Alert June 11, 2013

FRB Approves Interim Final Rule under Swaps Push-Out Provision of Dodd-Frank Act

The FRB approved an interim final rule (the “Interim Final Rule”) clarifying the treatment of uninsured U.S. branches and agencies of foreign banks under the swaps push-out provision of the Dodd-Frank Act, which generally prohibits the provision of certain types of federal assistance, including deposit insurance and access to FRB advances, to swaps entities (such as swap dealers).  The provision becomes effective on July 16, 2013, but insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months, as established by their regulator, before they must comply.  

The Interim Final Rule clarifies that swaps entities that are uninsured U.S. branches and agencies of foreign banks will be treated as insured depository institutions for purposes of the push-out provision, enabling them, among other things, to apply for the transition period.  The Interim Final Rule also establishes the process which state member banks and uninsured state branches or agencies of foreign banks must use if they wish to apply for the transition period.

The Interim Final Rule became effective on June 5, 2013.  The FRB will accept comments on the Interim Final Rule through August 4, 2013, and may revise the Interim Final Rule after review of any comments received.