Margin and Capital Requirements for Covered Swap Entities

 
CONTENT
Federal Register, Volume 84 Issue 249 (Monday, December 30, 2019)
[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Proposed Rules]
[Pages 71833-71834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28052]
[[Page 71833]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 45
[Docket No. OCC-2019-0023]
RIN 1557-AE69
FEDERAL RESERVE SYSTEM
12 CFR Part 237
[Docket No. R-1682]
RIN 7100-AF62
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 349
RIN 3064-AF08
FARM CREDIT ADMINISTRATION
12 CFR Part 624
RIN 3052-AD38
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1221
RIN 2590-AB03
Margin and Capital Requirements for Covered Swap Entities
AGENCY: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Farm Credit Administration (FCA);
and the Federal Housing Finance Agency (FHFA).
ACTION: Proposed rule; reopening of comment period.
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SUMMARY: The OCC, Board, FDIC, FCA, and FHFA (collectively, the
agencies) are reopening the comment period for the notice of proposed
rulemaking published in the Federal Register on November 7, 2019, to
amend 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 (Proposed Swap Margin Amendments). Reopening the
comment period that closed on December 9, 2019, will allow interested
persons additional time to analyze and comment on the Proposed Swap
Margin Amendments.
DATES: The comment period for the notice of proposed rulemaking
published on November 7, 2019 at 84 FR 59970, is reopened from December
9, 2019, to January 23, 2020.
ADDRESSES: You may submit comments by any of the methods identified in
the notice of proposed rulemaking, except that the FCA is no longer
accepting comments through the Federal eRulemaking Portal at
www.regulations.gov. Commenters may submit comments to the FCA through
any of the other methods that FCA identified in the notice of proposed
rulemaking.
FOR FURTHER INFORMATION CONTACT:
    OCC: Chris McBride, Director for Market Risk, Treasury and Market
Risk Policy, (202) 649-6402, or Allison Hester-Haddad, Counsel, Chief
Counsel's Office, (202) 649-5490, for persons who are deaf or hearing
impaired, TTY (202) 649-5597, Office of the Comptroller of the
Currency, 400 7th Street SW, Washington, DC 20219.
    Board: Constance Horsley, Deputy Associate Director, (202) 452-
5239, Lesley Chao, Lead Financial Institution Policy Analyst, (202)
974-7063, or John Feid, Principal Economist, (202) 452-2385, Division
of Supervision and Regulation; Patricia Yeh, Senior Counsel, (202) 452-
3089, Jason Shafer, Senior Counsel, (202) 728-5811, or Justyna Bolter,
Senior Attorney, (202) 452-2686, Legal Division; for users of
Telecommunication Devices for the Deaf (TDD) only, contact 202-263-
4869; Board of Governors of the Federal Reserve System, 20th and C
Streets NW, Washington, DC 20551.
    FDIC: Irina Leonova, Senior Policy Analyst, [email protected],
Capital Markets Branch, Division of Risk Management Supervision, (202)
898-3843; Thomas F. Hearn, Counsel, [email protected], Legal Division,
Federal Deposit Insurance Corporation, 550 17th Street NW, Washington,
DC 20429.
    FCA: Jeremy R. Edelstein, Associate Director, Finance & Capital
Market Team, Timothy T. Nerdahl, Senior Policy Analyst, Clayton D.
Milburn, Senior Financial Analyst, Office of Regulatory Policy, (703)
883-4414, TTY (703) 883-4056, or Richard A. Katz, Senior Counsel,
Office of General Counsel, (703) 883-4020, TTY (703) 883-4056, Farm
Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
    FHFA: Christopher Vincent, Senior Financial Analyst, Office of
Financial Analysis, Modeling & Simulations, (202) 649-3685,
[email protected], or James P. Jordan, Associate General
Counsel, Office of General Counsel, (202) 649-3075,
[email protected], 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.
SUPPLEMENTARY INFORMATION:
I. Background
    On November 7, 2019, the agencies published in the Federal Register
a notice of proposed rulemaking (the NPR) that would amend 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).\1\ Specifically, the NPR proposed to make the
following changes to the Swap Margin Rule:
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    \1\ 84 FR 59970 (Nov. 7, 2019).
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    First, the proposal would provide relief by allowing legacy swaps--
swaps that were entered into before the applicable compliance date of
the Swap Margin Rule- to be amended to replace existing interest rate
provisions based on certain interbank offered rates (IBORs) and other
interest rates that are reasonably expected to be discontinued or are
reasonably determined to have lost their relevance as a reliable
benchmark due to a significant impairment, without such swaps losing
their legacy status.
    Second, the proposal would amend the Swap Margin Rule's
requirements for inter-affiliate swaps. The proposal would repeal the
requirement for a covered swap entity to collect initial margin from
its affiliates, but would retain the requirement that variation margin
be exchanged for affiliate transactions.
    Third, the proposal would add an additional initial margin
compliance period for certain smaller counterparties, and clarify the
existing trading documentation requirements in Sec.  __.10 of the Rule.
    Fourth, the proposal would amend the Swap Margin Rule to permit
amendments caused by conducting certain routine life-cycle activities
that covered swap entities may conduct for legacy swaps, such as
reduction of
[[Page 71834]]
notional amounts and portfolio compression exercises, without
triggering margin requirements.
II. Reopening of Comment Period and Request for Comment
    The original comment period for the NPR closed on December 9,
2019.\2\ The agencies received public comments requesting an extension
of the comment period, noting that the commenters did not have
sufficient time to analyze fully the agencies' notice of proposed
rulemaking during the original 30-day comment period. To give these,
and similarly situated, commenters additional time, the agencies are
re-opening the comment period through January 23, 2020, until which
time interested parties may submit public comments on the rule
amendments proposed and the questions presented in the NPR.
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    \2\ See 84 FR 59970 (November 7, 2019).
    Dated: December 20, 2019.
Jonathan V. Gould,
Senior Deputy Comptroller and Chief Counsel, Office of the Comptroller
of the Currency.
    By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority, December 20, 2019.
Margaret McCloskey Shanks,
Deputy Secretary of the Board.
Federal Deposit Insurance Corporation.
    Dated at Washington, DC, on December 19, 2019.
Annmarie H. Boyd,
Assistant Executive Secretary.
    By order of the Board of the Farm Credit Administration.
    Dated at McLean, VA, this 20th day of December, 2019.
Dale L. Aultman,
Secretary.
    December 12, 2019.
Mark A. Calabria,
Director, Federal Housing Finance Agency.
[FR Doc. 2019-28052 Filed 12-27-19; 8:45 am]
 BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P; 8070-01-P; 6705-01-P