The Federal Reserve Board on Friday finalized a rule to extend by 18 months the initial compliance dates for certain parts of its single-counterparty credit limit rule. The extension, which is unchanged from the proposal, applies to the combined U.S. operations of foreign banks and provides additional time for foreign jurisdictions’ implementation of the standard to become effective.

In June 2018, the Board adopted a final single-counterparty credit rule to enhance financial stability by limiting the exposure that a large domestic or foreign bank can have to another counterparty. The rule applied those limits to both the intermediate holding company and combined U.S. operations of foreign banks, which includes any U.S. branches. For the limits applied to combined U.S. operations, a foreign bank could comply by certifying that it meets a similar rule or standard of its home country.

Certain foreign jurisdictions remain in the process of finalizing their rules or standards. The extension allows additional time for foreign banks to comply with the Board’s rule via certification with a similar home country rule or standard. All other parts of the Board’s rule remain unchanged.

Under the final rule, the largest foreign banks need to comply with the single-counterparty credit limit rule by July 1, 2021, whereas smaller foreign banks need to comply by January 1, 2022.