By Heath Tarbert  and Dimia Fogam

The Board of Governors of the Federal Reserve System (FRB), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) issued guidance to clarify the effective date of  Section 716 of Dodd-Frank, commonly referred to as the Push-Out Rule. The Agencies stated that Section 716 will become effective on July 16, 2013.

Section 716 prohibits federal assistance, including access to the Federal Reserve discount window and FDIC deposit insurance, to any swaps entity with respect to any swap, security-based swap, or other activity of the swaps entity. The term “swap entity” refers to any swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant that is registered under the Commodity Exchange Act or Securities Exchange Act of 1934.  However, the rule allows certain entities to remain eligible for federal assistance if they “push out” certain derivatives activities from their insured depository institutions and limit their swap and security-based swap activities to bona fide hedging and similar risk related activities or to acting as a swaps entity for swaps or security-based swaps involving rates or reference assets that are permissible for investment by a national bank.

The recent clarification of the Push-Out Rule’s effective date will be helpful to financial institutions that must migrate existing derivatives holdings from their insured depository institution subsidiaries to separately capitalized affiliates or subsidiaries registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission. Those swaps most likely to be “pushed out” by July 13, 2013 include: equity swaps; energy swaps; metal swaps (excluding gold and silver); agricultural swaps; and non-cleared credit default swaps.


The Working Group will continue to monitor any developments and provide timely coverage at Weil’s Financial Regulatory Reform Center.  If you are interested in discussing this or other regulatory developments, please contact Working Group member Heath P. Tarbert (202-682-7177 or

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