Featured Product

    CFTC Proposes to Amend Margin Requirements for Uncleared Swaps

    October 24, 2019

    CFTC is seeking comment on a proposed amendment to the margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no prudential regulator (CFTC Margin Rule). As adopted in 2016, the CFTC Margin Rule, which mandates the collection and posting of variation margin and initial margin, takes effect under a phased compliance schedule extending from September 01, 2016 to September 01, 2020. The proposed amendment would extend the compliance schedule to September 01, 2021, for entities with smaller average daily aggregate notional amounts of swaps and certain other financial products. By extending the compliance schedule, the proposed amendment would mitigate the potential market disruption that could result from such a large number of entities coming into the scope of the initial margin requirements on September 01, 2020. Comments must be received on or before December 23, 2019.

    BCBS and IOSCO revised their framework to extend the schedule for compliance with the initial margin requirements and provide an additional phase-in period for smaller counterparties. CFTC believes it is appropriate to amend the CFTC Margin Rule consistent with the revision in the BCBS and IOSCO framework. The proposal represents the CFTC effort to undertake coordinated action with international counterparts to achieve regulatory harmonization with respect to uncleared swaps margin. In proposing the change in the phase 5 compliance date, CFTC considered the relatively small amount of swap activity of the financial end-users that would be subject to the one-year extension. Given the relatively small amount of swap activity of the financial end-users in the extended compliance date group, CFTC believes the proposed compliance date extension will have a muted impact on the systemic risk, mitigating effects of the initial margin requirements during the extension period.

    Accordingly, CFTC proposes to amend Commission § 23.161(a), which sets forth the schedule for compliance with the CFTC Margin Rule, to add a sixth phase of compliance for certain smaller entities that are currently subject to phase 5. The proposed amendment would require compliance by September 01, 2020, for covered swap entities and covered counterparties with an average daily aggregate notional amounts (AANA) ranging from USD 50 billion up to USD 750 billion. The compliance date for all other remaining covered swap entities and covered counterparties, including financial end-user counterparties exceeding an material swap exposure of USD 8 billion in AANA, would be extended to September 01, 2021. In addition, CFTC is proposing non-substantive, conforming technical changes to Commission § 23.161(a). The proposed change will conform the CFTC Margin Rule to the rule text of the Margin Rule of Prudential Regulators, promoting further harmonization between both rules.

     

    Related Link: Federal Register Notice

    Comment Due Date: December 23, 2019

    Keywords: International, Americas, US, Banking, Securities, Margin Requirements, Implementation Timeline, Initial Margin, OTC Derivatives, Swaps, BCBS, IOSCO, CFTC

    Featured Experts
    Related Articles
    News

    MAS Concludes Blockchain Payments Prototype Shows Commercial Potential

    MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.

    July 13, 2020 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Validation Rules in July 2020

    APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    July 10, 2020 WebPage Regulatory News
    News

    PRA to Partly Apply EBA Guidelines on Disclosures for COVID Measures

    PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.

    July 10, 2020 WebPage Regulatory News
    News

    EBA Updates List of Correlated Currencies Under CRR

    EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5469