ABA Weighs in on Harmonization of Swap Margin, QFC Rules

The American Bankers Association today commented on a joint proposed rulemaking issued by the OCC, Federal Reserve and FDIC, Farm Credit Administration and the Federal Housing Finance Administration that would align the agencies’ margin rules with restrictions on qualified financial contracts that took effect last year.

The proposal would clarify that legacy uncleared swaps — those entered into before the margin rules’ compliance dates — or security-based swaps that are not subject to the swap margin rule will not become subject to margin requirements provided that they are amended solely to comply with QFC rules. It would also harmonize the definition of “eligible master netting agreement” in the swap margin rule with recent changes to the definition of “qualifying master netting agreement” in the agencies’ respective capital and liquidity regulations.

ABA generally supported the proposal, and urged the prudential regulators to further amend the swap margin rule so that the affiliate transaction provisions align with the relevant provisions in the Commodity Futures Trading Commission’s regulations governing margin for uncleared swaps.