US agencies look to change swap margin rule
14 February 2018 Washington DC
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Five US federal agencies have proposed to amend swap margin requirements in order to conform with recent rule changes that impose new restrictions on certain qualified financial contracts (QFCs).
Under the proposed amendments, legacy swaps, entered before the applicable compliance date, would not become subject to the margin requirements if they are amended solely to comply with the requirements of the QFC rules.
The proposed rule was featured in Margin and Capital Requirements for Covered Swap Entities; Proposed Rule, released on 5 February.
The five federal agencies involved in creating the proposed rule include the board of governors of the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corporation (FDIC), the Federal Housing Finance Agency and the Office of the Comptroller of the Currency (OCC).
According to the Federal Reserve, the proposed amendments would harmonise the definition of the eligible master netting agreement in relation to liquidity regulations, featured in the proposed rule document.
The swap margin rule was issued in November 2015 and established margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse.
The Federal Reserve stated the margin requirements are designed to “help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity”.
Under the proposed amendments, legacy swaps, entered before the applicable compliance date, would not become subject to the margin requirements if they are amended solely to comply with the requirements of the QFC rules.
The proposed rule was featured in Margin and Capital Requirements for Covered Swap Entities; Proposed Rule, released on 5 February.
The five federal agencies involved in creating the proposed rule include the board of governors of the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corporation (FDIC), the Federal Housing Finance Agency and the Office of the Comptroller of the Currency (OCC).
According to the Federal Reserve, the proposed amendments would harmonise the definition of the eligible master netting agreement in relation to liquidity regulations, featured in the proposed rule document.
The swap margin rule was issued in November 2015 and established margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse.
The Federal Reserve stated the margin requirements are designed to “help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity”.
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