Federal Agencies Issue Final Stress Test Guidance for Medium-Sized Firms
On Wednesday, March 5, 2014, the Board of Governors of the Federal Reserve System (the "Board"), the Federal Deposit Insurance Corporation (the "FDIC") and the Office of the Comptroller of Currency (the "OCC") issued final guidance regarding stress testing for financial companies with total consolidated assets between $10 billion and $50 billion ("Medium-Sized Firms"). The guidance outlines the principles for implementing stress tests required under Section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The guidance discusses supervisory expectations for stress test practices and offers additional details about methodologies that should be employed by Medium-Sized Firms.
Under rules issued by the agencies, Medium-Sized Firms are required to conduct stress tests annually, with the first company-run stress test to be conducted by March 31, 2014. However, this guidance confirms that Medium-Sized Firms are not subject to the Board's capital plan rule, the Board's annual Comprehensive Capital Analysis and Review, Dodd-Frank Act supervisory stress tests, or related data collections, which apply to bank holding companies with assets equal to or greater than $50 billion.
SEC Proposes Amendments to Rules Regarding Systemically Important and Security-Based Swap Clearing Agencies
On Wednesday, March 12, 2014, the Securities and Exchange Commission (the "SEC”) proposed amendments to Rules 17Ad-22 and 17Ab2-2 to increase oversight of clearing agencies that are determined to be systemically important, or are involved in complex transactions such as security-based swaps. The amendments are proposed pursuant to Section 17A of the Securities Exchange Act of 1934 and Title VIII of the Dodd-Frank Act. The proposed rules, as amended, would establish standards for the operation and governance of certain types of registered clearing agencies that meet the definition of a “covered clearing agency," by subjecting such agencies to new requirements regarding their financial risk management, operations, governance, and disclosures to market participants and the public. The proposed amendments would also establish the procedures by which the SEC would apply the rules to additional clearing agencies.
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