Margin and Capital Requirements for Covered Swap Entities, 39464-39470 [2020-14094]

Agencies

• Farm Credit Administration
• FEDERAL DEPOSIT INSURANCE CORPORATION
• Office of the Comptroller of the Currency
• DEPARTMENT OF THE TREASURY
• FEDERAL HOUSING FINANCE AGENCY
• Board of Governors of the Federal Reserve System

[Federal Register Volume 85, Number 127 (Wednesday, July 1, 2020)]
[Rules and Regulations]
[Pages 39464-39470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14094]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 45

[Docket No. OCC-2020-0027]
RIN 1557-AE98

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Part 237

[Docket No. R-1721]
RIN 7100-AF92

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 349

RIN 3064-AF55

FARM CREDIT ADMINISTRATION

12 CFR Part 624

RIN 3052-AD34

FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1221

RIN 2590-AB03


Margin and Capital Requirements for Covered Swap Entities

AGENCY: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Farm Credit Administration (FCA); 
and the Federal Housing Finance Agency (FHFA).

ACTION: Interim final rule and request for comment.

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SUMMARY: The OCC, Board, FDIC, FCA, and FHFA (each an Agency and, 
collectively, the Agencies) are adopting and inviting comment on an 
interim final rule amending the Agencies' regulations that require swap 
dealers, security-based swap dealers, major swap participants, and 
major security-based swap participants under the Agencies' respective 
jurisdictions to exchange margin with their counterparties for swaps 
that are not centrally cleared (non-cleared swaps) (Swap Margin Rule). 
Under the Swap Margin Rule, as amended, initial margin requirements 
will take effect under a phased compliance schedule spanning from 2016 
through 2020, and in a final rule published elsewhere in today's issue 
of the Federal Register, the Agencies have extended the phase-in period 
to 2021. Due to the COVID-19 pandemic, the Agencies are extending by 
one year the phases 5 and 6 implementation deadlines for initial margin 
requirements from September 1, 2020, to September 1, 2021 (for phase 5) 
and from September 1, 2021, to September 1, 2022 (for phase 6). The 
Agencies' objective is to give covered swap entities additional time to 
meet their initial margin requirements under the rule so as not to 
hamper any efforts

[[Page 39465]]

underway to address exigent circumstances caused by COVID-19.

DATES: The interim final rule is effective September 1, 2020. Comments 
should be received on or before August 31, 2020.

ADDRESSES: Interested parties are encouraged to submit written comments 
jointly to all of the Agencies. Commenters are encouraged to use the 
title ``Margin and Capital Requirements for Covered Swap Entities'' to 
facilitate the organization and distribution of comments among the 
Agencies.
    OCC: You may submit comments to the OCC by any of the methods set 
forth below. Commenters are encouraged to submit comments through the 
Federal eRulemaking Portal or email, if possible. Please use the title 
``Margin and Capital Requirements for Covered Swap Entities'' to 
facilitate the organization and distribution of the comments. You may 
submit comments by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
www.regulations.gov. Enter ``Docket ID OCC-2020-0027'' in the Search 
Box and click ``Search.'' Click on ``Comment Now'' to submit public 
comments. Click on the ``Help'' tab on the Regulations.gov home page to 
get information on using Regulations.gov, including instructions for 
submitting public comments.
     Email: [email protected].
     Mail: Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency, 400 7th Street SW, Suite 3E-
218, Washington, DC 20219.
     Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218, 
Washington, DC 20219.
     Fax: (571) 465-4326.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket ID OCC-2020-0027'' in your comment. In general, the OCC will 
enter all comments received into the docket and publish the comments on 
the Regulations.gov website without change, including any business or 
personal information that you provide such as name and address 
information, email addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not include any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this rulemaking action by any of the following methods:
     Viewing Comments Electronically: Go to 
www.regulations.gov. Enter ``Docket ID OCC-2020-0027'' in the Search 
box and click ``Search.'' Click on ``Open Docket Folder'' on the right 
side of the screen. Comments and supporting materials can be viewed and 
filtered by clicking on ``View all documents and comments in this 
docket'' and then using the filtering tools on the left side of the 
screen. Click on the ``Help'' tab on the Regulations.gov home page to 
get information on using Regulations.gov. The docket may be viewed 
after the close of the comment period in the same manner as during the 
comment period.
    Board: You may submit comments, identified by Docket No. R-1721 and 
RIN No. 7100-AF92, by any of the following methods:
     Agency Website: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Email: [email protected]. Include the 
docket number and RIN number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Address to Ann E. Misback, Secretary, Board of 
Governors of the Federal Reserve System, 20th Street and Constitution 
Avenue NW, Washington, DC 20551.
    All public comments are available from the Board's website at 
https://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons or to remove 
personally identifiable information at the commenter's request. 
Accordingly, comments will not be edited to remove any identifying or 
contact information. Public comments may also be viewed electronically 
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006 
between 9:00 a.m. and 5:00 p.m. on weekdays.
    FDIC: You may submit comments, identified by RIN **, by any of the 
following methods:
     Agency Website: https://www.FDIC.gov/regulations/laws/federal.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments/Legal ESS, Federal Deposit Insurance Corporation, 550 17th 
Street NW, Washington, DC 20429.
     Hand Delivered/Courier: The guard station at the rear of 
the 550 17th Street Building (located on F Street) on business days 
between 7:00 a.m. and 5:00 p.m.
     Email: [email protected]. Comments submitted must include 
``FDIC'' and ``RIN 3064-AF55--Margin and Capital Requirements for 
Covered Swap Entities.'' Comments received will be posted without 
change to https://www.fdic.gov/regulations/laws/federal, including any 
personal information provided.
    FCA: We offer a variety of methods for you to submit your comments. 
For accuracy and efficiency reasons, commenters are encouraged to 
submit comments by email or through the FCA's website. As facsimiles 
(fax) are difficult for us to process and achieve compliance with 
section 508 of the Rehabilitation Act, we are no longer accepting 
comments submitted by fax. Regardless of the method you use, please do 
not submit your comments multiple times via different methods. You may 
submit comments by any of the following methods:
     Email: Send us an email at [email protected].
     FCA Website: https://www.fca.gov. Click inside the ``I want 
to . . .'' field near the top of the page; select ``comment on a 
pending regulation'' from the dropdown menu; and click ``Go.'' This 
takes you to an electronic public comment form.
     Mail: David P. Grahn, Director, Office of Regulatory 
Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 
22102-5090.
    You may review copies of all comments we receive at our office in 
McLean, Virginia or on our website at https://www.fca.gov. Once you are 
on the website, click inside the ``I want to . . .'' field near the top 
of the page; select ``find comments on a pending regulation'' from the 
dropdown menu; and click ``Go.'' This will take you to the Comment 
Letters page where you can select the regulation for which you would 
like to read the public comments. We will show your comments as 
submitted, including any supporting data provided, but for technical 
reasons we may omit items such as logos and special characters. 
Identifying information that you provide, such as phone numbers and 
addresses, will be publicly available. However, we will attempt to 
remove email addresses to help reduce internet spam.
    FHFA: You may submit your written comments on the interim final 
rulemaking, identified by regulatory information number: RIN 2590-AB03, 
by any of the following methods:
     Agency Website: www.fhfa.gov/open-for-comment-or-input.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments. If

[[Page 39466]]

you submit your comment to the Federal eRulemaking Portal, please also 
send it by email to FHFA at [email protected] to ensure timely 
receipt by the Agency. Please include ``RIN 2590-AB03'' in the subject 
line of the message.
     Hand Delivery/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AB03, 
Federal Housing Finance Agency, Constitution Center (OGC Eighth Floor), 
400 7th St. SW, Washington, DC 20219. Deliver the package to the 
Seventh Street entrance Guard Desk, First Floor, on business days 
between 9:00 a.m. and 5:00 p.m.
     U.S. Mail, United Parcel Service, Federal Express, or 
Other Mail Service: The mailing address for comments is: Alfred M. 
Pollard, General Counsel, Attention: Comments/RIN 2590-AB03, Federal 
Housing Finance Agency, Constitution Center (OGC Eighth Floor), 400 7th 
St. SW, Washington, DC 20219.
    All comments received by the deadline will be posted for public 
inspection without change, including any personal information you 
provide, such as your name, address, email address and telephone number 
on the FHFA website at https://www.fhfa.gov. Copies of all comments 
timely received will be available for public inspection and copying at 
the address above on government-business days between the hours of 10 
a.m. and 3 p.m. To make an appointment to inspect comments please call 
the Office of General Counsel at (202) 649-3804.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Chris McBride, Director for Market Risk, Treasury and Market 
Risk Policy, (202) 649-6402, or Allison Hester-Haddad, Counsel, Chief 
Counsel's Office, (202) 649-5490, for persons who are deaf or hearing 
impaired, TTY (202) 649-5597, Office of the Comptroller of the 
Currency, 400 7th Street SW, Washington, DC 20219.
    Board: Constance Horsley, Deputy Associate Director, (202) 452-
5239, Lesley Chao, Lead Financial Institution Policy Analyst, (202) 
974-7063, or John Feid, Principal Economist, (202) 452-2385, Division 
of Supervision and Regulation; Patricia Yeh, Senior Counsel, (202) 452-
3089 or Jason Shafer, Senior Counsel, (202) 728-5811, Legal Division; 
for users of Telecommunication Devices for the Deaf (TDD) only, contact 
202-263-4869; Board of Governors of the Federal Reserve System, 20th 
and C Streets NW, Washington, DC 20551.
    FDIC: Irina Leonova, Senior Policy Analyst, [email protected], 
Capital Markets Branch, Division of Risk Management Supervision, (202) 
898-3843; Thomas F. Hearn, Counsel, [email protected], Legal Division, 
Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, 
DC 20429.
    FCA: Jeremy R. Edelstein, Associate Director, Timothy T. Nerdahl, 
Senior Policy Analyst, Clayton D. Milburn, Senior Financial Analyst, 
Finance and Capital Markets Team, Office of Regulatory Policy, (703) 
883-4414, TTY (703) 883-4056, or Richard A. Katz, Senior Counsel, 
Office of General Counsel, (703) 883-4020, TTY (703) 883-4056, Farm 
Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
    FHFA: Christopher Vincent, Senior Financial Analyst, Office of 
Financial Analysis, Modeling & Simulations, (202) 649-3685, 
[email protected], or James P. Jordan, Associate General 
Counsel, Office of General Counsel, (202) 649-3075, 
[email protected], Federal Housing Finance Agency, Constitution 
Center, 400 7th St. SW, Washington, DC 20219. The telephone number for 
the Telecommunications Device for the Deaf is (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    In November 2015, the Agencies jointly adopted a final rule 
establishing initial margin and variation margin requirements for 
dealers and major participants in non-cleared swaps and non-cleared 
security-based swaps, such entities defined in the joint final rule as 
``covered swap entities.'' The implementation of both initial and 
variation margin requirements started on September 1, 2016. With 
respect to initial margin requirements, the requirements in the Swap 
Margin Rule were implemented in six phases from September 1, 2016, 
through September 1, 2020, depending on the size of the covered swap 
entity's portfolio of non-cleared swaps and the counterparty's 
portfolio of non-cleared swaps. Variation margin requirements for all 
covered swap entities and counterparties were completely phased in by 
March 1, 2017. This schedule was consistent with BCBS/IOSCO framework 
when the Swap Margin Rule was adopted in 2015.
    By joint final rule, the Agencies, among other things, amended the 
compliance schedule to add a sixth phase of compliance for certain 
smaller entities that were previously subject to the ``phase five'' 
compliance deadline.

II. Description of the Interim Final Rule and Request for Comment

    The containment measures adopted in response to recent COVID-19 
public health concerns have slowed economic activity in many countries, 
including the United States. Financial conditions have tightened 
markedly, with extreme volatility in financial markets. Businesses in 
all fields of operation, including the financial sector, have 
experienced a reduction in the capacity of their operations, as local 
governments have issued stay-at-home orders, requiring businesses to 
shift to remote operations, with employees having to conduct many 
critical functions from their homes. Under these circumstances and 
taking account of the high market volatility resulting from the 
pandemic, market participants have diverted resources to ongoing 
business continuity.
    The Basel Committee on Banking Supervision and International 
Organization of Securities Commissions (BCBS/IOSCO) extended the 
implementation schedule for the initial margin requirements for non-
cleared derivatives for an additional year.\1\ BCBS/IOSCO stated that 
the extension would provide additional operational capacity for firms 
to respond to the immediate impact of COVID-19, allowing firms to 
diligently comply with upcoming initial margin deadlines by the revised 
deadlines.
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    \1\ BSBS/IOSCO extended the deadline for completing the final 
two implementation phases of the margin requirements for non-
centrally cleared derivatives, by one year. The final implementation 
phase will take place on September 1, 2022, at which point covered 
entities with an aggregate average notional amount (AANA) of non-
centrally cleared derivatives greater than [euro]8 billion will be 
subject to the requirements. As an intermediate step, from September 
1, 2021 covered entities with an AANA of non-centrally cleared 
derivatives greater than [euro]50 billion will be subject to the 
requirements. See, https://www.bis.org/press/p200403a.htm.
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    The agencies are issuing this interim final rule to provide covered 
swap entities additional time to comply with the Swap Margin Rule's 
phases 5 and 6 initial margin implementation deadlines. The interim 
final rule delays the effective date for phase 5 from September 1, 2020 
to September 1, 2021 and, for phase 6, from September 1, 2021 to 
September 1, 2022. In issuing this interim final rule, the Agencies' 
objective is to give covered swap entities additional time to meet the 
requirements under the rule so as not to divert resources from ongoing 
efforts to address exigent circumstances caused by COVID-19. In 
addition, the Agencies believe that an extension of one year for both 
phase 5 and phase 6 is necessary

[[Page 39467]]

to give covered swap entities sufficient time to address both 
deadlines. As explained in Agencies' most recent notice of proposed 
rulemaking addressing the Swap Margin Rule, the industry faced 
operational and other difficulties in preparing for the exchange of 
initial margin with a large number of relatively small counterparties 
by September 1, 2020; \2\ therefore, the Agencies amended the 
compliance schedule to add a sixth phase for certain smaller entities. 
Consistent with the policy goals explained in the recent proposed rule, 
a one year extension for both phases will allow covered swap entities 
to prioritize certain larger counterparties and avoid operational 
challenges they would encounter if it was necessary to prepare for the 
exchange of initial margin with a large number of relatively small 
counterparties on the same compliance date in 2021.
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    \2\ 84 FR 59976 (November 7, 2019).
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    While this interim final rule provides covered swap entities 
additional time to comply with the Swap Margin Rule's phases 5 and 6 
initial margin implementation deadlines by delaying the effective date 
for phase 5 from September 1, 2020 to September 1, 2021 and, for Phase 
6, from September 1, 2021 to September 1, 2022, covered swap entities 
and their counterparties may voluntarily start the compliance with the 
Swap Margin Rule prior to the new mandatory compliance dates in 
accordance with the original schedule or other mutually agreed date.
    The Agencies request comment on all aspects of the interim final 
rule.

III. Administrative Law Matters

A. Administrative Procedure Act

    The Agencies are issuing the interim final rule without prior 
notice and the opportunity for public comment. Pursuant to section 
553(b)(B) of the Administrative Procedure Act (APA), general notice and 
the opportunity for public comment are not required with respect to a 
rulemaking when an ``agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefor in the rules issued) 
that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' \3\
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    \3\ 5 U.S.C. 553(b)(B).
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    As discussed above, the interim final rule provides covered swap 
entities additional time to meet their obligations under the swap 
margin rule in light of the exigent circumstances caused by COVID-19. 
The Agencies believe that the public interest is best served by making 
the interim final rule effective as soon as possible given the scale, 
scope, and pace of the pandemic's disruptive nature. The Agencies 
believe that issuing the interim final rule will facilitate the 
industry's efforts to respond to COVID-19's impact. In addition, the 
Agencies believe that providing a notice and comment period prior to 
issuance of the interim final rule is impracticable given the need for 
relief immediately. For these reasons, the Agencies find there is good 
cause consistent with the public interest to issue the interim final 
rule without advance notice and comment.
    As noted above, the Interim Final Rule is amending provisions that 
are being adopted by the Final Rule that also published in today's 
edition of the Federal Register. The Final Rule will take effect August 
31, 2020. So that this Interim Final Rule takes effect in its proper 
sequence for purposes of allowing the Federal Register to accurately 
update the applicable sections of the Code of Federal Regulations being 
affected by the Final Rule and this Interim Final Rule, the Interim 
Final Rule an effective date of one day later than the effective date 
of the Final Rule, i.e., September 1, 2020.
    The agencies have found good cause that, despite such a delayed 
effective date, general notice and an opportunity for public comment 
are impracticable, unnecessary, or contrary to the public interest. 
Compliance with the new regulatory regime for phase 5 on September 1, 
2020 and phase 6 on September 1, 2021 involves significant planning by 
industry participants for months, and in some cases years, prior to the 
requirements taking effect. The agencies believe that, in this 
instance, publication of the Interim Final Rule in the Federal Register 
will provide industry participants critical information that will allow 
them to revise their implementation schedules immediately in light of 
the issuance of an interim final rule from the agencies that the phase 
5 and phase 6 compliance dates will be delayed for an additional year. 
But for the need to properly sequence the Final Rule's and Interim 
Final Rule's effective dates and the 60-day delay in the Final Rule's 
effective date in order to comply with the Congressional Review Act, 
the agencies would have set the effective date for this Interim Final 
Rule upon publication in the Federal Register. Nevertheless, the 
agencies have requested comment on the Interim Final Rule and will 
carefully consider any comments that are received.
    In the event that Federal Register publication takes place after 
July 2, 2020, the effective date of the Interim Final Rule will be 
after September 1, 2020. In this instance, the agencies do not expect 
that covered swap entities would comply with the phase 5 compliance 
date, as amended by the Final Rule, for the few days before the Interim 
Final Rule's effective date occurs.

B. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act requires the Federal 
banking Agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The Agencies have sought to present 
the interim final rule in a simple and straightforward manner. The 
Agencies invite comments on whether there are additional steps they 
could take to make the rule easier to understand. For example:
     Have we organized the material to suit your needs? If not, 
how could this material be better organized?
     Are the requirements in the regulation clearly stated? If 
not, how could the regulation be more clearly stated?
     Does the regulation contain language or jargon that is not 
clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
     What else could we do to make the regulation easier to 
understand?

C. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 \4\ (PRA), the Agencies may not conduct or sponsor, and a 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number. The Agencies have reviewed this interim final 
rule and determined that it would not introduce any new or revise any 
collection of information pursuant to the PRA. Therefore, no 
submissions will be made to OMB for review.
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    \4\ 44 U.S.C. 3501-3521.
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D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \5\ requires an agency to 
consider whether the rules it proposes will have a significant economic 
impact on a

[[Page 39468]]

substantial number of small entities.\6\ The RFA applies only to rules 
for which an agency publishes a general notice of proposed rulemaking 
pursuant to 5 U.S.C. 553(b). As discussed previously, consistent with 
section 553(b)(B) of the APA, the Agencies have determined for good 
cause that general notice and opportunity for public comment is 
unnecessary, and therefore the Agencies are not issuing a notice of 
proposed rulemaking. Accordingly, the Agencies have concluded that the 
RFA's requirements relating to initial and final regulatory flexibility 
analysis do not apply.
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    \5\ 5 U.S.C. 601 et seq.
    \6\ Under regulations issued by the Small Business 
Administration, a small entity includes a depository institution, 
bank holding company, or savings and loan holding company with total 
assets of $600 million or less and trust companies with total assets 
of $41.5 million or less. See 13 CFR 121.201.
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    Nevertheless, the agencies seek comment on whether, and the extent 
to which, the interim final rule would affect a significant number of 
small entities.

E. Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act), 2 U.S.C. 1532, requires the OCC to prepare a budgetary 
impact statement before promulgating any final rule for which a general 
notice of proposed rulemaking was published. As discussed above, the 
OCC has determined for good cause that the publication of a general 
notice of proposed rulemaking is impracticable and contrary to the 
public interest. Accordingly, this interim final rule is not subject to 
section 202 of the Unfunded Mandates Act.

F. Riegle Community Development and Regulatory Improvement Act of 1994

    The Riegle Community Development and Regulatory Improvement Act of 
1994 (RCDRIA) requires that each Federal banking agency, in determining 
the effective date and administrative compliance requirements for new 
regulations that impose additional reporting, disclosure, or other 
requirements on insured depository institutions (IDIs), consider, 
consistent with principles of safety and soundness and the public 
interest, any administrative burdens that such regulations would place 
on depository institutions, including small depository institutions, 
and customers of depository institutions, as well as the benefits of 
such regulations. In addition, new regulations and amendments to 
regulations that impose additional reporting, disclosures, or other new 
requirements on IDIs generally must take effect on the first day of a 
calendar quarter that begins on or after the date on which the 
regulations are published in final form.\7\ Each Federal banking agency 
has determined that the interim final rule would not impose additional 
reporting, disclosure, or other requirements; therefore the 
requirements of the RCDRIA do not apply.
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    \7\ 12 U.S.C. 4802.
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G. Congressional Review Act

    For purposes of Congressional Review Act (CRA), OMB makes a 
determination as to whether a final rule constitutes a ``major'' 
rule.\8\ If a rule is deemed a ``major rule'' by the OMB, the CRA 
generally provides that the rule may not take effect until at least 60 
days following its publication.\9\
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    \8\ 5 U.S.C. 801 et seq.
    \9\ 5 U.S.C. 801(a)(3).
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    The CRA defines a ``major rule'' as any rule that the Administrator 
of the Office of Information and Regulatory Affairs of the OMB finds 
has resulted in or is likely to result in (1) an annual effect on the 
economy of $100,000,000 or more; (2) a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies or geographic regions, or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export 
markets.\10\
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    \10\ 5 U.S.C. 804(2).
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    As required by the CRA, the Agencies will submit the interim final 
rule and other appropriate reports to Congress and the Government 
Accountability Office for review.

List of Subjects

12 CFR Part 45

    Administrative practice and procedure, Capital, Margin 
requirements, National Banks, Federal Savings Associations, Reporting 
and recordkeeping requirements, Risk.

12 CFR Part 237

    Administrative practice and procedure, Banks, Banking, Foreign 
banking, Holding companies, Reporting and recordkeeping requirements, 
Swaps.

 12 CFR Part 349

    Administrative practice and procedure, Banks, Banking, Holding 
companies, Capital, Margin requirements, Reporting and recordkeeping 
requirements, Savings associations, Risk, Swaps.

12 CFR Part 624

    Accounting, Agriculture, Banks, Banking, Capital, Cooperatives, 
Credit, Margin requirements, Reporting and recordkeeping requirements, 
Risk, Rural areas, Swaps.

12 CFR Part 1221

    Government-sponsored enterprises, Mortgages, Securities.

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the common preamble and under the 
authority of 12 U.S.C. 93a and 5412(b)(2)(B), the Office of the 
Comptroller of the Currency amends chapter I of Title 12, Code of 
Federal Regulations, as follows:

PART 45--MARGIN AND CAPITAL REQUIREMENTS FOR COVERED SWAP ENTITIES

0
1. The authority citation for part 45 continues to read as follows:

    Authority:  7 U.S.C. 6s(e), 12 U.S.C. 1 et seq., 12 U.S.C. 93a, 
161, 481, 1818, 3907, 3909, 5412(b)(2)(B), and 15 U.S.C. 78o-10(e).


0
2. Section 45.1 is amended by revising paragraphs (e)(6) and (7) to 
read as follows:


Sec.  45.1   Authority, purpose, scope, exemptions and compliance 
dates.

* * * * *
    (e) * * *
    (6) September 1, 2021 with respect to requirements in Sec.  45.3 
for initial margin for any non-cleared swaps and non-cleared security-
based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, foreign 
exchange forwards and foreign exchange swaps for March, April and May 
2021 that exceeds $50 billion, where such amounts are calculated only 
for business days; and
    (iii) In calculating the amounts in paragraphs (e)(6)(i) and (ii) 
of this section, an entity shall count the average daily aggregate 
notional amount of a non-cleared swap, a non-cleared security-based 
swap, a foreign exchange forward or a foreign exchange swap between the 
entity and an affiliate only

[[Page 39469]]

one time, and shall not count a swap or security-based swap that is 
exempt pursuant to paragraph (d) of this section.
    (7) September 1, 2022 with respect to requirements in Sec.  45.3 
for initial margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.
* * * * *

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the preamble, the Board of Governors 
of the Federal Reserve System amends 12 CFR part 237 to read as 
follows:

PART 237--SWAPS MARGIN AND SWAPS PUSH-OUT (REGULATION KK)

0
3. The authority citation for part 237 continues to read as follows:

    Authority:  7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 15 U.S.C. 8305, 
12 U.S.C. 221 et seq., 12 U.S.C. 343-350, 12 U.S.C. 1818, 12 U.S.C. 
1841 et seq., 12 U.S.C. 3101 et seq., and 12 U.S.C. 1461 et seq.


0
4. Revise the heading to part 237 to read as set forth above.

Subpart A--Margin and Capital Requirements for Covered Swap 
Entities (Regulation KK)

0
5. Section 237.1 is amended by revising paragraphs (e)(6) and (7) to 
read as follows:


Sec.  237.1   Authority, purpose, scope, exemptions and compliance 
dates.

* * * * *
    (e) * * *
    (6) September 1, 2021 with respect to requirements in Sec.  237.3 
for initial margin for any non-cleared swaps and non-cleared security-
based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, foreign 
exchange forwards and foreign exchange swaps for March, April and May 
2021 that exceeds $50 billion, where such amounts are calculated only 
for business days; and
    (iii) In calculating the amounts in paragraphs (e)(6)(i) and (ii) 
of this section, an entity shall count the average daily aggregate 
notional amount of a non-cleared swap, a non-cleared security-based 
swap, a foreign exchange forward or a foreign exchange swap between the 
entity and an affiliate only one time, and shall not count a swap or 
security-based swap that is exempt pursuant to paragraph (d) of this 
section.
    (7) September 1, 2022 with respect to requirements in Sec.  237.3 
for initial margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the Supplementary Information section, 
the Federal Deposit Insurance Corporation amends 12 CFR Chapter III as 
follows:

PART 349--DERIVATIVES

0
6. The authority citation for subpart A of part 349 continues to read 
as follows:

    Authority:  7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), and 12 U.S.C. 
1818 and 12 U.S.C. 1819(a)(Tenth), 12 U.S.C. 1813(q), 1818, 1819, 
and 3108.


0
7. Section 349.1 is amended by revising paragraphs (e)(6) and (7) to 
read as follows:


Sec.  349.1   Authority, purpose, scope, exemptions and compliance 
dates.

* * * * *
    (e) * * *
    (6) September 1, 2021 with respect to requirements in Sec.  349.3 
for initial margin for any non-cleared swaps and non-cleared security-
based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, foreign 
exchange forwards and foreign exchange swaps for March, April and May 
2021 that exceeds $50 billion, where such amounts are calculated only 
for business days; and
    (iii) In calculating the amounts in paragraphs (e)(6)(i) and (ii) 
of this section, an entity shall count the average daily aggregate 
notional amount of a non-cleared swap, a non-cleared security-based 
swap, a foreign exchange forward or a foreign exchange swap between the 
entity and an affiliate only one time, and shall not count a swap or 
security-based swap that is exempt pursuant to paragraph (d) of this 
section.
    (7) September 1, 2022 with respect to requirements in Sec.  349.3 
for initial margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.

FARM CREDIT ADMINISTRATION

12 CFR Chapter VI

Authority and Issuance

    For the reasons set forth in the preamble, the Farm Credit 
Administration amends chapter VI of title 12, Code of Federal 
Regulations, as follows:

PART 624--MARGIN AND CAPITAL REQUIREMENTS FOR COVERED SWAP ENTITIES

0
8. The authority citation for part 624 continues to read as follows:

    Authority: 7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 2154, 
12 U.S.C. 2243, 12 U.S.C. 2252, 12 U.S.C. 2279bb-1.


0
9. Section 624.1 is amended by revising paragraphs (e)(6) and (7) to 
read as follows:


Sec.  624.1   Authority, purpose, scope, exemptions and compliance 
dates.

* * * * *
    (e) * * *
    (6) September 1, 2021 with respect to requirements in Sec.  624.3 
for initial margin for any non-cleared swaps and non-cleared security-
based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, foreign 
exchange forwards and foreign exchange swaps for March, April and May 
2021 that exceeds $50 billion, where such amounts are calculated only 
for business days; and
    (iii) In calculating the amounts in paragraphs (e)(6)(i) and (ii) 
of this section, an entity shall count the average daily aggregate 
notional amount of a non-cleared swap, a non-cleared security-based 
swap, a foreign exchange forward or a foreign exchange swap between the 
entity and an affiliate only one time, and shall not count a swap or 
security-based swap that is exempt pursuant to paragraph (d) of this 
section.
    (7) September 1, 2022 with respect to requirements in Sec.  624.3 
for initial margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.

[[Page 39470]]

FEDERAL HOUSING FINANCE AGENCY

12 CFR Chapter XII

Authority and Issuance

    For the reasons set forth in the preamble, the Federal Housing 
Finance Agency amends chapter XII of title 12, Code of Federal 
Regulations, as follows:

PART 1221--MARGIN AND CAPITAL REQUIREMENTS FOR COVERED SWAP 
ENTITIES

0
10. The authority citation for part 1221 continues to read as follows:

    Authority:  7 U.S.C. 6s(e), 15 U.S.C. 78o-10(e), 12 U.S.C. 4513, 
and 12 U.S.C. 4526(a).


0
11. Section 1221.1 is amended by revising paragraphs (e)(6) and (7) to 
read as follows:


Sec.  1221.1   Authority, purpose, scope, exemptions and compliance 
dates.

* * * * *
    (e) * * *
    (6) September 1, 2021 with respect to requirements in Sec.  1221.3 
for initial margin for any non-cleared swaps and non-cleared security-
based swaps, where both:
    (i) The covered swap entity combined with all its affiliates; and
    (ii) Its counterparty combined with all its affiliates, have an 
average daily aggregate notional amount of non-cleared swaps, foreign 
exchange forwards and foreign exchange swaps for March, April, and May 
2021 that exceeds $50 billion, where such amounts are calculated only 
for business days; and
    (iii) In calculating the amounts in paragraphs (e)(6)(i) and (ii) 
of this section, an entity shall count the average daily aggregate 
notional amount of a non-cleared swap, a non-cleared security-based 
swap, a foreign exchange forward or a foreign exchange swap between the 
entity and an affiliate only one time, and shall not count a swap or 
security-based swap that is exempt pursuant to paragraph (d) of this 
section.
    (7) September 1, 2022 with respect to requirements in Sec.  1221.3 
for initial margin for any other covered swap entity with respect to 
non-cleared swaps and non-cleared security-based swaps entered into 
with any other counterparty.

Brian P. Brooks,
Acting Comptroller of the Currency.

    By order of the Board of Governors of the Federal Reserve 
System.
Ann E. Misback,
Secretary of the Board.

Federal Deposit Insurance Corporation.

    By order of the Board of Directors.

    Dated at Washington, DC, on or about June 25, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
    Dated: June 24, 2020.
Dale Aultman,
Secretary, Farm Credit Administration Board.
Mark A. Calabria,
Director, Federal Housing Finance Agency.
[FR Doc. 2020-14094 Filed 6-30-20; 8:45 am]
BILLING CODE 6210-01-P; 4810-33-P; 6714-01-P; 7535-01-P; 6705-01-P; 
8070-01-P