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
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 ArticleMNB and EBRD Held Conference on International Green Finance
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.