U.S. federal banking agencies have issued a final rule lowering the capital requirements for bank-owned securities firms operating in the United States

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision published the final rule which lowers the risk weight applied to certain claims on qualifying securities firms from 100% to 20%.

Under the final rule, qualifying securities firms are: firms incorporated in the U.S. that are broker-dealers registered with the Securities and Exchange Commission and are in compliance with the SEC’s net capital requirements; and, firms incorporated in the OECD that are subject to supervisory and regulatory arrangements, including risk-based capital requirements, comparable to those imposed on banks in OECD countries.

Consistent with the existing rules of the Board and the OCC, the FDIC and the OTS also are amending their risk-based capital standards to permit a zero percent risk weight for certain claims on qualifying securities firms that are collateralized by cash or by securities issued or guaranteed by the U.S. or OECD central governments. The rule will become effective on July 1.

The Fed says that this change is consistent with the treatment of claims on securities firms under an April 1998 amendment to the Basel Accord.