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    FED Extends Compliance Date for Single-Counterparty Credit Limit Rule

    May 01, 2020

    FED extended by 18 months the initial compliance dates under the single-counterparty credit limit rule, for bank holding companies and foreign banking organizations. The extension applies to the combined U.S. operations of foreign banks and provides additional time for foreign jurisdictions' implementation of the standard to become effective. Under the final rule, the largest foreign banks need to comply with the single-counterparty credit limit, or SCCL, rule by July 01, 2021, whereas smaller foreign banks need to comply by January 01, 2022. The final rule becomes effective on the date of its publication in the Federal Register.

    The initial compliance date for a foreign banking organization that has the characteristics of a global systemically important banking organization has been revised from January 01, 2020 to July 01, 2021; the compliance date for any other foreign banking organization subject to the single-counterparty credit limit rule has been amended from July 01, 2020 to January 01, 2022. FR 2590 is the reporting form associated with the single-counterparty credit limit rule. To implement the revisions to the compliance date for the reporting and recordkeeping requirements, FED is revising the information collection titled "Single-Counterparty Credit Limits" (FR 2590; OMB No. 7100-NEW). The information collected by this reporting form will allow the FED to monitor a covered company’s or a covered foreign entity’s compliance with the final single-counterparty credit limit rule. 

    In June 2018, FED had adopted a final single-counterparty credit rule to enhance financial stability by limiting the exposure that a large domestic or foreign bank can have to another counterparty. The rule applied these limits to both the intermediate holding company and combined U.S. operations of foreign banks, which includes any U.S. branches. For the limits applied to combined U.S. operations, a foreign bank could comply by certifying that it meets a similar rule or standard of its home country. Certain foreign jurisdictions remain in the process of finalizing their rules or standards. This extension allows additional time for foreign banks to comply with the FED rule via certification with a similar home country rule or standard. All other parts of the FED rule remain unchanged.

     

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    Effective Date: FR Publication Date

    Keywords: Americas, US, Banking, SCCL, Large Exposures, Credit Risk, Counterparty Credit Risk, FR 2590, FED

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