BPI recently filed a comment letter with the Federal Reserve in response to its request for comment on a proposed reporting template designed to provide the Fed with information to monitor bank compliance with the recently finalized single counterparty credit limits (SCCL) rule. The letter makes a number of technical recommendations on how to clarify and simplify the template and also recommends an approach to address the concern that the proposed information collection (e.g., requirement to provide very granular information on a covered firm’s relationships with its 50 largest counterparties) would require firms to provide information that exceeds what should be reported to allow the Federal Reserve reasonably to monitor compliance with the final SCCL rule. According to the letter, the information collection risks diverting resources to ensuring the accuracy of information that is not required by the statutory provision in the Dodd-Frank Act directing the Federal Reserve to establish a SCCL rule. The final SCCL rule prescribes standards that limit “the risks that the failure of any individual company could pose” to a large bank holding company covered by the rule. Under the final rule – which will apply to bank holding companies and foreign bank organizations with $250 billion in total assets, as well as all G-SIBs – the net credit exposure of a covered company to a counterparty cannot generally exceed 25% of the covered company’s tier 1 capital.
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