Major Banks Granted Two Year Extension under Pushout Rule | Practical Law
Regulators have granted several major global financial institutions a two year transition period to comply with the swaps Pushout Rule under Section 716 of the Dodd-Frank Act.
Regulators have granted several major global financial institutions a two year transition period to comply with the swaps Pushout Rule under Section 716 of the Dodd-Frank Act.
US bank regulators have agreed to grant several major banks a two year transition period to comply with the swaps Pushout Rule under Section 716 of the Dodd-Frank Act. The Pushout Rule, which otherwise takes effect on July 16, 2013, generally prohibits any "swaps entity" from receiving federal assistance, which includes deposit insurance and access to the federal discount window (see Practice Note, US Derivatives Regulation: Swaps Pushout Rule). This requires that federally insured depository institutions (IDIs) move their non-hedging swaps activities, including market-making swaps activities, outside the IDI. However, earlier this year, the OCC issued guidance, authorized under the rule itself, allowing IDIs to request a two year transition period to comply with the provision (see Legal Update, OCC Offers Swaps Pushout Rule Extensions). Federal bank regulators including the Federal Reserve Board (FRB) have responded positively to the individual requests, which remain nonpublic.
The OCC stated on June 11, 2013 that it had granted transition period approval to JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Morgan Stanley, US Bancorp and HSBC.
This announcement comes on the heels of an FRB interim final rule permitting uninsured US branches and agencies of foreign banks the same two year phase-in period to comply with the Pushout Rule as US IDIs may receive (see Legal Update, FRB Grants Swaps Pushout Rule Phase-in for Foreign Banks).