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Margin and Capital Requirements for Covered Swap Entities Joint Interim Final Rule

Open Date:
Open for comment 3/19/2019
Deadline:
All comments are due by 4/18/2019
Type:
Interim Final Rule
Number:
RIN-2590-AB02
Group:
 
Fannie Mae; FHLBanks; Freddie Mac
Document Number:
RIN-2590-AB02
CFR:
12 CFR Part 1221
CFR Description:
Margin and Capital Requirements for Covered Swap Entities
Federal Register Publish Date:
View Document:
/SupervisionRegulation/Rules/RuleDocuments/MARGIN AND CAPITAL REQUIREMENTS Brexit IFR FOR Web.pdf|232.92 KB;
Contact Information:

FOR FURTHER INFORMATION CONTACT:  Ron Sugarman, Principal Policy Analyst, Office of Policy Analysis and Research, (202) 649-3208, Ron.Sugarman@fhfa.gov, or James P. Jordan, Associate General Counsel, Office of General Counsel, (202) 649-3075, James.Jordan@fhfa.gov, Federal Housing Finance Agency, Constitution Center, 400 7th St., SW, Washington, DC  20219.  The telephone number for the Telecommunications Device for the Hearing Impaired is (800) 877-8339.

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SUMMARY:  The OCC, Board, FDIC, FCA, and FHFA (each an Agency and, collectively, the Agencies) are adopting and invite comment on an interim final rule amending the Agencies' regulations that require swap dealers and security-based swap dealers under the Agencies' respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule).  The Swap Margin Rule takes effect under a phased compliance schedule stretching from 2016 through 2020, and the dealers covered by the rule continue to hold swaps in their portfolios that were entered into before the effective dates of the rule.  Those swaps are grandfathered from the Swap Margin Rule's requirements until they expire according to their terms.

            There are currently financial services firms located within the United Kingdom (U.K.) that conduct swap dealing activities subject to the Swap Margin Rule.  The U.K. has provided formal notice of its intention to withdraw from the European Union (E.U.) on March 29, 2019.  If this transpires without a negotiated agreement between the U.K. and E.U., these entities located in the U.K. may not be authorized to provide full-scope financial services to swap counterparties located in the E.U.

The Agencies' policy objective in developing the interim final rule is to address one aspect of the scenario likely to ensue, whereby entities located in the U.K. might transfer their existing swap portfolios that face counterparties located in the E.U. over to an affiliate or other related establishment located within the E.U. or the United States (U.S.)  The Agencies seek to address industry concerns about the status of grandfathered swaps in this scenario, so the industry can focus on making preparations for swap transfers.  These transfers, if carried out in accordance with the conditions of the interim final rule, will not trigger the application of the Swap Margin Rule to grandfathered swaps that were entered into before the compliance dates of the Swap Margin Rule. 

DATES:  The interim final rule is effective March 19, 2019.  Comments should be received on or before April 18, 2019.

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