CFTC Approves Rules on Swap Clearing and Margin Requirements
CFTC, at its open meeting in April 2020, approved certain proposed rules and final rules. One of the proposed rules includes amendments to part 50 clearing requirements for central banks, sovereigns, international financial institutions, bank holding companies, and community development financial institutions. The comment period for this proposed rule ends on July 13, 2020. One of the adopted final rules amends the margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no prudential regulator; the rule is being amended to add the European Stability Mechanism to the list of entities that are expressly excluded from the definition of financial end-user under CFTC regulation 23.151. This final rule will become effective on June 10, 2020.
Proposed Amendments to Part 50 Clearing Requirements
CFTC approved proposed amendments to the regulations governing which swaps are exempt from the clearing requirement in section 2(h)(1) of the Commodity Exchange Act. The proposed amendments would address the treatment of swaps entered into by certain central banks, sovereign entities, and international financial institutions. The proposed rulemaking also addresses four no-action letters that the Division of Clearing and Risk of CFTC issued in 2013 and 2017. CFTC is also proposing amendments to exempt from required clearing swaps entered into by certain bank holding companies, savings and loan holding companies, and community development financial institutions. CFTC is proposing to re-codify the regulatory provisions exempting eligible banks, savings associations, farm credit institutions, and credit unions from the definition of “financial entity” for purposes of section 2(h)(7)(A) of the Commodity Exchange Act by moving the current requirements to a separate rule. Additionally, CFTC is proposing to publish a compliance schedule setting forth all the past compliance dates for the 2012 and 2016 swap clearing requirement regulations. The proposal also includes other non-substantive technical amendments.
Final Rule on Amendments to Part 23 Margin Requirements for the European Stability Mechanism
CFTC approved a final rule that codifies a CFTC No-Action Letter 19-22 concerning the European Stability Mechanism (ESM). Letter 19-22 states that the Division of Swap Dealer and Intermediary Oversight (DSIO) will not recommend an enforcement action against a registered swap dealer that does not follow the uncleared margin rules with respect to swaps entered into with the European Stability Mechanism. In October 2019, CFTC proposed to codify CFTC Letter No. 17-34 and amend regulation 23.151 to exclude the European Stability Mechanism from the definition of financial end-user and thus exempt from the CFTC Margin Rule uncleared swaps entered into by the European Stability Mechanism. On CFTC approval of the publication of the proposal, DSIO issued staff no-action letter 19-22, which modified the no-action relief under Letter 17-34. CFTC also proposed to correct a typographical error in CFTC regulation 23.157. CFTC is adopting the amendments to regulations 23.151 and 23.157 as proposed.
Related Links
Comment Due Date: July 13, 2020
Effective Date: June 10, 2020
Keywords: Americas, US, Banking, Securities, Swaps, Clearing Requirement, Commodity Exchange Act, Margin Requirements, Margin Rules, Derivatives, CFTC
Previous Article
HKMA Develops Assessment Framework for Green and Sustainable BankingRelated Articles
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements,
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,