The debate over collateral requirements for swap transactions by affiliates of financial institutions appears to be moving toward a rational compromise that would limit the collateral requirements to affiliates only.
Firms...wouldn’t have to set aside as much money in trades between their own divisions in the final version of a rule U.S. regulators may release as soon as next month, said two people familiar with the discussions. After months of disagreement, the agencies, which include the Federal Deposit Insurance Corp. and Federal Reserve, decided to ease the demands of an earlier version of the proposal. The industry had fought the mandate that both a bank and an affiliate put up collateral, which was laid out in the version of the rule that was proposed last September and had strong support from the FDIC. In a compromise, banking regulators now agree that the final measure should only demand collateral from an affiliate trading with a U.S. bank unit, said the people, who requested anonymity because the rule hasn’t been released publicly.