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From Banking and Finance Law Daily, August 2, 2016

Swaps margin exemptions finalized

By J. Preston Carter, J.D., LL.M.

Federal financial institution regulators have adopted a final rule that exempts some commercial and financial end users from margin requirements for some swaps not cleared through a clearinghouse. The rule applies to swaps of commercial end users, small banks, savings associations, Farm Credit System institutions, and credit unions with $10 billion or less in total assets. Non-cleared swaps of some treasury affiliates, financial cooperatives, and captive finance companies also are exempt. However, the non-cleared swaps must hedge or mitigate commercial risk of these counterparties and satisfy requirements for an exemption from mandatory clearing.

The Federal Reserve Board’s press release notes that the exemptions were first adopted by interim final rule published in the Federal Register in November 2015 with a request for public comment. The final rule discusses the comments received and adopts the earlier interim final rule as final without change. The Federal Deposit Insurance Corporation adopted the final rule in June (see Banking and Finance Law DailyJune 22, 2016).

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