Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB (FED the extension – with revisions – of reporting requirements of institutions in connection with the single-counterparty credit limit rule)

The Board of Governors of the Federal Reserve System (FED) has published in the Federal Register its final approval to extend – with revisions – its filing requirement (Form FR 2590) under its „single-counterparty credit limit rule (SCCL rule)“ which sets limits to the level of exposure large domestic and foreign banks can have to another counterparty. Specifically, the form has to be filed quarterly, annually, and upon violation of the rule and mainly includes the following:
– Information on the institution,
– Information on the counterparties,
– Counterparty exposure by different securities / business operations,
– Risk mitigating items (i.e. collateral), and
– The ratio of aggregate net credit exposures to the eligible capital base.
The final approval comes after a corresponding consultation in September 2023 (please see EventID 22948 for more detailed information). As the FED received NO comments on the extension and the planned changes to the filing requirement, it will proceed as proposed, with the changes coming into force on June 30, 2024.
To recall, the FED had proposed to extend the filing requirement for three years with key amendments to the FR 2590 form and corresponding filing instructions. The proposed changes included, among others, clarifying that foreign banking organizations (FBOs) subject to large exposure standards can indicate this on the form without extra documentation and that organizations subject to the SCCL rule should use the tier 1 capital amount reported in their financial statements for the same reporting period. The FED had also proposed to require institutions to keep a physical or electronic copy of the signed and attested printout of the data they submit for three years and to add Table B in Schedule M-1 for institutions using the standardized approach for counterparty credit risk to accurately report exposure and collateral related to derivative transactions.