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Session Law

2011

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Chapter 115 AN ACT RELATIVE TO DERIVATIVE ACTIVITIES OF STATE BANKS.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same as follows:

Subsection (a) of section 6 of chapter 167E of the General Laws, as appearing in the 2008 Official Edition, is hereby amended by adding the following clause:-

(6) The total obligations of 1 borrower for the purposes of this section shall include credit exposures as a counterparty in derivative transactions with a bank. For purposes of this clause, “derivative transaction” shall include 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, 1 or more commodities, securities, currencies, interest or other rates, indices or other assets; and “credit exposure” to a counterparty in connection with derivative transactions shall be determined based on an amount that the bank reasonably determines under the terms of the derivative or otherwise would be its loss were the counterparty to default on that date, taking into account any netting and collateral arrangements and any guarantees or other credit enhancements; provided, that the bank may elect to determine credit exposure on the basis of such other method of determining credit exposure as may be permitted by the bank’s primary federal regulatory authority.

Approved, September 15 , 2011.


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