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House Bill 5749
115th Congress(2017-2018)
Options Markets Stability Act
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Passed House on Jul 10, 2018
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H. R. 5749 (Introduced-in-House)


115th CONGRESS
2d Session
H. R. 5749


To require the appropriate Federal banking agencies to increase the risk-sensitivity of the capital treatment of certain centrally cleared options, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

May 10, 2018

Mr. Hultgren introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To require the appropriate Federal banking agencies to increase the risk-sensitivity of the capital treatment of certain centrally cleared options, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

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

SEC. 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.