US regulators find shortcomings in BNPP resolution plan for repo

On or before December 17, 2021, the Board of Governors of the Federal Reserve System (Board) and the Federal Deposit Insurance Corporation (FDIC) (together, the Agencies) received the targeted resolution plan submission (2021 Targeted Plan) of BNP Paribas (the Covered Company), as required by section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended (Dodd-Frank Act), 12 U.S.C. § 5365(d), and the jointly issued implementing regulation, 12 CFR Part 243 and 12 CFR Part 381, as amended (Resolution Plan Rule).

In its 2021 Targeted Plan, the firm did not adequately address 2018 resolution plan feedback to analyze and describe how the repurchase agreement activity would remain uninterrupted in the event of the failure of the firm’s U.S. operations. The 2021 Targeted Plan does not explain how the repurchase agreement activity—including daily trading and settlement, oversight, and risk management—would continue in resolution in the event the U.S. broker-dealer fails. In the 2024 Full Plan, the firm must analyze and describe how the repurchase agreement activity, which depends on operational interconnections between the U.S. broker-dealer affiliate and the Covered Company’s cross-border operations, will continue to operate following the failure and during the resolution, of the firm’s U.S. operations.

The full letter is available at

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