variation margin requirements for swap dealers and major swap participants ( swap entities ) on swaps that are not centrally cleared. these requirements are intended to ensure that the counterparty risks inherent in swaps are prudently limited and not allowed to build to bis central bankers ’ speeches unsustainable levels that could pose risks to the financial system. in addition, requiring all uncleared swaps to be subject to robust margin requirements will remove economic incentives for market participants to shift activity away from contracts that are centrally cleared. the federal reserve and four other u. s. agencies originally issued a proposed rule to implement these provisions of the dodd - frank act in april 2011. following the release of the original proposal, the bcbs and the international organization of securities commissions began working to establish a consistent global framework for imposing margin requirements on uncleared swaps. this global framework was finalized last september. after considering the comments that were received on the april 2011 u. s. proposal and the recently established global standards, the agencies issued a reproposal last week. under the reproposal, swap entities would be required to collect and post initial and variation margin on uncleared swaps with another swap entity and other financial end user counterparties. the requirements are intended to result in higher initial margin requirements than would be required for cleared swaps, which is meant to reflect the more complex and less liquid nature of uncleared swaps. in accordance with the statutory requirement to establish margin requirements regardless of counterparty type, the reproposal would require swap entities to collect and post margin in connection with any uncleared swaps they have with nonfinancial end users. these requirements, however, are quantitatively and qualitatively different from the margin requirements for swaps with financial end users. specifically, swaps with nonfinancial end users would not be subject to specific, numerical margin requirements but would only be subject to initial and variation margin requirements at such times, in such forms, and in such amounts, if any, that the swap entity determines is necessary to address the credit risk posed by the counterparty and the transaction. there are currently cases where a swap entity does not collect initial or variation margin from nonfinancial end users because it has determined that margin is not needed to address the credit risk posed by the counterparty or the transaction. in such cases, the reproposal would not require a change in current practice. the agencies believe that these requirements are consistent with

##now community, the service provider showcase, and the fednow early adopter workshop. 4 to advance the goal of nationwide reach for instant payments, we have worked closely with the private - sector rtp instant payment service on message specifications to ensure alignment in support of routing interoperability. just as the federal reserve has made a substantial commitment to our new instant payment infrastructure, we are calling on industry stakeholders to do the same. the shift to real - time payment infrastructure requires a focused effort, but the shift is inevitable. the time is now for all key stakeholders — financial institutions, core service providers, software companies, and application developers — to devote the resources necessary to support instant payments. this means upgrading back - office processes, evaluating accounting procedures to accommodate a seven - business - day week, arranging liquidity providers, deploying a new customer - facing application, and promoting instant payments for key use cases to customers. as the service providers featured at this event will information about fednow service stakeholder outreach and other resources can be found at this link : https : / / www. frbservices. org / financial - services / fednow. - 4demonstrate in the coming days, parts of the industry have already seized on the opportunity to build new services and capabilities that support instant payments. these efforts will increase competition in the market for end - user services and promote innovation — key benefits from providing the fednow service as a neutral platform, accessible to financial institutions of all sizes nationwide. i would like to personally thank our early adopters. the input that you have provided has been instrumental for our team as they have designed and built the service, and the time and energy that you have committed to this effort is important for a successful launch. i want to call on additional banks and core service providers to join your commitment to prepare for adoption of the fednow service. this time next year, i hope we can all have a great sense of accomplishment in our shared effort to transform america ’ s payment system for the digital era.