Farm Credit Administration

Agencies Approve Amendments to Swap Margin Rule

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On September 21, the Farm Credit Administration, the FDIC, the Federal Housing Finance Agency, the Federal Reserve and the OCC approved final amendments to swap margin requirements to conform with recent rule changes that impose new restrictions on certain qualified financial contracts of systemically important banking organizations. These amendments established minimum margin requirements for swaps and security-based swaps that are not cleared through a clearinghouse. The margin requirements are designed to help ensure the safety and soundness of swap entities and reduce risks to the stability of the financial system associated with non-cleared swaps activity. Rule.

Agencies Finalize Rule Exempting Certain Commercial and Financial End Users from Initial and Variation Margin Requirements

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On August 1, 2016, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Farm Credit Administration announced a final rule that contains certain exemptions for “certain commercial and financial end users from margin requirements for certain swaps not cleared through a clearinghouse.”  The rule implemented without any changes the interim final rule from November 2015. Press Release. Press Release. Press Release. Press Release.

CFTC Approves Final Rule on Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

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On December 16, 2015, the U.S. Commodity Futures Trading Commission approved a new regulation for uncleared swaps not regulated by the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration or the Federal Housing Finance Agency.  The new rule requires parties to collect margin in order to address concerns of entities taking on excessive risk. Press release.

Final Rule Issued to Establish Minimum Margin Requirements for Non-Cleared Swaps and Non-Cleared Security-Based Swaps

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On December 3, 2015, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Farm Credit Administration, and the Federal Housing Finance Agency (collectively, “Agencies”) issued a final rule establishing capital requirements, as well as minimum requirements for the exchange of initial and variation margin, for covered swap entities with respect to non-cleared swaps and non-cleared security-based swaps. The purpose of the requirements is to offset the greater risk to such entities, and thus, the amount of margin required will vary based on relative risk. The final rule implements sections 731 and 764 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 and will take effect on April 1, 2016 – however, the minimum margin requirements will not phase-in until September 1, 2016. All swap counterparties must comply with the variation margin requirements by March 1, 2017, while swap counterparties with more than $3 trillion in outstanding swap activity must comply with both the initial and variation margin requirements by September 1, 2016. Press Release. Final Rule.

Federal Agencies Seek Comment on Swap Margin Requirements

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On September 3, the Fed, the Farm Credit Administration, the FDIC, the FHFA, and the OCC sought comment on a proposed rule to establish margin requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  The proposed rule would establish minimum requirements for the exchange of initial and variation margin between covered swap entities and their counterparties to non-cleared swaps and non-cleared security-based swaps.  The margin requirements mandated by the Dodd-Frank Act are intended to address a number of weaknesses in the regulation and structure of the swap markets that were revealed during the recent financial crisis.  The requirements are intended to reduce risk, increase transparency, and promote market integrity.  Proposed Rule.

Agencies Reopen Comment Period on Swap Margin and Capital Proposed Rulemaking

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On September 26, the Fed, Farm Credit Administration, FDIC, FHFA, and OCC reopened the comment period on a proposed rule to establish margin and capital requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants.  The comment period has been extended to November 26 from July 11.  Joint Release.  Rule Extension.

Start of Registration Period under S.A.F.E. Act

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On January 31, the Fed, the Farm Credit Administration, the FDIC, the National Credit Union Administration, the OCC, and the OTS announced that the Nationwide Mortgage Licensing System and Registry has begun to accept federal registrations as required under the Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act). After the initial registration period expires on July 29, any employee of an agency-regulated institution subject to the registration requirements will be prohibited from engaging in the business of originating residential mortgage loans without first meeting the requirements. FDIC Release. Registration Process. Federal Register Notice.

Joint Agency Release on S.A.F.E. Act Mortgage Originator Requirements

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On July 28, the OCC, Fed, FDIC, OTS, Farm Credit Administration and National Credit Union Administration issued final rules requiring certain mortgage loan originators to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E.).  The final rules are effective October 1 and the agencies anticipate that the registry could begin accepting federal registrations as early as January 28, 2011. Joint Release. Federal Register Notice and Final Rules.