Title: To require the appropriate Federal banking agencies to recognize the exposure-reducing nature of client margin for cleared derivatives.
Policy area: Finance and Financial Sector

Summary:
This bill amends the Federal Deposit Insurance Act, the Bank Holding Company Act of 1956, and the Home Owners' Loan Act to exclude initial client margin funds (i.e., funds lent to a client by a broker to facilitate a derivatives contract) from leverage-exposure calculations for purposes of determining whether an insured depository institution, a bank holding company, or a savings and loan holding company is in compliance with federal leverage-based capital standards.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4659 Introduced in House (IH)]

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115th CONGRESS
  1st Session
                                H. R. 4659

 To require the appropriate Federal banking agencies to recognize the 
   exposure-reducing nature of client margin for cleared derivatives.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 14, 2017

Mr. Luetkemeyer (for himself, Mr. Lucas, Mr. Vela, Mr. O'Halleran, and 
 Mr. David Scott of Georgia) introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To require the appropriate Federal banking agencies to recognize the 
   exposure-reducing nature of client margin for cleared derivatives.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TREATMENT OF CLIENT MARGIN.

    (a) Treatment of Client Margin for Insured Depository 
Institutions.--Section 18(n) of the Federal Deposit Insurance Act (12 
U.S.C. 1828(n)) is amended--
            (1) by striking ``No appropriate'' and inserting the 
        following:
            ``(1) Unidentified intangible assets.--No appropriate''; 
        and
            (2) by adding at the end the following:
            ``(2) Treatment of client margin.--For purposes of any 
        leverage-based capital rule, guideline, standard, or 
        requirement promulgated, prescribed, or imposed by any 
        appropriate Federal banking agency on insured depository 
        institutions, the amount of any initial margin provided by a 
        client of an insured depository institution with respect to a 
        centrally-cleared derivative obligation shall be deducted from 
        the amount of any leverage exposure arising from the insured 
        depository institution's guarantee of the client's derivative 
        obligation to the central counterparty.''.
    (b) Treatment of Client Margin for Bank Holding Companies.--Section 
5(c)(3) of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(3)) 
is amended--
            (1) by adding at the end the following:
                    ``(D) Treatment of client margin.--For purposes of 
                any leverage-based capital rule, guideline, standard, 
                or requirement promulgated, prescribed, or imposed by 
                the Board on bank holding companies, the amount of any 
                initial margin provided by a client of a bank holding 
                company or affiliate thereof with respect to a 
                centrally-cleared derivative obligation shall be 
                deducted from the amount of any leverage exposure 
                arising from the guarantee by the bank holding company 
                or affiliate thereof of the client's derivative 
                obligation to the central counterparty.''.
    (c) Treatment of Client Margin for Savings and Loan Holding 
Companies.--Section 10(g)(1) of the Home Owners' Loan Act (12 U.S.C. 
1467a(g)(1)) is amended--
            (1) by striking ``The Board'' and inserting the following:
                    ``(A) Regulations and orders.--The Board''; and
            (2) by adding at the end the following:
            ``(B) Treatment of client margin.--For purposes of any 
        leverage-based capital rule, guideline, standard, or 
        requirement promulgated, prescribed, or imposed by the Board on 
        savings and loan holding companies, the amount of any initial 
        margin provided by a client of a savings and loan holding 
        company or affiliate thereof with respect to a centrally-
        cleared derivative obligation shall be deducted from the amount 
        of any leverage exposure arising from the guarantee by the 
        savings and loan holding company or affiliate thereof of the 
        client's derivative obligation to the central counterparty.''.
    (d) Amendments to Leverage-Based Capital Regulations.--Not later 
than the end of the 3-month period beginning on the date of the 
enactment of this Act, the Federal Deposit Insurance Corporation, the 
Board of Governors of the Federal Reserve System, and the Comptroller 
of the Currency shall amend their rules to implement the amendments 
made by this Act.
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