimation
of peak funding needs to stabilize each
entity under resolution;
(C) Provide a comprehensive breakout
of all inter-affiliate transactions and
arrangements that could impact the
MOL or peak funding needs estimates;
and
(D) Estimate the minimum amount of
liquidity required at each material entity
to meet the MOL and peak needs noted
above, which would inform the firm’s
board(s) of directors of when they need
to take resolution-related actions.
The MOL estimates should capture
material entities’ intraday liquidity
requirements, operating expenses,
working capital needs, and inter-affiliate
funding frictions to ensure that material
entities could operate without
disruption during the resolution.
The peak funding needs estimates
should be projected for each material
entity and cover the length of time the
firm expects it would take to stabilize
that material entity. Inter-affiliate
funding frictions should be taken into
account in the estimation process.
The firm’s forecasts of MOL and peak
funding needs should ensure that
material entities could operate postfiling consistent with regulatory
requirements, market expectations, and
the firm’s post-failure strategy. These
forecasts should inform the RLEN
estimate, i.e., the minimum amount of
HQLA required to facilitate the
execution of the firm’s strategy. The
RLEN estimate should be tied to the
firm’s governance mechanisms and be
incorporated into the playbooks as
discussed below to assist the board of

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directors in taking timely resolutionrelated actions.
IV. GOVERNANCE MECHANISMS
Playbooks and Triggers: A firm
should identify the governance
mechanisms that would ensure
execution of required board actions at
the appropriate time (as anticipated
under the firm’s preferred strategy) and
include pre-action triggers and existing
agreements for such actions.
Governance playbooks should detail the
board and senior management actions
necessary to facilitate the firm’s
preferred strategy and to mitigate
vulnerabilities, and should incorporate
the triggers identified below. The
governance playbooks should also
include a discussion of (A) the firm’s
proposed communications strategy, both
internal and external; 10 (B) the boards
of directors’ fiduciary responsibilities
and how planned actions would be
consistent with such responsibilities
applicable at the time actions are
expected to be taken; (C) potential
conflicts of interest, including
interlocking boards of directors; and (D)
any employee retention policy. All
responsible parties and timeframes for
action should be identified. Governance
playbooks should be updated
periodically for all entities whose
boards of directors would need to act in
advance of the commencement of
resolution proceedings under the firm’s
preferred strategy.
The firm should demonstrate that key
actions will be taken at the appropriate
time in order to mitigate financial,
operational, legal, and regulatory
vulnerabilities. To ensure that these
actions will occur, the firm should
establish clearly identified triggers
linked to specific actions for:
(A) The escalation of information to
senior management and the board(s) to
potentially take the corresponding
actions at each stage of distress postrecovery leading eventually to the
decision to file for bankruptcy;
(B) Successful recapitalization of
subsidiaries prior to the parent’s filing
for bankruptcy and funding of such
entities during the parent company’s
bankruptcy to the extent the preferred
strategy relies on such actions or
support; and
(C) The timely execution of a
bankruptcy filing and related pre-filing
actions.11
10 External communications include those with
U.S. and foreign authorities and other external
stakeholders.
11 Key pre-filing actions include the preparation
of any emergency motion required to be decided on
the first day of the firm’s bankruptcy. See

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These triggers should be based, at a
minimum, on capital, liquidity, and
market metrics, and should incorporate
the firm’s methodologies for forecasting
the liquidity and capital needed to
operate as required by the preferred
strategy following a parent company’s
bankruptcy filing. Additionally, the
triggers and related actions should be
specific.
Triggers linked to firm actions as
contemplated by the firm’s preferred
strategy should identify when and
under what conditions the firm,
including the parent company and its
material entities, would transition from
business-as-usual conditions to a stress
period and from a stress period to the
runway and recapitalization/resolution
periods. Corresponding escalation
procedures, actions, and timeframes
should be constructed so that breach of
the triggers will allow prerequisite
actions to be completed. For example,
breach of the triggers needs to occur
early enough to ensure that resources
are available and can be downstreamed,
if anticipated by the firm’s strategy, and
with adequate time for the preparation
of the bankruptcy petition and first-day
motions, necessary stakeholder
communications, and requisite board
actions. Triggers identifying the onset of
the runway and recapitalization/
resolution periods, and the associated
escalation procedures and actions,
should be discussed directly in the
governance playbooks.
Pre-Bankruptcy Parent Support: The
resolution plan should include a
detailed legal analysis of the potential
state law and bankruptcy law challenges
and mitigants to planned provision of
capital and liquidity to the subsidiaries
prior to the parent’s bankruptcy filing
(Support). Specifically, the analysis
should identify potential legal obstacles
and explain how the firm would seek to
ensure that Support would be provided
as planned. Legal obstacles include
claims of fraudulent transfer,
preference, breach of fiduciary duty,
and any other applicable legal theory
identified by the firm. The analysis also
should include related claims that may
prevent or delay an effective
recapitalization, such as equitable
claims to enjoin the transfer (e.g.,
imposition of a constructive trust by the
court). The analysis should apply the
actions contemplated in the plan
regarding each element of the claim, the
anticipated timing for commencement
and resolution of the claims, and the
extent to which adjudication of such
‘‘OPERATIONAL—Legal Obstacles Associated with
Emergency Motions,’’ below.

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claim could affect execution of the
firm’s preferred resolution strategy.
As noted, the analysis should include
mitigants to the potential challenges to
the planned Support. The plan should
include the mitigant(s) to such
challenges that the firm considers most
effective. In identifying appropriate
mitigants, the firm should consider the
effectiveness of a contractually binding
mechanism (CBM), pre-positioning of
financial resources in material entities,
and the creation of an intermediate
holding company. Moreover, if the plan
includes a CBM, the firm should
consider whether it is appropriate that
the CBM should have the following: (A)
clearly defined triggers; (B) triggers that
are synchronized to the firm’s liquidity
and capital methodologies; (C) perfected
security interests in specified collateral
sufficient to fully secure all Support
obligations on a continuous basis
(including mechanisms for adjusting the
amount of collateral as the value of
obligations under the agreement or
collateral assets fluctuates); and (D)
liquidated damages provisions or other
features designed to make the CBM
more enforceable. The firm also should
consider related actions or agreements
that may enhance the effectiveness of a
CBM. A copy of any agreement and
documents referenced therein (e.g.,
evidence of security interest perfection)
should be included in the resolution
plan.
The governance playbooks included
in the resolution plan should
incorporate any developments from the
firm’s analysis of potential legal
challenges regarding the Support,
including any Support approach(es) the
firm has implemented. If the firm
analyzed and addressed an issue noted
in this section in a prior plan
submission, the plan may reproduce
that analysis and arguments and should
build upon it to at least the extent
described above. In preparing the
analysis of these issues, firms may
consult with law firms and other experts
on these matters. The Agencies do not
object to appropriate collaboration
between firms, including through trade
organizations and with the academic
community, to develop analysis of
common legal challenges and available
mitigants.
V. OPERATIONAL
Payment, Clearing, and Settlement
Activities
Framework. Maintaining continuity of
payment, clearing, and settlement (PCS)
services is critical for the orderly
resolution of firms that are either users

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or providers,12 or both, of PCS services.
A firm should demonstrate capabilities
for continued access to PCS services
essential to an orderly resolution
through a framework to support such
access by:
• Identifying clients,13 FMUs, and
agent banks as key from the firm’s
perspective, using both quantitative
(volume and value) 14 and qualitative
criteria;
• Mapping material entities, critical
operations, core business lines, and key
clients to both key FMUs and key agent
banks; and
• Developing a playbook for each key
FMU and key agent bank reflecting the
firm’s role(s) as a user and/or provider
of PCS services.
The framework should address both
direct relationships (e.g., a firm’s direct
membership in an FMU, a firm’s
provision of clients with PCS services
through its own operations, or a firm’s
contractual relationship with an agent
bank) and indirect relationships (e.g., a
firm’s provision of clients with access to
the relevant FMU or agent bank through
the firm’s membership in or relationship
with that FMU or agent bank).
Playbooks for Continued Access to
PCS Services. The firm is expected to
provide a playbook for each key FMU
and key agent bank that addresses
considerations that would assist the
firm and its key clients in maintaining
continued access to PCS services in the
period leading up to and including the
firm’s resolution. Each playbook should
provide analysis of the financial and
operational impact to the firm’s material
entities and key clients due to adverse
actions that may be taken by a key FMU
or a key agent bank and contingency
actions that may be taken by the firm.
Each playbook also should discuss any
12 A firm is a user of PCS services if it accesses
PCS services through an agent bank or it uses the
services of a financial market utility (FMU) through
its membership in that FMU or through an agent
bank. A firm is a provider of PCS services if it
provides PCS services to clients as an agent bank
or it provides clients with access to an FMU or
agent bank through the firm’s membership in or
relationship with that service provider. A firm is
also a provider if it provides clients with PCS
services through the firm’s own operations (e.g.,
payment services or custody services).
13 For purposes of this section V, a client is an
individual or entity, including affiliates of the firm,
to whom the firm provides PCS services and any
related credit or liquidity offered in connection
with those services.
14 In identifying entities as key, examples of
quantitative criteria may include: for a client,
transaction volume/value, market value of
exposures, assets under custody, usage of PCS
services, and any extension of related intraday
credit or liquidity; for an FMU, the aggregate
volumes and values of all transactions processed
through such FMU; and for an agent bank, assets
under custody, the value of cash and securities
settled, and extensions of intraday credit.

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possible alternative arrangements that
would allow the firm and its key clients
continued access to PCS services in
resolution. The firm is not expected to
incorporate a scenario in which it loses
key FMU or key agent bank access into
its preferred resolution strategy or its
RLEN/RCEN estimates. The firm should
continue to engage with key FMUs, key
agent banks, and key clients, and
playbooks should reflect any feedback
received during such ongoing outreach.
Content Related to Users of PCS
Services. Individual key FMU and key
agent bank playbooks should include:
• Description of the firm’s
relationship as a user with the key FMU
or key agent bank and the identification
and mapping of PCS services to material
entities, critical operations, and core
business lines that use those PCS
services;
• Discussion of the potential range of
adverse actions that may be taken by
that key FMU or key agent bank when
the firm is in resolution,15 the
operational and financial impact of such
actions on each material entity, and
contingency arrangements that may be
initiated by the firm in response to
potential adverse actions by the key
FMU or key agent bank; and
• Discussion of PCS-related liquidity
sources and uses in business-as-usual
(BAU), in stress, and in the resolution
period, presented by currency type
(with U.S. dollar equivalent) and by
material entity.
Æ PCS Liquidity Sources: These may
include the amounts of intraday
extensions of credit, liquidity buffer,
inflows from FMU participants, and key
client prefunded amounts in BAU, in
stress, and in the resolution period. The
playbook also should describe intraday
credit arrangements (e.g., facilities of the
key FMU, key agent bank, or a central
bank) and any similar custodial
arrangements that allow ready access to
a firm’s funds for PCS-related key FMU
and key agent bank obligations
(including margin requirements) in
various currencies, including
placements of firm liquidity at central
banks, key FMUs, and key agent banks.
Æ PCS Liquidity Uses: These may
include firm and key client margin and
prefunding and intraday extensions of
credit, including incremental amounts
required during resolution.
Æ Intraday Liquidity Inflows and
Outflows: The playbook should describe
the firm’s ability to control intraday
liquidity inflows and outflows and to
15 Examples of potential adverse actions may
include increased collateral and margin
requirements and enhanced reporting and
monitoring.

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identify and prioritize time-specific
payments. The playbook also should
describe any account features that might
restrict the firm’s ready access to its
liquidity sources.
Content Related to Providers of PCS
Services.16 Individual key FMU and key
agent bank playbooks should include:
• Identification and mapping of PCS
services to the material entities, critical
operations, and core business lines that
provide those PCS services, and a
description of the scale and the way in
which each provides PCS services;
• Identification and mapping of PCS
services to key clients to whom the firm
provides such PCS services and any
related credit or liquidity offered in
connection with such services;
• Discussion of the potential range of
firm contingency arrangements available
to minimize disruption to the provision
of PCS services to its key clients,
including the viability of transferring
key client activity and any related
assets, as well as any alternative
arrangements that would allow the
firm’s key clients continued access to
PCS services if the firm could no longer
provide such access (e.g., due to the
firm’s loss of key FMU or key agent
bank access), and the financial and
operational impacts of such
arrangements from the firm’s
perspective;
• Description of the range of
contingency actions that the firm may
take concerning its provision of intraday
credit to key clients, including analysis
quantifying the potential liquidity the
firm could generate by taking such
actions in stress and in the resolution
period, such as (i) requiring key clients
to designate or appropriately preposition liquidity, including through
prefunding of settlement activity, for
PCS-related key FMU and key agent
bank obligations at specific material
entities of the firm (e.g., direct members
of key FMUs) or any similar custodial
arrangements that allow ready access to
key clients’ funds for such obligations in
various currencies; (ii) delaying or
restricting key client PCS activity; and
(iii) restricting, imposing conditions
upon (e.g., requiring collateral), or
eliminating the provision of intraday
credit or liquidity to key clients; and
• Description of how the firm will
communicate to its key clients the
16 Where a firm is a provider of PCS services
through the firm’s own operations, the firm is
expected to produce a playbook for the material
entities that provide those services, addressing each
of the items described under ‘‘Content Related to
Providers of PCS Services,’’ which include
contingency arrangements to permit the firm’s key
clients to maintain continued access to PCS
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potential impacts of implementation of
any identified contingency
arrangements or alternatives, including
a description of the firm’s methodology
for determining whether any additional
communication should be provided to
some or all key clients (e.g., due to the
key client’s BAU usage of that access
and/or related intraday credit or
liquidity), and the expected timing and
form of such communication.
Managing, Identifying, and Valuing
Collateral: The firm should have
capabilities related to managing,
identifying, and valuing the collateral
that it receives from and posts to
external parties and its affiliates.
Specifically, the firm should:
• Be able to query and provide
aggregate statistics for all qualified
financial contracts concerning crossdefault clauses, downgrade triggers, and
other key collateral-related contract
terms—not just those terms that may be
impacted in an adverse economic
environment—across contract types,
business lines, legal entities, and
jurisdictions;
• Be able to track both firm collateral
sources (i.e., counterparties that have
pledged collateral) and uses (i.e.,
counterparties to whom collateral has
been pledged) at the CUSIP level on at
least a t+1 basis;
• Have robust risk measurements for
cross-entity and cross-contract netting,
including consideration of where
collateral is held and pledged;
• Be able to identify CUSIP and asset
class level information on collateral
pledged to specific central
counterparties by legal entity on at least
a t+1 basis;
• Be able to track and report on interbranch collateral pledged and received
on at least a t+1 basis and have clear
policies explaining the rationale for
such inter-branch pledges, including
any regulatory considerations; and
• Have a comprehensive collateral
management policy that outlines how
the firm as a whole approaches
collateral and serves as a single source
for governance.17
Management Information Systems:
The firm should have the management
information systems (MIS) capabilities
to readily produce data on a legal entity
basis and have controls to ensure data
integrity and reliability. The firm also
should perform a detailed analysis of
the specific types of financial and risk
data that would be required to execute
the preferred resolution strategy and
how frequently the firm would need to
17 The policy may reference subsidiary or related
policies already in place, as implementation may
differ based on business line or other factors.

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produce the information, with the
appropriate level of granularity.
Shared and Outsourced Services: The
firm should maintain a fully actionable
implementation plan to ensure the
continuity of shared services that
support critical operations and robust
arrangements to support the continuity
of shared and outsourced services,
including without limitation
appropriate plans to retain key
personnel relevant to the execution of
the firm’s strategy. The firm should (A)
maintain an identification of all shared
services that support critical operations
(critical services); 18 (B) maintain a
mapping of how/where these services
support its core business lines and
critical operations; (C) incorporate such
mapping into legal entity rationalization
criteria and implementation efforts; and
(D) mitigate identified continuity risks
through establishment of service-level
agreements (SLAs) for all critical shared
services. These SLAs should fully
describe the services provided, reflect
pricing considerations on an arm’slength basis where appropriate, and
incorporate appropriate terms and
conditions to (A) prevent automatic
termination upon certain resolutionrelated events and (B) achieve
continued provision of such services
during resolution. The firm should also
store SLAs in a central repository or
repositories in a searchable format,
develop and document contingency
strategies and arrangements for
replacement of critical shared services,
and complete re-alignment or
restructuring of activities within its
corporate structure. In addition, the firm
should ensure the financial resilience of
internal shared service providers by
maintaining working capital for six
months (or through the period of
stabilization as required in the firm’s
preferred strategy) in such entities
sufficient to cover contract costs,
consistent with the preferred resolution
strategy.
The firm should identify all critical
outsourced services that support critical
operations and could not be promptly
substituted. The firm should (A)
evaluate the agreements governing these
services to determine whether there are
any that could be terminated despite
continued performance upon the
parent’s bankruptcy filing, and (B)
update contracts to incorporate
appropriate terms and conditions to
prevent automatic termination and
facilitate continued provision of such
services during resolution. Relying on
entities projected to survive during
18 This should be interpreted to include data
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resolution to avoid contract termination
is insufficient to ensure continuity. In
the plan, the firm should document the
amendment of any such agreements
governing these services.
Legal Obstacles Associated with
Emergency Motions: The Plan should
address legal issues associated with the
implementation of the stay on crossdefault rights described in Section 2 of
the International Swaps and Derivatives
Association 2015 Universal Resolution
Stay Protocol (Protocol), similar
provisions of any U.S. protocol,19 or
other contractual provisions that
comply with the Agencies’ rules
regarding stays from the exercise of
cross-default rights in qualified
financial contracts, to the extent
relevant.20 Generally, the Protocol
provides two primary methods of
satisfying the stay conditions for
covered agreements for which the
affiliate in Chapter 11 proceedings has
provided a credit enhancement (A)
transferring all such credit
enhancements to a Bankruptcy Bridge
Company (as defined in the Protocol)
(bridge transfer); or (B) having such
affiliate remain obligated with respect to
such credit enhancements in the
Chapter 11 proceeding (elevation).21 A
firm must file a motion for emergency
relief (emergency motion) seeking
approval of an order to effect either of
these alternatives on the first day of its
bankruptcy case.
First-day Issues—For each alternative
the firm selects, the resolution plan
should present the firm’s analysis of
issues that are likely to be raised at the
hearing on the emergency motion and
its best arguments in support of the
emergency motion. A firm should
include supporting legal precedent and
19 U.S. protocol has the same meaning as it does
at 12 CFR 252.85(a). See also 12 CFR 382.5(a)
(including a substantively identical definition).
20 See 12 CFR part 47, 252.81–.88, and part 382
(together, the QFC stay rules). Plans submitted prior
to the final initial applicability date of the QFC stay
rules should reflect how the early termination of
qualified financial contracts could impact the firm’s
resolution in light of the current state of its
qualified financial contracts’ compliance with the
requirements of the QFC stay rules. The firm may
also separately discuss the firm’s resolution
assuming that the final initial applicability date has
been reached and all covered qualified financial
contracts have been conformed to comply with the
QFC stay rules. If the firm complies with the QFC
stay rules other than through adherence to the
Protocol, the plan also should explain how the
alternative compliance method differs from
Protocol, how those differences affect the analysis
and other expectations of this ‘‘Legal Obstacles
Associated with Emergency Motions’’ section, and
how the firm plans to satisfy any different
conditions or requirements of the alternative
compliance method.
21 Under its terms, the Protocol also provides for
the transfer of credit enhancements to transferees
other than a Bankruptcy Bridge Company.

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describe the evidentiary support that the
firm would anticipate presenting to the
bankruptcy court—e.g., declarations or
other expert testimony evidencing the
solvency of transferred subsidiaries and
that recapitalized entities have
sufficient liquidity to perform their
ongoing obligations.
For either alternative, the firm should
address all potential significant legal
obstacles identified by the firm. For
example, the firm should address due
process arguments likely to be made by
creditors asserting that they have not
had sufficient opportunity to respond to
the emergency motion given the
likelihood that a creditors’ committee
will not yet have been appointed. The
firm also should consider, and discuss
in its plan, whether it would enhance
the successful implementation of its
preferred strategy to conduct outreach to
interested parties, such as potential
creditors of the holding company and
the bankruptcy bar, regarding the
strategy.
If the firm chooses the bridge transfer
alternative, its analysis and arguments
should address at a minimum the
following potential issues: (A) the legal
basis for transferring the parent holding
company’s equity interests in certain
subsidiaries (transferred subsidiaries) to
a Bankruptcy Bridge Company,
including the basis upon which the
Bankruptcy Bridge Company would
remain obligated for credit
enhancements; (B) the ability of the
bankruptcy court to retain jurisdiction,
issue injunctions, or take other actions
to prevent third parties from interfering
with, or making collateral attacks on (i)
a Bankruptcy Bridge Company, (ii) its
transferred subsidiaries, or (iii) a trust or
other legal entity designed to hold all
ownership interests in a Bankruptcy
Bridge Company (new ownership
entity); and (C) the role of the
bankruptcy court in granting the
emergency motion due to public policy
concerns—e.g., to preserve financial
stability. The firm should also provide
a draft agreement (e.g., trust agreement)
detailing the preferred post-transfer
governance relationships between the
bankruptcy estate, the new ownership
entity, and the Bankruptcy Bridge
Company, including the proposed role
and powers of the bankruptcy court and
creditors’ committee. Alternative
approaches to these proposed posttransfer governance relationships
should also be described, particularly
given the strong interest that parties will
have in the ongoing operations of the
Bankruptcy Bridge Company and the
likely absence of an appointed creditors’
committee at the time of the hearing.

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If the firm chooses the elevation
alternative, the analysis and arguments
should address at a minimum the
following potential issues: (A) the legal
basis upon which the parent company
would seek to remain obligated for
credit enhancements; (B) the ability of
the bankruptcy court to retain
jurisdiction, issue injunctions, or take
other actions to prevent third parties
from interfering with, or making
collateral attacks on, the parent in
bankruptcy or its subsidiaries; and (C)
the role of the bankruptcy court in
granting the emergency motion due to
public policy concerns—e.g., to preserve
financial stability.
Regulatory Implications—The plan
should include a detailed explanation of
the steps the firm would take to ensure
that key domestic and foreign
authorities would support, or not object
to, the emergency motion (including
specifying the expected approvals or
forbearances and the requisite format—
i.e., formal, affirmative statements of
support or, alternatively, ‘‘nonobjections’’). The potential impact on
the firm’s preferred resolution strategy if
a specific approval or forbearance
cannot be timely obtained should also
be detailed.
Contingencies if Preferred Structure
Fails—The plan should consider
contingency arrangements in the event
the bankruptcy court does not grant the
emergency motion—e.g., whether
alternative relief could satisfy the
Transfer Conditions and/or U.S. Parent
debtor-in-possession (DIP) Conditions of
the Protocol; 22 the extent to which
action upon certain aspects of the
emergency motion may be deferred by
the bankruptcy court without interfering
with the resolution; and whether, if the
credit-enhancement-related protections
are not satisfied, there are alternative
strategies to prevent the closeout of
qualified financial contracts with credit
enhancements (or reduce such
counterparties’ incentives to closeout)
and the feasibility of the alternative(s).
Format—If the firm analyzed and
addressed an issue noted in this section
in a prior plan submission, the plan may
incorporate this analysis and arguments
and should build upon it to at least the
extent required above. A bankruptcy
playbook, which includes a sample
emergency motion and draft documents
setting forth the post-transfer
governance terms substantially in the
form they would be presented to the
bankruptcy court, is an appropriate
vehicle for detailing the issues outlined
in this section. In preparing analysis of
22 See Protocol sections 2(b)(ii) and (iii) and
related definitions.

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these issues, the firm may consult with
law firms and other experts on these
matters. The Agencies do not object to
appropriate collaboration among firms,
including through trade organizations
and with the academic community and
bankruptcy bar, to develop analysis of
common legal challenges and available
mitigants.
VI. LEGAL ENTITY
RATIONALIZATION AND
SEPARABILITY
Legal Entity Rationalization Criteria
(LER Criteria): A firm should develop
and implement legal entity
rationalization criteria that support the
firm’s preferred resolution strategy and
minimize risk to U.S. financial stability
in the event of the firm’s failure. LER
Criteria should consider the best
alignment of legal entities and business
lines to improve the firm’s resolvability
under different market conditions. LER
Criteria should govern the firm’s
corporate structure and arrangements
between legal entities in a way that
facilitates the firm’s resolvability as its
activities, technology, business models,
or geographic footprint change over
time.
Specifically, application of the criteria
should:
(A) Facilitate the recapitalization and
liquidity support of material entities, as
required by the firm’s resolution
strategy. Such criteria should include
clean lines of ownership, minimal use
of multiple intermediate holding
companies, and clean funding pathways
between the parent and material
operating entities;
(B) Facilitate the sale, transfer, or
wind-down of certain discrete
operations within a timeframe that
would meaningfully increase the
likelihood of an orderly resolution of
the firm, including provisions for the
continuity of associated services and
mitigation of financial, operational, and
legal challenges to separation and
disposition;
(C) Adequately protect the subsidiary
insured depository institutions from
risks arising from the activities of any
nonbank subsidiaries of the firm (other
than those that are subsidiaries of an
insured depository institution); and
(D) Minimize complexity that could
impede an orderly resolution and
minimize redundant and dormant
entities.
These criteria should be built into the
firm’s ongoing process for creating,
maintaining, and optimizing its
structure and operations on a
continuous basis.
Separability: The firm should identify
discrete operations that could be sold or

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transferred in resolution, which
individually or in the aggregate would
provide meaningful optionality in
resolution under different market
conditions.
A firm’s separability options should
be actionable, and impediments to their
execution and projected mitigation
strategies should be identified in
advance. Relevant impediments could
include, for example, legal and
regulatory preconditions,
interconnectivity among the firm’s
operations, tax consequences, market
conditions, and other considerations. To
be actionable, divestiture options
should be executable within a
reasonable period of time.
In developing their options, firms
should also consider potential
consequences for U.S. financial stability
of executing each option, taking into
consideration impacts on
counterparties, creditors, clients,
depositors, and markets for specific
assets.
Firms should have a comprehensive
understanding of the entire organization
and certain baseline capabilities. That
understanding should include the
operational and financial linkages
among a firm’s business lines, material
entities, and critical operations.
Additionally, information systems
should be robust enough to produce the
required data and information needed to
execute separability options.
The level of detail and analysis
should vary based on the firm’s risk
profile and scope of operations. A
separability analysis should address the
following elements:
• Divestiture Options: the options in
the plan should be actionable and
comprehensive, and should include:
Æ Options contemplating the sale,
transfer, or disposal of significant assets,
portfolios, legal entities or business
lines.
Æ Options that may permanently
change the firm’s structure or business
strategy.
• Execution Plan: for each divestiture
option listed, the separability analysis
should describe the steps necessary to
execute the option. Among other
considerations, the description should
include:
Æ The identity and position of the
senior management officials of the
company who are primarily responsible
for overseeing execution of the
separability option.
Æ An estimated time frame for
implementation.
Æ A description of any impediments
to execution of the option and
mitigation strategies to address those
impediments.

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Æ A description of the assumptions
underpinning the option.
Æ A plan describing the methods and
forms of communication with internal,
external, and regulatory stakeholders.
• Impact Assessment: the separability
analysis should holistically consider
and describe the expected impact of
individual divestiture options. This
should include the following for each
divestiture option:
Æ A financial impact assessment that
describes the impact of executing the
option on the firm’s capital, liquidity,
and balance sheet.
Æ A business impact assessment that
describes the effect of executing the
option on business lines and material
entities, including reputational impact.
Æ A critical operation impact
assessment that describes how
execution of the option may affect the
provision of any critical operation.
Æ An operational impact assessment
and contingency plan that explains how
operations can be maintained if the
option is implemented; such an analysis
should address internal operations (for
example, shared services, IT
requirements, and human resources)
and access to market infrastructure (for
example, clearing and settlement
facilities and payment systems).
Further, the firm should have, and be
able to demonstrate, the capability to
populate in a timely manner a data
room with information pertinent to a
potential divestiture of the business
(including, but not limited to, carve-out
financial statements, valuation analysis,
and a legal risk assessment).
Within the plan, the firm should
demonstrate how the firm’s LER Criteria
and implementation efforts meet the
guidance above. The plan should also
provide the separability analysis noted
above. Finally, the plan should include
a description of the firm’s legal entity
rationalization governance process.
VII. DERIVATIVES AND TRADING
ACTIVITIES
Applicability.
This section of the proposed guidance
applies to Bank of America Corporation,
Citigroup Inc., Goldman Sachs Group,
Inc., JP Morgan Chase & Co., Morgan
Stanley, and Wells Fargo & Company
(each, a dealer firm).
Booking Practices.
A dealer firm should have booking
practices commensurate with the size,
scope, and complexity of a firm’s
derivatives portfolios,23 including
23 A firm’s derivatives portfolios include its
derivatives positions and linked non-derivatives

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systems capabilities to track and
monitor market, credit, and liquidity
risk transfers between entities. The
following booking practices-related
capabilities should be addressed in a
dealer firm’s resolution plan:
Derivatives booking framework. A
dealer firm should have a
comprehensive booking model
framework that articulates the
principles, rationales, and approach to
implementing its booking practices. The
framework and its underlying
components should be documented and
adequately supported by internal
controls (e.g., procedures, systems, and
processes). Taken together, the
derivatives booking framework and its
components should provide
transparency with respect to (i) what is
being booked (e.g., product/
counterparty), (ii) where it is being
booked (e.g., legal entity/geography),
(iii) by whom it is booked (e.g.,
business/trading desk); (iv) why it is
booked that way (e.g., drivers/
rationales); and (v) what controls are in
place to monitor and manage those
practices (e.g., governance/information
systems).24 The dealer firm’s resolution
plan should include detailed
descriptions of the framework and each
of its material components. In
particular, a dealer firm’s resolution
plan should include descriptions of the
documented booking models covering
its firm-wide derivatives portfolio.25
The descriptions should provide clarity
with respect to the underlying trade
flows (e.g., the mapping of trade flows
based on multiple trade characteristics
as decision points that determine on
which entity a trade is booked, if risk is
transferred, and at which entity that risk
is subsequently managed). For example,
a firm may choose to incorporate
decision trees that depict the multiple
trade flows within each documented
booking model.26 Furthermore, a dealer
trading positions. The firm may define linked nonderivatives trading positions based on its overall
business and resolution strategy.
24 The description of controls should include any
components of the firm-wide market, credit, and
liquidity risk management framework that are
material to the management of its derivatives
practices.
25 ‘‘Firm-wide derivatives portfolio’’ should
represent the vast majority (for example, 95%) of a
dealer firm’s derivatives transactions measured by
firm-wide derivatives notional and by firm-wide
gross market value of derivatives. Presumably, each
asset class/product would have a booking model
that is a function of the firm’s regulatory and risk
management requirements, client’s preference, and
regulatory requirements specifically for the
underlying asset class, and other transaction related
considerations.
26 Some firms use trader mandates or similar
controls to constrain the potential trading strategies
that can be pursued by a business and to monitor
the permissibility of booking activity. However, the

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firm’s resolution plan should describe
its end-to-end trade booking and
reporting processes, including a
description of the current scope of
automation (e.g., automated trade flows
and detective monitoring) for the
systems controls applied to its
documented booking models. The plan
should also discuss why the firm
believes its current (or planned) scope
of automation is sufficient for managing
its derivatives activities and executing
its preferred resolution strategy.27
Derivatives entity analysis and
reporting. A dealer firm should have the
ability to identify, assess, and report on
each of its entities (material and nonmaterial) with derivatives portfolios (a
derivatives entity). First, the firm’s
resolution plan should describe its
method (that may include both
qualitative and quantitative criteria) for
evaluating the significance of each
derivatives entity both with respect to
the firm’s current activities and to its
preferred resolution strategy.28 Second,
a dealer firm’s resolution plan should
demonstrate (including through
illustrative samples) its ability to readily
generate current derivatives entity
profiles that (i) cover all derivatives
entities, (ii) are reportable in a
consistent manner, and (iii) include
information regarding current legal
ownership structure, business activities/
volume, and risk profile (including
applicable risk limits).
Inter-Affiliate Risk Monitoring and
Controls.
A dealer firm should be able to assess
how the management of inter-affiliate
risks can be affected in resolution,
including the potential disruption in the
mapping of trader mandates alone, especially those
mandates that grant broad permissibility, may not
provide sufficient distinction between booking
model trade flows.
27 Effective preventative (up-front) and detective
(post-booking) controls embedded in a dealer firm’s
derivatives booking processes can help avoid and/
or timely remediate trades that do not align with a
documented booking model or related risk limits.
Firms typically use a combination of manual and
automated control functions. Although automation
may not be best suited for all control functions, as
compared to manual methods it can improve
consistency and traceability with respect to
derivatives booking practices. Nonetheless, nonautomated methods can also be effective when
supported by other internal controls (e.g., robust
detective monitoring and escalation protocols).
28 The firm should leverage any existing methods
and criteria it uses for other entity assessments (e.g.,
legal entity rationalization and/or the prepositioning of internal loss-absorbing resources).
The firm’s method for determining the significance
of derivatives entities is allowed to diverge from the
parameters for material entity designation under the
Resolution Plan Rule (i.e., entities significant to the
activities of a critical operation or core business
line) but should be adequately supported and any
differences should be explained.

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risk transfers of trades between affiliate
entities. Therefore, a dealer firm should
have capabilities to provide timely
transparency into the management of
risk transfers between affiliates by
maintaining an inter-affiliate market risk
framework, consisting of at least the
following two components 29:
1. A method for measuring,
monitoring, and reporting the market
risk exposures for a given material
derivatives entity 30 resulting from the
termination of a specific counterparty or
a set of counterparties (e.g., all trades
with a specific affiliate or with all
affiliates in a specific jurisdiction) 31
and
2. A method for identifying,
estimating associated costs of, and
evaluating the effectiveness of, a rehedge strategy in resolution put on by
the same material derivatives entity.32
In determining the re-hedge strategy,
the firm should consider whether the
instruments used (and the risk factors
and risk sensitives controlled for) are
sufficiently tied to the material
derivatives entity’s trading and riskmanagement practices to demonstrate
its ability to execute the strategy in
resolution using existing resources (e.g.,
existing traders and systems).
A dealer firm’s resolution plan should
describe and demonstrate its interaffiliate market risk framework
(discussed above). In addition, the
firm’s plan should provide detailed
descriptions of its compression
strategies used for executing its
preferred strategy and how those
strategies would differ from those used
currently to manage its inter-affiliate
derivatives activities. To the extent a
dealer firm relies on compression
strategies for executing its preferred
strategy, the plan should include
detailed descriptions of its compression
capabilities, the associated risks, and
obstacles in resolution.
Portfolio Segmentation and Forecasting.
A dealer firm should have the
capabilities to produce analysis that
29 The inter-affiliate market risk framework is a
supplement to the firm’s systems capabilities to
track and monitor market, credit, and liquidity risk
transfers between entities.
30 A ‘‘material derivatives entity’’ is a material
entity with a derivatives portfolio.
31 Firms may use industry market risk measures
such as statistical risk measures (e.g., VaR or SVaR)
or other risk measures (e.g., worst case scenario or
stress test).
32 A dealer firm’s method may include an
approach to identifying the risk factors and risk
sensitivities, hedging instruments, and risk limits a
derivatives entity would employ in its re-hedge
strategy, and the quantification of any estimated
basis risk that would result from hedging with only
exchange-traded and centrally-cleared instruments
in a severely adverse stress environment.

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reflects derivatives portfolio
segmentation and differentiation of
assumptions taking into account tradelevel characteristics. More specifically, a
dealer firm should have the systems
capabilities that would allow it to
produce a spectrum of derivatives
portfolio segmentation analysis using
multiple segmentation dimensions,
including (1) legal entity (and material
entities that are branches), (2) trading
desk and/or product, (3) cleared vs.
clearable vs. non-clearable trades, (4)
counterparty type, (5) currency, (6)
maturity, (7) level of collateralization,
and (8) netting set.33 A dealer firm
should also have the capabilities to
segment and analyze the full contractual
maturity (run-off) profile of its external
and inter-affiliate derivatives portfolios.
The dealer firm’s resolution plan should
describe and demonstrate the firm’s
ability to segment and analyze its firmwide derivatives portfolio using the
relevant segmentation dimensions and
to report the results of such
segmentation and analysis. In addition,
the dealer firm’s resolution plan should
address the following segmentation and
forecasting related capabilities:
‘‘Ease of exit’’ position analysis. A
dealer firm should have, and its
resolution plan should describe and
demonstrate, a method and supporting
systems capabilities for categorizing and
ranking the ease of exit for its
derivatives positions based on a set of
well-defined and consistently applied
segmentation criteria. These capabilities
should cover the firm-wide derivatives
portfolio and the resulting categories
should represent a range in degree of
difficulty (e.g., from easiest to most
difficult to exit). The segmentation
criteria should, at a minimum, reflect
characteristics 34 that the firm believes
could affect the level of financial
incentive and operational effort required
to facilitate the exit of derivatives
portfolios (e.g., to motivate a potential
step-in party to agree to the novation or
an existing counterparty to bilaterally
agree to a termination). Dealer firms
should consider this methodology when
separately identifying and analyzing the
population of derivatives positions that
it will include in the potential residual
33 The enumerated segmentation dimensions are
not intended as an exhaustive list of relevant
dimensions. With respect to any product/asset
class, a firm may have reasons for not capturing
data on (or not using) one or more of the
enumerated segmentation dimensions, but those
reasons should be explained.
34 Examples of characteristics that may affect the
level of financial incentive and operational effort
could include: product, size, clearability, currency,
maturity, level of collateralization, and other risk
characteristics.

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portfolio under the firm’s preferred
resolution strategy (discussed below).
Application of exit cost methodology.
Each dealer firm should have a
methodology for forecasting the cost and
liquidity needed to exit positions (e.g.,
terminate/tear-up, sell, novate, and
compress), and the operational
resources related to those exits, under
the specific scenario adopted in the
firm’s preferred resolution strategy. To
help preserve sufficient optionality with
respect to managing and de-risking its
derivatives portfolios in a resolution, a
dealer firm should have the systems
capabilities to apply its exit cost
methodology to its firm-wide
derivatives portfolio, at the
segmentation levels the firm would
likely apply to exit the particular
positions (e.g., valuation segment level).
The dealer firm’s plan should provide
detailed descriptions of the forecasting
methodology (inclusive of any challenge
and validation processes) and data
systems and reporting capabilities. The
firm should also describe and
demonstrate the application of the exit
cost method and systems capabilities to
the firm-wide derivatives portfolio.
Analysis of operational capacity. In
resolution, a dealer firm should have the
capabilities to forecast the incremental
operational needs and expenses related
to executing specific aspects of its
preferred resolution strategy (e.g.,
executing timely derivatives portfolio
novations). Therefore, a dealer firm
should have, and its resolution plan
should describe and demonstrate, the
capabilities to assess the operational
resources and forecast the costs (e.g.,
monthly expense rate) related to its
current derivatives activities at an
appropriately granular level and the
incremental impact from executing its
preferred resolution strategy.35 In
addition, a dealer firm should have the
ability to manage the logistical and
operational challenges related to
novating (selling) derivatives portfolios
during a resolution, including the
design and adjustment of novation
packages. A dealer firm’s resolution
plan should describe its methodology
and demonstrate its supporting systems
capabilities for timely segmenting,
packaging, and novating derivatives
positions. In developing its
methodology, a dealer firm should
consider the systems capabilities that
may be needed to reliably generate
preliminary novation packages tailored
to the risk appetites of potential step-in
35 A dealer firm should have separate categories
for fixed and variable expenses. For example, more
granular operational expenses could roll-up into
categories for (i) fixed-compensation, (ii) fixed noncompensation, and (iii) variable cost.

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counterparties (buyers), as well as the
novation portfolio profile information
that may be most relevant to such
counterparties.
Sensitivity analysis. A dealer firm
should have a method to apply
sensitivity analyses to the key drivers of
the derivatives-related costs and
liquidity flows under its preferred
resolution strategy. A dealer firm’s
resolution plan should describe its
method for (i) evaluating the materiality
of assumptions and (ii) identifying those
assumptions (or combinations of
assumptions) that constitute the key
drivers for its forecasts of operational
and financial resource needs under the
preferred resolution strategy. In
addition, using its preferred resolution
strategy as a baseline, the dealer firm’s
resolution plan should describe and
demonstrate its approach to testing the
sensitivities of the identified key drivers
and the potential impact on its forecasts
of resource needs.36
Prime Brokerage Customer Account
Transfers.
A dealer firm should have the
operational capacity to facilitate the
orderly transfer of prime brokerage
accounts to peer prime brokers in
periods of material financial distress
and in resolution. The firm’s plan
should include an assessment of how it
would transfer such accounts. This
assessment should be informed by
clients’ relationships with other prime
brokers, the use of automated and
manual transaction processes, clients’
overall long and short positions
facilitated by the firm, and the liquidity
of clients’ portfolios. The assessment
should also analyze the risks of and
mitigants to the loss of customer-tocustomer internalization (e.g., the
inability to fund customer longs with
customer shorts), operational
challenges, and insufficient staffing to
effectuate the scale and speed of prime
brokerage account transfers envisioned
under the firm’s preferred resolution
strategy.
In addition, a dealer firm should
describe and demonstrate its ability to
segment and analyze the quality and
composition of prime brokerage
customer account balances based on a
set of well-defined and consistently
applied segmentation criteria (e.g., size,
36 For example, key drivers of derivatives-related
costs and liquidity flows might include the timing
of derivatives unwind, cost of capital-related
assumptions (target ROE, discount rate, WAL,
capital constraints, tax rate), operational cost
reduction rate, and operational capacity for
novations. Other examples of key drivers likely also
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single-prime, platform, use of leverage,
non-rehypothecatable securities, and
liquidity of underlying assets). The
capabilities should cover the firm’s
prime brokerage customer account
balances, and the resulting segments
should represent a range in potential
transfer speed (e.g., from fastest to
longest to transfer, from most liquid to
least liquid). The selected segmentation
criteria should reflect characteristics 37
that the firm believes could affect the
speed at which the client account
balance would be transferred to an
alternate prime broker.
Derivatives Stabilization and De-risking
Strategy.
A dealer firm’s plan should provide a
detailed analysis of the strategy to
stabilize and de-risk its derivatives
portfolios (derivatives strategy) that has
been incorporated into its preferred
resolution strategy.38 In developing its
derivatives strategy, a dealer firm
should apply the following assumption
constraints:
• OTC derivatives market access: At
or before the start of the resolution
period, each derivatives entity should
be assumed to lack an investment-grade
credit rating (e.g., unrated or
downgraded below investment grade).
The derivatives entity should also be
assumed to have failed to establish or
reestablish investment-grade status for
the duration of the resolution period,
unless the plan provides well-supported
analysis to the contrary. As a result of
the lack of investment grade status, it
should be further assumed that the
derivatives entity has no access to the
bilateral OTC derivatives markets and
must use exchange-traded and/or
centrally-cleared instruments where any
new hedging needs arise during the
resolution period. Nevertheless, a dealer
firm may assume the ability to engage in
certain risk-reducing derivatives trades
with bilateral OTC derivatives
counterparties during the resolution
period to facilitate novations with third

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37 For

example, relevant characteristics might
include: product, size, clearability, currency,
maturity, level of collateralization, and other risk
characteristics.
38 Subject to the relevant constraints, a firm’s
derivatives strategy may take the form of a goingconcern strategy, an accelerated de-risking strategy
(e.g., active wind-down) or an alternative, third
strategy so long as the firm’s resolution plan
adequately supports the execution of the chosen
strategy. For example, a firm may choose a goingconcern scenario (e.g., derivatives entities
reestablish investment grade status and do not enter
a wind-down) as its derivatives strategy. Likewise,
a firm may choose to adopt a combination of goingconcern and accelerated de-risking scenarios as its
derivatives strategy. For example, the derivatives
strategy could be a stabilization scenario for the
lead bank entity and an accelerated de-risking
scenario for the broker-dealer entities.

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parties and to close out inter-affiliate
trades.39
• Early exits (break clauses). A dealer
firm should assume that counterparties
(external or affiliates) will exercise any
contractual termination right, consistent
with any rights stayed by the ISDA 2015
Universal Resolution Stay protocol or
other applicable protocols or
amendments,40 (i) that is available to the
counterparty at or following the start of
the resolution period; and (ii) if
exercising such right would
economically benefit the counterparty
(counterparty-initiated termination).
• Time horizon: The duration of the
resolution period should be between 12
and 24 months. The resolution period
begins immediately after the parent
company bankruptcy filing and extends
through the completion of the preferred
resolution strategy.
A dealer firm’s analysis of its
derivatives strategy should take into
account (i) the starting profile of its
derivatives portfolios (e.g., nature,
concentration, maturity, clearability,
and liquidity of positions); (ii) the
profile and function of the derivatives
entities during the resolution period;
(iii) the means, challenges, and capacity
for managing and de-risking its
derivatives portfolios (e.g., method for
timely segmenting, packaging, and
selling the derivatives positions;
challenges with novating less liquid
positions; re-hedging strategy); (iv) the
financial and operational resources
required to effect the derivatives
strategy; and (v) any potential residual
portfolio (further discussed below). In
addition, the firm’s resolution plan
should address the following areas in
the analysis of its derivatives strategy:
Forecasts of resource needs. The
forecasts of capital and liquidity
resource needs of material entities
required to adequately support the
firm’s derivatives strategy should be
incorporated into the firm’s RCEN and
RLEN estimates for its overall preferred
39 A firm may engage in bilateral OTC derivatives
trades with, for example, (i) external counterparties,
to effect the novation of the firm’s side of a
derivatives contract to a new counterparty, bilateral
OTC trades with the acquiring counterparty; and,
(ii) inter-affiliate counterparties, where the trades
with inter-affiliate counterparties do not materially
increase (a) the credit exposure of any participating
counterparty and (b) the market risk of any such
counterparty on a standalone basis, after taking into
account hedging with exchange-traded and
centrally-cleared instruments. The firm should
provide analysis to support the risk nature of the
trade on the basis of information that would be
known to the firm at the time of the transaction.
40 For each of the derivatives entities that have
adhered to the Protocol, the dealer firm may assume
that the protocol is in effect for all counterparties
of that derivatives entity (except for any affiliated
counterparty of the derivatives entity that has not
yet adhered to the Protocol).

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resolution strategy. These include, for
example, the costs and/or liquidity
flows resulting from (i) the close-out of
OTC derivatives, (ii) the hedging of
derivatives portfolios, (iii) the
quantified losses that could be incurred
due to basis and other risks that would
result from hedging with only exchangetraded and centrally cleared instruments
in a severely adverse stress
environment, and (iv) the operational
costs.41
Potential residual derivatives
portfolio. A dealer firm’s resolution plan
should include a method for estimating
the composition of any potential
residual derivatives portfolio
transactions remaining at the end of the
resolution period under its preferred
resolution strategy. The method may be
a combination of approaches (e.g.,
probabilistic and deterministic) but
should demonstrate the dealer firm’s
capabilities related to portfolio
segmentation (discussed above). The
dealer firm’s plan should also provide
detailed descriptions of the trade
characteristics used to identify the
potential residual portfolio and of the
resulting trades (or categories of
trades).42 A dealer firm should assess
the risk profile of the potential residual
portfolio (including its anticipated size,
composition, complexity,
counterparties) and the potential
counterparty and market impacts of
non-performance on the stability of U.S.
financial markets (e.g., on funding
markets and the underlying asset
markets and on clients and
counterparties).
Non-surviving entity analysis. To the
extent the preferred resolution strategy
assumes a material derivatives entity
enters its own resolution proceeding
after the entry of the parent company
into a bankruptcy proceeding (a nonsurviving material derivatives entity),
the dealer firm should provide a
detailed analysis of how the nonsurviving material derivatives entity’s
resolution can be accomplished within
a reasonable period of time and in a
manner that substantially mitigates the
risk of serious adverse effects on U.S.
financial stability and to the orderly
41 A dealer firm may choose not to isolate and
separately model the operational costs solely
related to executing its derivatives strategy.
However, the firm should provide transparency
around operational cost estimation at a more
granular level than material entity (e.g., business
line level within a material entity, subject to winddown).
42 If under the firm’s preferred resolution strategy,
any derivatives portfolios are transferred during the
resolution period by way of a line of business sale
(or similar transaction), then those portfolios should
nonetheless be included within the firm’s potential
residual portfolio analysis.

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execution of the firm’s preferred
resolution strategy. In particular, the
firm should provide an analysis of the
potential impacts on funding markets
and the underlying asset markets, on
clients and counterparties (including
affiliates), and on the preferred
resolution strategy. If the non-surviving
material derivatives entity is located in,
or provides more than de minimis
services to clients or counterparties
located in, a non-U.S. jurisdiction, then
the analysis should also specifically
consider potential local market impacts.
VIII. FORMAT AND STRUCTURE OF
PLANS

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Format of Plan
Executive Summary. The Plan should
contain an executive summary
consistent with the Rule, which must
include, among other things, a concise
description of the key elements of the
firm’s strategy for an orderly resolution.
In addition, the executive summary
should include a discussion of the
firm’s assessment of any impediments to
the firm’s resolution strategy and its
execution, as well as the steps it has
taken to address any identified
impediments.
Narrative. The Plan should include a
strategic analysis consistent with the
Rule. This analysis should take the form
of a concise narrative that enhances the
readability and understanding of the
firm’s discussion of its strategy for rapid
and orderly resolution in bankruptcy or
other applicable insolvency regimes
(Narrative). The Narrative also should
include a high level discussion of how
the firm is addressing key
vulnerabilities jointly identified by the
Agencies. This is not an exhaustive list
and does not preclude identification of
further vulnerabilities or impediments.
Appendices. The Plan should contain
a sufficient level of detail and analysis
to substantiate and support the strategy
described in the Narrative. Such detail
and analysis should be included in
appendices that are distinct from and
clearly referenced in the related parts of
the Narrative (Appendices).
Public Section. The Plan must be
divided into a public section and a
confidential section consistent with the
requirements of the Rule.
Other Informational Requirements.
The Plan must comply with all other
informational requirements of the Rule.
The firm may incorporate by reference
previously submitted information as
provided in the Rule.
Guidance Regarding Assumptions
1. The Plan should be based on the
current state of the applicable legal and

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policy frameworks. Pending legislation
or regulatory actions may be discussed
as additional considerations.
2. The firm must submit a plan that
does not rely on the provision of
extraordinary support by the United
States or any other government to the
firm or its subsidiaries to prevent the
failure of the firm.43
3. The firm should not assume that it
will be able to sell critical operations or
core business lines, or that unsecured
funding will be available immediately
prior to filing for bankruptcy.
4. The Plan should assume the DoddFrank Act Stress Test (DFAST) severely
adverse scenario for the first quarter of
the calendar year in which the Plan is
submitted is the domestic and
international economic environment at
the time of the firm’s failure and
throughout the resolution process. The
Plan should also discuss any changes to
the resolution strategy under the
adverse and baseline scenarios to the
extent that these scenarios reflect
obstacles to a rapid and orderly
resolution that are not captured under
the severely adverse scenario.
5. The resolution strategy may be
based on an idiosyncratic event or
action. The firm should justify use of
that assumption, consistent with the
conditions of the economic scenario.
6. Within the context of the applicable
idiosyncratic scenario, markets are
functioning and competitors are in a
position to take on business. If a firm’s
Plan assumes the sale of assets, the firm
should take into account all issues
surrounding its ability to sell in market
conditions present in the applicable
economic condition at the time of sale
(i.e., the Firm should take into
consideration the size and scale of its
operations as well as issues of
separation and transfer.)
7. The firm should not assume any
waivers of section 23A or 23B of the
Federal Reserve Act in connection with
the actions proposed to be taken prior
to or in resolution.
8. The firm may assume that its
depository institutions will have access
to the Discount Window only for a few
days after the point of failure to
facilitate orderly resolution. However,
the firm should not assume its
subsidiary depository institutions will
have access to the Discount Window
while critically undercapitalized, in
FDIC receivership, or operating as a
bridge bank, nor should it assume any
lending from a Federal Reserve credit
facility to a non-bank affiliate.
43 12

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Financial Statements and Projections
The Plan should include the actual
balance sheet for each material entity
and the consolidating balance sheet
adjustments between material entities as
well as pro forma balance sheets for
each material entity at the point of
failure and at key junctures in the
execution of the resolution strategy. It
should also include projected
statements of sources and uses of funds
for the interim periods. The pro forma
financial statements and accompanying
notes in the Plan must clearly evidence
the failure trigger event; the Plan’s
assumptions; and any transactions that
are critical to the execution of the Plan’s
preferred strategy, such as
recapitalizations, the creation of new
legal entities, transfers of assets, and
asset sales and unwinds.
Material Entities
Material entities should encompass
those entities, including foreign offices
and branches, which are significant to
the maintenance of a critical operation
or core business line. If the abrupt
disruption or cessation of a core
business line might have systemic
consequences to U.S. financial stability,
the entities essential to the continuation
of such core business line should be
considered for material entity
designation. Material entities should
include the following types of entities:
a. Any U.S.-based or non U.S.
affiliates, including any branches, that
are significant to the activities of a
critical operation conducted in whole or
material part in the United States.
b. Subsidiaries or foreign offices
whose provision or support of global
treasury operations, funding, or
liquidity activities (inclusive of
intercompany transactions) is
significant to the activities of a critical
operation.
c. Subsidiaries or foreign offices that
provide material operational support in
resolution (key personnel, information
technology, data centers, real estate or
other shared services) to the activities of
a critical operation.
d. Subsidiaries or foreign offices that
are engaged in derivatives booking
activity that is significant to the
activities of a critical operation,
including those that conduct either the
internal hedge side or the client-facing
side of a transaction.
e. Subsidiaries or foreign offices
engaged in asset custody or asset
management that are significant to the
activities of a critical operation.
f. Subsidiaries or foreign offices
holding licenses or memberships in
clearinghouses, exchanges, or other

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FMUs that are significant to the
activities of a critical operation.
For each material entity (including a
branch), the Plan should enumerate, on
a jurisdiction-by-jurisdiction basis, the
specific mandatory and discretionary
actions or forbearances that regulatory
and resolution authorities would take
during resolution, including any
regulatory filings and notifications that
would be required as part of the
preferred strategy, and explain how the
Plan addresses the actions and
forbearances. Describe the consequences
for the covered company’s resolution
strategy if specific actions in a non-U.S.
jurisdiction were not taken, delayed, or
forgone, as relevant.
IX. PUBLIC SECTION
The purpose of the public section is
to inform the public’s understanding of
the firm’s resolution strategy and how it
works.
The public section should discuss the
steps that the firm is taking to improve
resolvability under the U.S. Bankruptcy
Code. The public section should
provide background information on
each material entity and should be
enhanced by including the firm’s
rationale for designating material
entities. The public section should also
discuss, at a high level, the firm’s intragroup financial and operational
interconnectedness (including the types
of guarantees or support obligations in
place that could impact the execution of
the firm’s strategy). There should also be
a high-level discussion of the liquidity
resources and loss-absorbing capacity of
the firm.
The discussion of strategy in the
public section should broadly explain
how the firm has addressed any
deficiencies, shortcomings, and other
key vulnerabilities that the Agencies
have identified in prior Plan
submissions. For each material entity, it
should be clear how the strategy
provides for continuity, transfer, or
orderly wind-down of the entity and its
operations. There should also be a
description of the resulting organization
upon completion of the resolution
process.
The public section may note that the
resolution plan is not binding on a
bankruptcy court or other resolution
authority and that the proposed failure
scenario and associated assumptions are
hypothetical and do not necessarily
reflect an event or events to which the
firm is or may become subject.
APPENDIX: Frequently Asked
Questions
In April 2016, the Federal Reserve
Board and the Federal Deposit

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Insurance Corporation issued guidance
for use in developing the 2017
resolution plan submissions by eight
large domestic bank holding companies
(BHCs).44
In response to frequently asked
questions regarding the guidance from
the BHCs, Board and FDIC staff jointly
developed answers and provided those
answers to the firms in 2016 so that
firms could take them into account in
developing their next resolution plan
submissions.45
The questions in this Appendix:
• Comprise common questions asked
by different BHCs. Not every question is
applicable to every BHC; not every
aspect of the guidance applies to each
BHC’s preferred strategy/structure; and
• Reflect updated references to
correspond to the Agencies’ final
resolution planning guidance for the
BHCs (the Final Guidance).
As indicated below, those questions
and answers that are deemed to be no
longer meaningful or relevant have not
been consolidated in this Appendix to
the Final Guidance and are superseded.

expectations of their primary regulator.
Material entities should be recapitalized
to meet jurisdictional requirements and
to maintain market confidence as
required under the preferred resolution
strategy.
CAP 4. RCEN Relationship to DFAST
Severely Adverse Scenario
Q. How should the firm’s RCEN and
RLEN estimates relate to the DFAST
Severely Adverse scenario (as per the
2014 feedback letters)? Can those
estimates be recalibrated in actual stress
conditions?
A. For resolution plan submission
purposes, the estimation of RLEN and
RCEN should assume macroeconomic
conditions consistent with the DFAST
Severely Adverse scenario.
However, the RLEN and RCEN
methodologies should have the
flexibility to incorporate
macroeconomic conditions that may
deviate from the DFAST Severely
Adverse scenario in order to facilitate
execution of the preferred resolution
strategy.
CAP 5. Not consolidated.

Capital
CAP 1. Capital Pre-Positioning and
Balance
Q. How should a firm determine the
appropriate balance between resources
pre-positioned at the material entities
and held at the parent?
A. The Final Guidance addresses this
issue in the Capital section. The
Agencies are not prescribing a specific
percentage allocation of resources prepositioned at the material entities versus
resources held at the parent. In
considering the balance between
certainty and flexibility, the Agencies
note that the risk profile of each
material entity should inform the
‘‘unanticipated losses’’ at the entity,
which should be taken into account in
determining the appropriate balance.
For instance, the balance would likely
be different for a large, complex, foreign
trading subsidiary versus a small,
domestic bank subsidiary.
CAP 2. Not consolidated.
CAP 3. Definition of ‘‘WellCapitalized’’ Status
Q. How should firms apply the term
‘‘well-capitalized’’ to material entities
outside the U.S. or to material entities
not subject to Basel III requirements?
A. Material entities must comply with
the local capital requirements and

Liquidity
LIQ 1. Inter-Company ‘‘Frictions’’ and
Inter-Affiliate Deposits
Q. Can the Agencies clarify what
kinds of frictions might occur between
affiliates beyond regulatory ringfencing?
A. Frictions are any impediments to
the free flow of funds, collateral and
other transactions between material
entities. Examples include regulatory,
legal, financial (i.e., tax consequences),
market, or operational constraints or
requirements. Explicit frictions are
described in the Final Guidance and
include the requirement that firms
should not assume that a net liquidity
sur- plus at one material entity
subsidiary (including material entities
that are non-U.S. branches) can be
moved to meet net liquidity deficits at
other material entities or to augment
parent resources.
Q2. How should firms treat deposits
at affiliate banks, including parent
deposits? Should firms assume they are,
or are not, fungible in resolution?
A. As stated in the Final Guidance,
the model estimating the net liquidity
surplus/deficit for the firm may assume
the parent holding company’s deposits
at the U.S. branch of the lead bank
subsidiary are available as HQLA.
Further, the stand-alone net liquidity
position of each material entity (HQLA
less net outflows) should treat interaffiliate exposures in the same manner
as third-party exposures. For example,
an overnight unsecured exposure,
including deposits, made with an

44 Bank of America Corporation, Bank of New
York Mellon, Citigroup, Goldman Sachs, JPMorgan
Chase, Morgan Stanley, State Street Corporation,
and Wells Fargo & Company.
45 The FAQs represent the views of staff of the
Board of Governors of the Federal Reserve System
and the Federal Deposit Insurance Corporation and
do not bind the Board or the FDIC.

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affiliate should be assumed to mature.
As noted in the Liquidity section of the
Final Guidance, firms should not
assume that a net liquidity surplus at
one material entity could be moved to
meet net liquidity deficits at other
material entities or to augment parent
resources.
LIQ 2. Distinction between Liquidity
Forecasting Periods
Q. How long is the stabilization
period?
A. The stabilization period begins
immediately after the parent company
bankruptcy filing and extends until each
material entity reestablishes market
confidence. The stabilization period
may not be less than 30 days. The
reestablishment of market confidence
may be reflected by the maintaining,
reestablishing, or establishing of
investment grade ratings or the
equivalent financial condition for each
entity. The stabilization period may
vary by material entity, given
differences in regulatory, counterparty,
and other stakeholder interests in each
entity.
Q2. How should we distinguish
between the runway, resolution, and
stabilization periods on the one hand,
and RLAP and RLEN on the other, in
terms of their length, sequencing, and
liquidity thresholds?
A. In the Final Guidance, the
Agencies did not specify a direct
mathematical relationship between the
runway period, the RLAP model, and
RLEN model. As noted in prior
guidance, firms may assume a runway
period of up to 30 days prior to entering
bankruptcy provided the period is
sufficient for management to
contemplate the necessary actions
preceding the filing of bankruptcy. The
RLAP model should provide for the
adequate sizing and positioning of
HQLA at material entities for
anticipated net liquidity outflows for a
period of at least
30 days. The RLEN model estimates
the liquidity needed after the parent’s
bankruptcy filing to stabilize the
surviving material entities and to allow
those entities to operate post-filing. As
noted in the Final Guidance, the RLEN
model should be integrated into the
firm’s governance framework to ensure
that the firm files for bankruptcy prior
to HQLA falling below the RLEN
estimate. See ‘‘LIQ 4. RLEN and
Minimum Operating Liquidity (MOL),’’
Question 1, for further detail on the
required components of the RLEN
model.
Q3. What is the resolution period?
A. The resolution period begins
immediately after the parent company
bankruptcy filing and extends through

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the completion of the preferred strategy.
After the stabilization period (see ‘‘LIQ
2. Distinction between Liquidity
Forecasting Periods,’’ Question 1,
regarding ‘‘stabilization period’’),
financial statements and projections
may be provided at quarterly intervals
through the remainder of the resolution
period.
LIQ 3. Inter-Affiliate Transaction
Assumptions
Q. Does inter-affiliate funding refer to
all kinds of intercompany transactions,
including both unsecured and secured?
A. Yes.
LIQ 4. RLEN and Minimum Operating
Liquidity (MOL)
Q. How should firms distinguish
between the minimum operating
liquidity (MOL) and peak funding needs
during the RLEN period?
A. The RLEN should ensure that the
firm has sufficient liquidity in the form
of HQLA to facilitate the execution of
the firm’s resolution strategy; therefore,
RLEN should include both MOL and
peak funding needs. The peak funding
needs represent the peak cumulative net
out- flows during the stabilization
period. The components of peak
funding needs, including the
monetization of assets and other
management actions, should be
transparent in the RLEN projections.
The peak funding needs should be
supported by projections of daily
sources and uses of cash for each
material entity, incorporating interaffiliate and third-party exposures. In
mathematical terms, RLEN = MOL +
peak funding needs during the
stabilization period. For the firms
subject to the Derivatives and Trading
Activities section of the Final Guidance
(dealer firms), RLEN should also
incorporate liquidity execution needs of
the preferred derivatives strategy (see
‘‘DER 1. Preferred Resolution Strategy
and Wind-Down Scenarios’’ in the
Derivatives and Trading Activities
section).
Q2. Should the MOL per entity make
explicit the allocation for intraday
liquidity requirements, inter-affiliate
and other funding frictions, operating
expenses, and working capital needs?
A. Yes, the components of the MOL
estimates for each material entity should
be transparent and supported.
Q3. Can MOLs decrease as MLEs wind
down?
A. MOL estimates can decline as long
as they are sufficiently supported by the
firm’s method- ology and assumptions.
LIQ 5. Liquidity Pre-Positioning and
Balance
Q. How should a firm determine the
appropriate balance between liquidity
resources pre-positioned at the material

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1461

entities and held at the parent? Do the
Agencies have a specific ratio allocation
in mind?
A. The Final Guidance addresses this
issue in the Liquidity section. The
Agencies are not prescribing a specific
percentage allocation of resources prepositioned at the material entities versus
resources held at the parent. In
considering the balance between
certainty and flexibility, the risk profile
of each material entity should inform
the ‘‘unanticipated outflows’’ at the
entity, which should be taken into
account in determining the appropriate
balance. For instance, the balance
would likely be different for a large,
complex, foreign trading subsidiary
versus a small, domestic bank
subsidiary.
LIQ 6. RLAP Guidance Application
Q. The RLAP guidance elements can
be applied in different ways that yield
disparate outcomes for the same
situation. For instance, a parent
overnight loan to a material entity could
be assumed to unwind (treated as a
third-party exposure), or it could be
assumed to be trapped (to not augment
parent resources). In such situations,
what should a firm do to ensure it is
applying the guidance appropriately?
A. Firms should interpret and apply
the Final Guidance in the context of the
Resolution Plan Assessment Framework
and Determinations paper (April 2016),
which states on page 10: ‘‘[Firms] must
be able to track and measure their
liquidity sources and uses at all
material entities under normal and
stressed conditions. They must also
conduct liquidity stress tests that
appropriately capture the effect of
stresses and impediments to the
movement of funds’’ (emphasis
added).
For instance, the Final Guidance
states:
• ‘‘The [RLAP] model should ensure
that the parent holding company holds
sufficient HQLA (inclusive of its
deposits at the U.S. branch of the lead
bank subsidiary) to cover the sum of all
stand-alone material entity net liquidity
deficits.’’
• An RLAP model that utilizes the
U.S. LCR definition of HQLA for each
material entity and expands that for the
parent to include parent deposits at the
U.S. branch of the lead bank subsidiary
would be consistent with the Final
Guidance. For an RLAP model that
utilizes an internal stress testing
definition of HQLA that is more
expansive than the U.S. LCR definition,
the Agencies expect the firm to support
whether that assumption is consistent
with a liquidity stress test that
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stresses and impediments to the
movement of funds.
The Final Guidance also states:
• ‘‘[T]he firm should not assume that
a net liquidity surplus at one material
entity could be moved to meet net
liquidity deficits at other material
entities or to augment parent
resources’’ (emphasis added).
• An RLAP model that assumes zero
liquidity flows from material entities
back to the parent would be consistent
with this statement. Note, parent HQLA
(including overnight secured lending
collateralized by Treasury securities), as
well as deposits at the U.S. branch of
the lead bank subsidiary, would also be
consistent with this statement.
In addition, the Final Guidance states:
• ‘‘The stand-alone net liquidity
position of each material entity (HQLA
less net outflows) should be measured
using the firm’s internal liquidity stress
test assumptions and should treat interaffiliate exposures in the same manner
as third-party exposures.’’
A firm’s RLAP model should ‘‘treat
inter-affiliate exposures in the same
manner as third-party exposures’’ only
where the results would appropriately
capture impediments to the movement
of funds. For instance, application of
third-party assumptions to inter-affiliate
deposits that would result in treatment
of inter-affiliate deposits as HQLA, and
thus not subject to any impediments to
the movement of funds, even though
such impediments could exist, would
not be consistent with the Final
Guidance.
More generally, for material entities
where the net liquidity position is
comprised of a significant third party
net outflow offset by an inter-affiliate
net inflow, the Agencies note the
heightened importance of taking into
account ‘‘trapped liquidity as a result of
actions taken by clients, counterparties,
financial market utilities (FMUs), and
foreign supervisors, among others,’’ as
described in the Liquidity section of the
Final Guidance.
LIQ 7. Not consolidated.
LIQ 8. Inter-Affiliate Transactions
with Optionality
Q. How should firms treat an interaffiliate transaction with an embedded
option that may affect the contractual
maturity date?
A. For the purpose of calculating a
firm’s net liquidity position at a material
entity, RLAP and RLEN models should
assume that these transactions mature at
the earliest possible exercise date; this
adjusted maturity should be applied
symmetrically to both material entities
involved in the transaction. See also
‘‘LIQ 6. RLAP Guidance Application.’’

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LIQ 9. Stabilization and Regulatory
Liquidity Requirements
Q. As it relates to the RLEN model
and actions necessary to re-establish
market confidence, what assumptions
should firms make regarding
compliance with regulatory liquidity
requirements?
A. Firms should consider the
applicable regulatory expectations for
each material entity to achieve the
stabilization needed to execute the
preferred strategy. Firms’ assumptions
in the RLEN model regarding the actions
necessary to reestablish market
confidence during the stabilization
period may vary by material entity, for
example, based on differences in
regulatory, counterparty, other
stakeholder interests, and based on the
preferred strategy for each material
entity. See also ‘‘LIQ 2. Distinction
between Liquidity Forecasting Periods.’’
LIQ 10. HQLA and Assets Not Eligible
as HQLA in RLAP and RLEN Models
Q. The Final Guidance states that
HQLA should be used to meet estimated
net liquidity deficits in the RLAP model
and that the RLEN estimate should be
based on the minimum amount of
HQLA required to facilitate the
execution of the firm’s preferred
resolution strategy. How should firms
incorporate any expected liquidity value
of assets that are not eligible as HQLA
(non-HQLA) into RLAP and RLEN
models?
A. A firm’s RLAP model should
assume that only HQLA are available to
meet net liquidity deficits at material
entities. For a firm’s RLEN model, firms
may incorporate conservative estimates of potential liquidity that may be
generated through the monetization of
non-HQLA. The estimated liquidity
value of non-HQLA should be
supported by thorough analysis of the
potential market constraints and asset
value haircuts that may be required.
Assumptions for the monetization of
non-HQLA should be consistent with
the preferred resolution strategy for each
material entity. See ‘‘LIQ 6. RLAP
Guidance Application’’ for detail on
assets eligible as HQLA.
LIQ 11. Components of Minimum
Operating Liquidity
Q. Do the agencies have particular
definitions of the ‘‘intraday liquidity
requirements,’’ ‘‘operating expenses,’’
and ‘‘working capital needs’’
components of minimum operating
liquidity (MOL) estimates?
A. No. A firm may use its internal
definitions of the components of MOL
estimates. The components of MOL
estimates should be well-supported by a
firm’s internal methodologies and

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calibrated to the specifics of each
material entity.
LIQ 12. RLEN Model and Net Revenue
Recognition
Q. Can firms assume in the RLEN
model that cash-based net revenue
generated by material entities after the
parent holding company’s bankruptcy
filing is available to offset estimated
liquidity needs?
A. Yes. Firms may incorporate cash
revenue generated by material entities
in the RLEN model. Cash revenue
projections should be conservatively
estimated and consistent with the
operating environment and the
preferred strategy for each material
entity.
LIQ 13. RLEN Model and InterAffiliate Frictions
Q. Can a firm modify its assumptions
regarding one or more inter-affiliate
frictions during the stabilization or poststabilization period in the RLEN model?
A. Once a material entity has
achieved market confidence necessary
for stabilization consistent with the
preferred strategy, a firm may modify
one or more inter-affiliate frictions,
provided the firm provides sufficient
analysis to support this assumption.
LIQ 14. RLEN Relationship to DFAST
Severely Adverse scenario
(See ‘‘CAP 4. RCEN Relationship to
DFAST Severely Adverse Scenario’’ in
the Capital section.)
LIQ 15. Application of Inter-Affiliate
Frictions Guidance to Intermediate
Holding Companies (IHC)
Q. With respect to an IHC that has
been established to facilitate
recapitalization or liquidity support to
material entities, how should firms
apply the RLAP and RLEN guidance for
inter-affiliate frictions?
A. For IHCs that provide funds for
recapitalization or liquidity support to
material entities and do not have any
operations or outstanding third-party
exposures of their own, the Agencies
recognize that fewer potential
impediments to the movement of the
funds may exist when compared to
movements of funds between operating
material entities. Still, for both the
RLAP and RLEN model, firms are
expected to provide an analysis of, and
take into account, potential interaffiliate frictions that may exist between
an IHC and material entities.
Specific to the Final Guidance for the
RLAP model and the Q&A in ‘‘LIQ 6.
RLAP Guidance Application,’’ it would
be inconsistent with the guidance for
firms to assume that an IHC could be
used as an intermediary to facilitate
transfers of net liquidity surpluses at
one material entity to another material
entity. Instead, firms may only assume

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a one-way flow of funds from the IHC
to the material entity. For the RLEN
model, firms should assess the potential
for inter-affiliate frictions in
transactions from the IHC to material
entities as well as from material entities
to the IHC. The prohibition on assuming
that net liquidity surplus at one material
entity could be moved to meet net
liquidity deficits at other material
entities under the Final Guidance does
not prohibit the firm from assuming that
an IHC may provide liquidity to
material entities.
LIQ 16. Access to Reserve Bank
Daylight Credit
Q. What assumptions can firms make
regarding access to Federal Reserve
daylight credit?
A. Access to daylight credit is
governed by the Federal Reserve Board’s
Policy on Payment System Risk (PSR
Policy) and generally is provided only
to institutions that are in sound
financial condition based on their
capital ratios and supervisory ratings
and subject to the discretion of the
Reserve Bank. For the purpose of
Section 165(d) resolution plans only,
firms may assume that subsidiary
depository institutions that are at least
adequately capitalized will have access
to fully collateralized daylight credit
even in cases where the supervisory
ratings of the parent assumed in the
exercise fall below fair as a result of the
condition of the parent firm or an
affiliate. However, the plan should not
assume depository institutions will have
access to intraday credit while
undercapitalized, in FDIC receivership,
or operating as a bridge bank. This
guidance applies only to the Section
165(d) resolution plans and does not
modify the PSR Policy.
Governance Mechanisms
GOV 1. Triggers
Q. Do firms need to have all three
types of triggers (i.e., capital, liquidity,
and market) for each phase (i.e., BAU to
stress, stress to runway, runway to
recapitalization; and recapitalization to
bankruptcy filing/PNV)?
A. No, a firm does not need all three
types of triggers for each phase.
Q2. Are firms required to have triggers
for each material entity or are firm-wide
triggers sufficient?
A. Triggers at the level of the
consolidated company may not be
sufficient without additional triggers at
the material entity level depending
upon the firm structure and/or preferred
strategy. All triggers may not be
applicable to all material entities. For
example, pre-funded service entities or
foreign branches may not require
particular capital or liquidity triggers if

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they will not need these resources prior
to the parent company entering
bankruptcy.
Q3. Should firms include a formal
regulatory trigger by which the Agencies
can directly trigger a contractually
binding mechanism?
A. No.
Q4. Could the Agencies clarify what is
meant by ‘‘synchronized’’ triggers within
the Final Guidance?
A. ‘‘Synchronized to the firm’s
liquidity and capital methodologies’’ in
this context means informed by the
firm’s RCEN and RLEN estimates.
Q5. What are examples of market
metrics and market metric triggers?
A. The Agencies are not prescribing
specific market metrics or triggers.
Operational: Shared Services
OPS SS 1. Not consolidated.
OPS SS 2. Working Capital
Q. Must working capital be
maintained for third party and internal
shared service costs?
A. Where a firm maintains shared
service companies to provide services to
affiliates, working capital should be
maintained in those entities sufficient to
permit those entities to continue to
provide services for six months or
through the period of stabilization as
required in the firm’s preferred strategy.
Costs related to third-party vendors and
inter-affiliate services should be
captured through the working capital
element of the MOL estimate (RLEN).
Q2. When does the six month working
capital requirement period begin?
A. The measurement of the six month
working capital expectation begins upon
the bankruptcy filing of the parent
company. The expectation for
maintaining the working capital is
effective upon the July 2017 submission.
OPS SS 3. Not consolidated.
OPS SS 4. Not consolidated.
Operational: Payments, Clearing,
and Settlement
OPS PCS 1. Not consolidated.
OPS PCS 2. Access to Reserve Bank
Daylight Credit
(See ‘‘LIQ 16. Access to Reserve Bank
Daylight Credit’’ in the Liquidity
section)
Legal Entity Rationalization and
Separability
LER 1. Data Room
Q. What information should be in the
data room?
A. The Final Guidance addresses the
data room on page in the section
regarding Legal Entity Rationalization
and Separability. The data room should
contain the necessary information on
discrete sales options to facilitate buyer

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due diligence. Including only a table of
contents of information that could be
provided when needed would not be
sufficient.
Q2. Are firms expected to include in
a data room described in the Final
Guidance lists of individual employee
names and compensation levels?
A. The firm should include the
necessary information to facilitate buyer
due diligence. In the circumstance
where employee information would be
important to buyer due diligence the
firm should demonstrate the capability
to provide such information in a timely
manner. For individual employee names
and compensation, the data room may
include a representative sample and
may have personally identifiable
information redacted.
LER 2. Not consolidated.
LER 3. Legal Entity Rationalization
Criteria
Q. Is it acceptable to take into account
business-related criteria, in addition to
the resolution requirements, so that the
LER Criteria can be used for both
resolution planning and business
operations purposes?
A. Yes, LER criteria may incorporate
both business and resolution
considerations. In determining the best
alignment of legal entities and business
lines to improve the firm’s resolvability
under different market conditions,
business considerations should not be
prioritized over resolution needs.
LER 4. Creation of Additional Legal
Entities
Q. Is the addition of legal entities
acceptable, so long as it is consistent
with the LER criteria?
A. Yes.
LER 5. Clean Funding Pathway
Q. Can you provide additional context
around what is meant by clean lines of
ownership and clean funding pathways
in the legal entity rationalization
criteria? Additionally, what types of
funding are covered by the
requirements?
A. The funding pathways between the
parent and material entities and the
ownership chain should minimize
uncertainty in the provision of funds
and facilitate recapitalization. Also, the
complexity of ownership should not
impede the flow of funding to a material
entity under the firm’s preferred
resolution strategy. Potential sources of
additional complexity could include, for
example, multiple intermediate holding
companies, tenor mismatches, or
complicated ownership structures
(including those involving multiple
jurisdictions or fractional ownerships).
Ownership should be as clean and
simple as practicable, supporting the
preferred strategy and actionable sales,

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transfers, or wind-downs under varying
market conditions. The clean funding
pathways expectation applies to all
funding provided to a subsidiary
material entity regardless of type and
should not be viewed solely to apply to
internal TLAC.
Q2. The Final Guidance regarding
legal entity rationalization criteria
discusses ‘‘clean lines of ownership’’
and ‘‘clean funding pathways.’’ Does
this statement mean that firms’ legal
entity rationalization criteria should
require funding pathways and
recapitalization to always follow lines of
ownership?
A. No. However, the firm should
identify and address or mitigate any
legal, regulatory, financial, operational,
and other factors that could complicate
the recapitalization and/or liquidity
support of material entities.
LER 6. Separability Options
Information
Q. How should a firm approach
inclusion of legal risk assessments and
other buyer due diligence information
into separability options?
A. The legal assessment should
consider both buyer and seller legal
aspects that could impede the timely or
successful execution of the divestiture
option. Where impediments are
identified, mitigation strategies should
be developed.
LER 7. Market Conditions
Q. What is meant by the phrase
‘‘under different market conditions’’ in
the Legal Entity Rationalization and
Separability section of the Final
Guidance?
A. The phrase ‘‘under different market
conditions’’ is meant to ensure that a
firm has a menu of divestiture options
from which at least some could be
executed under different market
stresses.
LER 8. Not consolidated.
LER 9. Application of Legal Entity
Rationalization Criteria
Q. Which legal entities should be
covered under the LER framework?
A. All legal entities. The scope of a
firm’s LER criteria should apply to the
entire enterprise.
Q2. To the extent a firm has a large
number of similar non-material entities
(such as single-purpose entities formed
for Community Reinvestment Act
purposes), may a firm apply its legal
entity rationalization criteria to these
entities as a group, rather than at the
individual entity level?
A. Yes.
Derivatives and Trading Activities
To the extent relevant, the derivatives
and trading FAQs have been
consolidated into the updated section of
the Final Guidance.

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Legal
LEG 1. Emergency Motion
Q. The Final Guidance states that
‘‘the plan should consider contingency
arrangements in the event the
bankruptcy court does not grant the
emergency motion.’’ What are the
Agencies’ expectations given the
industry’s focus on complying with the
ISDA Resolution Stay Protocol?
A. Firms may present a preferred
strategy that makes use of the Protocol.
Nonetheless, the Agencies expect firms
also to consider the possibility that a
bankruptcy court may not timely enter
an order that satisfies the Transfer
Conditions and/or the U.S. Parent
debtor-in-possession Conditions of the
Protocol as contemplated in the firm’s
preferred strategy. See the Legal
Obstacles Associated with Emergency
Motions section of the Final Guidance.
Q2. Could the Agencies clarify what
further legal analysis would be expected
regarding the impact of potential state
law and bankruptcy law challenges and
mitigants to the planned provision of
Support?
A. The firms should address
developments from the firm’s own
analysis of potential legal challenges
regarding the Support and should also
address any additional potential legal
challenges identified by the Agencies in
the Pre-Bankruptcy Parent Support
section of the Final Guidance. A legal
analysis should include a detailed
discussion of the relevant facts, legal
challenges, and Federal or State law and
precedent. The analysis also should
evaluate in detail the legal challenges
identified in the Final Guidance under
the heading ‘‘Pre-Bankruptcy Parent
Support,’’ any other legal challenges
identified by the firm, and the efficacy
of potential mitigants to those
challenges. Firms should identify each
factual assumption underlying their
legal analyses and discuss how the
analyses and mitigants would change if
the assumption were not to hold.
Moreover, the analysis is not required to
take the form of a legal opinion.
Q3. Not consolidated.
LEG 2. Contractually Binding
Mechanisms
Q. Do the Agencies have any
preference as to whether capital is
down-streamed to key subsidiaries
(including an IDI subsidiary) in the form
of capital contributions vs. forgiveness
of debt?
A. No. The Agencies do not have a
preference as to the form of capital
contribution or liquidity support.
Q2. The letter makes reference to a
contractually binding mechanism. Does
such an agreement relate to the

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provision of capital or liquidity? What
classes of assets would be deemed to
provide capital vs. liquidity?
A. Contractually binding mechanism
is a generic term and includes the
down-streaming of capital and/or
liquidity as contemplated by the
preferred strategy. Furthermore, it is up
to the firm, as informed by any relevant
guidance of the Agencies, to identify
what assets would satisfy a subsidiary’s
need for capital and/or liquidity.
Q3. Is there a minimum acceptable
duration for a contractually binding
mechanism? Would an ‘‘evergreen’’
arrangement, renewable on a periodic
basis (and with notice to the Agencies),
be acceptable?
A. To the extent a firm utilizes a
contractually binding mechanism, such
mechanism, including its duration,
should be appropriate for the firm’s
preferred strategy, including adequately
addressing relevant financial,
operational, and legal requirements and
challenges.
Q4. Not consolidated.
Q5. Not consolidated.
Q6. The firm may need to amend its
contractually binding mechanism from
time to time resulting potentially from
changes in relevant law, new or different
regulatory expectations, etc. Is a firm
able to do this as long as there is no
undue risk to the enforceability (e.g., no
signs of financial stress sufficient to
unduly threaten the agreement’s
enforceability as a result of fraudulent
transfer)?
A. Yes, however the Agencies should
be informed of the proposed duration of
the agreement, as well as any terms and
conditions on renewal and/or
amendment. Any amendments should
be identified and discussed as part of
the firm’s next plan submission.
General
None of the general FAQs were
consolidated.
By order of the Board of Governors of the
Federal Reserve System.
Ann E. Misback,
Secretary of the Board.
Dated at Washington, DC, on December 18,
2018.
Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 2019–00800 Filed 2–1–19; 8:45 am]
BILLING CODE P

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