US Banking Agencies Propose Changes to Calculation of Derivative Contract Exposures under Regulatory Capital Rules

On October 30, 2018, the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a notice of proposed rulemaking (NPR) that, if finalized, would implement the “standardized approach to counterparty credit risk,” as developed by the Basel Committee on Banking Supervision (BCBS) to improve upon other standardized methods for calculating derivatives exposures for regulatory capital purposes. In this Legal Update, we comment on selected aspects of the NPR.