cfr_sections
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18 rows where agency = "CFTC" and part_number = 75 sorted by section_id
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| section_id ▼ | title_number | title_name | chapter | subchapter | part_number | part_name | subpart | subpart_name | section_number | section_heading | agency | authority | source_citation | amendment_citations | full_text |
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| 17:17:2.0.1.1.10.1.1.1 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | A | Subpart A—Authority and Definitions | § 75.1 Authority, purpose, scope, and relationship to other authorities. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35021, July 22, 2019] | (a) Authority. This part is issued by the Commission under section 13 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. 1851). (b) Purpose. Section 13 of the Bank Holding Company Act establishes prohibitions and restrictions on proprietary trading by, and investments in or relationships with covered funds by, certain banking entities. This part implements section 13 of the Bank Holding Company Act by defining terms used in the statute and related terms, establishing prohibitions and restrictions on proprietary trading and investments in or relationships with covered funds, and further explaining the statute's requirements. (c) Scope. This part implements section 13 of the Bank Holding Company Act with respect to banking entities for which the CFTC is the primary financial regulatory agency, as defined in section 2(12) of the Dodd-Frank Act, but does not include such entities to the extent they are not within the definition of banking entity in § 75.2(c). (d) Relationship to other authorities. Except as otherwise provided under section 13 of the BHC Act, and notwithstanding any other provision of law, the prohibitions and restrictions under section 13 of the BHC Act shall apply to the activities of an applicable banking entity, even if such activities are authorized for the applicable banking entity under other applicable provisions of law. | ||||
| 17:17:2.0.1.1.10.1.1.2 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | A | Subpart A—Authority and Definitions | § 75.2 Definitions. | CFTC | [84 FR 62201, Nov. 14, 2019] | Unless otherwise specified, for purposes of this part: (a) Affiliate has the same meaning as in section 2(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(k)). (b) Bank holding company has the same meaning as in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). (c) Banking entity. (1) Except as provided in paragraph (c)(2) of this section, banking entity means: (i) Any insured depository institution; (ii) Any company that controls an insured depository institution; (iii) Any company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106); and (iv) Any affiliate or subsidiary of any entity described in paragraph (c)(1)(i), (ii), or (iii) of this section. (2) Banking entity does not include: (i) A covered fund that is not itself a banking entity under paragraph (c)(1)(i), (ii), or (iii) of this section; (ii) A portfolio company held under the authority contained in section 4(k)(4)(H) or (I) of the BHC Act (12 U.S.C. 1843(k)(4)(H), (I)), or any portfolio concern, as defined under 13 CFR 107.50, that is controlled by a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), so long as the portfolio company or portfolio concern is not itself a banking entity under paragraph (c)(1)(i), (ii), or (iii) of this section; or (iii) The FDIC acting in its corporate capacity or as conservator or receiver under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (d) Board means the Board of Governors of the Federal Reserve System. (e) CFTC means the Commodity Futures Trading Commission. (f) Dealer has the same meaning as in section 3(a)(5) of the Exchange Act (15 U.S.C. 78c(a)(5)). (g) Depository institution has the same meaning as in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)). (h) Derivative. (1) Except as provided in paragraph (h)(2) of this … | ||||
| 17:17:2.0.1.1.10.2.1.1 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | § 75.3 Prohibition on proprietary trading. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62203, Nov. 14, 2019] | (a) Prohibition. Except as otherwise provided in this subpart, a banking entity may not engage in proprietary trading. Proprietary trading means engaging as principal for the trading account of the banking entity in any purchase or sale of one or more financial instruments. (b) Definition of trading account —(1) Trading account. Trading account means: (i) Any account that is used by a banking entity to purchase or sell one or more financial instruments principally for the purpose of short-term resale, benefitting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging one or more of the positions resulting from the purchases or sales of financial instruments described in this paragraph; (ii) Any account that is used by a banking entity to purchase or sell one or more financial instruments that are both market risk capital rule covered positions and trading positions (or hedges of other market risk capital rule covered positions), if the banking entity, or any affiliate with which the banking entity is consolidated for regulatory reporting purposes, calculates risk-based capital ratios under the market risk capital rule; or (iii) Any account that is used by a banking entity to purchase or sell one or more financial instruments, if the banking entity: (A) Is licensed or registered, or is required to be licensed or registered, to engage in the business of a dealer, swap dealer, or security-based swap dealer, to the extent the instrument is purchased or sold in connection with the activities that require the banking entity to be licensed or registered as such; or (B) Is engaged in the business of a dealer, swap dealer, or security-based swap dealer outside of the United States, to the extent the instrument is purchased or sold in connection with the activities of such business. (2) Trading account application for certain banking entities. (i) A banking entity that is subject to paragraph (b)(1)(ii) of this section in determining the scope of its trading a… | ||||
| 17:17:2.0.1.1.10.2.1.2 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | § 75.4 Permitted underwriting and market making-related activities. | CFTC | [84 FR 62205, Nov. 14, 2019] | (a) Underwriting activities —(1) Permitted underwriting activities. The prohibition contained in § 75.3(a) does not apply to a banking entity's underwriting activities conducted in accordance with this paragraph (a). (2) Requirements. The underwriting activities of a banking entity are permitted under paragraph (a)(1) of this section only if: (i) The banking entity is acting as an underwriter for a distribution of securities and the trading desk's underwriting position is related to such distribution; (ii)(A) The amount and type of the securities in the trading desk's underwriting position are designed not to exceed the reasonably expected near term demands of clients, customers, or counterparties, taking into account the liquidity, maturity, and depth of the market for the relevant types of securities; and (B) Reasonable efforts are made to sell or otherwise reduce the underwriting position within a reasonable period, taking into account the liquidity, maturity, and depth of the market for the relevant types of securities; (iii) In the case of a banking entity with significant trading assets and liabilities, the banking entity has established and implements, maintains, and enforces an internal compliance program required by subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of paragraph (a) of this section, including reasonably designed written policies and procedures, internal controls, analysis and independent testing identifying and addressing: (A) The products, instruments or exposures each trading desk may purchase, sell, or manage as part of its underwriting activities; (B) Limits for each trading desk, in accordance with paragraph (a)(2)(ii)(A) of this section; (C) Written authorization procedures, including escalation procedures that require review and approval of any trade that would exceed a trading desk's limit(s), demonstrable analysis of the basis for any temporary or permanent increase to a trading desk's limit(s), and ind… | ||||
| 17:17:2.0.1.1.10.2.1.3 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | § 75.5 Permitted risk-mitigating hedging activities. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62207, Nov. 14, 2019] | (a) Permitted risk-mitigating hedging activities. The prohibition contained in § 75.3(a) does not apply to the risk-mitigating hedging activities of a banking entity in connection with and related to individual or aggregated positions, contracts, or other holdings of the banking entity and designed to reduce the specific risks to the banking entity in connection with and related to such positions, contracts, or other holdings. (b) Requirements. (1) The risk-mitigating hedging activities of a banking entity that has significant trading assets and liabilities are permitted under paragraph (a) of this section only if: (i) The banking entity has established and implements, maintains and enforces an internal compliance program required by subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of this section, including: (A) Reasonably designed written policies and procedures regarding the positions, techniques and strategies that may be used for hedging, including documentation indicating what positions, contracts or other holdings a particular trading desk may use in its risk-mitigating hedging activities, as well as position and aging limits with respect to such positions, contracts or other holdings; (B) Internal controls and ongoing monitoring, management, and authorization procedures, including relevant escalation procedures; and (C) The conduct of analysis and independent testing designed to ensure that the positions, techniques and strategies that may be used for hedging may reasonably be expected to reduce or otherwise significantly mitigate the specific, identifiable risk(s) being hedged; (ii) The risk-mitigating hedging activity: (A) Is conducted in accordance with the written policies, procedures, and internal controls required under this section; (B) At the inception of the hedging activity, including, without limitation, any adjustments to the hedging activity, is designed to reduce or otherwise significantly mitigate one or more spec… | ||||
| 17:17:2.0.1.1.10.2.1.4 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | § 75.6 Other permitted proprietary trading activities. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62208, Nov. 14, 2019; 85 FR 46516, July 31, 2020] | (a) Permitted trading in domestic government obligations. The prohibition contained in § 75.3(a) does not apply to the purchase or sale by a banking entity of a financial instrument that is: (1) An obligation of, or issued or guaranteed by, the United States; (2) An obligation, participation, or other instrument of, or issued or guaranteed by, an agency of the United States, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, a Federal Home Loan Bank, the Federal Agricultural Mortgage Corporation or a Farm Credit System institution chartered under and subject to the provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq. ); (3) An obligation of any State or any political subdivision thereof, including any municipal security; or (4) An obligation of the FDIC, or any entity formed by or on behalf of the FDIC for purpose of facilitating the disposal of assets acquired or held by the FDIC in its corporate capacity or as conservator or receiver under the Federal Deposit Insurance Act or Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (b) Permitted trading in foreign government obligations —(1) Affiliates of foreign banking entities in the United States. The prohibition contained in § 75.3(a) does not apply to the purchase or sale of a financial instrument that is an obligation of, or issued or guaranteed by, a foreign sovereign (including any multinational central bank of which the foreign sovereign is a member), or any agency or political subdivision of such foreign sovereign, by a banking entity, so long as: (i) The banking entity is organized under or is directly or indirectly controlled by a banking entity that is organized under the laws of a foreign sovereign and is not directly or indirectly controlled by a top-tier banking entity that is organized under the laws of the United States; (ii) The financial instrument is an obligation of, or issued or guaranteed by, the foreign sovereig… | ||||
| 17:17:2.0.1.1.10.2.1.5 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | § 75.7 Limitations on permitted proprietary trading activities. | CFTC | (a) No transaction, class of transactions, or activity may be deemed permissible under §§ 75.4 through 75.6 if the transaction, class of transactions, or activity would: (1) Involve or result in a material conflict of interest between the banking entity and its clients, customers, or counterparties; (2) Result, directly or indirectly, in a material exposure by the banking entity to a high-risk asset or a high-risk trading strategy; or (3) Pose a threat to the safety and soundness of the banking entity or to the financial stability of the United States. (b) Definition of material conflict of interest. (1) For purposes of this section, a material conflict of interest between a banking entity and its clients, customers, or counterparties exists if the banking entity engages in any transaction, class of transactions, or activity that would involve or result in the banking entity's interests being materially adverse to the interests of its client, customer, or counterparty with respect to such transaction, class of transactions, or activity, and the banking entity has not taken at least one of the actions in paragraph (b)(2) of this section. (2) Prior to effecting the specific transaction or class or type of transactions, or engaging in the specific activity, the banking entity: (i) Timely and effective disclosure. (A) Has made clear, timely, and effective disclosure of the conflict of interest, together with other necessary information, in reasonable detail and in a manner sufficient to permit a reasonable client, customer, or counterparty to meaningfully understand the conflict of interest; and (B) Such disclosure is made in a manner that provides the client, customer, or counterparty the opportunity to negate, or substantially mitigate, any materially adverse effect on the client, customer, or counterparty created by the conflict of interest; or (ii) Information barriers. Has established, maintained, and enforced information barriers that are memorialized in written policies and procedures, such as ph… | |||||
| 17:17:2.0.1.1.10.2.1.6 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | B | Subpart B—Proprietary Trading | §§ 75.8-75.9 [Reserved] | CFTC | ||||||
| 17:17:2.0.1.1.10.3.1.1 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.10 Prohibition on acquiring or retaining an ownership interest in and having certain relationships with a covered fund. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35021, July 22, 2019; 84 FR 62208, Nov. 14, 2019; 85 FR 46516, July 31, 2020; 85 FR 60355, Sept. 25, 2020; 89 FR 78814, Sept. 26, 2024] | (a) Prohibition. (1) Except as otherwise provided in this subpart, a banking entity may not, as principal, directly or indirectly, acquire or retain any ownership interest in or sponsor a covered fund. (2) Paragraph (a)(1) of this section does not include acquiring or retaining an ownership interest in a covered fund by a banking entity: (i) Acting solely as agent, broker, or custodian, so long as; (A) The activity is conducted for the account of, or on behalf of, a customer; and (B) The banking entity and its affiliates do not have or retain beneficial ownership of such ownership interest; (ii) Through a deferred compensation, stock-bonus, profit-sharing, or pension plan of the banking entity (or an affiliate thereof) that is established and administered in accordance with the law of the United States or a foreign sovereign, if the ownership interest is held or controlled directly or indirectly by the banking entity as trustee for the benefit of persons who are or were employees of the banking entity (or an affiliate thereof); (iii) In the ordinary course of collecting a debt previously contracted in good faith, provided that the banking entity divests the ownership interest as soon as practicable, and in no event may the banking entity retain such ownership interest for longer than such period permitted by the Commission; or (iv) On behalf of customers as trustee or in a similar fiduciary capacity for a customer that is not a covered fund, so long as: (A) The activity is conducted for the account of, or on behalf of, the customer; and (B) The banking entity and its affiliates do not have or retain beneficial ownership of such ownership interest. (b) Definition of covered fund. (1) Except as provided in paragraph (c) of this section, covered fund means: (i) An issuer that would be an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq. ), but for section 3(c)(1) or 3(c)(7) of that Act (15 U.S.C. 80a-3(c)(1) or (7)); (ii) Any commodity pool under section… | ||||
| 17:17:2.0.1.1.10.3.1.2 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.11 Permitted organizing and offering, underwriting, and market making with respect to a covered fund. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 35022, July 22, 2019; 84 FR 62208, Nov. 14, 2019] | (a) Organizing and offering a covered fund in general. Notwithstanding § 75.10(a), a banking entity is not prohibited from acquiring or retaining an ownership interest in, or acting as sponsor to, a covered fund in connection with, directly or indirectly, organizing and offering a covered fund, including serving as a general partner, managing member, trustee, or commodity pool operator of the covered fund and in any manner selecting or controlling (or having employees, officers, directors, or agents who constitute) a majority of the directors, trustees, or management of the covered fund, including any necessary expenses for the foregoing, only if: (1) The banking entity (or an affiliate thereof) provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services; (2) The covered fund is organized and offered only in connection with the provision of bona fide trust, fiduciary, investment advisory, or commodity trading advisory services and only to persons that are customers of such services of the banking entity (or an affiliate thereof), pursuant to a written plan or similar documentation outlining how the banking entity or such affiliate intends to provide advisory or similar services to its customers through organizing and offering such fund; (3) The banking entity and its affiliates do not acquire or retain an ownership interest in the covered fund except as permitted under § 75.12; (4) The banking entity and its affiliates comply with the requirements of § 75.14; (5) The banking entity and its affiliates do not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the covered fund or of any covered fund in which such covered fund invests; (6) The covered fund, for corporate, marketing, promotional, or other purposes: (i) Does not share the same name or a variation of the same name with the banking entity (or an affiliate thereof), except that a covered fund may share the same name or a variation of the same name with a banki… | ||||
| 17:17:2.0.1.1.10.3.1.3 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.12 Permitted investment in a covered fund. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 85 FR 46520, July 31, 2020] | (a) Authority and limitations on permitted investments in covered funds. (1) Notwithstanding the prohibition contained in § 75.10(a), a banking entity may acquire and retain an ownership interest in a covered fund that the banking entity or an affiliate thereof organizes and offers pursuant to § 75.11, for the purposes of: (i) Establishment. Establishing the fund and providing the fund with sufficient initial equity for investment to permit the fund to attract unaffiliated investors, subject to the limits contained in paragraphs (a)(2)(i) and (a)(2)(iii) of this section; or (ii) De minimis investment. Making and retaining an investment in the covered fund subject to the limits contained in paragraphs (a)(2)(ii) and (a)(2)(iii) of this section. (2) Investment limits —(i) Seeding period. With respect to an investment in any covered fund made or held pursuant to paragraph (a)(1)(i) of this section, the banking entity and its affiliates: (A) Must actively seek unaffiliated investors to reduce, through redemption, sale, dilution, or other methods, the aggregate amount of all ownership interests of the banking entity in the covered fund to the amount permitted in paragraph (a)(2)(i)(B) of this section; and (B) Must, no later than 1 year after the date of establishment of the fund (or such longer period as may be provided by the Board pursuant to paragraph (e) of this section), conform its ownership interest in the covered fund to the limits in paragraph (a)(2)(ii) of this section; (ii) Per-fund limits. (A) Except as provided in paragraph (a)(2)(ii)(B) of this section, an investment by a banking entity and its affiliates in any covered fund made or held pursuant to paragraph (a)(1)(ii) of this section may not exceed 3 percent of the total number or value of the outstanding ownership interests of the fund. (B) An investment by a banking entity and its affiliates in a covered fund that is an issuing entity of asset-backed securities may not exceed 3 percent of the total fair market value of the ownership… | ||||
| 17:17:2.0.1.1.10.3.1.4 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.13 Other permitted covered fund activities and investments. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62208, Nov. 14, 2019; 85 FR 46521, July 31, 2020] | (a) Permitted risk-mitigating hedging activities. (1) The prohibition contained in § 75.10(a) of this subpart does not apply with respect to an ownership interest in a covered fund acquired or retained by a banking entity that is designed to reduce or otherwise significantly mitigate the specific, identifiable risks to the banking entity in connection with: (i) A compensation arrangement with an employee of the banking entity or an affiliate thereof that directly provides investment advisory, commodity trading advisory or other services to the covered fund; or (ii) A position taken by the banking entity when acting as intermediary on behalf of a customer that is not itself a banking entity to facilitate the exposure by the customer to the profits and losses of the covered fund. (2) The risk-mitigating hedging activities of a banking entity are permitted under this paragraph (a) only if: (i) The banking entity has established and implements, maintains and enforces an internal compliance program in accordance with subpart D of this part that is reasonably designed to ensure the banking entity's compliance with the requirements of this section, including: (A) Reasonably designed written policies and procedures; and (B) Internal controls and ongoing monitoring, management, and authorization procedures, including relevant escalation procedures; and (ii) The acquisition or retention of the ownership interest: (A) Is made in accordance with the written policies, procedures, and internal controls required under this section; (B) At the inception of the hedge, is designed to reduce or otherwise significantly mitigate one or more specific, identifiable risks arising: ( 1 ) Out of a transaction conducted solely to accommodate a specific customer request with respect to the covered fund; or ( 2 ) In connection with the compensation arrangement with the employee that directly provides investment advisory, commodity trading advisory, or other services to the covered fund; (C) Does not give rise, at the inception … | ||||
| 17:17:2.0.1.1.10.3.1.5 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.14 Limitations on relationships with a covered fund. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62209, Nov. 14, 2019; 85 FR 46522, July 31, 2020] | (a) Relationships with a covered fund. (1) Except as provided for in paragraph (a)(2) of this section, no banking entity that serves, directly or indirectly, as the investment manager, investment adviser, commodity trading advisor, or sponsor to a covered fund, that organizes and offers a covered fund pursuant to § 75.11, or that continues to hold an ownership interest in accordance with § 75.11(b), and no affiliate of such entity, may enter into a transaction with the covered fund, or with any other covered fund that is controlled by such covered fund, that would be a covered transaction as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c(b)(7)), as if such banking entity and the affiliate thereof were a member bank and the covered fund were an affiliate thereof. (2) Notwithstanding paragraph (a)(1) of this section, a banking entity may: (i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of § 75.11, § 75.12, or § 75.13; (ii) Enter into any prime brokerage transaction with any covered fund in which a covered fund managed, sponsored, or advised by such banking entity (or an affiliate thereof) has taken an ownership interest, if: (A) The banking entity is in compliance with each of the limitations set forth in § 75.11 with respect to a covered fund organized and offered by such banking entity (or an affiliate thereof); (B) The chief executive officer (or equivalent officer) of the banking entity certifies in writing annually no later than March 31 to the CFTC (with a duty to update the certification if the information in the certification materially changes) that the banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the covered fund or of any covered fund in which such covered fund invests; and (C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and (iii) Enter into a transaction wi… | ||||
| 17:17:2.0.1.1.10.3.1.6 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.15 Other limitations on permitted covered fund activities. | CFTC | (a) No transaction, class of transactions, or activity may be deemed permissible under §§ 75.11 through 75.13 if the transaction, class of transactions, or activity would: (1) Involve or result in a material conflict of interest between the banking entity and its clients, customers, or counterparties; (2) Result, directly or indirectly, in a material exposure by the banking entity to a high-risk asset or a high-risk trading strategy; or (3) Pose a threat to the safety and soundness of the banking entity or to the financial stability of the United States. (b) Definition of material conflict of interest. (1) For purposes of this section, a material conflict of interest between a banking entity and its clients, customers, or counterparties exists if the banking entity engages in any transaction, class of transactions, or activity that would involve or result in the banking entity's interests being materially adverse to the interests of its client, customer, or counterparty with respect to such transaction, class of transactions, or activity, and the banking entity has not taken at least one of the actions in paragraph (b)(2) of this section. (2) Prior to effecting the specific transaction or class or type of transactions, or engaging in the specific activity, the banking entity: (i) Timely and effective disclosure. (A) Has made clear, timely, and effective disclosure of the conflict of interest, together with other necessary information, in reasonable detail and in a manner sufficient to permit a reasonable client, customer, or counterparty to meaningfully understand the conflict of interest; and (B) Such disclosure is made in a manner that provides the client, customer, or counterparty the opportunity to negate, or substantially mitigate, any materially adverse effect on the client, customer, or counterparty created by the conflict of interest; or (ii) Information barriers. Has established, maintained, and enforced information barriers that are memorialized in written policies and procedures, such as … | |||||
| 17:17:2.0.1.1.10.3.1.7 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | § 75.16 Ownership of interests in and sponsorship of issuers of certain collateralized debt obligations backed by trust-preferred securities. | CFTC | [79 FR 5228, Jan. 31, 2014] | (a) The prohibition contained in § 75.10(a)(1) does not apply to the ownership by a banking entity of an interest in, or sponsorship of, any issuer if: (1) The issuer was established, and the interest was issued, before May 19, 2010; (2) The banking entity reasonably believes that the offering proceeds received by the issuer were invested primarily in Qualifying TruPS Collateral; and (3) The banking entity acquired such interest on or before December 10, 2013 (or acquired such interest in connection with a merger with or acquisition of a banking entity that acquired the interest on or before December 10, 2013). (b) For purposes of this § 75.16, Qualifying TruPS Collateral shall mean any trust preferred security or subordinated debt instrument issued prior to May 19, 2010 by a depository institution holding company that, as of the end of any reporting period within 12 months immediately preceding the issuance of such trust preferred security or subordinated debt instrument, had total consolidated assets of less than $15,000,000,000 or issued prior to May 19, 2010 by a mutual holding company. (c) Notwithstanding paragraph (a)(3) of this section, a banking entity may act as a market maker with respect to the interests of an issuer described in paragraph (a) of this section in accordance with the applicable provisions of §§ 75.4 and 75.11. (d) Without limiting the applicability of paragraph (a) of this section, the Board, the FDIC and the OCC will make public a non-exclusive list of issuers that meet the requirements of paragraph (a). A banking entity may rely on the list published by the Board, the FDIC and the OCC. | ||||
| 17:17:2.0.1.1.10.3.1.8 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | C | Subpart C—Covered Fund Activities and Investments | §§ 75.17-75.19 [Reserved] | CFTC | ||||||
| 17:17:2.0.1.1.10.4.1.1 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | D | Subpart D—Compliance Program Requirement; Violations | § 75.20 Program for compliance; reporting. | CFTC | [79 FR 6048, Jan. 31, 2014, as amended at 84 FR 62209, Nov. 14, 2019; 85 FR 46522, July 31, 2020] | (a) Program requirement. Each banking entity (other than a banking entity with limited trading assets and liabilities or a qualifying foreign excluded fund under section 75.6(f) or 75.13(d)) shall develop and provide for the continued administration of a compliance program reasonably designed to ensure and monitor compliance with the prohibitions and restrictions on proprietary trading and covered fund activities and investments set forth in section 13 of the BHC Act and this part. The terms, scope, and detail of the compliance program shall be appropriate for the types, size, scope, and complexity of activities and business structure of the banking entity. (b) Banking entities with significant trading assets and liabilities. With respect to a banking entity with significant trading assets and liabilities, the compliance program required by paragraph (a) of this section, at a minimum, shall include: (1) Written policies and procedures reasonably designed to document, describe, monitor and limit trading activities subject to subpart B of this part (including those permitted under §§ 75.3 to 75.6), including setting, monitoring and managing required limits set out in §§ 75.4 and 75.5, and activities and investments with respect to a covered fund subject to subpart C of this part (including those permitted under §§ 75.11 through 75.14) conducted by the banking entity to ensure that all activities and investments conducted by the banking entity that are subject to section 13 of the BHC Act and this part comply with section 13 of the BHC Act and this part; (2) A system of internal controls reasonably designed to monitor compliance with section 13 of the BHC Act and this part and to prevent the occurrence of activities or investments that are prohibited by section 13 of the BHC Act and this part; (3) A management framework that clearly delineates responsibility and accountability for compliance with section 13 of the BHC Act and this part and includes appropriate management review of trading limits, strategies,… | ||||
| 17:17:2.0.1.1.10.4.1.2 | 17 | Commodity and Securities Exchanges | I | 75 | PART 75—PROPRIETARY TRADING AND CERTAIN INTERESTS IN AND RELATIONSHIPS WITH COVERED FUNDS | D | Subpart D—Compliance Program Requirement; Violations | § 75.21 Termination of activities or investments; penalties for violations. | CFTC | (a) Any banking entity that engages in an activity or makes an investment in violation of section 13 of the BHC Act or this part, or acts in a manner that functions as an evasion of the requirements of section 13 of the BHC Act or this part, including through an abuse of any activity or investment permitted under subparts B or C of this part, or otherwise violates the restrictions and requirements of section 13 of the BHC Act or this part, shall, upon discovery, promptly terminate the activity and, as relevant, dispose of the investment. (b) Whenever the Commission finds reasonable cause to believe any banking entity has engaged in an activity or made an investment in violation of section 13 of the BHC Act or this part, or engaged in any activity or made any investment that functions as an evasion of the requirements of section 13 of the BHC Act or this part, the Commission may take any action permitted by law to enforce compliance with section 13 of the BHC Act and this part, including directing the banking entity to restrict, limit, or terminate any or all activities under this part and dispose of any investment. |
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chapter TEXT,
subchapter TEXT,
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