Diana provided formal training for state bank supervisors about the Dodd-Frank Act mandated new regulatory framework for the swaps markets. The presentation included background information about regulations and pending federal and state legislation. She focused on the measurement of credit exposure now included in lending limits for both national and state-chartered banks, single counterparty credit limits, margin requirements, affiliate transactions, and more.

In the full committee meeting of the Business Law Section Banking Law Committee (BLC), Diana gave a presentation about the new regulatory framework for the swaps markets mandated by the Dodd-Frank Act. She provided an overview of dozens of pending rules and related pending legislation. Her focus was on clearing and margin requirements, registration and regulation of market participants, transaction reporting, push-out of certain derivatives from the most active banks, and international implications.

The ABA provided additional comments to the CFTC and SEC about how end-user banks with limited swaps activities and use swaps solely to hedge or mitigate risk would be affected if one of their counterparties ceased conducting business. The letter describes existing bank risk management practices and comprehensive regulation, including legal lending limits. The CFTC final rule provides a clearing exemption for banks and savings associations with $10 billion or less in total assets.

The IBFed includes representatives from bank trade associations in more than a dozen countries and the European Banking Federation. Diana gave a formal presentation to the Financial Markets Working Group about the changes in capital markets regulation as a result of the Dodd-Frank Act. Her remarks focused on the newly created Financial Stability Oversight Council (FSOC), new regulatory framework for the swaps market, Volcker Rule, and securitization reform for asset-backed securities.

The ABA and ABASA asked the OCC, FDIC, Federal Reserve Board, and CFTC to not impose margin requirements for uncleared swaps entered into by commercial end users that use swaps to hedge or mitigate commercial risk and for the same exemption for banks with the limited swaps activities. They also asked the regulators not to impose third-party margin requirements on inter-affiliate transactions. The final rules did not impose margin on commercial end users and also exempted financial end users with $8 billion or less in gross notional exposure in uncleared swaps. Nonbanks that are covered swap entities (CSEs) would generally not have to collect initial margin from affiliates, while bank CSEs will be required to collect but not post initial margin with affiliates.

The Dodd-Frank Act directs the CFTC and SEC to consider an exception from clearing requirements for banks and savings associations with $10 billion or less in total assets. The ABA urged the CFTC and SEC to grant the exception to small banks and savings associations whose swaps constitute a truly de minimis amount of the market. The final CFTC rule granted an exception.