April 11, 2011

INSTITUTE OF INTERNATIONAL BANKERS:

PROPOSED FRAMEWORK FOR SWAP DEALER REGISTRATION AND REGULATION

In order to assist the agencies in structuring their swap dealer registration and regulatory frameworks for foreign banks, and to ensure that the agencies’ frameworks do not give rise to market 

disruption by failing to accommodate the structuring alternatives that must be available to foreign firms, we have summarized below a registration and regulatory framework that we believe 

appropriately applies sound principles of home/host country regulation in the context of Title VII of the Dodd Frank Act.1 

The paradigms outlined in this matrix represent the principal (although not the only) structuring paradigms that foreign firms employ to structure their cross-border swap and security-based swap 

(hereinafter, “swap”) business with U.S.-domiciled counterparties. Individual banks often use different structural paradigms for swaps involving different asset categories, and individual 

variations on these pure paridigms are not uncommon. No single paradigm would suffice to meet the needs and circumstances of all foreign banks and we do not believe that it is necessary or 

desirable to impose any single paradigm on foreign banks—whether the bank is ultimately U.S. owned or non-U.S. owned. This matrix illustrates how supervision and oversight of swap dealers 

can be established under each of the paradigms in a manner that is compliant with the provisions and objectives of Title VII.

We also note that, as an integral part of this framework, it is critical that the relevant U.S. and home country regulators agree upon an appropriate framework for examination, direct supervisory 

responsibility and access to information that is consistent with the allocation of applicable host/home country law. 

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

Facts

Employees of the foreign bank 

resident outside the U.S. contact 

U.S. persons to deal in swaps that 

the foreign bank enters into as 

principal. Certain market risks, 

such as risks relating to swaps 

involving U.S. underliers, may 

be risk managed on an agency 

basis (subject to specified 

parameters) by personnel of an 

affiliate or branch located in the 

U.S., or certain market risks may 

be hedged through inter-branch 

Employees of a U.S. branch, 

acting as agent for the foreign 

bank principal, solicit, negotiate 

and commit to swaps that are 

booked to the foreign bank. 

Certain market risks, such as 

risks relating to swaps involving 

U.S. underliers, may be risk 

managed on an agency basis 

(subject to specified parameters) 

by personnel of an affiliate or 

branch located in the U.S., or 

certain market risks may be 

Employees of a U.S. futures 

commission merchant 

(“FCM”)/broker-dealer affiliate, 

acting as agent for the foreign 

bank principal, solicit, negotiate 

and commit to swaps that are 

booked to the foreign bank. 

Certain market risks, such as 

risks relating to swaps involving 

U.S. underliers, may be risk 

managed on an agency basis 

(subject to specified parameters) 

by personnel of an affiliate or 

Employees of a U.S. swap dealer 

affiliate, acting as agent for the 

foreign bank principal, solicit, 

negotiate and commit to swaps 

that are booked to the foreign 

bank. Certain market risks, such 

as risks relating to swaps 

involving U.S. underliers, may 

be risk managed on an agency 

basis (subject to specified 

parameters) by personnel of an 

affiliate or branch located in the 

U.S., or certain market risks may 

Personnel employed by a U.S. 

affiliate contact U.S. persons to 

deal in swaps for the account of 

the U.S. affiliate. Some or all of 

the risk arising from this swap 

activity might be backed-to-back 

to the foreign bank.

 

1 While this framework is, for convenience, described with reference to a foreign bank, the same framework would also apply to a foreign, non-bank financial institution, except that the Commodity Futures 

Trading Commission (“CFTC”) and the Securities and the Exchange Commission (the “SEC” and, together with the CFTC, the “Commissions”), rather than the Board of Governors of the Federal Reserve System 

(the “FRB”), would be responsible for capital and margin requirements.
April 11, 2011

2

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

or inter-affiliate swaps. hedged through inter-branch or 

inter-affiliate swaps.

branch located in the U.S., or 

certain market risks may be 

hedged through inter-branch or 

inter-affiliate swaps.

be hedged through inter-branch 

or inter-affiliate swaps.

Registration (Commodity 

Exchange Act (“CEA”) § 

4s(a)(1) / Securities Exchange 

Act of 1934 (“SEA”) § 

15F(a)(1))

The foreign bank would register 

in the U.S. as a swap dealer, but 

registration and regulation (other 

than with respect to entity-wide 

prudential regulation

requirements identified below) 

would be limited to the U.S.-

facing activities of the 

branch/separately identifiable 

department or division that is 

involved in the execution of 

swaps with U.S. persons. Other 

branches/divisions would not be 

subject to U.S. regulation.

The foreign bank would register 

in the U.S. as a swap dealer, but 

registration and regulation (other 

than with respect to entity-wide 

prudential regulation

requirements identified below) 

would be limited to the U.S. 

branch activities. Foreign 

branches would not be subject to 

U.S. regulation.

The U.S. affiliate, since it is 

engaged in soliciting and 

accepting orders for swaps on 

behalf of the foreign bank, would 

register as an introducing broker 

or securities broker (or, if it is 

registered as an FCM/brokerdealer, otherwise qualify).

The foreign bank would register 

in the U.S. as a swap dealer, but 

registration and regulation (other 

than with respect to entity-wide 

prudential regulation

requirements identified below) 

would be limited to the U.S.-

facing activities.

The U.S. affiliate would register 

as a swap dealer. 

The foreign bank “booking 

entity” would either register in 

the U.S. as a swap dealer solely 

with respect to its role as the 

contractual counterparty on U.S. 

customer-facing swaps or, as a 

condition to not registering, be 

required to be subject to and 

comply with home country 

standards determined by the FRB

and the Commissions, as 

applicable, to be comparable to 

U.S. capital, risk management, 

and other prudential 

requirements (in which case the 

foreign bank would undertake to 

notify the FRB and the 

Commissions of any violations of

or material changes to those 

home country standards, which 

could constitute a basis for 

revoking the exception from 

registration).

The U.S. affiliate would register 

as a swap dealer.

The foreign bank affiliated with 

the U.S. swap dealer would not 

be subject to U.S. regulation, 

including in cases where:

(a) market risk is hedged 

back to the foreign bank by the 

U.S. swap dealer; and/or 

(b) the foreign bank 

guarantees the U.S. swap dealer’s 

obligations.

Capital (CEA § 4s(e) / SEA § 

15F(e))

The FRB would be responsible 

for the foreign bank’s capital, but 

would defer to comparable home 

The FRB would be responsible 

for the foreign bank’s capital, but 

would defer to comparable home 

The FRB would be responsible 

for the foreign bank’s capital, but 

would defer to comparable home 

The U.S. swap dealer affiliate 

would comply with U.S. capital 

requirements, as established by 

the Commissions. Under these 

The U.S. swap dealer affiliate 

would comply with U.S. capital 

requirements, as established by 

the Commissions or the relevant 
April 11, 2011

3

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

country standards.

Failure to comply with home 

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

country standards.

Failure to comply with home 

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

country standards.

Failure to comply with home 

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

requirements, the U.S. swap 

dealer affiliate would not be 

required to hold capital against 

the market and credit risk arising 

from positions booked in the 

foreign bank so long as either:

(a) the foreign bank 

counterparty registers as a swap 

dealer, in which case the FRB

would defer to comparable home 

country standards, and failure to 

comply with those standards 

would constitute a violation of 

FRB rules by the foreign bank; or

(b) the U.S. swap dealer 

affiliate obtains a determination 

from the FRB that the foreign 

bank booking entity is subject to 

comparable home country capital 

standards and undertakes to 

notify the FRB and the 

Commissions of any violations of

or material changes to those 

standards, which could constitute 

a basis for revoking the 

exception from registration.

prudential regulator.

Margin (CEA § 4s(e) / SEA § 

15F(e))

The FRB would be responsible 

for the foreign bank’s margin 

requirements, but would defer to 

comparable home country 

standards.

Failure to comply with home 

The FRB would be responsible 

for the foreign bank’s margin 

requirements, but would defer to 

comparable home country 

standards.

Failure to comply with home 

The FRB would be responsible 

for the foreign bank’s margin 

requirements, but would defer to 

comparable home country 

standards.

Failure to comply with home 

Foreign banks would agree to 

comply with U.S. requirements 

applicable to the affiliate for 

transactions intermediated by the 

affiliate.

The U.S. swap dealer affiliate 

would comply with U.S. margin 

requirements, as established by 

the Commissions or the relevant 

prudential regulator.
April 11, 2011

4

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

country standards would 

constitute a violation of FRB

requirements by the foreign 

bank.

With respect to the FCM/brokerdealer, Commission rules for 

FCMs/broker-dealers would 

apply.

Financial and Operational 

Records (CEA § 4s(f)(1) / SEA 

§ 15F(f)(1))2

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

Failure to comply with home

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

With respect to the FCM/brokerdealer, Commission rules for 

FCMs/broker-dealers would 

apply.

The U.S. swap dealer affiliate 

would comply with Commission 

requirements.

For the limited registration 

foreign bank swap dealer, if any, 

the Commissions would defer to 

comparable home country 

standards, and failure to comply 

with home country standards 

would constitute a violation of 

Commission rules by the foreign 

bank.

The U.S. swap dealer affiliate 

would comply with Commission 

requirements.

Risk Management Procedures 

(including Business Continuity 

/ Disaster Recovery) (CEA § 

4s(j)(2) / SEA § 15F(j)(2))

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

Since these requirements are 

integrally related to capital 

adequacy and overall safety and 

soundness, the Commissions 

would defer to comparable home 

country standards.

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, but these should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

 

2 U.S. regulators would, in consultation with home country regulators, establish an allocation for the exercise of examination authority and access to financial, operational, and other supervisory information.
April 11, 2011

5

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

With respect to the FCM/brokerdealer, Commission rules for 

FCMs/broker-dealers would 

apply.

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards.

For the limited registration 

foreign bank swap dealer, if any, 

the Commissions would defer to 

comparable home country 

standards, and failure to comply 

with home country standards 

would constitute a violation of 

Commission rules by the foreign 

bank.

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards.

Conflicts of Interest (including 

Information Barriers) (CEA § 

4s(j)(5) / SEA § 15F(j)(5))

Where comparable (i.e., 

reasonably designed to achieve 

the same objectives), the 

Commissions would defer to 

home country standards.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Where comparable (i.e., 

reasonably designed to achieve 

the same objectives), the 

Commissions would defer to 

home country standards.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

Where comparable (i.e., 

reasonably designed to achieve 

the same objectives), the 

Commissions would defer to 

home country standards.

Failure to comply with home 

country standards would 

constitute a violation of 

Commission rules by the foreign 

bank.

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards.

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards.

Position Limits / Monitoring of 

Trading (CEA §§ 4s(h)(1)(C) 

and (j)(1) / SEA §§ 

15F(h)(1)(C) and (j)(1))

The foreign bank would comply 

with Commission requirements, 

but these should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

The foreign bank would comply 

with Commission requirements, 

but these should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

The foreign bank would comply 

with Commission requirements, 

but these should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

The foreign bank would comply 

with Commission requirements, 

but these should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

structures that comport with 

home country standards that are 
April 11, 2011

6

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

objective to U.S. standards. objective to U.S. standards. objective to U.S. standards. objective to U.S. standards. comparable in objective to U.S. 

standards.

Diligent Supervision (CEA § 

4s(h)(1)(B) / SEA § 

15F(h)(1)(B)) / Chief 

Compliance Officer (CEA § 

4s(k) / SEA § 15F(k))

The branch/division that is 

involved in the execution of 

swaps with U.S. persons would 

establish a system for supervision 

of compliance with applicable 

U.S. requirements, including 

designation of supervisory 

personnel, but requirements 

should be flexible enough to 

accommodate group-structured 

systems, policies and procedures 

and different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards. 

The foreign bank would 

designate the branch/division 

involved in the execution of 

swaps with U.S. persons as 

responsible for complying with 

these requirements. Examination 

for compliance would occur at 

the branch/division where the 

relevant customer-facing activity 

occurs.

The U.S. branch would establish 

a system for supervision of 

compliance with applicable U.S. 

requirements, including 

designation of supervisory 

personnel, but requirements 

should be flexible enough to 

accommodate group-structured 

systems, policies and procedures 

and different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards. 

The foreign bank would 

designate the U.S. branch as 

responsible for complying with 

these requirements. Examination 

for compliance would occur at 

the U.S. branch where the 

relevant customer-facing activity 

occurs.

The foreign bank, in conjunction 

with the U.S. FCM/Broker-dealer 

affiliate, would establish an 

integrated system for supervision 

of compliance with applicable 

U.S. requirements, including 

designation of supervisory 

personnel at the foreign bank, but 

requirements should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country

standards that are comparable in 

objective to U.S. standards.

The U.S. swap dealer affiliate 

would establish a system for 

supervision of compliance with 

applicable U.S. requirements, 

including designation of 

supervisory personnel, but 

requirements should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

objective to U.S. standards.

The U.S. swap dealer affiliate 

would establish a system for 

supervision of compliance with 

applicable U.S. requirements, 

including designation of 

supervisory personnel, but 

requirements should be flexible 

enough to accommodate groupstructured systems, policies and 

procedures and different 

organizational structures that 

comport with home country 

standards that are comparable in 

objective to U.S. standards.

Business Conduct Standards 

with Counterparties (CEA §§ 

4s(h)(3), (4) and (5) / SEA §§ 

15F(h)(3), (4) and (5))

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

U.S. branch personnel, and 

would not apply to transactions 

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

The U.S. swap dealer affiliate 

would comply with, and be 

responsible for, U.S. 

requirements as though it were 

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

the U.S. swap dealer affiliate.
April 11, 2011

7

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

domiciled abroad. 

The foreign bank would 

designate the branch/division 

involved in the execution of 

swaps with U.S. persons as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S. 

persons. Examination for 

compliance would occur at the 

branch/division where the 

relevant customer-facing activity 

occurs. No U.S. examination of 

or enforcement relating to 

conduct associated with non-U.S. 

transactions.

executed with non-U.S. persons 

by foreign bank personnel 

located outside the U.S. 

The foreign bank would 

designate the U.S. branch as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S. 

persons. Examination for 

compliance would occur at the 

U.S. branch where the relevant 

customer-facing activity occurs.

domiciled abroad.

The foreign bank would 

outsource the performance, but 

not responsibility for due 

performance, of those 

requirements to the U.S. 

FCM/broker-dealer affiliate. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.

With respect to the FCM/brokerdealer, Commission rules for 

FCMs/broker-dealers would 

apply.

the counterparty. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.

Back Office / Documentation 

Standards (CEA § 4s(i) / SEA § 

15F(i))3

U.S. requirements that apply to 

particular transactions/ 

counterparties (e.g., 

acknowledgement, confirmation, 

trading relationship 

documentation) would apply to 

transactions with U.S. persons, 

but should be flexible enough to 

accommodate group-structured 

systems, policies and procedures 

and different organizational 

structures that comport with 

U.S. requirements that apply to

particular transactions/ 

counterparties (e.g., 

acknowledgement, confirmation, 

trading relationship 

documentation) would apply to 

transactions with U.S. persons, 

but should be flexible enough to 

accommodate group-structured 

systems, policies and procedures

and different organizational 

structures that comport with 

U.S. requirements that apply to 

particular transactions/ 

counterparties (e.g., 

acknowledgement, confirmation, 

trading relationship 

documentation) would apply to 

transactions with U.S. persons, 

but should be flexible enough to 

accommodate group-structured 

systems, policies and procedures 

and different organizational 

structures that comport with 

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards. 

The U.S. swap dealer affiliate 

would comply with Commission 

requirements, which should be 

flexible enough to accommodate 

group-structured systems, 

policies and procedures and 

different organizational 

structures that comport with 

home country standards that are 

comparable in objective to U.S. 

standards.

 

3 To the extent that the Commissions adopt portfolio compression requirements pursuant to these provisions, we would regard those requirements, like risk management requirements, as integrally related to 

capital adequacy and overall safety and soundness. Accordingly, under this framework, the Commissions would defer to comparable home country standards designed to address the same objectives as the 

Commissions’ portfolio compression requirements, and failure to comply with home country standards would constitute a violation of Commission rules.
April 11, 2011

8

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

home country standards that are 

comparable in objective to U.S. 

standards. 

The foreign bank would 

designate the branch/division 

involved in the execution of 

swaps with U.S. persons as 

responsible for complying with 

these requirements. Examination 

for compliance would occur at 

the branch/division where the 

relevant customer-facing activity 

occurs. No U.S. examination of 

or enforcement relating to 

conduct associated with non-U.S. 

transactions.

home country standards that are 

comparable in objective to U.S. 

standards. 

The foreign bank would 

designate the U.S. branch as 

responsible for complying with 

these requirements. Examination 

for compliance would occur at 

the U.S. branch where the 

relevant customer-facing activity 

occurs.

home country standards that are 

comparable in objective to U.S. 

standards. 

The foreign bank would 

outsource the performance, but 

not responsibility for due 

performance, of those 

requirements to the U.S. 

FCM/broker-dealer affiliate. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.

Trading Records (CEA § 4s(g) 

/ SEA § 15F(g))

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

domiciled abroad.

The foreign bank would 

designate the branch/division 

involved in the execution of 

swaps with U.S. persons as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S.

persons. Examination for 

compliance would occur at the 

branch/division where the 

relevant customer-facing activity 

occurs. No U.S. examination of 

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

U.S. branch personnel, and 

would not apply to transactions 

executed with non-U.S. persons 

by foreign bank personnel 

located outside the U.S.

The foreign bank would 

designate the U.S. branch as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S. 

persons. Examination for 

compliance would occur at the 

U.S. branch where the relevant 

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

domiciled abroad.

The foreign bank would 

outsource the performance, but 

not responsibility for due 

performance, of those 

requirements to the U.S. 

FCM/broker-dealer affiliate. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs. Books 

and records relevant to 

compliance with respect to all 

The U.S. swap dealer affiliate 

would comply with, and be 

responsible for, U.S. 

requirements as though it were 

the counterparty. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

the U.S. swap dealer affiliate.
April 11, 2011

9

Direct Contacts by Foreign 

Bank Personnel

U.S. Branch Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. FCM/Broker-Dealer 

Affiliate Personnel, on an 

Agency Basis, Solicit, Negotiate 

and Commit to Swaps that are 

“Booked” to the Foreign Bank

U.S. Swap Dealer Affiliate 

Personnel, on an Agency Basis, 

Solicit, Negotiate and Commit 

to Swaps that are “Booked” to 

the Foreign Bank

U.S. Affiliate Deals in Swaps as 

Principal

or enforcement relating to 

conduct associated with non-U.S. 

transactions.

customer-facing activity occurs. activities conducted by the U.S. 

affiliate on behalf of the foreign 

bank swap dealer would be 

accessible in the U.S. 

With respect to the FCM/brokerdealer, Commission rules for 

FCMs/broker-dealers would 

apply.

Segregation Requirements 

(CEA § 4s(l) / SEA § 3E(f))

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

domiciled abroad.

The foreign bank would 

designate the branch/division 

involved in the execution of 

swaps with U.S. persons as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S. 

persons. Examination for 

compliance would occur at the 

branch/division where the 

relevant customer-facing activity 

occurs. No U.S. examination of 

or enforcement relating to 

conduct associated with non-U.S. 

transactions.

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

U.S. branch personnel, and 

would not apply to transactions 

executed with non-U.S. persons 

by foreign bank personnel 

located outside the U.S.

The foreign bank would 

designate the U.S. branch as 

responsible for complying with 

such U.S. regulations applicable 

to its transactions with U.S. 

persons. Examination for 

compliance would occur at the 

U.S. branch where the relevant 

customer-facing activity occurs.

U.S. requirements would apply 

directly to transactions with U.S. 

persons, but would not apply to 

transactions with persons 

domiciled abroad.

The foreign bank would 

outsource the performance, but 

not responsibility for due 

performance, of those 

requirements to the U.S. 

FCM/broker-dealer affiliate. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.4

The U.S. swap dealer affiliate 

would comply with, and be 

responsible for, U.S. 

requirements as though it were 

the counterparty. 

Examination for compliance 

would occur at the U.S. affiliate 

where the relevant customerfacing activity occurs.

U.S. requirements would apply to 

all transactions (with U.S. and 

non-U.S. persons) executed by 

the U.S. swap dealer affiliate.

 

4 As discussed above, books and records relevant to compliance with respect to all activities conducted by the U.S. affiliate on behalf of the foreign bank swap dealer would be accessible in the U.S.