Two proposed rules will be considered by the board of the federal bank deposit insurer when it meets July 20 – on revisions to the standardized approach for calculating the exposure amounts of derivative contracts, and on deposit insurance rules for trust and mortgage service accounts, the agency announced Tuesday.
The board meeting for the Federal Deposit Insurance Corp. (FDIC) is set to get underway at 10 a.m.
In February 2019, the FDIC (along with the Federal Reserve and the Office of the Comptroller of the Currency [OCC]), adopted a final rule under their regulatory capital regulations regarding the approach for calculating the exposure amounts of derivative contracts. Under that rule, according to its summary in the Federal Register, an “advanced approaches” banking organization could use the standardized approach for counterparty credit risk (SA-CCR) or the internal models methodology to calculate its advanced approaches total risk-weighted assets; and must use SA-CCR, instead of the current exposure methodology, to calculate its standardized total risk-weighted assets.
The regulation also allows a non-advanced approaches banking organization to use the current exposure methodology or SA-CCR to calculate its standardized total risk-weighted assets, the summary stated.
Further, according to the summary, the rule requires an advanced approaches banking organization to use SA-CCR to determine the exposure amount of derivative contracts included in the banking organization’s total leverage exposure, the denominator of the supplementary leverage ratio. It also incorporates SA-CCR into the cleared transactions framework and makes other amendments, generally with respect to cleared transactions.
The final rule was effective April 1, 2020 – but, for advanced approaches institutions, the rule takes effect Jan. 1, 2022.
No other details were immediately available about the proposal on deposit insurance rules for trust and mortgage service accounts.