By Christopher S. Connell and Daniel C. Knox
The Federal Reserve System (FRS) recently announced the implementation of a new online system that allows the banking institutions it supervises to submit regulatory applications and notices online, either directly or through their authorized representatives. Authorized representatives may include law firms or other consultants which submit filings on behalf of the banking institution. The online system – known as E-Apps – is also intended to facilitate the internal distribution of banking applications to relevant staff within the FRS and eliminate inefficiencies brought about by printing, copying and mailing hardcopy documents. While the FRS will encourage the use of E-Apps, banking institutions will not be required to utilize the system and hardcopy filings will continue to be accepted for the foreseeable future. Moreover, the submission of applications and notices via the system will not affect processing timeframes, nor will such filing affect the time required for the FRS to take action once a filing has been received.
The vast majority of filings may be submitted through E-Apps, including applications, notices, waiver requests and regulatory relief requests. For example, E-Apps may be used to file applications and notices related to bank holding company mergers and acquisitions, state member bank mergers and branch expansion, and international banking applications. However, E-Apps does not allow for the submission of regulatory reporting forms such as the FR Y-9SP. In addition, Change in Bank Control Act (CIBCA) filings may not be submitted electronically due to current security rules related to the issuance of digital certificates as discussed below.
Each individual authorized to submit filings on behalf of a banking institution is required to receive a digital certificate issued by the FRS. A digital certificate is a type of electronic key or access component which ensures that only authenticated filers are permitted to access E-Apps; the digital certificate resides on each individual’s computer and can only be used by the authorized individual. Each individual may receive only one digital certificate, even if the individual is an attorney or consultant authorized by multiple banking institutions to submit filings on their behalf. Attorneys and consultants should be aware that obtaining a digital certificate is essentially a two-step process. First, authorization is required from the banking institution. This step involves submission of an authorization letter by the banking institution to the FRS designating the agent as an authorized filer. Forms of authorization letters are available on the FRS website. Second, the digital certificate must be issued by the FRS and established on the individual’s computer. As such, attorneys and consultants should act promptly in obtaining a digital certificate in order to be prepared should they wish to submit a filing on E-Apps.
Through the use of digital certificates, the process for submitting applications and notices online has been carefully designed to both ensure the confidentiality of data and verify the identity of the filer. However, E-Apps does not provide complete confidentiality to banking institutions with multiple filing agents. Each filing agent authorized by a banking institution may view a complete list of all filings submitted through E-Apps on behalf of that institution. The list includes a brief description of the filing type and the authorization sought, and in certain instances, the identities of the related parties. That being said, a filing agent can not view the contents of the filing or any associated documents themselves. However, even as the filings themselves can not be viewed, the information provided on the list could allow a filer to become aware of a proposed transaction before details have been made public by the parties. This could create problems in situations where an authorized filing agent outside the banking institution also represents competitors or potential competitors of the filing entity.
Banking institutions which have not done so already should familiarize themselves with the E-Apps filing process and begin identifying authorized filers in order to take advantage of the efficiencies created by the system. While other bank regulators have yet to adopt an e-filing system, one can reasonably anticipate that they will follow the lead of the FRS in an effort to streamline the application filing process.
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