Preparing for SA-CCR

March 12, 2019 Eric Juzenas

In this video, Eric Juzenas discusses an important topic related to the “Notice of Proposed Rulemaking,” which concerns revisions to the standardized approach for calculating the exposure amount of derivative contracts conducted by regulated banking institutions and their affiliates. This is commonly referred to as “SA-CCR”.

This “Proposed Rule” was issued by the Board of Governors of the Federal Reserve System, the FDIC and the OCC and it has significant potential to impact corporate end-users of derivatives. The “proposed rule’s” revisions to SA-CCR risk-weighting for derivatives transactions could result in significantly higher capital requirements for regulated counterparties. This impacts interest rate, currency and commodity hedges.

Potential unintentional consequences of SA-CCR could include:

  • These requirements may be passed along to corporate end users of hedging instruments in the form of higher hedge transaction costs.
  • They could lead more counterparties to exit derivatives markets leaving corporate end users with fewer counterparties and decreasing liquidity.
  • Counterparties could also require corporate end users to post cash collateral for derivatives transactions, which would raise costs and create operational barriers for hedging.

To learn more about this issue or its impacts, contact your Chatham relationship manager or contact us.

About the Author

Eric Juzenas

Eric is Chatham Financial's Global Head of Compliance and Regulation. He advises on derivatives regulatory compliance and legal documentation, including regulatory advisory, ISDA negotiation, pre- and post-trade compliance processes, and standalone regulatory technology solutions for clients, including reporting, valuations, portfolio reconciliation, and collateral management. He covers both US and European regulations. Eric has advised a range of clients including senior government officials, Members of Congress, and financial and commercial firms on derivatives regulation and compliance. He has played a central role in derivatives policy, helping write and implement portions of the Dodd Frank Act and working on several reauthorizations of the US Commodity Futures Trading Commission (CFTC). He has also participated in international policy and regulatory efforts with the European Union, Financial Stability Board, and the International Organization of Securities Commissions (IOSCO). At the CFTC, he was a deputy to the US Financial Stability Oversight Council. Prior to Chatham, Eric worked at Bloomberg, LP in their Global Regulatory Policy Group covering US and European regulation. Previously, he spent eleven years at CFTC in a variety of roles including Chief of Staff, Chief Operating Officer and Senior Counsel to Chairman Gary Gensler, Commissioner Michael V. Dunn and Commissioner Sharon Y. Bowen. He began his career in derivatives spending six years as Deputy Chief Counsel and Counsel to the US Senate Agriculture, Nutrition and Forestry Committee where he was responsible for writing and advising on derivatives legislation and policy. Eric graduated from the University of Wisconsin-Madison with a degree in Philosophy and certificate in Integrated Liberal Studies. He holds a law degree from the George Washington University Law School, and a masters degree in Environmental/Occupational Health from the Milken Institute School of Public Health at George Washington University.

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