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Federal banking agencies propose revising swap margin rule

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Federal banking agencies propose revising swap margin rule

Five federal agencies released a notice of proposed rulemaking Feb. 5 that would amend the swap margin rule, a postcrisis Dodd-Frank provision that mandated regulatory capital and liquidity requirements on swaps and other financial contracts.

The Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency joined the Farm Credit Administration and the Federal Housing Finance Agency to revise the definition of an "eligible master netting agreement" to align rulemaking with the definition of a "qualifying master netting agreement" as outlined by other agency rulemaking.

The proposal would resolve any differences among previous rulemaking concerning the capital treatment of a covered qualified financial contract, or QFC. The notice of proposed rulemaking would also allow any legacy non-cleared swap or non-cleared security-based swap not subject to the margin requirements of the swap margin rule to retain its exemption even if the swap is amended to comply with the requirements of existing QFC rules.

The agencies said the change would also match proposed capital rule changes that will separately be proposed by the FCA.