Rule Proposal Regarding Margin And Capital Requirements For Uncleared Swaps

On April 12, 2011, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Farm Credit Administration and the Federal Housing Finance Agency jointly issued a notice of proposed rulemaking (the "Proposed Rules") requiring institutions within their respective jurisdictions that are swap dealers, security-based swap dealers, major swap participants and security-based swap participants ("covered swap entities") to collect initial and variation margin from counterparties to non-cleared swaps and security-based swaps. The Proposed Rules also require a covered swap entity to comply with existing capital standards set by its prudential regulator. The margin and capital requirements are intended to offset the risk to covered swap entities and the financial system from the use of uncleared swaps. Comments on the Notice are being sought through June 24, 2011.