FED adopted a proposal to implement the Single-Counterparty Credit Limits (SCCL) reporting form FR 2590. Also published were the draft form and instructions for FR 2590. The first data collection will occur as of the end of the first quarter of 2020 for respondents that are U.S. and foreign global systemically important bank holding companies (G-SIBs) and as of the end of the third quarter of 2020 for all other respondents. The frequency of data collection will be quarterly, annual, and event-generated. The estimated number of respondents for this form are 75. The respondents include U.S. bank holding companies and savings and loan holding companies that are subject to Category I, II, or III standards; foreign banking organizations that are subject to Category II or III standards or that have USD 250 billion or more in total global consolidated assets; and U.S. intermediate holding companies that are subject to Category II or III standards.
FR 2590 is being implemented in connection with the SCCL rule, which has been codified in the Regulation YY on enhanced prudential standards (under 12 CFR part 252, subpart H). In addition to the reporting form, the FR 2590 information collection incorporates notice requirements pertaining to requests that may be made by a covered company or covered foreign entity to request temporary relief from specific requirements of the SCCL rule. The information collected by SCCL reporting form will allow FED to monitor a covered company's or a covered foreign entity's compliance with the SCCL rule.
FED had published, on August 06, 2018, a proposal on implementation of FR 2590 in the Federal Register. The comment period for this notice expired on October 05, 2018. FED has received two comment letters in response to the proposal. The respondents generally requested that the required number of reported counterparties be lowered to only the top 20 counterparties plus certain other counterparties to whom exposure is more than 10% of the firm's tier 1 capital or capital stock and surplus, as applicable. Respondents also sought clarification on the process by which foreign banking organizations could comply with the requirements of the SCCL rule with respect to their combined U.S. operations by certifying that they meet limits established by home-country supervision frameworks, which are consistent with the BCBS standard on large exposures, and by the reporting requirements associated with such certification.
However, FED still believes that it is appropriate to require a firm to report its top 50 counterparties, as that would provide FED with greater ability to monitor a wider network of counterparty relationships and potential channels of contagion, consistent with the SCCL rule. The reporting form includes a checkbox that foreign banking organizations can use to indicate that they meet the requirements of a home-country supervisory regime. The preamble to SCCL rule clarifies that submission of the FR 2590 report with this box checked generally will be sufficient to meet the reporting requirements of the SCCL rule with respect to the single-counterparty credit limits that apply to an foreign banking organizations' combined U.S. operations. However, a foreign banking organization may be required to provide additional information or reporting of its counterparty credit exposures on written request by FED.
- Federal Register Notice
- 12 CFR Part 252
- Draft Form FR 2590 (PDF)
- Draft Instructions for FR 2590 (PDF)
Keywords: Americas, US, Banking, Foreign Banks, SCCL, G-SIB, Data Collection, Large Exposures, Basel III, Credit Risk, Reporting, FED
Previous ArticleIFSB Guidance on Lender of Last Resort Facilities for Islamic Banks
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.