4.2.6 Classifying Operational Account

Operational deposit means unsecured wholesale funding or a collateralized deposit that is necessary for the covered company to provide operational services as an independent third-party intermediary, agent, or administrator to the wholesale customer or counterparty providing the unsecured wholesale funding or collateralized deposit.

The deposits are classified as operational deposit if it is designated as operational deposit by the covered company and the deposit is used or either cash management, custody management or clearing management and not used of prime brokerage or correspondent banking. The customer must hold the deposit at the covered company for the primary purpose of obtaining the operational services provided by the covered company. The related operational services must be performed pursuant to a legally binding written agreement, and:

1. The termination of the agreement must be subject to a minimum 30 calendar-day notice period; or
2. As a result of termination of the agreement or transfer of services to a third-party provider, the customer providing the deposit would incur significant contractual termination costs or switching costs (switching costs include significant technology, administrative, and legal service costs incurred in connection with the transfer of the operational services to a third-party provider);