Study of implementation of basel iii capital requirements related to derivatives exposures

(a)

Study

The Financial Stability Oversight Council shall conduct a study of the likely effects that differences between the United States and other jurisdictions in implementing the derivatives credit valuation adjustment (in this section referred to as CVA) capital requirement would have on— (1)United States financial institutions that conduct derivatives transactions and participate in derivatives markets; (2)end users of derivatives; and (3)international derivatives markets. (b)

Content

The study required by subsection (a) shall include— (1)an assessment of— (A)the extent to which there are differences in the approaches that the United States and other jurisdictions are taking regarding implementation of the CVA capital requirement, and the nature of the differences; (B)the impact that the differences would have on— (i)United States financial institutions that conduct derivatives transactions and participate in derivatives markets, including their ability to serve end users of derivatives; (ii)pricing and other costs of, and services available to, end users of derivatives in the United States and other jurisdictions; and (iii)the competitiveness of United States financial institutions and United States derivatives markets, including the extent to which differences in the CVA capital requirement could shift derivatives business among jurisdictions; and (C)the interaction between differing CVA capital requirements and margin rules; and (2)recommendations regarding steps that the Congress and the Federal financial regulatory agencies that comprise the Financial Stability Oversight Council should take to— (A)minimize any expected negative effects on United States financial institutions, derivatives markets, and end users; (B)encourage greater international consistency in implementation of internationally agreed capital, liquidity, and other prudential standards; and (C)ensure that the Financial Stability Oversight Council fulfills its statutory mandate to identify risks and respond to emerging threats to financial stability. (c)

Report

No later than 90 days after the date of the enactment of this Act, the Financial Stability Oversight Council shall submit a written report containing the results of the study to the Chairman and ranking minority member of the Committees on Agriculture and Financial Services of the House of Representatives, and the Chairman and ranking minority member of the Committees on Agriculture, Nutrition, and Forestry, and Banking, Housing, and Urban Affairs of the Senate.