The American supermarket chain QFC has a wide-ranging array of locations in western Washington and northwestern Oregon. It is a subsidiary of Cincinnati-based Kroger Company. QFC is known for its high-quality products and its commitment to its customers. The company is also a member of the Consumer Reports testing program for Grocery Stores & Supermarkets.
The company’s latest endeavor is a five-story apartment complex and mid-block public plaza at Wedgwood Center in Seattle. It is planned to open in 2023 and will be anchored by a new QFC location and HomeStreet Bank branch.
During a recent news conference, QFC President and CEO Jeff Skoll addressed concerns that the company’s move to Wedgwood could harm local residents. He emphasized the company’s deep roots in the community and its commitment to serve the area.
QFC’s commitment to its customers extends well beyond the retail business. The company has a number of charitable initiatives, including the QFC Foundation and The Giving Partnership. The company’s efforts have been recognized by numerous organizations, including the U.S. Chamber of Commerce, which has named QFC one of America’s Best Companies to Work For.
Banking regulators recently adopted regulations that require “global, systemically-important banks” (“GSIBs”) to amend a broad variety of “qualified financial contracts” (“QFC”). The regulations, which are based on Dodd-Frank Section 13(b) of the Federal Deposit Insurance Act (“FDI Act”), require GSIBs to amend QFCs with both corporate and non-corporate counterparties. The amendments will make the contracts “resolution stay-compatible,” meaning that they will remain enforceable under the FDI Act’s so-called “resolution stay” in the event of a GSIB’s insolvency or liquidation (either through the FDIC’s orderly liquidation authority under Title II of Dodd-Frank, or otherwise).
While the regulations are not yet fully in force, they will be effective on July 1, 2019. As a result, many buy-side participants are beginning to receive requests from their GSIB counterparties to conform their existing QFC agreements with the applicable resolution stay-compliant provisions.
In addition to requiring conforming amendments to QFCs, the regulations will also impose additional recordkeeping requirements. The GSIBs must be able to quickly and easily identify their QFC positions. They must also be able to produce reports that will allow the FDIC, upon its appointment as receiver of an insolvent GSIB, to transfer those positions to other solvent institutions during a short stay period notwithstanding any contractual restrictions on transfers (e.g., default rights or transfer restrictions).
Some buy-side participants may choose to comply with the resolution stay rules through adherence to ISDA’s standard bilateral amendments. The 2018 protocol contains “counterparty friendly” provisions, intended to incentivize protocol adherence, that are not strictly required by the GSIB resolution stay regulations. Other buy-side participants may elect to comply through their own bilateral amendments or other methods. In either case, advice of counsel is strongly encouraged. It is important to understand the impact on your organization and any available alternatives to ensure compliance by the applicable deadline. QFC