Who Must File SCCL Reports?

Who Must File SCCL Reports?

1. Overview

In banking, managing credit risk is critical. One key area of focus is the Single Counterparty Credit Limits (SCCL) rule. This rule helps prevent banks from taking on too much risk with any single counterparty or group of connected counterparties. By limiting this exposure, regulators aim to reduce the chance that the failure of one large client could threaten the health of a bank or the financial system as a whole.

To support this objective, certain banking organizations are required to file quarterly reports that show their credit exposures to individual counterparties. These reports are called FR 2590 reports and are submitted to the Federal Reserve. They help regulators monitor whether firms are staying within required credit limits.

2. Regulatory Requirement

The SCCL rule is part of Regulation YY (Enhanced Prudential Standards), specifically Subpart H, issued by the Federal Reserve. It outlines which institutions must comply and what they need to report.

Who Must Report?

Entities required to file SCCL reports include:

  • Covered companies:
    • Global systemically important bank holding companies (G-SIBs)
    • Category II bank holding companies
    • Category III bank holding companies
  • Covered foreign entities: Intermediate Holding Companies (IHCs) of foreign banking organizations with significant U.S. assets
  • Nonbank financial companies: Designated by the Financial Stability Oversight Council (FSOC) for supervision by the Federal Reserve

Refer to 12 CFR 252.5 for defintions of Category II and Category III banks.

Deadlines and Submission

SCCL reports (FR 2590) must be submitted quarterly:

  • As of March 31, June 30, September 30, and December 31
  • Due 40 calendar days after each quarter-end (except for December, which is due 45 days after)

Reports must be submitted electronically through the Federal Reserve’s Reporting Central system.

3. Common Challenges

Filing SCCL reports is not a simple task. Many institutions face challenges when preparing these reports:

Data Aggregation

Exposures come from different systems, including lending, trading, and derivatives. Gathering and standardizing this data can be difficult. Poor data quality can result in incorrect exposure calculations.

Defining the Counterparty

SCCL rules apply not just to individual legal entities, but also to groups of "connected counterparties." These are entities controlled by the same parent or that are financially interdependent. Identifying these relationships requires deep analysis.

Operational Complexity

SCCL reporting requires ongoing updates. Credit exposures change daily. Firms must ensure their systems and teams can handle these dynamic reporting needs.

Regulatory Interpretation

Some parts of the SCCL rule can be open to interpretation. For example, how to treat guarantees, collateral, or off-balance-sheet exposures. Misinterpreting these regulations can lead to compliance issues.

4. Peer Approaches

Leading firms have developed strategies to manage SCCL compliance effectively:

Dedicated SCCL Teams

Many banks form teams that focus only on SCCL. These teams include experts in regulation, data management, risk, and IT.

Technology Investment

Manual reporting is not sustainable. Firms invest in automated systems that can gather data, calculate exposures, and generate reports with minimal manual effort.

Strong Data Governance

Effective SCCL compliance depends on reliable data. Leading banks build strong data governance processes, with clear ownership, quality checks, and controls.

Integrated Risk Systems

Instead of building separate systems for SCCL, many firms integrate SCCL reporting into existing credit risk platforms. This approach allows for a consistent view of risk across the organization.

Ongoing Testing and Audit

Top-performing organizations regularly test their SCCL processes. Internal audits and stress tests help identify weaknesses and ensure readiness for regulatory reviews.

5. GLOBAL ABAS View

At GLOBAL ABAS, we see SCCL reporting as more than a compliance requirement. It is a key part of effective risk management. Our approach focuses on helping clients build long-term, sustainable solutions.

Be Proactive

Do not wait until a problem arises. Assess your current systems and processes early. Fix gaps before they become regulatory issues.

Use Technology Wisely

Technology is important, but it must be implemented correctly. Choose tools that match your business needs and ensure your teams know how to use them effectively.

Focus on the Spirit of the Rule

SCCL is designed to reduce systemic risk. Compliance should go beyond checking boxes. Build a risk-aware culture with strong internal controls.

Continuously Improve

Regulations change. Your SCCL program should evolve over time. Review your policies, systems, and data regularly to stay compliant and efficient.

6. Final Thoughts

SCCL reporting is a critical requirement for large U.S. and foreign banking organizations. Understanding who must file, and how to do it properly, is essential. While the rules are complex, a strategic approach can make compliance manageable and even beneficial to your overall risk framework.

By investing in the right people, systems, and processes, firms can not only meet regulatory expectations but also improve their ability to manage credit risk across the board.

To learn more about how GLOBAL ABAS can support your SCCL compliance program, visit our website or subscribe for future updates.

Disclaimer: This blog post is for informational purposes only and reflects our understanding of the SCCL rule and FR 2590 reporting as of the date of publication. It does not constitute legal, regulatory, or professional advice. Institutions should consult with internal and external advisors and refer directly to the SCCL rule (12 CFR Part 252, Subpart H) and FR 2590 instructions for specific guidance. GLOBAL ABAS disclaims any liability for actions taken or not taken based on this information.

Consult a GLOBAL ABAS Consulting, LLC professional regarding your specific issues and questions. Your feedback will help us improve the SCCL Compliance Lab. Please let us know what you think in the Comment below. Copyright © 2025 GLOBAL ABAS Consulting, LLC. All rights reserved.

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