The Board, OCC, FDIC, FCA, and FHFA (each an Agency and, collectively, the Agencies) sought comment on proposed amendments to the minimum margin requirements for registered swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants for which one of the Agencies is the prudential regulator (Swap Margin Rule). The Agencies proposed these amendments in light of the rules recently adopted by the Board, the OCC, and the FDIC that impose restrictions on certain non-cleared swaps and non-cleared security-based swaps and other financial contracts (Covered QFCs) (the QFC Rules). The QFC Rules amend the definition of Qualifying Master Netting Agreement” in the Federal banking agencies’ regulatory capital and liquidity rules to ensure that a Covered QFC is not prevented from being part of a Qualifying Master Netting Agreement solely because the Covered QFC conforms to the new requirements in the QFC Rules. The FCA proposed amendments to its capital rules, including potential revisions to its regulatory definition of Qualifying Master Netter Agreement,” which is expected to be identical to the definition used in the Federal banking agencies’ regulatory capital and liquidity rules.

The Agencies proposed to amend the definition of Eligible Master Netting Agreement” in the Swap Margin Rule so that it remains harmonized with the amended definition of Qualifying Master Netting Agreement” in the Federal banking agencies’ regulatory capital and liquidity rules, and amendments to the capital rules that the FCA separately plans to propose. This rule ensures that netting agreements of firms subject to the Swap Margin Rule are not excluded from the definition of Eligible Master Netting Agreement” based solely on their compliance with the QFC Rules. The Agencies also proposed that any legacy non-cleared swap or non-cleared security-based swap (i.e., a non-cleared swap or non-cleared security-based swap entered into before the applicable compliance date) that is not subject to the margin requirements of the Swap Margin Rule would not become subject to the provisions of the Swap Margin Rule if the non-cleared swap or non-cleared security-based swap is amended solely to comply with the requirements of the QFC Rules.