Agencies Facilitate Transfers of Legacy Swaps Under ‘Hard Brexit’

With uncertainty rising around the United Kingdom’s pending withdrawal from the European Union, five federal regulatory agencies today issued an interim final rule to allow qualifying swaps to be transferred from a UK entity to an affiliate in the EU or the U.S. without triggering new requirements.

This action applies to legacy swaps that were entered into before applicable regulatory margin requirements took effect. It ensures that any legacy swap currently exempt from the agencies’ rule on margin for non-cleared swaps would not become subject to the rule if it is amended solely for the purpose of transferring it to an affiliate as a result of a “hard” Brexit.

While the interim final rule is effective immediately, the agencies are accepting comments on the rule for 30 days after publication in the Federal Register. For more information, contact ABA’s Ananda Radhakrishnan.