Fed Approves Transition Period for Swaps Push Out Provision

The U.S. Federal Reserve has approved a final rule granting non-FDIC-insured U.S. branches and agencies of foreign banks a two-year transition period to comply with Section 716 of Dodd-Frank, known as the swaps push out provision.
By Jake Safane(2147484770)
The U.S. Federal Reserve has approved a final rule granting non-FDIC-insured U.S. branches and agencies of foreign banks a two-year transition period to comply with Section 716 of Dodd-Frank, known as the swaps push out provision.

Section 716 generally prohibits the provision of certain types of federal assistance, such as discount window lending and deposit insurance, to swaps entities such as swap dealers and major swap participants. Thus, in order to receive federal assistance, the bank needs to push out their swap activities to non-bank affiliates that are not eligible for federal assistance or cease swap activities altogether.

Under the final ruling by the Fed, which adopts without change the interim final rule issued on June 5, 2013, these uninsured U.S. branches and agencies of foreign banks receive the same treatment as insured depository banks, which allows these institutions to have up to 24 months to comply with the swaps provision from either July 16, 2013, the date that the provisions of Section 716 came into effect, or from the later date the institution became or becomes a swap entity.

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