Deferral of the Swaps Push-Out Requirement, But Only for Insured Federal Depository Institutions

An insured federal depository institution may request a transition period to comply with the “push-out” requirements of section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) according to guidance issued by the Office of the Comptroller of the Currency (“OCC”) on December 31, 2012 (“Guidance”). Insured federal depository institutions granted a transition period will be allowed for a time — but not beyond July 16, 2015 — to defer compliance with the requirement to conduct swaps activities in a separate entity in order to continue to qualify for access to the Federal Reserve discount window and other funding programs sponsored by the US government. Requests for a transition period are to be made in writing to the OCC by January 31, 2013.

The Guidance derives from section 716 of the Dodd-Frank Act that allows the appropriate federal banking supervisor to provide “an insured depository institution that qualifies as a ‘‘swaps entity’’ and would be subject to the federal assistance prohibition” a transition period of up to 24 months to divest its swaps entity or cease the activities that require registration as a swaps entity.2 That provision also allows for the grant of an additional one-year extension on top of the “up to 24-month” initial extension, but that is not part of the Guidance.

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