The Federal Reserve Board issued an interim final rule clarifying that uninsured U.S. branches and agencies of foreign banks will be treated as insured depository institutions for purposes of Section 716 of the Dodd-Frank Act -- the so-called “swaps pushout” provision – which will take effect July 16.
Insured depository institutions are permitted up to a two-year period to comply with Section 716 with the possibility of an additional one year extension. The pushout provision prohibits swap dealers from accessing federal assistance, such as the discount window. The rule establishes a procedure for swap dealers that are state member banks or uninsured U.S. branches of foreign banks to request a transition period.
The rule takes effect June 5, and comments will be accepted through August 4.