U.S. regulators to give banks more time to push out swap trading
WASHINGTON, Jan 3 (Reuters) - Banks could have up to three extra years to comply with a new U.S. rule requiring firms that receive federal deposit insurance to spin off some of their swaps trading into separate arms, U.S. regulators said on Thursday.
The Office of the Comptroller of the Currency said it would "consider favorably" requests for transition periods before banks must comply with the so-called "swaps push-out" rule.
Under the rule, included as part of the 2010 Dodd-Frank financial oversight law, banks that receive deposit insurance and other government backstops have to set up separate arms to trade certain swaps.
Supporters hoped this would separate the parts of banks that are federally guaranteed from their more risky activities.
But the rule, which was tucked into the law by then-Senator Blanche Lincoln, was widely opposed by the financial services industry. Critics said it would limit the ability of banks to hedge risk and could be expensive.
The OCC said it would allow banks to request extra time to comply because U.S. regulators are still hashing out the details of a number of derivatives rules required by Dodd-Frank.
Swap dealers had to register with the Commodity Futures Trading Commission this week and regulators are setting tougher standards for data reporting and other activities.
Transition periods would prevent service disruptions for clients and limit credit risks, the OCC said.
The OCC said banks can request a transition period of up to two years from the rule's effective date of July 16, 2013. Firms would need to spell out a plan for complying with the push-out rule and explain how a transition period would help protect mortgage lending, small business lending and other activities.
Officials could decide to give banks an additional year on top of that after consulting with the CFTC and the Securities and Exchange Commission, which oversee some swap dealers, the OCC said.
(Reporting By Emily Stephenson. Editing by Andre Grenon)