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CFTC Staff Issues Advisory to Swap Dealers

June 24th | 2021


The CFTC recently issued an advisory to swap dealers clarifying the use of internal models in calculating minimum capital requirements. In particular, the advisory clarifies that a dually registered futures commission merchant and swap dealer (FCM/SD) or a standalone SD may use a model to compute the uncleared swap margin amount for purposes of determining the firm’s minimum regulatory capital requirement without obtaining CFTC or NFA Approval. The advisory also clarifies that an FCM/SD or standalone SD may use an initial margin model other than the Standardized Initial Margin Model developed by the International Swaps and Derivatives Association (ISDA) for the purposes of computing the uncleared swap margin amount. The advisory is in response to requests for guidance on the new swap dealer capital and financial reporting requirements, which have a compliance date beginning on October 6, 2021.

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