US Codex
Bill
Notes

To require the appropriate Federal banking agencies to recognize the exposure-reducing nature of client margin for cleared derivatives.

S. 3682 · 115th Congress · Nov 29, 2018 · Lineage

A BILL

Section 1 Treatment of client margin

(a)
Treatment of client margin for insured depository institutions— Section 18(n) of the Federal Deposit Insurance Act (12 U.S.C. 1828(n)) is amended—
(1)
by striking “No appropriate” and inserting the following:

“(1) Unidentified intangible assets—No appropriate”

(2)
by adding at the end the following:

“(2) Treatment of client margin—For purposes of any leverage-based capital rule, guideline, standard, or requirement promulgated, prescribed, or imposed by any appropriate Federal banking agency on insured depository institutions, the amount of any initial margin provided by a client of an insured depository institution with respect to a centrally cleared derivative obligation shall be deducted from the amount of any leverage exposure arising from the insured depository institution’s guarantee of the client’s derivative obligation to the central counterparty.”

(b)
Treatment of client margin for bank holding companies— Section 5(c)(3) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(3)) is amended—
(1)
by adding at the end the following:

“(D) Treatment of client margin—For purposes of any leverage-based capital rule, guideline, standard, or requirement promulgated, prescribed, or imposed by the Board on bank holding companies, the amount of any initial margin provided by a client of a bank holding company or affiliate thereof with respect to a centrally cleared derivative obligation shall be deducted from the amount of any leverage exposure arising from the guarantee by the bank holding company or affiliate thereof of the client’s derivative obligation to the central counterparty.”

(c)
Treatment of client margin for savings and loan holding companies— Section 10(g)(1) of the Home Owners’ Loan Act (12 U.S.C. 1467a(g)(1)) is amended—
(1)
by striking “The Board” and inserting the following:

“(A) Regulations and orders—The Board”

(2)
by adding at the end the following:

“(B) Treatment of client margin—For purposes of any leverage-based capital rule, guideline, standard, or requirement promulgated, prescribed, or imposed by the Board on savings and loan holding companies, the amount of any initial margin provided by a client of a savings and loan holding company or affiliate thereof with respect to a centrally cleared derivative obligation shall be deducted from the amount of any leverage exposure arising from the guarantee by the savings and loan holding company or affiliate thereof of the client’s derivative obligation to the central counterparty.”

(d)
Amendments to leverage-Based capital regulations— Not later than the end of the 3-month period beginning on the date of the enactment of this Act, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Comptroller of the Currency shall amend their rules to implement the amendments made by this Act.