MEMORANDUM

TO: File No. S7-14-18

FROM: Division of Trading and Markets

RE: Meeting with Representative of Data Boiler Technologies, LLC

DATE: October 24, 2018

On Wednesday, October 24, 2018, representatives of the Securities and Exchange Commission (“SEC”) participated in a meeting with a representative of Data Boiler Technologies, LLC (“Data Boiler”). The SEC representatives present were Mark Wolfe, Carol McGee, Andrew Bernstein, Elizabeth Sandoe, and Samuel Litz from the Division of Trading and Markets and Nicholas Cordell from the Division of Investment Management. The Data Boiler representative was Kelvin To.

The participants discussed, among other things, the proposed rule amendments to rules adopted under section 13 of the Bank Holding Company Act related to prohibitions and restrictions on proprietary trading and certain interests in, and relationships with, hedge funds and private equity funds (commonly known as the "Volcker rule"). Data Boiler provided the SEC with the attached materials during the meeting.

Attachment

2~ ~o DATA B O I L E R BIG DATA ~ BIG PICTURE ~ BIG OPPORTUNITIES

We see big to continuously bou down the essent~~~•

TECHNOLOGIES , L L C improvements until you achieve sustainable growtr

AS' 617.237.6111 ~ info@databoiler.com databoiler.com

Volcker Revision lets Toxic to Retain and Reflate at Banks

ey Kelvin To, Founder and President of Data Boiler Technologies

The FED, SEC, CFTC, OCC, and FDIC (collectively, the "Agencies") are rounding out public comments on their proposed revision to

the Dodd-Frank Volcker Rule. Below table highlights some loopholes hidden in the details:

"Subterfuge" of the Agencies' proposal Implications

Accounting prom +trading account/ desk redefinitionsWide open backdoors (especially Subpart B §_.3(d) liquidity

management exclusion) to proprietary trading

Reliance on internal set limit (Subpart B §_.4(b), (e)). Downplay risk of unreasonable activities amid cases of blindsided

Eliminate the need for a definition for "market-maker risky positions and dodged regulatory oversight. Trade under the

inventory". No longer require banks to conduct a guise of market-making exclusion even it would not fit the SEC's

demonstrable analysis of historical customer demand, market-making definition per se. Indirectly weaken stance against

current inventory of financial instruments, and market "conflict of interest" (Subpart B §_.7(a)) when controls may be

and other factors regarding the amount, types, and risks bypassed through transfers in-and-out of category between

of or associated with positions in financial instruments available-for-sale and hold-till-maturity and/or aflipping-switch

(remove purpose test/ short-term prong). between dealing with "client" versus "counterparty".

Sub-B §_.3(c) Presumption of complianceEliminate problem by turning a blind eye to it -~ no demonstration

of how exclusions are qualified, which affects §_.4(c), (d), (f), (g)

Reservation of authority on high-risk assets and high-Trim almost everything, the residual "High-Risk Asset' and "High-

risk trading strategiesRisk Trading Strategy" (Subpart B §_.7(b) Backstop provision) is

hard to enforce

Carve-out ASC-815 derivatives + no correlation analysis Invite gaming of control (§_.4(h) and §_.5(b)), use of instruments

+ demonstrably reduce (or otherwise significantly and inventory level are unaccounted for, risks not "specified" ~

mitigate) risk be removed bets and abuses to cover/ hide losses, violate Fed Reg. 5542

Remove §_.20(c) Appendix B +replace ownership test Allow toxic to retain and reflate at banks, circumvent sponsor

with vague fund characteristics, carve-out non- limit, opposite the President's "America First" principlestraditional structured Hedge Funds /Private Equities

It is the deposit insurance mechanism ($2 billion/ year + cost to

Cost-benefit justificationsbring banks into conformance with FDIC) that out-weighted its

benefits ($73.1 to "move" every $100 for resolution disbursements

in the past 5 years), not Volcker.

The Agencies' proposal is like "putting the cart before the horse" to retrofit banks' flawed risk management frameworks as

Volcker revision, because such "risk approach" has proven to be ineffective during the last financial crisis. The proposal will

reverse years of effort by Troubled Asset Relief Program to "separate out the bad bank" and allow toxic to reenter the banking

system benefiting merchants of "~u~ nks' whom have little or no skin in the game.

According to St. Louis FED, "U.S. commercial banks holding of treasury and other U.S. agency securities doubled to $2.4 trillion

compared to nine years ago", it fills a vital money gap where U.S. faces massive sell-off of treasuries from foreign creditors (see

this). Volcker's favorable policy has made the U.S. government debt less depending on foreign countries, such as China.

Tragically, the Agencies' top officials overlooked the Rule synchronization with President Trump's "America First" principle.

Consequently, the Agencies' proposal would inadvertently push banks to abandon prudent investment in U.S. Treasury and

other U.S. Agencies securities. As a result, it will cause an "irrational exuberance" if banks recklessly pursuit higher yields in risky

O 2018 All rights reserved -Data Boiler Technologies, LLC Page 1 of 2

~8 DATA ~ O I L ~ R

BIG DATA ~ BIG PICTURE ~ BIG OPPORTUNITIES

We see big to continuously bor! down the essentra!

T E C H N O L O G I E S, L L C ~n7Pr~vements untr! y~~, achieve sustainable c~rowfh!

~617.237.6111 ~ info@databoiler.com databoiler.com

and illiquid products, which is unsustainable. The timing could not be more disastrous amid the largest budget deficit in the U.S.

history and flatten (possible inversion) of yield curve!

To address a 2008 liked crisis, the Agencies should holistic review the outdated deposit insurance mechanism because it is unfit

for the 215C century challenges (flash crashes, too-big-to-fail, and financial engineering abuses in particular). Unfortunately the

FED is proposing to relax capital rule in parallel with Volcker revision. Hence, there won't be adequate capital to address the

short comings of deposit insurance (moral hazard in particular). The Volcker Rule not only fills this policy gap, it also addresses

the too-big-to-fail issues if implement properly. We advocate for using innovative RiskTech and BPO to:

• Gauge "reasonableness" in securities inventory each day via an empirical RENTD calculator;

nistinguish permissible versus prohibited activities, and prevent bypassing of controls via automated surveillarte'e;

• Monitor the banking entity's investments in, and transactions with, any covered funds.

The current and proposed metrics are not effective to deal with rapidly evolving issues proliferated by hidden problems and

Si~~~, if ~r~de ~rtj~iitie5 rain rpn5jctently hQ Srr~tjni~ed rer niir cagoastjnnc~ then rha gganciac r„ay niih~jri~a th2 ner~entage of

suspicious Trades being "red-flagged" to enhance transparency of the Rule's implementation. This would essentially eliminate all

metric requirements, except the Agencies may ask for, or commission a "comprehensive profit and loss attribution study"~ when

symptom of control weakness is identified by the surveillance system. Besides, we see an opportunity to streamline the Rule's

covered fund provision by rewritten it to become the 21st Century Glass-Steagall Act (i.e. prohibited banks from participating in

hedge funds, private equity funds, and the like businesses). To ensure shifted risks won't come back to haunt banks, one should

consider the use behavioral science to ensure "exit only, no re-entry" —like "letting go" of bad habits or toxic assets.

Finally, the Volcker Rule's preventive approach is better than salvaging a troubled bank through other regulatory measures. This

is because "demonstrate compliance" is helpful to restore a healthy hierarchy of diversified banks, so that tier-two banks would

be ready to step-up in case a failed global systemically important bank is under stress. Bottom line, it is all about streamlining

the right priorities to save costs and foster control improvements to achieve the Rule's financial stability goals, I afraid that's not

the case in the Agencies' proposal. Please see the full comments that I have submitted to the Agencies in here.

l~J 2Ulti Aii rights reserved — Uata boiler I echnologies, LLC Page 2 of Z

Z~ ~o DATA B01 L E R BAG DATA ~ BIG PICTURE ~ BIG OPPORTUNITIES

Everybody talks abut big data, but not anyone can be

TECHNOLOGIES , L L C naninated for the best Regulatory Compliance Solution!

~617.237.6111 ~ info@databoiler.com databoiler.com

About Data Boiler Technologies, LLC

We bring big data to solve big challenges in the financial industry. By seeing big and boiling all the puzzle

pieces together, you'll benefit from our FinTech innovations that turn problems into strategic

opportunities. To realize big data ROI, it's not just the tools but our boiling hot ideas at 212° (the extra

degree to make a positive difference).

Kelvin ToFounder and PresidentfinTech Person of the Year Nominee

Homer ChengChief Technology Officer

A FinTech Person of the Year nominee, over 20 years ofHomer has over 20+years of experience in the investment

experience in strategic planning and corporate developmentbanking industry. During his tenure as Executive Director at

with a strong emphasis on Business Modeling and LEAN SixGoldman Sachs, he managed business critical applications and

Sigma. Kelvin has proven success at Citigroup in formulating aWas part of the global management team for Investment

500+% growth model by leveraging Big Data analytics. Prior toBanking Technology. He is known for his collaborative skills to

his current role, he was VP for Broadridge, VP Functional Headpartner with the business and other technology teams in

for Citigroup, subject matter expert incorporate finance fordelivering practical solutions with concrete results. His areas

the Institute ofi Bankers, and also lecturer far variousof expertise include trade analytics, risk management,

professional organizations. Kelvin holds a MSc degree incompliance and operations systems development and

Banking from City University, a Master of Management fromimplementation. Hamer is based in California and holds a BSc

Macquarie Graduate School, and a BSc degree in Accountancyand Masters of Engineering degree from Cornell University.

from Bentley University.

VR Machine: a suite of patent pending solutions for the Volcker Rule proprietary trading ban compliance

Address Problems:

1. How banks determine "reasonableness" insecurities inventory each day

2. How banks distinguish trade intents when both permitted and prohibited trades may involve taking

principal positions

3. How banks ensure financial stability and prevent rogue traders from bypassing the controls

RENTD Calculation (Inventory Control)

• Web-based application for generating comprehensive RENTD/ Securities Inventory Plan

• Include: (1) historical projection and outliers justification; (2) scholastic models that don't follow

historical projection; (3) customize parameters to fit different trading desk natures.

Independent Testing (Vulnerability Scan)

• Validate the correct usage of exemptions. Identify proprietary trades that may have slipped through

a bank's compliance program.

• The one and only essential proof of bank's compliance program effectiveness.

Preventive System (Filtering Mechanism)

• The market's only pre-trade filtering mechanism for Volcker compliance.

• A filtering mechanism to quarantine suspicious proprietary trade activities and qualify exemptions

with rigorous tests

O 2015 All rights reserved —Data Boiler Technologies, LLC

What it is?

• A filtering mechanism to quarantinesuspicious proprietary trade activities

• Qualify exemptions with rigorous tests(Click here for more information on our

independent testing solution)

• Methods to perform inventory forecast(Click here for more information on ourRENTD calculation module)

• Backstop final QA checkrecognize synethically created tradepatterns, control material exposures,aggregate risk functionalities, andavailable add-ons for manipulationdetection

• Workflow functionalities and more!!

rkets

lients

nents

~r

• Utility model that combines crowdcollective intelligence with machinelearning to implement an iterativecomplex event monitoring system.

A real-time" preventive risk managementsystem to win the race over rogue traders"Low latency infrastructure's speed will be collectivelypetermined by consortium of sponsors ~-bU milliseconds)

Why you should care?

s .- ~ —@o =a +; —„C) ~ White

~~ nscTrade amendments

andior cancellations ~

Blatkr5c

~, Active learning

QuarantineNot qualifying for liquidity. Material

underwriting, market exposure

making, hedging exemptions & others

Detection

$COfEr ~ ~a+~YUNm

5afeh~ andSoundnessThreats

• The Rule specifically calls fora "preventive system"; active risk prevention isbetter than investigating huge losses after-the-facts

• Address the problem in distinguishing trade intents when both permitted andprohibited trades may involve taking principal positions

• Address the impending problem where VaR /daily risk limits are ineffective todefend against rogue traders from escalating/ bumping-up basis risk

• Timing to increase or decrease inventory is critical to determine andsubstantiate the "reasonableness" of your trade activities

• Address the problem where integrated risk controls embedded in productdesign may be bypassed through the use of synthetic created trades

o Aligns with your BCBS 239 initiatives; enables your middle-office to match-upagainst the front-office; adaptive system makes surveillance process easy

• The Rule states that you are "guilty until proven otherwise"

Our Offerings

• Trade Monitoring

• Dynamic Assessment

• RENTD Forecast

• Correlation Study

• Quantitative Analysis

• Quarantine Suspicious Trades

SaaS Sharing

• Rosters and Workflow

• Pattern Recognition

• Manipulation Detection (add-ons)

• Material Exposure

• Active Learning

• Metrics, Audit Trails

No risks are fully mitigated, and there is no end to the regulators demanding more control. IYs a race to stop theprohibited before the violators stop you. Toll is needed to run the daily operations and maintain this industry utility,but you only pay for what we can value-add in the process. Network externality enhance the utility values for all

crowd users. It is a concerted effort to prevent another financial crisis, Contact us to find out more.

ContactUs 212 DATA BOILERPhone: 617.237.6111 ~ TECHNOLOGIES, LLC

Email: info@databoiler.com

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xPatent Rending Ir antion for the Volcker Rule Cc~mpiiance

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What it is?

• Validate the correct usage of exemptions

• Identify proprietary trades that may haveslipped through a bank's complianceprogram

• Vulnerability scan consisting of:

1. Rule-based checking(Clear Violation, White/ Black List)

2. Scoring Model(ABC analysis, timing and sizeconsistency, magnitude measures)

3. Limited Backstop QA(Synthetic short/ forward, total returnswap, related party thresholds, assetclass/ instrument thresholds by desk)

The Process:

• Load trade data

• Provide RENTD/ securities inventoryplan and other desk specific parameters

• Run Tests (compares captured signals)

• Affirm non-violation or flag questionabletrades for follow-up action

Fast and essential way for banks to validatethat they have attained a satisfactory level ofVolcker compliance without the rhetoric.

Why you should care?

.:~ .

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• ■www.DataBoiler.com

Processed Trades Incorrect tag

~~ Violation of exemption

-~~ nderwriting,Market Making,

~~~ ~ Risk Mitigating~~ edges, Liquidit

~~anagemen

•~ ~l

• Banks are required by law to perform independent testing at least annually• The one and only essential proof of bank's compliance program effectiveness

• All document verification services are considered as weak form of probativeendorsements that does not necessarily satisfy the "guilty until provenotherwise" provision

• Favorable scan result as assurance to support the CEO attestation• Help pinpoint areas where compliance program needs enhancements

Our Offerings• Quick pulse check for potential violations

(No long dreadful questionnaire to test one's articulation ability)

• Independent testing to uncover possible abuses(Control effectiveness assurance with audit trails of captured signals)

• Available regulatory version(Save examiners' time on field audits, efficient identification of flaws)

Disclaimers+ Independent testing is not a substitute for the Volcker's requirement of having a

"preventive system" (Click here to see our related product offering)

* This is only a limited check on selected processed transactions, while clientsmay enjoy a more comprehensive assurance by using our preventive systemand other add-on modules (such as control of material exposures, cross-assets/regions risk aggregation, market manipulation detection, etc.)

~°"ta`t"S 212 DATA B01 LERPhone: 617.237.6111 ~ TECHNOLOGIES, LAC

Email: infoC~databoiler.com

BIG DATA ~ BIG PICTURE ~ BIG OPPORTUNITIES

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. D' ' DV.R. Machine - RENTD Calculation ~ - . ~,~ ~A Patent Pending Invention for the Volcker Rule Compliance ~ ~ ~

72o~ri~aated t{on SeQt ,'~'eyuf'atanc~ ~o~rat~£'c'accce Sofutuuc ~www.DataBoiler.com

What it is?

• Method to perform RENTD (reasonablyexpected near term demands) forecast

• Making it easy to calculate the absurdlycomplicated "reasonable" demand

1 . ~i~k a combination of marketsscenarios, client segments, andinstruments (Fixed Income, Equity,Derivatives and Others}

2. Utilize in-house views, assumptions,and market feeds- Risk management policy(appetite and tolerance levels)

- Liquidity management plan

- Bayesian model, statistics(demand &supply factors)

- Order imbalances and more

3. Crunch-out daily inventory projection

• Consider market dynamics and otherevent-driven factors

• Interface with order books, and banksmay mark-off "instruments" that will besquared-off in a certain time horizon

• Optimize time to replenish inventory

Why you should care?

DemandForecast

Risk Mgt. Policyr_ __.

Liquidity Mgt. Plan

-- ~r Securii~esinventory Tian

•ERM -Risk appetite statement $ RENTD

• Volcker's "instrument approach" to inventory is different from risk limits

• Value-at-Risk would never be able to cope with the impending problem ofwhen it is the right timing to get in or out of a position (a critical factor todetermine "reasonableness" of trade activities)

• Banks need justification for those outlier instruments (infrequent trade withturnover > 60 days) to ensure related market risks are deemed "reasonable"

• No bank wants the regulators to use one "generic" template to measure theeffectiveness of a bank's securities inventory plan in comparison to others

Our Offerings

• Historical projection and outliers justification

• Scholastic models that don't follow historical projection

• Customize parameters to fit different trading desk natures

OOtimaingreordenng Advantages in using our algorithm:ReaR to market changes and Drodudion

m moderation Breaking down inventory (a) Validity has already been proven

Ir1ve11t01'y 3 (b) Parameters are customizable to ensure fit-for-purpose

~., COtl~l'O~ (c) Saves time and costs to deal with nuances in daily reforecast

Determine most hacking safety stockproductive inventory and distressed inventoryAdd to sales and

operations planning

ContactUs 2 ~ 2 DATA B01 LERScenario planning for the right amount of Phone: 617.237.6111 ~ TECHNOLOGIES , L L Ctrades at the right time!

Email: info _ databoiler.com

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TECHNOLOGIES, LLC

The Outline

Overview and Understanding:

Sit

uati

on:

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The Federal Reserve, FDIC, OCC, CFTC, SEC approved §619 of the

U.S. Dodd-Frank Act, also known as the Vo

lcke

r Rule, in Dec 201

3. The law went into

eff ect April 1, 2014 with a full compliance requirement by Jul

y 2i, 2015. The statute:

Subpart B: Bans covered entities from eng

agin

g in

Pro

prie

tary

Tra

ding

(Out of scope for this outline);

Subpart C: Restricts investments (s

pons

orin

g, acquiring, or ret

aini

ng an int

eres

t) in

Covered Funds, and activities in

connection with Covered Funds.

The Out

line

and the enclosed Presentation foc

us on Subpart C: Covered Funds req

uire

ment

s.

Banks are supposed to divest

all covered fu

nds held aft

er December 31,

2013 by July 21, 201

5. Thus by now, banks sho

uld only have covered funds held

prio

r to December 31, 2013, which r

egulators ha

ve provided

relief to extend the dea

dlin

e to Jul

y 2016 (additional 1-year extension to Jul

y 2017 at

discretion of the Federal Reserve i

s highly probable). For certain "qualifying

illiquid funds" (in existence on May 1, 2010), regulators al

low a transition

period for a sta

ble ru

n-of

f of ill

iqui

d in

tere

sts through 2022, but exemption has to be obtained on a fund-by-fund basis.

According to the OCC analysis of 12 CFR Part 4~

, it estimated that U.S. banks held appropriate $66 billion of impermissible as

sets

. OCC assumed a fir

e sa

le

would reduce prices by 5.5%. Therefore, banks can at least ex

pect

$3.6 billion from the required divestiture of

impermissible assets, such as CLO notes.

Per

SIA Par

tner

s' briefing note, "Bloomberg has

enlisted KPMG i

n an effort to evaluate the development of a to

ol that wo

uld be

used

specifically to

determine whether or not a secondary trading instrument is or is not a covered fund simply by

searching for its CUSIP in a specific database. The tool

is

expected to be up and running by July 2016. Participation

in the industry wide effort has been quite costly, and

the too

l itself has not yet pro

ven to

This outline and presentation (an

d any related references) a

re intended so

lely

for

the use of the in

divi

dual

or entity to whom it i

s addressed.

If you are not

the intended

r eci

pien

t of

this

message ple

ase notify Data Boiler Technologies, LLC at info@databoiler.com and de

lete

and destroy al

l copies immediately.

Pale 1 of 9

2 ~ 2~

DATA B01 L~;R

TECHNOLOGIES, LLC

o- ~~a617.237.6111

~info@databoiler.com

+

~0

~ .DataBoiler.com

provide significant added value, especially for ceit~~in American banking entities and

Foreign Banking Organizations with significant covered funds

activities outside of the United States."

With reference to a Bloomberg's press release, "CFID i,ises nearly 3

0 data fields to extract relevant details from offering documents to classify securities".

From public available information, w

e know Bloomb~~r~;'s offer has an identifier tag that "will deliver a wide variety cif data sets, including an indicative flab

called 'covered funds yes', covered funds no' or 'needs leg~il review"'. H

ow many funds fall into Bloomberg's

need legal review' category is unknovur~.

This data license product "provides data feeds for c:liE~nts tc~ feed into databases ... subscribe to the premium ser~~~ice ... T

he product wall require banks

selling securities via the (Bloomberg) teriminal to inform Bloomberg vuhether it is a covene~d fund ..." One bank counsel responded to IFLR inquires, quotecfi

"there will b

e a not insignificant subscription fee" and Bloomberg is guarding the data very closely.

S IA further quoted that, "This cost (external counsel, ~;ombined with costs for external resources to complement th!~e work of internal t

eams in organizing

and performing the covered funds review process ryas easily added u

p to approxirrr~atel~/ 1

5 million dollars or m

are for the majority of major financiall

institutions."

Objectives,

Based on initial conversations between

and Data Boiler Technologies (DBT), DBT understands

would like to:

(1) identify covered funds in their global portfolio:

(i)

Ensuring that the compliance pr~~grarn pro~ridles a process for identifying all covered funds that the banking entity sponsors, organizes or offers,

and covered funds in which the banking entity inves1.s;

(ii) ensuring that the compliance program pr~ovide~s a m~ethocY for iidentifying all funds and pools that the banking entity sponsors or F~as an interesit in

and the type of exemption from the InvestmE1nt C

ompany Act or C

ommodity Exchange Act (whether or n~~t the fund relies o

n section 3(c)(1) car

3 (c)(7) of the Investment Comp;3ny Act or section 4.7 of the regulations under the Commodity Exchange Act), and the a

mount of ownership

interest the banking entity has in those funcls .or po~~ls;

(2) ensure ongoing conformance with the Volcker Rule covEred fund requirements:

(iii)

identifying, documenting, an~~ mapping ~wl-iere any covered fund activities are permitted to be conducted within the banking entity; and

(iv)

onclu~~ing an explanation of compliance;;

This outline and presentation (and any related references) ~~re intended solely for the use of the individual or entity to whom it is addressed. If you are not the intende~~

recipient of this message please notify Data Eeoiler Technolouies, LLC at info@databoiler.com and delete and destroy all copies immediately. Pale 2

of 9

�

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�

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2 ~ 2

~ DATA B01 LER

TECHNOLOGIES, LLC

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DataBoiler.com

(v)

describing spo

nsor

ship

activities related to

cov

ered

funds; and

(vi)

esta

blis

hing

, maintaining and en

forc

ing

internal co

ntro

ls that

are

reas

onab

ly .designed to

en

sure

that it

s covered fund ac

tivi

ties

or

investments comply wit

h the requirements of se

ctio

n 13 of th

e BHC Act and sub

part

C, and

(vi

i)

monito

ring

of the ba

nkin

g en

tity

's inv

estm

ents

in and transactions wi

th any cov

ered

funds.

l ooks for outside help

in ach

ievi

ng the

above two objectives and see

king

an alternate vendor cho

ice be

side

s the Bl

oomb

erg'

s of

fer.

DBT is in the

pro

cess

of evaluating the business requirements

. Po

ssib

ly we'll par

tner

with an international Bus

ines

s Process Outsourcing (BPO) company and reference

dat

a provider to jo

intl

y pr

epar

e a

suite of

comprehensive ser

vice

s at a com

peti

tive

price to give the ind

ustr

y an alternate cho

ice fo

r the Volcker Rule

Cov

ered

Funds com

plia

nce,

Disclaimers;

In p

reparing for thi

s ou

tlin

e and the enclosed

pres

enta

tion

, DBT has

reviewed the co

vere

d Funds req

uirements as suggested by Davis Polk and other

r egu

lato

ry compliance documents, whi

le noted that:

•This out

line

and the

enc

lose

d presentation are for

informational pur

pose

s only and do not

con

stit

ute le

gal ad

vice

or create a cli

ent re

lati

onsh

ip.

•Please consult your own att

orne

y for legal ad

vice

on the issues di

scus

sed in this ou

tlin

e and the enc

lose

d pr

esen

tati

on.

•Because of th

e generality of th

is out

line

, the in

form

atio

n provided her

ein may not be applicable in all

situations and should no

t be acted upon without

specific le

gal ad

vice

bas

ed on par

ticu

lar situations.

`,~

~:l

•;;.

4~

4~•

k

L

,':*.

~~.:

This outline an

d presentation (and any re

late

d re

fere

nces

) are int

ende

d solely for the use of the individual or en

tity

to whom it i

s addressed. If

you are

not

the int

ende

dr eci

pien

t of

this message please no

tify

Data Bo

iler

Technologies, LLC

at in

fo@d

atab

oile

r.co

m an

d de

lete

and destroy al

l copies imm

edia

tely

. Pale 3 of 9

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Presentation

Tasks and Assumptions:

~' 617.237.6111 ~. ~

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DataBoiler.com

Following tasks aim to augment

conforma~n~::e with the Volcker Rule covered fund requirements. The suggested tasks are assumed to help

substantiate that a given investment or activity doe~~ not qu,3lify as covered fund nor does it imply relationships with covered funds. The task list m

ay not

be all encompassing. T

he information provided heneir•~ is generalized, and m

ay not be applicable in all situations. Please consult your o

wn attorney 'for

legal advice on the compliance effectiverness discussE~d in thi:~ presentation.

Please Q

to indicate interest in the following C~~mpliance Technologies (CT) and/or Business Process Outsourcing (

BPO) or Consulting Services (CS).

Sq.#Tasks

Covered248.10(C)

Remarks

1Identify Registered Investment Companie<_; (RIG) under the 1

940 Act

No*

EDGAR

Verify if the issuer is in compiliance with SE:C 1

940 Act §

18 requirements that

Se~re~ated account approach;

Alt - 2

010 ABA Derivatives Report,

imposes limitations on funds' issuance of "senior securities", generally

the bifurcated approach set out in1.1

prohi'~biting, among other things, a fund Frc;~m issuing or selling any senior

No*

(b)(3)

security representing indebtedness unlessit maintains 3

00% asset coverage.

CESR's Global Exposure Guidelines

1.2Identify Business Development C

ompanies (

BDC) -Section 54(a) 1

940 Act

No*

Form N-6 & 54A; 1933/34Act N-2

2Verify if issuer use 3(c)(1) or

3(c)(7) exernK~tionYes*

SEC Rule 5

06 Reg. D

2.1Verify other 1

940 Act E

xemption -Suction

3(c)(?.) Common Trust F

unds

No

~~~~12

~

17CFR 270.3c-4,

15USC 80a3(c)t31

2.2Verify other 1

940 Act Exemption -Section 3(c)(~~) Certain T

ypes of REITs

No

SEC Form 5-11

2.3Verify other 1

940 Act E

xemption -Section 3(c)(].1) Pension &Profit Sharing

No

ExcludedSection 4

01 of title 2

6Plans

Private

Funds

Verify other 1

940 Act E

xemption -SEC Rule 3

a-7 Asset-

Backed Securities

~~ 17 CFR 230.501(a) accredited

2.4which entitle their holders tc~ receive p

ayments that d

epend primarily o

n the

No

investor / 230.144A private

c ash flow from static pool

resales of securities to institutions

~Verily if t

he issuers of certain mortgage•b~acked securities are s

ponsored by

Flow of Funds Accounts of the U

S

Table L.125; S

IFMA - X

LS

2'Sgovernment-sponsored enterprises (GSI=s)

No

FAQ#9

3Identify Foreign Public F

und(Non-US Issue=r)

No*

(c)(1)<> 1940 Act, F

orm 6-K, annual

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TECHNOLOGIES, LLC

•°

617

.237

.611

1

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+

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Excluded

Foreign

repo

rt on Form 20-

F /Form 40-F

Validate Foreign Public Fund

3.1

•

public offering to

retail investors

No

Public Funds

~~= g5% sol

d to inv

esto

rs tha

t are not US person

•The fund sponsor is no

t a US Organized or located banking en

tity

Val

idat

e Foreign Public Fund is not an aff

ilia

tes of

the U.S. Banking Sponsor

3.1.

1• does not

own, co

ntrol, or hold with the power to vote >= 25% of the

No*

FA #14

§248

.12(

b)(i

)

voti

ng shares of

the fund

Verify foreign issuer as

if it was subjected to US sec

urit

ies la

ws (<101

(c)(

12)

3.2

beneficiary, is

not and do not pro

pose

to make pub

lic of

fer;

owned by

No*

Excluded

qua

lifi

ed purchaser)

Private

Funds

3.2.

1Verify if the foreign issuer may qualify for exc

lude

d pr

ivat

e fund

No

Document the seeding vehicles th

at will become a Foreign Pubic Fund

•Wr

itte

n plan to document the ban

king

entity's plan to market the. v

ehicle

to thi

rd-party inv

esto

rs and con

vert

it i

nto a foreign public fund within the

3.3

time per

iod specified in § 248.12(a)(2)(i)(B) o

f su

bpar

t C,

and the

ban

king

No

FAQ#5

entity's plan to op

erat

e th

e seed

ing ve

hicl

e in a manner con

sist

ent with

the investment st

rate

gy, in

clud

ing leverage, of

the

issuer upon becoming a

fore

ign public fund.

Identify For

eign

Pension Funds

(c)(

5)

•Or

gani

zed and admin out

side

of the US for the benefit of foreign

Excluded

4beneficiary,

No

Foreign

Section 89

7(1)

(2)

•No sin

gle pa

rtic

ipan

t or

beneficiary with a right to more than 5% of it

sPe

nsio

n or

Ret

irem

ent

ass

ets or

income.

Funds

Verify

if Who

lly Owned Subsidiary /J

oint

Venture /Ac

quis

itio

n Vehicle met

5

excl

usio

ns

•JV exclusion is no

t met by an issuer that. r

aise

s money from a sma

llNo*

(c)(2), (

c)(3),

Para

su

ort under ui

danc

e of

pp

g

number of investors pr

imar

ily for the purpose of

inv

esti

ng in securities;

FAQ#15

legal counsel

•The Rule intended to prevent the JV exclusion from bei

ng use

d as a

Thi

s ou

tlin

e an

d presentation (and any re

late

d re

fere

nces

) are int

ende

d solely for the use of the in

divi

dual

or en

tity

to whom it i

s ad

dres

sed.

If you are not the int

ende

dr eci

pien

t of th

is message please no

tify

Data Bo

iler

Tec

hnol

ogie

s, LLC at info@databoiler.com an

d de

lete

and

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troy

all copies imm

edia

tely

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o~ ~~a617."L37.6111

~info@databoiler.com

'~ ~

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vehicle to raise funds frorn investors primarily for the purpose of profitingfrom investment activity in securitie<.; fear resale or other disposition or

oi:herwise trading in securities.

6Identify Loan Securitizations

No*

Section 3(a)(79) of the Securities

(c)(8)

Exchange Apt of 1934

6.1Verify if assets &holdings of t:he issuers comprised solely of permissible

~o

interest rate derivatives or Fo reign Ex~hz in~e derivatives

'Exclusionfor loan

~6 2

Verify if assets &holdings of t:he issuers romprisNd solely of Special Unit of ~

No

Benei~icial Interest (SUBIs) anti CollateralC~=.rtificates

;securitizatic~

ns6.3

Verify if assets &holdings of the issuers comprised solely of directly held loan

No

6.4Verify if assets &holdings of t:he issuers comprised solely of cash equivalents

No

and securities received in lieu

of debts pre~~~iousl~/ contracted

any servicing asset that is aVerify if assets &holdings of i:he issuers r_omprised solely of other servicing

assets that display characters of cash egiai~ralentssecurity must be a permitted

6.4.1o

°gash equivalents" mean high quality, highly liquid shirt term investments

No

FAQ#4

security €ender § 248.10(c)(8)(iii)

whose maturity corresponds to the e~x~~ected or potential need for funds

by the securitization and w

hose currency co►

•responds to either theunderlying loans or the a~~set-bacl<ec l s ecurities.

https://ww

w.im

f.or~/external/ri ps em

inars/eng/2010/mcm

/pdf/Rut

7Identify Asset-Backed CommE~rcial Pa~~er (~~~BCP) Conduits

No*

ant. df(~)(g)

Excluded

_

~Ierifii if ABCP conduit:

aIssue only A

BS comprised' of a residual interest and A

BS < 397 days

ABCP

7.1~

Hold only permissible assets for a lo~~n securitizationNo

ConduitsSee 6

.1— 6.4

oInitial issuance, no secon~~ary market ~~urchaGses

oCommitment to provide :1

00% and u

nconditional liquidity coverageI dentify Covered Bonds

(c)(10)Dual-recourse, claim in priority to

8o

debt obligation issued by a foreign bankin~~;#rganizatic~n or an eligibleNo*

Excludedunsecure, ~

V > notional value,

entity that is awholly-ow

ned subsid iary of'a foreign banking organizationCoveredBonds

Independent cover pool monitor

8.1`✓erif~~

if Covered Bond Entities own or h~~lc l dyn~imic or fixed pool of loans and

No

See 6.1— 6.4

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nd presentation (and a

ny related references;) are intended solely for the use of the individual or entity to w

hom it is addressed. If you are not the intended

recipient of this message please notify Data Boiler Technologies, LI.0 at info@databoiler.com s

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TECHNOLOGIES, LLC

~'

617.237.6111

~info@databoiler.com j

~0

~ .

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other permitted ass

ets

~9

Verify if Sma

ll Business Investment Companies (S

BIC)

/Public We

lfar

eNo

(c)(11)

SBA lic

ense

#, 12USC24 CRA, IRC47

Inve

stme

nt Funds /Qualified Rehabilitation Exp

endi

ture

s met exclusion

10

Verify if Sep

arat

e Accounts —In

sura

nce Co/ Bank Owned Life In

sura

nce met

No

(c)(

6)Pa

ra sup

port

und

er gui

danc

e of

exc

lusi

on(c

)(7)

legal co

unse

l

11

Ongoing mo

nito

ring

of en

titi

es regulated und

er the inv

estm

ent company act

Yes

(b)(3)

Fund

-by-Fund Por

tfol

io Mgt.

Verify if F

inan

cial

Market

Util

itie

s (FMU) may rely on 3(b)(1) exe

mpti

on to the

No*

(d)(1)

Busi

ness

nat

ure other th

an those

11.

1definition of in

vest

ment

company

non-

spec

ific

that wou

ld make it a

n IC

Ver

ify

if Cas

h Co

llat

eral

Pools may rely on sections 3(

c)(1

) and

3(c)(7) of the

11.2

Inve

stme

nt Company Act

to av

oid being an

inv

estm

ent company

No*

td~~2

~Se

e 2

•re

gist

er cas

h collateral pools with the SEC as IC

, or to

ope

rate

pools as

Non-

spec

ific

separate acc

ount

s to

exc

lude

fro

m the co

vere

d fund definition

Ver

ify

if Pas

s-th

roug

h RE

ITS may rely on sections 3(c)(1) and

3(c

)(7)

of the

3(c)(5) not engaged

in business of

Inve

stme

nt Company Act

to av

oid being an

inv

estm

ent company (Se

e 2)

No*

(d)(3)

issuing re

deem

able

sec

urit

ies.

..11.

3•

Pass

thr

ough

statutory trust between the ban

king

entity an

d the RE

IT may

Not-

spec

ific

3(c)

(6) engaged in bu

sine

ss other

n ot rely on the exclusion con

tain

ed in section 3(

c)(5

) or 3(

c)(6

)th

an inv

esti

ng, reinvesting

...

Ver

ify

if Emp

loye

e Securities Com

pani

es may rely on exe

mpti

on available

under section 80a

-6(b) o

f the In

vest

ment

Company Act

~d~~

~~.

11.4

•

... shall app

ly, t

he Com

miss

ion

... weight

... for

m of

org

aniz

atio

n an

d the

No*

Not-

spec

ific

Form S-8

capital st

ruct

ure

...,

the per

sons

by whom its

voting se

curi

ties

, evi

denc

es

of ind

ebte

dnes

s, and oth

er sec

urit

ies are owned and con

trol

led,

...

Ver

ify

if certain mortgage-backed securities is

suer

s sponsored by

Section 2(

b) of In

vest

ment

11.5

government-sp

onso

red en

terp

rise

s ("G

SEs"

) may rely on an ex

clus

ion or

No*

F~Company Act

exemption fro

m the de

fini

tion

of in

vest

ment

company

Ongoing monitoring of

Commodity Pools

12

• exempt poo

l status under CFTC Rule 4.

7(a)

(1)(

iii)

Yes

(b)(

2)NFA For

m 7-

R

•QEP only, no un

its ha

ve bee

n publicly offered

Ver

ify

if Mun

icip

al Securities Tender Opt

ion Bond Transactions may rely on

~d)(4)

Section 13

(g)(

2) of the BHC Act,

13

exclusion fo

r lo

an securitizations

No*

Not-

spec

ific

See 6

•no

t pe

rmit

ted to

pro

vide

credit en

hanc

emen

t, li

quidity su

ppor

t, and oth

er

Thi

s ou

tlin

e and presentation (an

d any re

late

d references) a

re int

ende

d so

lely

for

the use of t

he individual or

entity t

o whom it i

s addressed. If you are

not

the intended

r eci

pien

t of

this mes

sage

please notify Dat

a Boiler Tec

hnol

ogie

s, LLC at in

fo@d

atab

oile

r.co

m an

d delete and

des

troy

all c

opies im

medi

atel

y.

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DataBoiler.com

similar services if it serves in a capacity covered by section 13(f) with the

t ender option b

ond program

•If a tender option b

ond vE~hicle is a covered fund and a~~ exclusion f

rom

tF~at definition is not available, then banking entities sponsoring such a

vehicle will be subject to i:he prohibii:ions in ?x_.14 of the final rule anr~ the

provisions of section 13(f;i of the BHC: A,ct.

Verify if Credit Funds m

ay rel~r o

n exclusi~or~ for joint ventures, or exclusion for

loan securitizations

~d~~6

~14

•

partnerships with third-p~3rty capital and invest in loans or m

ake loans or

No*

Not-specific

See 5 and 6

o 1:herwise extend the type of credit th~~t banks are authorized to

undertake o

n their o

wn balance sheet

15

Verify' if Venture Capital Funds may be covered fend

•Permit from making a venture capital-~~tyle investment in a c

ompany,

business, so long as

Yes*~d

~~5~

section 13(d)(1)(G)•

That investment is not thirough or in a covered fund, such as through aNot -specifier.

direct investment m

ade pursuant to merchant banking authority or

t hrough business development camK~a nies which are not covered funds.

.:

The List of Tasks to be continued ...

`t~;~,~,~::

16

Would an entity that is f

ormed and operated pursuant to a~ written plan to

become a foreign public fund receive thE~ s

ame treatment ~(i.e. excludes from

the definition of covered fund a regisl:er~~d investment company and business

FA #5

See 3

development company, including an entity that is f

ormed and operated

pursuant to a written plan to

become or

e~~f these entities)?

Is a registered investment company or a foreign public fund a banking erutity

17

subject to section 13 of the B

HC Act and in~iplementing rules during its seeding

FA #16

period?

18.1May ~ banking entity's compliance progrann for market making-related

FA #17

activities include objective factors on wriic h a trading desk m

ay reasonat~ly

This outline and presentation (and any related references;) are intended solely for the use of the ini~ividual or entity to w

hom it is addressed. If you are not the intended

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~'

617.237.6111 i

~in

fo@d

atab

oile

r.co

m ,

Dat

aBoi

ler.

com

rely to de

term

ine wh

ethe

r a security is issued by a co

vere

d fu

nd?

Furt

herm

ore,

may a mar

ket ma

ker meet it

s compliance pro

gram

requirements

by mak

ing use of a shared

utility or thi

rd party ser

vice

provider that uti

lize

sobjective factors if

the mar

ket ma

ker reasonably bel

ieve

s the sy

stem

of the

shared u

tili

ty or th

ird pa

rty service pr

ovid

er wil

l identify whe

ther

a sec

urit

y is

issu

ed by a co

vere

d fund?

How do the requirements of sec

tion

13 of the BHC Act

and

the final rul

e apply

19to

a ban

king

entity during the con

form

ance

period? For

ins

tanc

e, must a

FA #3

banking entity ded

uct

its in

vest

ment

in a co

vere

d fund fro

m its t

ier 1 cap

ital

prior to

the end

of the co

nfor

manc

e period?

Is a ban

king

entity re

quir

ed to deduct fro

m it

s tie

r 1 cap

ital

an in

vest

ment

in a

19.1

coll

ater

aliz

ed deb

t ob

liga

tion

backed by

tru

st pre

ferr

ed securities retained

FA #21

pursuant to

sec

tion

248

.16(

a) of the in

teri

m final rule (Q

ualifying Tr

uPS CDOj?

Con

diti

ons re

quir

e th

at the cov

ered

fund, fo

r co

rpor

ate,

marketing,

promotional or other pur

pose

s does not

sha

re the same name or a variation

20

of the same name wit

h the ba

nkin

g entity (or an

affi

liat

e thereof). What does

FA #6

i t mean for

a covered fund to

share the same name or a variation

ofi the

same

name wit

h a ba

nkin

g entity?

21

Does the mar

keti

ng restriction apply only to

the activities of

a for

eign

ban

king

FA #13

ent

ity th

at is s

eeki

ng to re

ly on the SOTUS cov

ered

fund ex

empt

ion or does

it

apply more generally to the ac

tivi

ties

of an

y pe

rson

offering fo

r sale or selling

ownership int

eres

ts in the co

vere

d fu

nd?

D22

Section 248.14 Cov

ered

Transaction (Su

per 23A)

Section

1 4(a

)-(d)

~~k •ti

.;~.,

~:

ti.

This outline and presentation (a

nd any rel

ated

references) are int

ende

d so

lely

for the use

of th

e individual or entity to whom i

t is addressed.

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not the

intended

recipient of

this message please no

tify

Dat

a Boiler Tec

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atab

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atel

y.

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