---
kind: "section"
citation: "12 C.F.R. § 47.3"
title: "12"
number: "47.3"
heading: "Applicability."
url: "https://uscodex.org/cfr/12/47.3"
---

# §47.3. Applicability.

- (a) **General requirement.** A covered bank must ensure that each covered QFC conforms to the requirements of §§ [47.4](/cfr/12/47.4.md) and [47.5](/cfr/12/47.5.md).
- (b) **Covered bank—**
  - (1) **Generally.** For purposes of this part, a covered bank is:
    - (i) A national bank or Federal savings association that has more than $700 billion in total assets as reported on the national bank's or Federal savings association's most recent Consolidated Reports of Condition and Income (Call Report);
    - (ii) A national bank or Federal savings association that is a subsidiary of a global systemically important bank holding company that has been designated pursuant to [§ 252.82](/cfr/12/252.82.md) of this title (Federal Reserve Board Regulation YY) ([12 CFR 252.82](/cfr/12/252.82.md));
    - (iii) A national bank or Federal savings association that is a subsidiary of a global systemically important foreign banking organization that has been designated pursuant to [§ 252.87](/cfr/12/252.87.md) of this title (Federal Reserve Board Regulation YY) ([12 CFR 252.87](/cfr/12/252.87.md)); or
    - (iv) A Federal branch or agency, as defined in [subpart B](/cfr/12/subpartB.md) of this chapter (governing Federal branches and agencies), of a global systemically important foreign banking organization that has been designated pursuant to [§ 252.87](/cfr/12/252.87.md) of this title (Federal Reserve Board Regulation YY) ([12 CFR 252.87](/cfr/12/252.87.md)).
  - (2) **Subsidiary of a covered bank.** This part applies to a subsidiary of a covered bank as provided under [paragraph (b)(1)](#b-1) of this section. Specifically, the covered bank is required to ensure that a covered QFC to which the subsidiary of a covered bank is a party (as a direct counterparty or a support provider) satisfies the requirements of §§ [47.4](/cfr/12/47.4.md) and [47.5](/cfr/12/47.5.md) in the same manner and to the same extent applicable to the covered bank.
  - (3) **Subsidiaries not included as covered banks.** Notwithstanding paragraphs [(b)(1)](#b-1) and [(2)](#b-2) of this section, a covered bank does not include:
    - (i) A subsidiary that is owned by a covered bank in satisfaction of debt previously contracted in good faith pursuant to section 5137 of the Revised Statutes ([12 U.S.C. 29](/usc/12/29.md)) (national bank) or section 5(c) of the Home Owners' Loan Act ([12 U.S.C. 1464](/usc/12/1464.md)) (Federal savings association);
    - (ii) A portfolio concern, as defined under [13 CFR 107.50](/cfr/13/107.50.md), 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](/usc/15/662.md)) (national banks), or under section 5(c) of the Home Owners' Loan Act ([12 U.S.C. 1464(c)](/usc/12/1464.md?p=c)) (Federal savings associations);
    - (iii) A subsidiary that is owned pursuant to paragraph (7) of section 5136 of the Revised Statutes ([12 U.S.C. 24(Seventh)](/usc/12/24.md?p=Seventh)), or paragraph (11) of section 5136 of the Revised Statutes ([12 U.S.C. 24(Eleventh)](/usc/12/24.md?p=Eleventh)) (national banks), or [§ 5.59](/cfr/12/5.59.md) of this chapter ([12 CFR 5.59](/cfr/12/5.59.md)) (Federal savings associations) designed primarily to promote the public welfare, including the welfare of low- and moderate-income communities or families (such as providing housing, services or jobs).
- (c) **Covered QFCs.** For purposes of this part, a covered QFC is:
  - (1) With respect to a covered bank that is a covered bank on January 1, 2018, an in-scope QFC that the covered bank:
    - (i) Enters, executes, or otherwise becomes a party to on or after January 1, 2019; or
    - (ii) Entered, executed, or otherwise became a party to before January 1, 2019, if the covered bank, or any affiliate that is a covered entity, covered bank, or covered FSI, also enters, executes, or otherwise becomes a party to a QFC with the same person or a consolidated affiliate of the same person on or after January 1, 2019.
  - (2) With respect to a covered bank that becomes a covered bank after January 1, 2018, an in-scope QFC that the covered bank:
    - (i) Enters, executes or otherwise becomes a party to on or after the later of the date the covered bank first becomes a covered bank and January 1, 2019; or
    - (ii) Entered, executed, or otherwise became a party to before the date identified in [paragraph (c)(2)(i)](#c-2-i) of this section with respect to the covered bank, if the covered bank or any affiliate that is a covered entity, covered bank, or covered FSI, also enters, executes, or otherwise becomes a party to a QFC with the same person or consolidated affiliate of the same person on or after the date identified in [paragraph (c)(2)(i)](#c-2-i) of this section with respect to the covered bank.
- (d) **In-scope QFCs.** An in-scope QFC is a QFC that explicitly:
  - (1) Restricts the transfer of a QFC (or any interest or obligation in or under, or any property securing, the QFC) from a covered bank; or
  - (2) Provides one or more default rights with respect to a QFC that may be exercised against a covered bank.
- (e) **Rules of construction.** For purposes of this part:
  - (1) A covered bank does not become a party to a QFC solely by acting as agent with respect to the QFC; and
  - (2) The exercise of a default right with respect to a covered QFC includes the automatic or deemed exercise of the default right pursuant to the terms of the QFC or other arrangement.
- (f) **Initial applicability of requirements for covered QFCs.**
  - (1) With respect to each of its covered QFCs, a covered bank that is a covered bank on January 1, 2018, must conform the covered QFC to the requirements of this part by:
    - (i) January 1, 2019, if each party to the covered QFC is a covered entity, covered bank, or covered FSI;
    - (ii) July 1, 2019, if each party to the covered QFC (other than the covered bank) is a financial counterparty that is not a covered entity, covered bank, or covered FSI; or
    - (iii) January 1, 2020, if a party to the covered QFC (other than the covered bank) is not described in paragraphs [(f)(1)(i)](#f-1-i) or [(f)(1)(ii)](#f-1-ii) of this section, or if, notwithstanding [paragraph (f)(1)(ii)](#f-1-ii) of this section, a party to the covered QFC (other than the covered bank) is a small financial institution.
  - (2) With respect to each of its covered QFCs, a covered bank that is not a covered bank on January 1, 2018, must conform the covered QFC to the requirements of this part by:
    - (i) The first day of the calendar quarter immediately following one year after the date the covered bank first becomes a covered bank if each party to the covered QFC is a covered entity, covered bank, or covered FSI;
    - (ii) The first day of the calendar quarter immediately following 18 months from the date the covered bank first becomes a covered bank if each party to the covered QFC (other than the covered bank) is a financial counterparty that is not a covered entity, covered bank, or covered FSI; or
    - (iii) The first day of the calendar quarter immediately following two years from the date the covered bank first becomes a covered bank if a party to the covered QFC (other than the covered bank) is not described in paragraphs [(f)(2)(i)](#f-2-i) or [(f)(2)(ii)](#f-2-ii) of this section, or if, notwithstanding [paragraph (f)(2)(ii)](#f-2-ii) of this section, a party to the covered QFC (other than the covered bank) is a small financial institution.

## Notes

### Authority

Authority: 12 U.S.C. 1, 93a, 481, 1462a, 1463, 1464, 1467a, 1818, 1828, 1831n, 1831o, 1831p-1, 1831w, 1835, 3102(b), 3108(a), 5412(b)(2)(B), (D)-(F).

### Source

Source: 82 FR 56662, Nov. 29, 2017, unless otherwise noted.