CFTC published in Federal Register the final rule on margin requirements for uncleared swaps for swap dealers and major swap participants for which there is not a prudential regulator (CFTC Margin Rule), with an effective date of February 04, 2021. Additionally, at a joint open meeting, CFTC and SEC had approved a final rule to harmonize the minimum margin level for security futures held in a futures account, with the minimum margin level for security futures held in a securities portfolio margin account. The final rule will be effective on December 24, 2020. The agencies also approved the issuance of a joint request for comment on the portfolio margining of uncleared swaps and non-cleared security-based swaps. The comment period ended on December 07, 2020.
Final rule on margin requirements for uncleared swaps for market participants without prudential regulator
CFTC adopted amendments to its margin requirements for uncleared swaps for swap dealers and major swap participants, for which there is no prudential regulator (CFTC Margin Rule). CFTC is amending the CFTC Margin Rule to revise the calculation method for determining whether certain entities come within the scope of its initial margin requirements for uncleared swaps beginning in the last phase of the phased compliance schedule, which starts on September 01, 2022, and the timing for compliance with the initial margin requirements after the end of the phased compliance schedule. These amendments align certain aspects of the CFTC Margin Rule with the BCBS-IOSCO framework for margin requirements for non-centrally cleared derivatives. CFTC is also amending the CFTC Margin Rule to allow swap dealers and major swap participants subject to the CFTC Margin Rule to use the risk-based model calculation of initial margin of a counterparty that is a CFTC-registered swap dealer or major swap participant to determine the amount of initial margin to be collected from the counterparty and to determine whether the initial margin threshold amount for the exchange of initial margin has been exceeded such that documentation concerning the collection, posting, and custody of initial margin would be required.
Final rule on margin requirements for security futures
CFTC and SEC are adopting rule amendments to lower the margin requirement for an unhedged security futures position from 20% to 15% and adopting certain conforming revisions to the security futures margin offset table. In July 2019, CFTC and SEC had proposed to amend the security futures margin rules. CFTC and SEC sought to align margin requirements for security futures held in futures accounts and customer securities accounts that are not subject to the Portfolio Margin Rules with security futures and exchange-traded options held in customer securities accounts subject to the Portfolio Margin Rules. CFTC and SEC also proposed certain conforming revisions to the Strategy-Based Offset Table. CFTC and SEC received a number of comments in response to the proposal. After considering the comments, CFTC and SEC are adopting, as proposed, amendments to the security futures margin rules to lower the required initial and maintenance margin levels for an unhedged security futures position from 20% to 15%. CFTC and SEC are also publishing a revised Strategy-Based Offset Table as proposed.
Consultation on portfolio margining of uncleared swaps and security-based swaps
CFTC and SEC are seeking public comment on the potential ways to implement portfolio margining of uncleared swaps and non-cleared security-based swaps, including whether there are opportunities to enhance efficiencies, reduce complexity, increase consistency, and add resiliency to the financial system through adjustments to the current margin rules. CFTC and SEC are requesting comment on all aspects of the portfolio margining of uncleared swaps and non-cleared security-based swaps, including on the merits, benefits, and risks of portfolio margining these types of positions and on any regulatory and operational issues associated with portfolio margining them. Additionally, comments are being solicited on specific aspects of the margining of uncleared swaps, non-cleared security-based swaps, and related positions.
- Press Release
- Final Margin Rule for Swaps
- Final Margin Rule for Futures
- Proposal on Portfolio Margining of Uncleared Swaps
Comment Due Date: December 07, 2020
Effective Date: February 04, 2021/December 24, 2020
Keywords: Americas, US, Banking, Securities, Margin Rule, Derivatives, Swaps, Futures, CGTC, SEC
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.