QFC, also known as Quality Food Centers, is a supermarket chain owned by Kroger that operates stores in the states of Washington and Oregon. The company is best known for its QFC brand of grocery stores, but it also operates QFC Fresh & Easy stores and QFC Market cafés. In Seattle, the chain operates two locations in Wedgwood and Capitol Hill. QFC recently announced it will close the two stores by April 24, citing the city’s $4-an-hour hazard pay law as one of the reasons for the closures.

QFC’s business model is unique in the retail industry, relying on franchised store ownership and management of its locations. This allows QFC to maintain high levels of customer service and provide consistent quality across its stores. Its success is based on a long-term investment strategy and a focus on customer needs. It is a highly-regarded company in the retail sector and has been growing rapidly in recent years.

The US banking regulators recently issued final rules (the “US QFC Resolution Stay Rules”) that require global systemically important banks (“GSIBs”) to amend a broad variety of Qualified Financial Contracts (“QFCs”). The Rules provide for two methods to bring GSIBs into compliance with the Regulations: bilateral amendment, in which case an amendment must adhere strictly to the Resolution Stay regulations; and ISDA protocol adherence, which provides a safe harbor and offers certain creditor protections that are not available under the resolution stays in the regulations.

ISDA has published standard bilateral amendments for use in complying with the requirements of the US QFC Resolution Stay Rules. By adhering to the ISDA 2018 protocol, a party to a QFC agrees to limit its exercise of default rights in that agreement (and any credit enhancements attached to that agreement) upon the commencement of an insolvency proceeding by or in respect of a covered entity. The ISDA 2018 protocol also enables parties to opt in to similar limitations on the exercise of default rights in their agreements with non-U.S. GSIBs, as well as with the special resolution regimes of France, Germany, Japan, Switzerland and the United Kingdom.

To facilitate complying with the requirements of the US QFC Rules, a GSIB must conform its existing QFCs by Jan. 1, 2019. For most covered entities, this will mean that the entity must ensure all of its financial counterparties (other than small financial institutions and sovereigns, central banks and corporations) have agreed to waive any transfer restrictions in their existing QFCs with the GSIB and not exercise cross-default remedies in the event of the bankruptcy or other insolvency of the GSIB or any of its affiliates.

In addition, the GSIB will need to make a series of changes to its recordkeeping systems to ensure that all of its contracts and other records are identified as sin-scope for QFC recordkeeping purposes. This will likely involve the creation of a trusted product taxonomy to identify which contracts, agreements and other records are in-scope. QFC