The FDIC adopted a final rule concerning the regulatory capital and liquidity treatment of certain financial contracts. The final rule ensures that the regulatory capital and liquidity treatment of certain financial contracts would not be affected by implementation of special resolution regimes in non-U.S. jurisdictions that are substantially similar to the U.S. resolution framework, or by changes to the ISDA Master Agreement that provide for contractual submission to such regimes. The final rule was published in the Federal Register.

Among other provisions, the final rule permits an otherwise qualifying master netting agreement to qualify for favored netting treatment under the FDIC regulatory capital and liquidity rules if: (i) default rights under the agreement may be stayed under a qualifying non-U.S. special resolution regime; or (ii) the agreement incorporates a qualifying special resolution regime by contract. Additionally, the final rule revises the definition of "collateral agreement," "eligible margin loan," and "repo-style transaction" to detail when a counterparty's default rights may be stayed under a non-U.S. special resolution regime or, if applicable, when they are made subject to a special resolution regime by contract.

The final rule is effective immediately.

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