115 HR 5749 IH: Options Markets Stability Act U.S. House of Representatives 2018-05-10 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I115th CONGRESS2d SessionH. R. 5749IN THE HOUSE OF REPRESENTATIVESMay 10, 2018Mr. Hultgren introduced the following bill; which was referred to the Committee on Financial ServicesA BILLTo require the appropriate Federal banking agencies to increase the risk-sensitivity of the capital treatment of certain centrally cleared options, and for other purposes.

1.

Short title

This Act may be cited as the Options Markets Stability Act.

2.

Credit exposure for guarantees of centrally cleared options

(a)

Definitions

In this section, the terms affiliate, appropriate Federal banking agency, depository institution, and depository institution holding company have the meanings given those terms, respectively, in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813). (b)

Treatment of certain centrally cleared option derivatives exposures

For purposes of calculating the counterparty credit risk exposure of a depository institution, depository institution holding company, or affiliate thereof, to a client arising from a guarantee provided by the depository institution, depository institution holding company, or affiliate thereof to a central counterparty in respect of the client’s performance under a derivative contract cleared through that central counterparty pursuant to the risk-based and leverage-based capital rules applicable to depository institutions and depository institution holding companies under parts 3, 217, and 324 of title 12, Code of Federal Regulations, the term effective notional principal amount with respect to such centrally cleared derivative contract means the hypothetical on-balance sheet position in the underlying asset that would evidence the same change in fair value (measured in dollars) given a small change in the price of the underlying asset. (c)

Calculation of exposure for centrally cleared derivatives

For purposes of calculating the counterparty credit risk exposure of a depository institution, depository institution holding company, or affiliate thereof to a client arising from a guarantee provided by the depository institution, depository institution holding company, or affiliate thereof to a central counterparty in respect of the client’s performance under a derivative contract cleared through that central counterparty pursuant to the risk-based and leverage-based capital rules applicable to depository institutions and depository institution holding companies under parts 3, 217 and 324 of title 12, Code of Federal Regulations, the offsetting nature of significantly and reliably correlated positions within a netting set must be reflected in a manner consistent with the risk offsets provided by the central counterparty.