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 ArticleDNB Corrects an Error in Instructions for IRRBB Reporting by Banks
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.