SCCL Compliance Lab

What is FR 2590? Regulatory Scope and Purpose 1. Overview FR 2590 is the reporting form required under the Single Counterparty Credit Limits (SCCL) rule. The Federal Reserve Board (FRB) created it to monitor how much exposure large banks have to any one counterparty. The purpose is to reduce the risk that one large firm's failure could threaten the financial system. FR 2590 helps ensure that large institutions identify and manage their biggest credit risks and remain within set regulatory limits. 2. Regulatory Requirement The SCCL rule and FR 2590 were finalized as part of the broader reforms following the 2008 financial crisis. These rules align with international standards developed by the Basel Committee on Banking Supervision (BCBS). The rule sets limits on how much credit exposure a large banking organization can have to a single counterparty, based on the firm’s capital strength: 25% of Tier 1 capital for most large institutions, irrespective of whethe...

What is SCCL? A Beginner’s Guide 1. Overview The Single-Counterparty Credit Limits (SCCL) rule is a key regulation issued by the Federal Reserve. It is designed to make sure that large banks do not take on too much credit risk with any single borrower or trading partner. In simple terms, SCCL limits how much a bank can lend or be exposed to any one counterparty. The goal is to reduce the chance that the failure of a large counterparty, like a major financial institution, could threaten the health of a bank or even the broader financial system. SCCL is part of the broader set of rules under the Dodd-Frank Act aimed at making the financial system safer. You can think of SCCL as a diversification rule for credit exposure. Just like investors are encouraged not to put all their money in one stock, SCCL requires banks to spread their credit risk across different counterparties. 2. Regulatory Requirement The SCCL rule ...