CFTC Approves Position Limit and Initial Margin Compliance Date Rules
CFTC, at its open meeting, approved a final rule on position limits for derivatives and a final rule to delay the compliance date of September 01, 2021 to September 01, 2022 for the initial margin requirements for smaller entities under the CFTC Margin Rule. The final rule on position limits for derivatives amends regulations of speculative position limits to conform with certain Dodd-Frank amendments to the Commodity Exchange Act. The final rule on position limits will become effective 60 days after its publication in the Federal Register while the final rule on initial margin requirements for entities with smaller portfolios will become effective on December 09, 2020. CFTC also approved a final rule that amends CFTC Regulation 3.10(c), which provides exemptions from intermediary registration under certain conditions to foreign-located persons, in connection with their U.S. commodity interest transactions conducted on behalf of persons located outside the US. This final rule will become effective 60 days after its publication in the Federal Register.
Rule on Position Limits for Derivatives
Among other things, CFTC adopted:
- New and amended federal spot month position limits for derivatives contracts associated with 25 physical commodities
- Amended single-month and all-months-combined limits for most of the agricultural contracts currently subject to federal position limits
- New and amended definitions for use throughout the position limits regulations, including a revised definition of “bona fide hedging transaction or position” and a new definition of “economically equivalent swaps”
- Amended rules governing exchange-set limit levels and grants of exemptions therefrom
- A new streamlined process for bona fide hedging recognitions for purposes of federal position limits
- New enumerated bona fide hedges
- Amendments to certain regulatory provisions that would eliminate Form 204 while also enabling CFTC to leverage and receive cash-market reporting submitted directly to the exchanges by market participants
Rule on margin requirements for uncleared swaps for swap dealers and major swap participants (Phase VI Compliance Date Extension)
CFTC approved a final rule that amends the margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no banking regulator. The final rule extends the initial margin implementation schedule for entities with smaller uncleared swap portfolios from September 01, 2021 to September 01, 2022, to avoid market disruption due to the large number of entities that would have been required to comply with the initial margin requirements by September 01, 2021. This final rule is effective on December 09, 2020.
Effective Date: December 09, 2020/FR+60 Days
Keywords: Americas, US, Banking, Securities, Swaps, Derivatives, Initial Margin, Compliance Date, Position Limits, Dodd-Frank Act, Basel, CFTC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
