SR 25-6: Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations

An official website of the United States Government Official websites use .gov A .gov website belongs to an official government organization in the United States. Secure .gov websites use HTTPS A lock ( ) or https:// means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.

Sections

Search

Search Submit Button

Supervision and Regulation Letters

Share

?body=https://www.federalreserve.gov/supervisionreg/srletters/SR2506.htm&subject=SR 25-6

PDF

RSS

By topic

SR 25-6: Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551

DIVISION OF SUPERVISION AND REGULATION

SR 25-6

December 19, 2025

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations

Applicability: This guidance applies to banks that are members of the Federal Reserve System and principal shareholders of such banks.

The Federal Reserve Board (Board) is issuing the attached statement (Statement), which states that the Board will continue to exercise discretion to not take enforcement action against either an asset manager that is a principal shareholder of a bank, or a bank for which an asset manager is a principal shareholder, with respect to extensions of credit by the bank to the related interests of such asset manager that otherwise would violate Regulation O.

Regulation O places quantitative limits and qualitative restrictions on extensions of credit by banks to their executive officers, directors, and principal shareholders, and to the related interests of such persons. 1 The popularity of mutual funds, exchange-traded funds, and similar index-based investment products has resulted in several large asset management companies becoming principal shareholders of a number of banks. As a principal shareholder, an asset manager can trigger a Regulation O presumption of control, resulting in companies in the asset manager's portfolios becoming related interests subject to limits and restrictions under Regulation O. Market participants have expressed concern about possible unintended consequences of the application of Regulation O to these relationships.

The Board is extending this no-action position while considering whether to amend Regulation O to address this issue. As detailed in the Statement, the Board will exercise discretion in not bringing an enforcement action against asset managers 2 and banks for extensions of credit to related interests that would otherwise violate Regulation O, provided the asset managers and banks satisfy certain conditions that evidence that there is a lack of control by the asset manager over the bank. In addition, the Board would not take action against banks for failure to report to the Board, for purposes of section 363.2 of the FDIC's regulations, 3 extensions of credit that would otherwise violate Regulation O but are covered by the Statement.

Unless amended, extended, or superseded in writing, the Statement will cease to be effective on the sooner of January 1, 2027, or the effective date of a final Board rule having a revision to Regulation O that addresses the treatment of extensions of credit by a bank to fund complex-controlled portfolio companies that are insiders of the bank.

Reserve Banks should distribute this SR letter to supervised institutions in their districts and to appropriate supervisory staff. Questions regarding this SR letter may be sent via the Board's public website. 4

signed by Julie Williams Acting Deputy Director Division of Supervision and Regulation

Supersedes:

SR 24-9, "Status of Certain Investment Funds and Their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations"

Attachments:

Statement Regarding Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations

Notes:

See 12 CFR part 215. Return to text.

The no action statement does not extend to asset managers that are, or are affiliated with, a bank holding company or savings and loan holding company. Return to text.

12 CFR 363.2. Return to text.

See

http://www.federalreserve.gov/apps/contactus/feedback.aspx . Return to text.

Back to Top

Last Update: December 19, 2025