QFC - Qualifited Financial Contracts

In order to assist the Federal Deposit Insurance Corporation (FDIC) in resolution of financial institutes that enter solvency, the U.S. Secretary of the Treasury issued Rule 148 which significantly expands impacted institutions and the depth of required recordkeeping. Now systemically important financial institutions (SIFIs) meeting QFC size criteria and qualifying as a “record entity of financial company” are required to keep meticulous records and be able to report on their end-of-day QFC books in specific formats within 24 hours of an FDIC request. Reporting entities (REs) have equal to or greater than $50 billion in total consolidated assets, and, either total gross notional derivatives outstanding equal to or greater than $250 billion, or derivative liabilities equal to or greater than $3.5 billion. Troubled institutions also are covered under revised Rule 371.

By adopting AxiomSL’s solution, REs can meet the QFC rule requirements for recordkeeping and reporting speed and accuracy, with virtual out-of-the-box implementation. Skilled in working with clients facing new and complex requirements such as the QFC rule, AxiomSL’s regulatory and data-management subject-matter experts offer scoping consultation and practical guidance that can speed implementation, and facilitate REs in addressing related issues such as identifying qualified contracts, monitoring affiliates covered status ongoing and leveraging new QFC data for other uses. Post implementation, AxiomSL maintains the solution with timely updates to reflect ensuing regulatory-driven requirements.

The system populates the four required reports (A1: position/transaction-level details; A2: counterparty level aggregated exposure; A3: information on QFC-related legal agreements, A4: collateral information supporting counterparty details), and maintains the four required master tables that provide detail on corporate organization including affiliates, counterparties, booking location and safekeeping agents. Should the FDIC request a submission, the system enables the RE to report out within the 24-hour window.

The QFC framework sits on AxiomSL’s award-winning, high-performance data-driven platform. A hallmark of the platform is its capacity to handle the large daily record volume inherent in a QFC end-of-day book. The platform is designed to ingest the disparate and often atypical data that REs must identify and electronically centralize from multiple and various sources.

AxiomSL’s data models facilitate standardization of the required data and aggregation of transactional-level data. Once data is sourced, standardized and integrated, the solution performs rigorous checks: first to ensure data integrity on the 128 required data points, then to ensure all 60 validation requirements are met.

AxiomSL’s signature dashboard technology offers an inspection window into the entire process. Its built-in analytical charts and trend reports enhance the RE’s ability to monitor, understand, trace, investigate and address gaps or errors. The system produces gap and failure reports and reconciles position- and counterparty level data. At any point in the process, the RE can drill-down and drill-back to each data-point’s origin, a mission-critical capability for REs faced with drawing disparate data from various sources.

• Defines the taxonomy of the required data attributes by qfc product
• Ingests source data across multiple systems
• Aggregates positionlevel detail to generate counterparty-level exposures
• Validates position and interrelationship details
• Reconciles between position- and counterparty-level data n generates validation checks failure report
• Axiomsl dashboard technology facilitates indepth analysis

• Data dictionary houses all qfc counterparty related information
• Data validation and integrity checks specifically support qfc filing and reconciliation
• On-demand generation of a qfc filing includes a pre-processing step for review, reconciliation and sign-off
• Trend analysis and portfolio composition of counterparties on a daily basis