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Swaps Collateral Rules Tightening

Fed re-proposes collateral rules for uncleared swaps that exempt a company's first $65 million worth of collateral.

By Silla Brush, Bloomberg | Updated on September 03, 2014

The Federal Reserve proposed collateral requirements for swaps traded between banks, manufacturers, and other firms. The proposal, also scheduled to be adopted today by the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC), seeks to free so-called end users—commercial manufacturers and other non-financial firms that use swaps to hedge business risks—from government collateral requirements.

The regulation determines how much collateral is necessary to reduce risk in the market for swaps traded directly between JPMorgan Chase & Co., Goldman Sachs Group Inc., BP Plc, and others, instead of those guaranteed at a clearinghouse. The re-proposal is open for public comment before it’s completed.

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