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October 18, 2017

CFTC published a notification in the Federal Register on comparability determination of the margin requirements for uncleared swaps for swap dealers (SDs) and major swap participants (MSPs) for the EU. The determination was made and issued by the Commission on October 13, 2017.

On November 22, 2016, the EC had submitted a request that the Commission determine that laws and regulations applicable in the EU provide a sufficient basis for an affirmative finding of comparability with respect to the Final Margin Rule. The Commission found the margin requirements for uncleared swaps under the laws and regulations of the EU comparable in outcome to those under the Commodity Exchange Act and Commission regulations. CFTC determined that laws and regulations applicable in the EU provide a sufficient basis for an affirmative finding of comparability with respect to margin requirements for uncleared swaps applicable to certain SDs and MSPs registered with the Commission. Pursuant to section 4s(e) of the Commodity Exchange Act, the Commission is required to promulgate margin requirements for uncleared swaps applicable to each SD and MSPs, for which there is no Prudential Regulator (collectively, Covered Swap Entities or CSEs). The Commission published final margin requirements for such CSEs in January 2016 (the Final Margin Rule).

Additionally, in May 31, 2016, the Commission published in the Federal Register its final rule with respect to the cross-border application of the Commission's margin requirements for uncleared swaps applicable to CSEs (also known as the Cross-Border Margin Rule). The Cross-Border Margin Rule sets out the circumstances under which a CSE is allowed to satisfy the requirements under the Final Margin Rule by complying with comparable foreign margin requirements (substituted compliance); offers certain CSEs a limited exclusion from the Commission's margin requirements; and outlines a framework for assessing whether a foreign jurisdiction's margin requirements are comparable in outcome to the Final Margin Rule (comparability determinations).

 

Related Link: Federal Register Notification (PDF)

Keywords: Americas, Europe, US, EU, Securities, Equivalence, Margin Requirements, Commodity Exchange Act, SD, MSP, CSEs,Cross-Border Margin Rule, CFTC

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