As soon as
possible, the OCC should issue a 60 day notice soliciting comment
on the collection under the interim final rule and note that the
agency requested and obtained an emergency revision from OMB to
cover the interim period. Upon completion of the 60 day window
under the aforementioned notice, the OCC should expeditiously issue
a 30 day notice that it has submitted the collection to OIRA for
approval upon adoption of the final rule.
Inventory as of this Action
Requested
Previously Approved
09/30/2019
6 Months From Approved
03/31/2022
2,620
0
2,610
17,400
0
17,390
0
0
0
Sections 731 and 764 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act require the OCC,
FRB, FDIC, FHFA, and FCA to adopt joint rules for swap entities
under their jurisdictions imposing capital requirements and initial
and variation margin requirements on all non-cleared swaps.
Currently, we are requesting emergency clearance for an interim
final rule with an immediate effective date that will addresses a
potential impact of the scenario in which the United Kingdom (U.K.)
exits from the European Union (E.U.)—also known as Brexit—in the
absence of a negotiated withdrawal agreement allowing financial
services firms located in the U.K. to continue providing full-scope
financial services in the E.U. In that event, numerous U.K.
financial services firms may begin to transfer their existing swap
portfolios that face counterparties located in the E.U. over to a
related establishment of the U.K. financial services firm located
within the E.U. or the U.S. Brexit is expected to occur on March
29, 2019. The Interim Final Rule authorizes a financial entity with
non-cleared swaps located in the U.K. to relocate existing swap
portfolios to affiliates or other related entities located within
the E.U. or U.S., without the legacy swaps in the portfolios
becoming subject to the requirements of the Swap Margin
Rule.
The OCC has determined
that (1) the collection of information within the scope of this
request is needed prior to the expiration of time periods
established under 5 C.F.R. § 1320.12; (2) this collection of
information is essential to the mission of the OCC; and (3) the OCC
cannot reasonably comply with the normal clearance procedures
because public harm is reasonably likely to result if normal
clearance procedures are followed and the use of normal clearance
procedures is reasonably likely to prevent or disrupt the
collection of information. First issued in 2015, the Swap Margin
Rule includes a phased compliance schedule from 2016 to 2020 and
generally applies only to a non-cleared swap entered into on or
after the applicable compliance date. A non-cleared swap entered
into prior to an entity’s applicable compliance date is
“grandfathered” by this regulatory provision and is generally not
subject to the margin requirements in the Swap Margin Rule (legacy
swap) unless it is amended or novated on or after the applicable
compliance date. The Interim Final Rule addresses a potential
impact of the scenario in which the United Kingdom (U.K.) exits
from the European Union (E.U.)—also known as Brexit—in the absence
of a negotiated withdrawal agreement allowing financial services
firms located in the U.K. to continue providing full-scope
financial services in the E.U. In that event, numerous U.K.
financial services firms may begin to transfer their existing swap
portfolios that face counterparties located in the E.U. over to a
related establishment of the U.K. financial services firm located
within the E.U. or the U.S. Brexit is expected to occur on March
29, 2019. The Interim Final Rule authorizes a financial entity with
non-cleared swaps located in the U.K. to relocate existing swap
portfolios to affiliates or other related entities located within
the E.U. or U.S., without the legacy swaps in the portfolios
becoming subject to the requirements of the Swap Margin Rule. The
Interim Final Rule includes a new information collection
requirement for transfers initiated by a covered swap entity’s
counterparty. For those transfers, the counterparty must make a
representation to the covered swap entity that the counterparty
performed the transfer in compliance with the requirements of the
rule. The representation must provide that (1) the swap was
originally entered into before the relevant compliance date and was
booked at an entity located in the U.K. and (2) the U.K. entity is
amending the swap because of Brexit, transferring the swap to an
affiliate in the E.U. or U.S., and the transferee is either a
covered swap entity or the counterparty of a covered swap entity.
The Interim Final Rule was issued with an immediate effective date
in anticipation of Brexit, which may occur as soon as March 29,
2019. The Agencies also contemplate that financial entities may
negotiate and document their desired transfers even before the
withdrawal date, under terms that delay consummation of any
transfer until withdrawal takes place without an agreement. To
ensure the certainty needed to allow the industry to facilitate
transfers immediately upon the U.K.’s withdrawal, this timeline
requires immediate regulatory relief and prevents the OCC from
clearing the collection under 5 C.F.R. § 1320.12 prior to the
rule’s effective date. Accordingly, the OCC requests emergency
clearance.
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
1557-0251 Brexit.doc
Request for Emergency PRA Approval.pdf
Counterparty Disclosure