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Federal Register / Vol. 86, No. 188 / Friday, October 1, 2021 / Rules and Regulations System institution for the purposes of this subpart.

6. Amend 615.5220 by revising paragraph a6 to read as follows:
615.5220

Capitalization bylaws.

a
6 The manner in which equities will be retired, including a provision stating that equities other than those protected under section 4.9A of the Act are retireable at the sole discretion of the board, provided minimum capital adequacy standards established by the Farm Credit Administration, and the capital requirements established by the board of directors of the System institution, are met;

PART 620DISCLOSURE TO
SHAREHOLDERS
7. The authority citation for part 620
continues to read as follows:

Authority: Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 5.19 of the Farm Credit Act 12 U.S.C. 2154, 2154a, 2207, 2243, 2252, 2254; sec. 424 of Pub. L. 100233, 101 Stat. 1568, 1656; sec.
514 of Pub. L. 102552, 106 Stat. 4102.

8. Amend 620.3 by adding a sentence at the ends of paragraphs a and c3 to read as follows:

620.3 Accuracy of reports and assessment of internal control over financial reporting.

a Unless otherwise determined by the Farm Credit Administration FCA, the appropriate use of the limited disclosure authorized by 628.62c of this chapter does not create an incomplete disclosure.

c
3 If the report contains the limited disclosure authorized by 628.62c of this chapter, the statement may be modified to explain that the completeness of the report was determined in consideration of 628.62c.

9. Amend 620.5 by adding paragraph f3v and revising paragraph f4 to read as follows:
620.5 Contents of the annual report to shareholders.

f
3
v Tier 1 leverage ratio.
4 For all banks on a bank only basis and for all associations. The following ratios shall be disclosed in comparative columnar form in each
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annual report through fiscal year end 2021, only as long as these ratios are part of the previous 5 fiscal years of financial data required under paragraphs f2 and 3 of this section:
i Core surplus ratio.
ii Total surplus ratio.
iii For banks only, net collateral ratio.

PART 628CAPITAL ADEQUACY OF
SYSTEM INSTITUTIONS
10. The authority citation for part 628
is revised to read as follows:

Authority: Secs. 1.5, 1.7, 1.10, 1.11, 1.12, 2.2, 2.3, 2.4, 2.5, 2.12, 3.1, 3.7, 3.11, 3.25, 4.3, 4.3A, 4.9, 4.14B, 4.25, 5.9, 5.17, 8.0, 8.3, 8.4, 8.6, 8.8, 8.10, 8.12 of the Farm Credit Act 12
U.S.C. 2013, 2015, 2018, 2019, 2020, 2073, 2074, 2075, 2076, 2093, 2122, 2128, 2132, 2146, 2154, 2154a, 2160, 2202b, 2211, 2243, 2252, 2279aa, 2279aa3, 2279aa4, 2279aa6, 2279aa8, 2279aa10, 2279aa12; 12 U.S.C.
2154 note; 15 U.S.C. 78o7 note.

11. Amend 628.2 by:
a. Revising the definition of Collateral agreement;
b. Adding in alphabetical order a definition for Common cooperative equity issuance date; and c. Revising the definitions of Eligible margin loan, Qualifying master netting agreement, Repo-style transaction, and System institution.
The revisions and addition read as follows:

628.2

Definitions.

Collateral agreement means a legal contract that specifies the time when, and circumstances under which, a counterparty is required to pledge collateral to a System institution for a single financial contract or for all financial contracts in a netting set and confers upon the System institution a perfected, first-priority security interest notwithstanding the prior security interest of any custodial agent, or the legal equivalent thereof, in the collateral posted by the counterparty under the agreement. This security interest must provide the System institution with a right to close-out the financial positions and liquidate the collateral upon an event of default of, or failure to perform by, the counterparty under the collateral agreement. A contract would not satisfy this requirement if the System institutions exercise of rights under the agreement may be stayed or avoided:
1 Under applicable law in the relevant jurisdictions, other than:
i In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-

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Frank Act, or under any similar insolvency law applicable to Government-sponsored enterprises GSEs, or laws of foreign jurisdictions that are substantially similar to the U.S.
laws referenced in this paragraph 1i in order to facilitate the orderly resolution of the defaulting counterparty;
ii Where the agreement is subject by its terms to, or incorporates, any of the laws referenced in paragraph 1i of this definition; or 2 Other than to the extent necessary for the counterparty to comply with the requirements of part 47, subpart I of part 252, or part 382 of this title, as applicable.

Common cooperative equity issuance date means the date in which the holding period for purchased stock excluding statutory minimum borrower stock and third-party stock and allocated equities start:
1 For allocated equities, the calendar quarter-ending in which:
i The System institutions Board of Directors has passed a resolution declaring a patronage refund; and ii The System institution has completed the applicable accounting treatment by segregating the new allocated equities from its unallocated retained earnings.
2 For purchased stock excluding statutory minimum borrower stock and third-party stock, the calendar quarterending in which the stock is acquired by the holder and recognized on the institutions balance sheet.

Eligible margin loan means:
1 An extension of credit where:
i The extension of credit is collateralized exclusively by liquid and readily marketable debt or equity securities, or gold;
ii The collateral is marked-to-fair value daily, and the transaction is subject to daily margin maintenance requirements; and iii The extension of credit is conducted under an agreement that provides the System institution the right to accelerate and terminate the extension of credit and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, conservatorship, or similar proceeding, of the counterparty, provided that, in any such case:
A Any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:
1 In receivership, conservatorship, or resolution under the Federal Deposit
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