Fed Rule Extends Payment Protections To Swap Dealers
Law360 (February 19, 2021, 9:59 PM EST) -- The Federal Reserve Board has finalized a rule that applies so-called netting protections to a broader range of financial institutions, including swap dealers, and expands the definition of a "financial institution."
The rule is "intended to reduce risk and increase efficiency in the financial system," the Fed said in Thursday's rule.
Existing banking rules — namely the Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA — provide certainty that netting contracts between financial institutions will be enforced, even if one party falls into insolvency proceedings. Netting contracts protect an institution from having to make gross payments to an insolvent...
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