Overseas-based banks won leeway in Dodd-Frank Act requirements to separate swaps trading from U.S. branches under a Federal Reserve policy released today.

The Federal Reserve said in an interim final rule that the banks will be eligible to apply for a transition period of 24 months in rules taking effect July 16. The Institute of International Bankers, a lobbying group representing Credit Suisse Group AG and Deutsche Bank AG among others, urged the Fed to grant foreign banks the same phase-in process as U.S. banks like JPMorgan Chase & Co.

In the context of the relevant section of Dodd-Frank, "uninsured U.S. branches and agencies of foreign banks would appear to be properly considered to be insured depository institutions," the Fed said in the rule.

Dodd-Frank, the 2010 financial regulatory overhaul, requires banks to separate some swaps trading from units that are backed by federal deposit insurance or have access to the central bank's discount window.

The interim final rule takes effect today, while the central bank will accept comments until Aug. 4. The rule will be revised if necessary, the Fed said in a statement.

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