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

    MAS Amends Notice 610 on Reporting Templates for Banks in Singapore

    MAS published amendments to Notices 610 and 1003 related to submission of statistics and returns, along with the reporting templates and frequently asked questions (FAQs) associated with these Notices.

    January 24, 2020 WebPage Regulatory News
    News

    HKMA Updates Policy Module on Supervisory Review Process

    HKMA is issuing, by notice in the Gazette, revised versions of two Supervisory Policy Manual modules as statutory guidelines under section 7(3) of the Banking Ordinance. The Supervisory Policy Manual modules are CA-G-5 on “Supervisory Review Process” and SB-2 on “Leveraged Foreign Exchange Trading.”

    January 24, 2020 WebPage Regulatory News
    News

    PRA Amends Pillar 2 Capital Framework for Banks

    PRA published the policy statement PS2/20 that contains the final amendments to the Pillar 2 framework and provides feedback to responses to the consultation paper CP5/19 on updates related to Pillar 2 capital framework.

    January 23, 2020 WebPage Regulatory News
    News

    FED Proposes to Revise Information Collection Under Market Risk Rule

    FED proposed to revise and extend, for three years, FR 4201, which is the information collection under the market risk capital rule.

    January 22, 2020 WebPage Regulatory News
    News

    HKMA Consults on Stay Rules on Financial Contracts Under FIRO

    HKMA published proposals for making rules related to contractual stays on termination rights in financial contracts for authorized institutions under FIRO or the Financial Institutions (Resolution) Ordinance (Cap. 628).

    January 22, 2020 WebPage Regulatory News
    News

    MAS Amends Notices on Minimum Liquid Asset Requirements for Banks

    MAS published amendments to Notices 1015, 613, and 649 related to the minimum liquid assets (MLA) requirements.

    January 21, 2020 WebPage Regulatory News
    News

    APRA Publishes Submission on Fintech and Regtech

    APRA published its submission, to the Senate Select Committee, on financial technology and regulatory technology.

    January 21, 2020 WebPage Regulatory News
    News

    OSFI to Implement Operational Risk Capital Rules for Banks in Q1 2022

    OSFI decided to move domestic implementation of the revised Basel III operational risk capital requirements from the first quarter of 2021 to the first quarter of 2022.

    January 20, 2020 WebPage Regulatory News
    News

    ECB Consults on Guideline on Threshold for Credit Obligations Past Due

    ECB published a draft guideline, along with the frequently asked questions (FAQs), on the definition of the materiality threshold for credit obligations past due for less significant institutions.

    January 20, 2020 WebPage Regulatory News
    News

    OSFI Consults on Instruction Guide for Termination of Pension Plan

    OSFI is consulting on draft revisions to the instruction guide for termination of a defined benefit pension plan.

    January 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4526