The OCC and the Federal Reserve issued interim final rules on December 30, 2014 that amend certain provisions of their respective capital, liquidity and lending limit rules to ensure that the treatment of over-the-counter derivatives, eligible margin loans and repo-style transactions is unaffected by the International Swaps and Derivatives Association Resolution Stay Protocol (ISDA Protocol) or by implementation of special resolution regimes in foreign jurisdictions. The amendments became effective on January 1.

     Nutter Notes: The agencies' rules currently recognize netting of collateral agreements for over-the-counter derivatives and certain securities financing transactions, as long as the banking organization may terminate its positions upon an event of default of its counterparty. For parties that adhere to the ISDA Protocol, the protocol limits the default and early termination rights in their ISDA master agreements to make the agreements subject to the stay provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the FDI Act, and other similar special resolution regimes, such as the European Union Bank Recovery and Resolution Directive. Absent the amendments under the interim final rule, many exposures that are currently netted would be disqualified from netting under the agencies' rules when the ISDA Protocol becomes effective.