Federal financial services regulators have proposed a rule that could give them the authority to set tougher minimum margin and capital requirements for transactions with large swaps operations, or speculative swaps operations, affiliated with insurers.
The proposed rule would implement sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require the regulators to set standards for the swaps dealers, “major swap participants” and “major security-based swap participants” that they regulate.
The agencies involved include the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corp., the Farm Credit Administration and the Federal Housing Finance Agency.
The agencies are in the process of creating formal definitions of terms such as “swap,” but the term “swap” could refer to a wide range of financial transactions that involve trading one stream of cash flows for another.
The agencies did not suggest in the proposed swaps regulations published today in the Federal Register that they would impose swaps oversight directly on insurers.
An agency could not impose direct oversight on a swaps transaction participant unless the agency was the participant’s prudential regulator.