The Board of Governors of the Federal Reserve System ("Board") on June 5, 2013 took a bold step in issuing interim final rules ("Interim Rules") that allow a foreign bank's uninsured US branches and agencies to continue to access the Reserve Banks' discount windows notwithstanding the foreign bank being a registered swaps dealer engaged in swaps activities. The Interim Rules limit the effect on foreign banks of the ban on access by swaps entities to the discount window and other Federal Reserve credit facilities that was established by Section 716 of the Dodd-Frank Act. That ban becomes effective as of July 16, 2013.
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—Board Final Rule Release on Prohibition Against Federal Assistance to Swaps Entities (Regulation KK) (June 5, 2013), pending publication in the Federal Register, available at http://www.federalreserve.gov/newsevents/press/bcreg/20130605a.htm.
—Section 716 is poorly drafted and may be read in several different ways—one of which only prohibits discount window proceeds from being used to assist in swaps-related activities. This subject approach is a narrower one but would meet the needs of most foreign banks.
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