The Federal Reserve and OCC issued an interim final rule — effective Jan. 1 — to reflect the agreements the largest global banks have made to help wind down a troubled derivatives counterparty.
Under the auspices of the International Swaps and Derivatives Association, 18 global systemically important banks agreed in October to delay their options to end cross-border derivatives transactions with a troubled counterparty. The 48-hour delay will provide extra time for regulators to resolve a failing large bank.
The agencies’ rule ensures that the regulatory treatment of over-the-counter derivatives, eligible margin loans and repo-style transactions under the capital and liquidity rules would not be affected by a bank’s participation in ISDA’s protocol or in an overseas special resolution regime similar to the United States’.
Read the rule.