Sweep Repurchase Agreements

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  • #3461

    Under the new “extension of credit definition”:

    Having credit exposure to the person arising from a derivative transaction (as defined in section 5200(b) of the Revised Statues of the United States (12 U.S.C. 84(b))), repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction between the Bank and the person.

    Should we getting our sweep repurchase agreements formally approved by the BOD for Directors or just Principal Shareholders? Is there something that clarifies that?



    As far as I know, Regulation O hasn’t been amended yet. So based on what information we have at this point, IMO if you have an credit exposure with your repurchase agreements then you should refer to 12 CFR 215.4 and 215.5. The prior approval section in 215.4 applies to all extensions of credit to insiders (exec. officers, directors and principal shareholders and any related interests of these individuals) that exceed the stated threshold. Once Regulation O is amended what’s required should become clearer.

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