Key takeaways

• The Federal Reserve, the OCC, the FDIC and other federal banking agencies have adopted final rules on margin and capital requirements for non-cleared swaps and security-based swaps (“Covered Swaps”), which requirements apply to swap dealers and security-based swap dealers for which one of these agencies is the prudential regulator (“Covered Swap Entities”).
• While only the Covered Swap Entities are directly subject to the new rules, all swap market participants who transact Covered Swaps with Covered Swap Entities will be affected as they will be required to post and/or collect margin in accordance with the new margin requirements when transacting with a Covered Swap Entity.
• The final capital rules require a Covered Swap Entity to comply with the risk-based and leverage capital requirements already applicable to it as part of its prudential regulatory regime and do not impose any additional capital requirements with respect to Covered Swaps.
• The banking agencies also adopted interim final rules to exempt from the margin requirements of the final rules certain Covered Swaps with non-financial end users and certain other counterparties that qualify for an exception or exemption from mandatory clearing requirement for swaps and security-based swaps.