Title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (DFA) established a
comprehensive regulatory framework for derivatives, which are
generally characterized as swaps and security-based swaps. Sections
731 and 764 of the DFA require the registration and regulation of
certain “swap entities”. For certain types of swap entities that
are prudentially regulated by one of the Agencies ("covered swap
entities"), sections 731 and 764 of the DFA require the Agencies to
jointly adopt rules for swap entities under their respective
jurisdictions imposing capital requirements and initial and
variation margin requirements on all non-cleared swaps. The
swaps-related provisions are intended to reduce risk, increase
transparency, promote market integrity within the financial system,
and, in particular, address a number of weaknesses in the
regulation and structure of the swaps markets that were revealed
during the financial crisis. The opacity of swap transactions among
dealers and between dealers and their counterparties created
uncertainty about whether market participants were significantly
exposed to the risk of a default by a swap counterparty. The OCC,
Board, FDIC, FCA, and FHFA (the Agencies) issued an interim final
rule (Brexit Interim Final Rule) that addresses a potential impact
of the scenario in which the United Kingdom (U.K.) exits from the
European Union (E.U.) without a negotiated withdrawal agreement
allowing financial services firms located in the U.K. to continue
providing full-scope financial services in the E.U. The Brexit
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 Agencies are adopting a final rule that amends the
agencies’ regulations requiring 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 as
adopted in 2015 takes effect under a phased compliance schedule
spanning from 2016 through 2020, and the entities covered by the
rule continue to hold swaps in their portfolios that were entered
into before the effective dates of the rule. Such swaps are
grandfathered from the Swap Margin Rule’s requirements until they
expire according to their terms. The final rule permits swaps
entered into prior to an applicable compliance date (legacy swaps)
to retain their legacy status in the event that they are amended to
replace an interbank offered rate (IBOR) or other discontinued
rate, modifies initial margin requirements for non-cleared swaps
between affiliates, introduces an additional compliance date for
initial margin requirements, clarifies the point in time at which
trading documentation must be in place, permits legacy swaps to
retain their legacy status in the event that they are amended due
to technical amendments, notional reductions, or portfolio
compression exercises, and makes technical changes to relocate the
provision addressing amendments to legacy swaps that are made to
comply with the Qualified Financial Contract Rules, as defined in
the Supplementary Information section. In addition, the final rule
addresses comments received in response to the agencies’
publication of the interim final rule that would preserve the
status of legacy swaps meeting certain criteria if the United
Kingdom withdraws from the European Union (hereafter ‘‘Brexit)
without a negotiated settlement agreement.
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.
SPST-0204 AF08 Margin and Capital Requirements for Covered Swap Entities Final Rule.docx
NOA (Preapproval) 3064-0204 RIN 3064-AF08.pdf
? 349.11(b)(1) Posting Initial Margin