On October 31st, the CFTC’s Office of the Chief Economist (the “OCE”) issued a report about “Phase 5” of the uncleared margin rules (“UMR”) that are slated to go into effect on September 1, 2020. The purpose of the report was “to guide regulators in their responses to industry requests for relief” from the scheduled application of Phase 5.
This post will provide an overview of the main conclusions of the report. Any potential implementation of revisions to the UMR consistent with the conclusions in the report would have the effect of reducing the number of market participants subject to UMR, thereby simplifying compliance processes and burdens on entities that may have otherwise been impacted by the UMR. It is too early to forecast whether regulators will propose and ultimately implement revisions to the UMR based upon this report. Although, we believe that its issuance is a noteworthy development.
At the outset, the UMR are complex and their application to any particular trading activities should be undertaken in consultation with counsel familiar with these rules. This post is not legal advice.