CFTC Publishes Amendments to Comparability Determination for Japan

CFTC unanimously approved an amended the comparability determination that would extend the substituted compliance permitted for Japan’s margin requirements for uncleared swaps when compared to the uncleared swap margin provisions of Title VII of the Dodd-Frank Act and CFTC regulations. This amends the determination for Japan by making a positive determination of comparability with respect to the scope of entities subject to margin requirements and making a positive determination of comparability with respect to the treatment of inter-affiliate transactions. All other findings and determinations contained in the Japan Determination remain unchanged and in full force and effect. Additionally, CFTC published statements of CFTC Chairman J. Christopher Giancarlo, Commissioner Brian Quintenz, and Commissioner Dan M. Berkovitz on the comparability determination for Japan.

Substituted compliance describes the circumstances where CFTC would permit swap dealers or major swap participants subject to the rules of a foreign jurisdiction, but whose swap activities bring them within the scope of certain CFTC regulations, to use compliance with regulations in the foreign jurisdiction as a substitute for compliance with the relevant CFTC regulations. This approach builds on the CFTC’s long-standing policy of recognizing comparable regulatory regimes based on international coordination and comity principles with respect to cross-border activities involving futures and options. In accordance with the CFTC policy framework described in its "Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants – Cross-Border Application," which was announced on May 24, 2016, the comparability determination is part of substituted compliance with respect to CFTC regulations applicable to swaps activities outside the U.S. The approval of CFTC also reflects a collaborative effort with authorities and market participants from Japan. Working with authorities in Japan, CFTC has extended the 2016 determination to two additional requirements.

Related Link: Federal Register Notice

Keywords: Americas, Asia Pacific, US, Japan, Banking, Securities, Comparability Determination, Margin Requirements, Uncleared Swaps, Equivalence Regime, CFTC