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Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Rules and Regulations
For the Nuclear Regulatory Commission.
Angella M. Love Blair, Acting Chief, Regulatory Analysis and Rulemaking Support Branch, Division of Rulemaking, Environmental, andFinancial Support, Office of Nuclear Material Safety and Safeguards.
FR Doc. 202111192 Filed 52521; 8:45 am BILLING CODE 759001P

DEPARTMENT OF TREASURY
Office of the Comptroller of the Currency 12 CFR Part 9
Docket ID OCC20200031
RIN 1557AE99

Collective Investment Funds: Prior Notice Period for Withdrawals Office of the Comptroller of the Currency, Treasury.
ACTION: Final rule.
AGENCY:

The OCC is adopting as final, with one minor change, the interim final rule published in the Federal Register on August 13, 2020, that codifies and creates an exception to the standard withdrawal period for a bank administering a collective investment fund invested primarily in real estate or other assets that are not readily marketable a covered CIF. Pursuant to the interim final rule, a bank administering a covered CIF may request OCC approval to extend the standard withdrawal period under limited circumstances and if certain conditions are met. The final rule adopts as final the changes made by the interim final rule and introduces a minor revision to one of the conditions necessary for the extension.
DATES: The interim final rule is effective May 26, 2021.
FOR FURTHER INFORMATION CONTACT: Beth Kirby, Assistant Director, Asa Chamberlayne, Counsel, or Daniel Perez, Counsel, Chief Counsels Office, 202 6495490; or David Stankiewicz, Technical Expert for Asset Management Policy, Market Risk Policy Division, Bank Supervision Policy, 202649
6360, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
SUMMARY:

SUPPLEMENTARY INFORMATION:
I. Background A collective investment fund CIF is a bank-managed fiduciary fund that holds pooled assets. A national bank or Federal savings association
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collectively, a bank that establishes and operates a CIF must do so in accordance with the criteria established under the fiduciary activities regulation of the Office of the Comptroller of the Currency OCC at 12 CFR 9.18.1 A CIF
is funded through contributions by the CIFs participants, which are the beneficial owners of the funds assets. A
bank admitting a CIF participant or withdrawing all or part of its participating interest that is, allowing the participant to, in effect, redeem a proportionate interest in the assets of the CIF must do so on the basis of a valuation of the CIFs assets.2
A bank administering a C IF invested primarily in real estate or other assets that are not readily marketable a covered CIF may require a prior notice period of up to one year for withdrawals.3 The OCC previously interpreted this notice period requirement as requiring the bank to withdraw an account within the prior notice period or, if permissible under the CIFs written plan, within one year after prior notice was required standard withdrawal period.4 The OCC also recognized, however, that there were circumstances when a longer withdrawal period was appropriate. For example, during the 2009 financial crisis, the OCC permitted a bank to extend the time period for withdrawals, subject to certain conditions.5
During normal market conditions, a bank can typically satisfy withdrawal requests within the standard withdrawal period. However, in the event of unanticipated and severe market conditions, a bank may be faced with an increased number of withdrawal requests and reduced market liquidity.
In such conditions, a bank that is required to sell CIF assets to satisfy withdrawals within the standard withdrawal period could have difficulty realizing a fair value for those assets.
This could compel fire sales of CIF
assets and lead to avoidable economic harm for CIF participants, which would be contrary to general fiduciary principles that require a CIF trustee to act in the best interests of CIF
participants.
II. Interim Final Rule On August 13, 2020, the OCC
published an interim final rule in the Federal Register that codified the 1 Pursuant to 12 CFR 150.260, the terms bank and national bank as used in 12 CFR 9.18 are deemed to include a Federal savings association.
2 12 CFR 9.18b5i.
3 12 CFR 9.18b5iii.
4 See, e.g., OCC Interpretive Letter No. 1121 Aug.
2009 Interpretive Letter 1121.
5 Id.

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standard withdrawal period for a bank administering a covered CIF and established a limited exception to that withdrawal period. The exception was intended to enable a bank to preserve the value of a CIFs assets for the benefit of fund participants during unanticipated and severe market conditions, such as those resulting from the current national health emergency concerning the coronavirus disease COVID19 outbreak.
Under the interim final rule, to satisfy the standard withdrawal period requirement, a bank administering a covered CIF that requires a prior notice period for withdrawals generally must withdraw an account within the prior notice period or, if permissible under the CIFs written plan, within one year after prior notice was required.
Under the exception established by the interim final rule, a bank may withdraw an account from a CIF up to one year beyond the standard withdrawal period with OCC approval and if certain conditions are met.
Namely, the funds written plan including its notice and withdrawal policy must authorize an extended withdrawal period and be fully disclosed to fund participants. In addition, the banks board of directors, or a committee authorized by the board of directors, must determine that 1 due to unanticipated and severe market conditions for specific assets held by the fund, an extended withdrawal period is necessary in order to preserve the value of the funds assets for the benefit of fund participants; and 2 the extended withdrawal period is consistent with 12
CFR part 9 and applicable law. The banks board of directors, or a committee authorized by the board of directors, must also commit that the bank will act upon any withdrawal request as soon as practicable. Finally, the rule provides discretion for the OCC
to impose additional conditions if the OCC determines that the conditions are necessary or appropriate to protect the interests of fund participants. The conditions established by this interim final rule were intended to ensure that the exception is only granted if it is consistent with fiduciary principles, applicable law, and the CIFs written plan.6 To ensure that the exception is consistent with these principles and requirements, and as described above, the OCC may impose additional conditions, such as requiring periodic progress reports from the bank.
In addition to the above, the interim final rule provided that if, due to 6 See 12 CFR 9.18b1 written plan requirements.

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