W. Va. Code R. § 106-20-2

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 106-20-2 - Definitions

2.1 "Bank" means a federally insured depository institution chartered under the laws of West Virginia.

2.2 "Derivative transaction" means an obligation, created by 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, one or more commodities, securities, currencies, interest or other rates, indices, or other assets.

2.3 "Loans and extensions of credit" are defined in the state law with respect to legal lending limits, at W.Va. Code § 31A-4-26(a)(3), as "all direct or indirect advances of funds to a person made on the basis of any obligation of that person to repay the funds or repayable from specific property pledged by or on behalf of the person and to the extent specified by the Commissioner of Banking, the terms also include any liability of a state-chartered banking institution to advance funds to or on behalf of a person pursuant to a contractual commitment".

2.4 A "Contractual Commitment to Advance Funds" has been defined broadly in the Legislative Rule Pertaining to the Legal Lending Limit, 106 CSR, Series 9, Section 2.1 as "(a) an obligation on the part of the bank to make payments (directly or indirectly) to a designated third party contingent upon a default by the bank's customer in the performance of an obligation under the terms of that customer's contract with the third party or (b) an obligation to guarantee or stand as surety for the benefit of a third party. The term includes, but is not limited to, 'Standby Letters of Credit', guarantees, puts and other similar arrangements."

2.5 "Credit derivative" means a financial contract executed under standard industry credit derivative documentation that allows one party (the bank or protection purchaser) to transfer the credit risk of one or more exposures (reference exposure) to another party (the protection provider).

2.6 "Effective margining arrangement" means a master legal agreement governing derivative transactions between a bank and a counterparty that requires the counterparty to post, on a daily basis, variation margin to fully collateralize that amount of the bank's net credit exposure to the counterparty that exceeds $1 million created by the derivative transactions covered by the agreement.

W. Va. Code R. § 106-20-2