Disclosure of Material Information for Swaps and SBS
Material Information
Wells Fargo Bank, N.A. ("WFBNA", "we", "us" or "our") is disclosing certain material information to you regarding swaps and security-based swaps (“SBS”) (such information ("Material Information")), by making such Material Information available to you on or through our website, or websites of others, via one or more documents, URLs or hyperlinks specified herein. By making such Material Information available to you in such manner, you may also receive from us certain disclosures or other written materials, whether in physical or electronic form (each, a "Writing") that incorporate by reference all or a portion of the Material Information to the extent indicated in the Writing. For purposes hereof, references to "you" mean our swap or SBS counterparty, and each person or entity comprising our swap or SBS counterparty if a swap or SBS is to be executed jointly, except for purposes hereof "swap counterparty" and “SBS counterparty” exclude any "swap dealer", "major swap participant", "SBS dealer", or "major SBS participant," unless context requires otherwise.
As used herein, "swap" has its meaning as defined in the Section 1a(47) of the Commodity Exchange Act (“CEA”) and regulations thereunder, and also includes, unless noted otherwise, foreign exchange swaps and foreign exchange forwards exempted from regulation as swaps by the Secretary of the Treasury pursuant to Section 1a(47)(E) of the CEA. A “security-based swap” has its meaning as defined in Section 3(a)(68) of the Securities Exchange Act of 1934 (“SEA”) and regulations thereunder. Additionally, the term “swap” or “SBS” as used herein includes, unless otherwise noted, any amendment of the material economic terms of a swap or SBS or any transfer or termination of a swap or SBS, in whole or in part (excluding any involuntary termination or other transaction effected unilaterally by a party pursuant to its exercise of rights under the swap, SBS, or swap or SBS trading relationship documentation).
Purpose
Under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”), the Commodity Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) are required to adopt regulations governing multiple aspects of swaps and SBS and the functioning of the swaps and SBS markets. Among these are certain regulations adopted by the CFTC and SEC that enumerate certain business conduct standards (respectively the “CFTC Business Conduct Standards” and the “SEC Business Conduct Standards”) applicable to swap dealers and SBS dealers such as WFBNA in our dealings with swap and SBS counterparties, commencing May 1, 2013 for swaps and November 1, 2021 for SBS. See Business Conduct Standards for Swap Dealers and Major Swap Participants with Counterparties, 77 Fed. Reg. 9734 (Feb. 17, 2012); Business Conduct Standards for [SBS] Dealers and Major [SBS] Participants, 81 Fed. Reg. 29960 (May 13, 2016).
As a swap dealer registered with the CFTC, and an SBS dealer registered with the SEC, WFBNA is required pursuant to Section 23.431 of the CFTC Business Conduct Standards and Section 240.15Fh-3(b) of the SEC Business Conduct Standards to disclose to you certain material information in connection with any proposed swap or SBS, sufficient for you to evaluate:
- the material risks of the swap or SBS, including market, credit, liquidity, foreign currency, legal, operational and other applicable risks,
- the material characteristics of the swap or SBS, including the material economic terms, operational terms, and the rights and obligations of the parties during the term of the swap or SBS, and
- the material incentives and conflicts of interest that may apply with respect to the swap or SBS, including any compensation or other incentive we may receive from any source other than you in connection with the swap or SBS, and for swaps only, the pre-trade mid-market mark of the swap.
LRC-1021
