CFTC and SEC Joint Proposal on Margin Rules for Security Futures

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