Reuters: Regulatory News: UPDATE 1-Fed okays U.S. swaps rule, foreign banks have 2 years to comply

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UPDATE 1-Fed okays U.S. swaps rule, foreign banks have 2 years to comply Jun 5th 2013, 22:28 Wed Jun 5, 2013 6:28pm EDT WASHINGTON, June 5 (Reuters) - The Federal Reserve on Wednesday approved a rule requiring that banks receiving federal deposit insurance or access to the Fed's discount window should spin off some of their swaps trading into separate arms, and gave foreign banks with branches and agencies in the United States up to two years to comply. The Fed approved a rule to implement a provision of the 2010 Dodd-Frank law known as the swaps push-out. The requirement is meant to prevent banks that receive federal assistance, such as deposit insurance or access to the Fed's discount window, from engaging in risky activity. Regulators have said U.S. banks can ask for up to 24 months to comply with the rules, which take effect on July 16. Foreign banks called for similar treatment. The Fed said it clarified the rules to ensure that uninsured U.S. branches and agencies of foreign banks would be treated the same as insured U.S.-based depository institutions for the purposes of the push-out provision. That means they can apply for a transition period, the Fed said. Regulators set up a process for state banks that are members of the Federal Reserve system and uninsured state branches or agencies of foreign banks to apply as well. "We applaud the Federal Reserve's clarification that for the purposes of the swaps push-out provision of Dodd-Frank, uninsured U.S. branches and agencies of foreign banks have parity of treatment vis-à-vis U.S. insured depository institutions," Sally Miller, chief executive of the Institute of International Bankers, said in a statement. "This clarification addresses a widely-acknowledged drafting error in the original legislation." The Fed's rule is an interim final rule, which means it is subject to changes if necessary, regulators said. The Fed will accept comments on the rule through Aug. 4. Link this Share this Digg this Email Reprints

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