Prudential Regulators Propose Swap Margin and Capital Requirements

On April 12, 2011, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Farm Credit Administration and the Office of the Comptroller of the Currency proposed rules under Sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act governing margin and capital requirements applicable to swap dealers, security-based swap dealers, major swap participants and security-based swap participants that are banks or otherwise subject to oversight by the Prudential Regulators.  The comment period for the proposed rules closes on June 24, 2011. The attached memorandum reviews the proposed rules and considers their impact on the OTC swap market and market participants.