Earlier today, the CFTC’s Division of Clearing and Risk issued an interpretation stating that, “variation margin (‘VM’) payments and all other payments in satisfaction of outstanding exposures on counterparty’s cleared swap positions constitute settlement of the outstanding exposure and not collateral against it.” The practical effect of this interpretation… Continue Reading
In testimony earlier today before the House Agricultural Committee, CFTC Chairman Christopher Giancarlo announced his advocacy of a one-year delay in the implementation of the reduction in swap dealer de minimis level. As background, a bank or other market participant can engage in a de minimis level of swap dealing activity without having to register … Continue Reading
Earlier today, European regulators and the Federal Reserve Board and the Office of the Comptroller of Currency provided additional relief (of sorts) from the March 1st variation margin deadline and related amendments of credit support documentation for non-cleared swaps. This relief was provided by the regulators in recognition of the challenges faced by market participants in … Continue Reading
The International Swaps and Derivatives Association (“ISDA”) has published a very useful 2-page checklist of steps that should be taken in order to get ready for the March 1, 2017 Variation Margin deadline. In summary, ISDA has identified four steps:… Continue Reading
Many buy-side market participants are in the process of grappling with issues related to the amendment of their derivatives trading documentation in order to account for new U.S. margin requirements that will apply to non-cleared swaps beginning on March 1, 2017 (the “Implementation Date”). But, in our experience, a large number of market participants have not … Continue Reading
Two recent letters from the CFTC staff hold that, beginning October 14, 2016, its regulations will prohibit investment of client funds by futures commission merchants (“FCMs”) and derivatives clearing organizations (“DCOs”) in prime money market funds (“Prime MMFs”). Although the staff’s positions are clearly articulated, I found their relationship to Regulation 1.25 questionable.… Continue Reading
