Featured Product

    FED Adopts Final Rule on SCCL for Large Banking Organizations

    June 14, 2018

    FED adopted the final rule to establish single counterparty credit limits (SCCL) for banks. The entities include bank holding companies and foreign banking organizations with USD 250 billion or more in consolidated assets, including any U.S. intermediate holding company of such a foreign banking organization with USD 50 billion or more in consolidated assets, along with any bank holding company identified as a global systemically important bank holding company (G-SIB) under the capital rules of FED. The final rule will be effective 60 days after publication in the Federal Register. FED is also inviting comment on a proposal to implement a new information collection, the SCCL (FR 2590; OMB No. 7100-NEW) and the associated notice requirements in connection with the final SCCL rule. Comments must be submitted on or before 60 days after publication in the Federal Register.

    The final rule, which implements a part of the Dodd-Frank Act, is generally similar to the proposed rule that was issued in March 2016 and applies credit limits that increase in stringency as the systemic footprint of a firm increases. A G-SIB would be limited to a credit exposure of no more than 15% of its tier 1 capital to another systemically important financial firm, reflecting FED's analysis of the increased systemic risk posed when the largest firms have significant exposure to one another. A bank holding company with USD 250 billion or more in consolidated assets would be restricted to a credit exposure of no more than 25% of its tier 1 capital to a counterparty. Foreign banks operating in the United States with USD 250 billion or more in global consolidated assets, along with their intermediate holding companies with USD 50 billion or more in U.S. consolidated assets, would be subject to similar limits. 

    In response to comments, the final rule reduces regulatory burden by using common accounting definitions to simplify application of exposure limits. In addition, a foreign bank's combined U.S. operations, though not its U.S. intermediate holding company, will be considered in compliance with the final rule if a comparable rule is in effect in the foreign bank's home country. G-SIBs will be required to comply by January 01, 2020 and all other firms are required to comply by July 01, 2020. FED approved the rule to prevent concentrations of risk between large banking organizations and their counterparties from undermining financial stability. 

     

    Related Links

    Comment Due Date: Federal Register + 60 days (FR 2590)

    Effective Date: Federal Register + 60 days (Final Rule)

    Keywords: Americas, US, Banking, SCCL, Systemic Risk, Regulatory Reporting, G-SIB, FR 2590, Credit Exposures, Tier 1 Capital, FED

    Featured Experts
    Related Articles
    News

    EU Amends IFRS 9 Rule, Changes Concern Interest Rate Benchmark Reforms

    EU published Regulation 2020/34 regarding the International Accounting Standard (IAS) 39 and International Financial Reporting Standards (IFRS) 7 and 9.

    January 16, 2020 WebPage Regulatory News
    News

    FDIC and OCC Issue Statement on Heightened Cyber Security Risk

    In response to the heightened cyber-security risk facing the financial services industry and other critical business sectors, FDIC and OCC issued an interagency statement on heightened cyber-security risk.

    January 16, 2020 WebPage Regulatory News
    News

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020.

    January 16, 2020 WebPage Regulatory News
    News

    BCRA Updates Regulation on Capital Requirements and Information Regime

    BCRA updated the rules on minimum capital requirements for financial entities and on certain aspects of the information transparency regime for quarterly and annual supervision.

    January 16, 2020 WebPage Regulatory News
    News

    BIS to Expand Central Bank Membership

    BIS is to expand its central bank membership base and to increase collaboration in its work as a forum for international cooperation and as a hub for central banks and other financial authorities.

    January 14, 2020 WebPage Regulatory News
    News

    EIOPA Issues Technical Specifications for Market and Credit Risk Study

    EIOPA published the technical specifications, including instructions, for the market and credit risk modeling comparative study for year-end 2019.

    January 13, 2020 WebPage Regulatory News
    News

    FED Publishes FAQs on Tailoring Rules for Banks

    FED released a letter announcing the publication of an initial set of frequently asked questions (FAQs) in response to questions from institutions.

    January 13, 2020 WebPage Regulatory News
    News

    IA of Hong Kong Publishes Stress Testing Scenarios in Relation to ORSA

    IA of Hong Kong published the prescribed scenarios for stress and scenario testing to be used by the authorized insurers conducting general insurance business.

    January 13, 2020 WebPage Regulatory News
    News

    FDIC Letter on Submission of Call Reports by End of January 2020

    FDIC, in a letter to financial institutions, announced that the Consolidated Reports of Condition and Income (Call Reports) for the December 31, 2019 report date must be submitted to the Central Data Repository of the relevant US agencies by January 30, 2020.

    January 13, 2020 WebPage Regulatory News
    News

    EBA Consults on Calculation of Own Funds Requirements for Market Risk

    EBA is consulting on the draft regulatory technical standards for calculation of the own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.

    January 13, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4489