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.
Effective Date: FR Publication Date
Keywords: Americas, US, Banking, SCCL, Large Exposures, Credit Risk, Counterparty Credit Risk, FR 2590, FED
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Previous ArticleDNB Expects First Reporting on COVID-19 Data to Begin in September
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.