US bank regulator proposes easing margin requirement for trades between bank affiliates

WASHINGTON, Sept 17 (Reuters) - A U.S. banking regulator Tuesday proposed easing a post-crisis restriction on how much cash big banks should set aside to safeguard derivatives trades between affiliates, marking one of the biggest wins for Wall Street lenders under the Trump administration.

The proposal by the Federal Deposit Insurance Corporation could potentially free $40 billion of cash across the nation’s largest banks, according to a 2018 survey by the International Swaps and Derivatives Association which has been lobbying for the rule change for years.

The regulator also proposed relief for banks transitioning from the London interbank offered rate (LIBOR) to the new Secured Overnight Financing Rate (SOFR), and also proposed delaying rules that would require smaller fund managers to begin posting margin for derivatives transactions to Sept. 2021, after the Basel Committee of global regulators had done the same.

Reporting by Pete Schroeder