non-cleared swap margin

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.


Continue Reading Initial Margin Phase 5: Report from CFTC’s Office of the Chief Economist

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 amending trading and credit support documentation in time for the March 1, 2017 variation margin deadline.  The following is a “Plain English” overview of where things stand in less than 300 words:
Continue Reading US and European Regulators Issue Additional Relief from March 1st Variation Margin Deadline for Non-Cleared Swaps

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 yet begun to consider how they are going to implement the required changes despite the fact that the Implementation Date is only a little over three months away.  In this posting, we offer a few thoughts on a protocol that was recently published by the International Swaps and Derivatives Association (“ISDA”) to facilitate amendments to ISDA Master Agreements and related Credit Support Annexes that account for the new non-cleared swap margin rules recently enacted by U.S. regulators.
Continue Reading Don’t Forget March 1, 2017: Amending Trading Documentation to Account for New Non-Cleared Swap Margin Requirements

Earlier today, the Board of Directors (the “Board”) of the Federal Deposit Insurance Corporation (FDIC) approved a final rule to establish margin requirements on non-cleared swaps and security-based swaps (collectively, for this posting, “non-cleared swaps”).  The FDIC is issuing the rule jointly with the OCC, the board of the Federal Reserve,
Continue Reading A Marginally Important Day: FDIC’s Board Approves Joint Final Rule on Margin for Uncleared Swaps and Finalizes Relief for End-Users