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 until August 26, 2019.
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.
Related Links: Proposed Rule
Comment Due Date: August 26, 2019
Keywords: Americas, US, Banking, Securities, Margin Requirements, Security Futures, Margin Rules, Margin Offset Table, CFTC, SEC
Previous ArticleUS Agencies Extend Deadline for Resolution Plans of Certain Banks
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).