Texas Register, Volume 37, Number 35, Pages 6819-7008, August 31, 2012 Page: 6,842
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words and terms shall have the following meanings, unless the con-
text clearly indicates otherwise.
(1) Borrower--A person who is named as a borrower,
obligor, or debtor in a loan or extension of credit; a person to whom
a state bank has credit exposure arising from a derivative transaction
or a securities financing transaction, entered by the bank; or any other
person, including but not limited to a drawer, endorser, or guarantor
who is considered to be a borrower under the direct benefit, source of
repayment, or common enterprise tests set forth in 12.9 of this title
(relating to Aggregation and Attribution).
(2) Call report--The federal Consolidated Report of Condi-
tion and Income required by and filed under 12 U.S.C. 1817 (or under
12 U.S.C. 324 in the case of a bank that is a member of the Federal
Reserve System), or a report of financial condition and results of op-
erations of a state bank required by the banking commissioner under
Finance Code, 31.108.
(3) Control--Control is presumed to exist when a person
directly or indirectly, or acting through or together with one or more
(A) owns, controls, or has the power to vote 25 percent
or more of any class of voting securities of another person;
(B) controls, in any manner, the election of a majority
of the directors, trustees, or other persons exercising similar functions
of another person; or
(C) has the power to exercise a controlling influence
over the management or policies of another person.
(4) Credit derivative--As defined in 2 of the federal capital
(5) Derivative transaction--Includes any transaction that is
a contract, agreement, swap, warrant, note, or option that is based, in
whole or in part, on the value of, any interest in, or any quantitative
measure or the occurrence of any event relating to, one or more com-
modities, securities, currencies, interest or other rates, indices, or other
(6) Effective margining arrangement--A master legal
agreement governing derivative transactions between a bank and a
counterparty that requires the counterparty to post, on a daily basis,
variation margin to fully collateralize that amount of the bank's net
credit exposure to the counterparty that exceeds $1 million created by
the derivative transactions covered by the agreement.
(7) Eligible credit derivative--A single-name credit deriva-
tive or a standard, non-tranched index credit derivative provided that:
(A) the derivative contract meets the requirements of
an eligible guarantee, as defined in 2 of the federal capital adequacy
guidelines, and has been confirmed by the protection purchaser and the
(B) any assignment of the derivative contract has been
confirmed by all relevant parties;
(C) if the credit derivative is a credit default swap, the
derivative contract includes the following credit events:
(i) failure to pay any amount due under the terms
of the reference exposure, subject to any applicable minimal payment
threshold that is consistent with standard market practice and with a
grace period that is closely in line with the grace period of the reference
(ii) bankruptcy, insolvency, or inability of the
obligor on the reference exposure to pay its debts, or its failure or
admission in writing of its inability generally to pay its debts as they
become due and similar events;
(D) the terms and conditions dictating the manner in
which the derivative contract is to be settled are incorporated into the
(E) if the derivative contract allows for cash settlement,
the contract incorporates a robust valuation process to estimate loss
with respect to the derivative reliably and specifies a reasonable period
for obtaining post-credit event valuations of the reference exposure;
(F) if the derivative contract requires the protection pur-
chaser to transfer an exposure to the protection provider at settlement,
the terms of at least one of the exposures that is permitted to be trans-
ferred under the contract provides that any required consent to transfer
may not be unreasonably withheld; and
(G) if the credit derivative is a credit default swap, the
derivative contract clearly identifies the parties responsible for deter-
mining whether a credit event has occurred, specifies that this determi-
nation is not the sole responsibility of the protection provider, and gives
the protection purchaser the right to notify the protection provider of
the occurrence of a credit event.
(8) Eligible protection provider--An entity that is:
(A) a sovereign entity (a central government, includ-
ing the U.S. government; an agency; department; ministry; or central
(B) the Bank for International Settlements, the Interna-
tional Monetary Fund, the European Central Bank, the European Com-
mission, or a multilateral development bank;
(C) a Federal Home Loan Bank;
(D) the Federal Agricultural Mortgage Corporation;
(E) a depository institution, as defined in section 3 of
the Federal Deposit Insurance Act, 12 U.S.C. 1813(c);
(F) a bank holding company, as defined in section 2 of
the Bank Holding Company Act, as amended, 12 U.S.C. 1841;
(G) a savings and loan holding company, as defined in
section 10 of the Home Owners' Loan Act, 12 U.S.C. 1467a;
(H) a securities broker or dealer registered with the SEC
under the Securities Exchange Act of 1934, 15 U.S.C. 78o et seq.;
(I) an insurance company that is subject to the supervi-
sion of a State insurance regulator;
(J) a foreign banking organization;
(K) a non-U.S.-based securities firm or a non-U.S.-
based insurance company that is subject to consolidated supervision
and regulation comparable to that imposed on U.S. depository institu-
tions, securities broker-dealers, or insurance companies; or
(L) a qualifying central counterparty.
(9) Federal capital adequacy guidelines--The federal refer-
ence entitled "Capital Adequacy Guidelines for Banks: Internal-Rat-
ings-Based and Advanced Measurement Approaches," codified as Ap-
pendix C to 12 C.F.R. part 325 (or Appendix F to 12 C.F.R. part 208 in
the case of a bank that is a member of the Federal Reserve System).
(10) Federal risk-based capital standards--The federal sys-
tem for calculating a bank's equity capital and its specified components,
set forth in Appendix A to 12 C.F.R. part 325 (or Appendix A to 12
C.F.R. part 208 in the case of a bank that is a member of the Federal
37 TexReg 6842 August 31, 2012 Texas Register
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Texas. Secretary of State. Texas Register, Volume 37, Number 35, Pages 6819-7008, August 31, 2012, periodical, August 31, 2012; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth253227/m1/24/: accessed August 21, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.