CFTC is adopting amendments to the margin requirements for uncleared swaps for swap dealers (SDs) and major swap participants (MSPs), for which there is no prudential regulator. CFTC is adopting these amendments in light of the recently adopted rules by FED, FDIC, and OCC (collectively, the qualified financial contract or QFC rules) that impose restrictions on certain uncleared swaps, uncleared security-based swaps, and other financial contracts. The rule will be effective from December 26, 2018.
CFTC is amending the definition of “eligible master netting agreement” in the CFTC Margin Rule to ensure that master netting agreements of firms subject to the CFTC Margin Rule are not excluded from the definition of eligible master netting agreement based solely on such agreements' compliance with the QFC rules. CFTC is also amending the Margin Rule such that any legacy uncleared swap (that is, an uncleared swap entered into before the applicable compliance date of the CFTC Margin Rule) that is not now subject to the margin requirements of the CFTC Margin Rule will not become so subject if it is amended solely to comply with the QFC rules. These amendments are consistent with amendments that FED, FDIC, OCC, the Farm Credit Administration (FCA), and the Federal Housing Finance Agency (FHFA) jointly published in the Federal Register on October 10, 2018.
CFTC had published the proposal for amendments to the margin requirements in May 2018. The comment period for the proposal ended in July 2018. CFTC received four relevant comments in response to the proposal. Though the comments raised issues unrelated to the proposal or suggested additions that would go beyond the scope of the proposal, the comments were generally supportive of the aims of the proposal. The final rule is consistent with rule changes recently adopted by the Prudential Regulators to the Prudential Margin Rule and addresses suggestions received as part of the CFTC’s Project KISS [“Keep It Simple, Stupid”] initiative for the CFTC to harmonize its uncleared swap margin regime with that of the Prudential Regulators.
Related Link: Final Rule
Effective Date: December 26, 2018
Keywords: Americas, US, Banking, Qualified Financial Contracts, Swap Margin Rule, Swap Dealers, Major Swap Participant, CFTC
Previous ArticleECB Rule on Materiality Threshold for Credit Obligations Past Due
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.