July 09, 2019

CFTC and SEC proposed a rule to align the minimum margin required on security futures with other similar financial products. The proposal would set the minimum margin requirement for security futures at 15% of the current market value of each security future. The comment period on this proposal will remain open for 30 days following publication in the Federal Register.

CFTC and SEC have joint rulemaking authority regarding margin requirements for security futures. In 2002, CFTC and SEC adopted rules establishing margin requirements for unhedged security futures products at 20%. In light of lower margin requirements that have been established for comparable financial products and the resulting asymmetry, both CFTC and SEC have determined that it is appropriate to re-examine the minimum margin required for security futures and are proposing an adjustment. This proposal is one component of the ongoing efforts of CFTC and SEC to further harmonize their regulatory regimes for the benefit of investors and the markets.

Officials from CFTC and SEC are looking forward to this collaboration. CFTC Commissioner Dan M. Berkovitz stated that this action would increase consistency in the markets by bringing the margin requirement for security futures held outside of a securities portfolio margin account into alignment with the margining for security futures under risk-based portfolio margining methodologies. He further said that the proposal represents an opportunity for CFTC and SEC to gain more knowledge about the security futures markets, reevaluate the status quo, and establish a more effective regulatory standard.

 

Comment Due Date: FR+30 Days

Keywords: Americas, US, Banking, Securities, Margin Requirements, Security Futures, Margin Rules, Margin Offset Table, CFTC, SEC

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