As soon as possible, the OCC should issue a 60 day notice soliciting comment on the collection under the interim final rule and note that the agency requested and obtained an emergency revision from OMB to cover the interim period. Upon completion of the 60 day window under the aforementioned notice, the OCC should expeditiously issue a 30 day notice that it has submitted the collection to OIRA for approval upon adoption of the final rule.
Inventory as of this Action
Requested
Previously Approved
09/30/2019
6 Months From Approved
03/31/2022
2,620
0
2,610
17,400
0
17,390
0
0
0
Sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act require the OCC, FRB, FDIC, FHFA, and FCA to adopt joint rules for swap entities under their jurisdictions imposing capital requirements and initial and variation margin requirements on all non-cleared swaps. Currently, we are requesting emergency clearance for an interim final rule with an immediate effective date that will addresses a potential impact of the scenario in which the United Kingdom (U.K.) exits from the European Union (E.U.)âalso known as Brexitâin the absence of a negotiated withdrawal agreement allowing financial services firms located in the U.K. to continue providing full-scope financial services in the E.U. In that event, numerous U.K. financial services firms may begin to transfer their existing swap portfolios that face counterparties located in the E.U. over to a related establishment of the U.K. financial services firm located within the E.U. or the U.S. Brexit is expected to occur on March 29, 2019. The Interim Final Rule authorizes a financial entity with non-cleared swaps located in the U.K. to relocate existing swap portfolios to affiliates or other related entities located within the E.U. or U.S., without the legacy swaps in the portfolios becoming subject to the requirements of the Swap Margin Rule.
The OCC has determined that (1) the collection of information within the scope of this request is needed prior to the expiration of time periods established under 5 C.F.R. § 1320.12; (2) this collection of information is essential to the mission of the OCC; and (3) the OCC cannot reasonably comply with the normal clearance procedures because public harm is reasonably likely to result if normal clearance procedures are followed and the use of normal clearance procedures is reasonably likely to prevent or disrupt the collection of information.
First issued in 2015, the Swap Margin Rule includes a phased compliance schedule from 2016 to 2020 and generally applies only to a non-cleared swap entered into on or after the applicable compliance date. A non-cleared swap entered into prior to an entityâs applicable compliance date is âgrandfatheredâ by this regulatory provision and is generally not subject to the margin requirements in the Swap Margin Rule (legacy swap) unless it is amended or novated on or after the applicable compliance date.
The Interim Final Rule addresses a potential impact of the scenario in which the United Kingdom (U.K.) exits from the European Union (E.U.)âalso known as Brexitâin the absence of a negotiated withdrawal agreement allowing financial services firms located in the U.K. to continue providing full-scope financial services in the E.U. In that event, numerous U.K. financial services firms may begin to transfer their existing swap portfolios that face counterparties located in the E.U. over to a related establishment of the U.K. financial services firm located within the E.U. or the U.S. Brexit is expected to occur on March 29, 2019. The Interim Final Rule authorizes a financial entity with non-cleared swaps located in the U.K. to relocate existing swap portfolios to affiliates or other related entities located within the E.U. or U.S., without the legacy swaps in the portfolios becoming subject to the requirements of the Swap Margin Rule.
The Interim Final Rule includes a new information collection requirement for transfers initiated by a covered swap entityâs counterparty. For those transfers, the counterparty must make a representation to the covered swap entity that the counterparty performed the transfer in compliance with the requirements of the rule. The representation must provide that (1) the swap was originally entered into before the relevant compliance date and was booked at an entity located in the U.K. and (2) the U.K. entity is amending the swap because of Brexit, transferring the swap to an affiliate in the E.U. or U.S., and the transferee is either a covered swap entity or the counterparty of a covered swap entity.
The Interim Final Rule was issued with an immediate effective date in anticipation of Brexit, which may occur as soon as March 29, 2019. The Agencies also contemplate that financial entities may negotiate and document their desired transfers even before the withdrawal date, under terms that delay consummation of any transfer until withdrawal takes place without an agreement. To ensure the certainty needed to allow the industry to facilitate transfers immediately upon the U.K.âs withdrawal, this timeline requires immediate regulatory relief and prevents the OCC from clearing the collection under 5 C.F.R. § 1320.12 prior to the ruleâs effective date. Accordingly, the OCC requests emergency clearance.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
1557-0251 Brexit.doc
Request for Emergency PRA Approval.pdf
Counterparty Disclosure