CFTC Unanimously Approves Proposals Amending Margin Requirements
August 18th | 2020
The CFTC recently approved two proposals concerning margin requirements for swap dealers (SDs) and major swap participants (MSPs). According to Commissioner Dawn D. Stump, the proposals further several important policy objectives, like facilitating international coordination, codifying existing CFTC Staff relief, and appropriately tailoring rules to assure workability for those required to comply with them.
The first proposal would align aspects of the CFTC’s uncleared swap margin requirements (CFTC Margin Rule) with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ margin requirements for non-cleared derivatives (BCBS/IOSCO Framework). The proposal would also allow SDs and MSPs to rely on certain counterparties’ calculation of initial margin and revises the method for determining whether an entity comes within the scope of the initial margin requirements under the CFTC Margin Rule beginning in the last phase of the phased compliance schedule, which is scheduled to begin on September 1, 2021.
The second proposal would amend the CFTC Margin Rule to permit the application of separate minimum transfer amounts for initial and variation margin, and the application of a minimum transfer amount of up to $50,000 for separately managed accounts.