In this report, we assess the final rule approved unanimously today by the Federal Reserve to impose long-awaited single-counterparty credit limits (SCCLs) on large U.S. BHCs and FBOs.  The final rules track much in the 2016 proposal (see FSM Report CONCENTRATION9), which was a significant rewrite from a very controversial 2012 proposal (see FSM Report SYSTEMIC55).  Although the final rule retains the Tier 1 measure against which exposures are judged, it relaxes measurement of “intertwined” counterparties and counterparties as consolidated entities.  Exposures may be judged under any methodology approved under the capital rule, with these options now also applying to securities financing transactions (SFTs).

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