CFTC – Proposed Rule – Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

July 10, 2020 – The CFTC is seeking comment on a proposed amendment to the margin requirements for uncleared swaps for swap dealers (“SD”) and major swap participants (“MSP”) for which there is no prudential regulator (the “CFTC Margin Rule”). As adopted in January 2016, the CFTC Margin Rule, which mandates the collection and posting of variation margin and initial margin (“IM”), was to take effect under a phased compliance schedule extending from September 1, 2016, to September 1, 2020.

On April 9, 2020, the Commission published in the Federal Register a final rule extending the September 1, 2020 compliance date by one year to September 1, 2021, for a portion of what was to be the final phase consisting of entities with smaller average daily aggregate notional amounts of swaps and certain other financial products (the “Smaller Portfolio Group”) to reduce the potential market disruption that could result from a large number of entities coming into the scope of compliance on September 1, 2020 (“April 2020 Final Rule”).

Subsequently, on May 28, 2020, to mitigate the operational challenges faced by certain entities subject to the CFTC Margin Rule as a result of the coronavirus disease 2019 (“COVID-19”) pandemic, the Commission adopted an interim final rule (the “IFR”) extending the September 1, 2020 compliance date for certain entities by one year (“IFR Extension Group”) to September 1, 2021.

This rulemaking proposal (“Proposal”) would further delay the compliance date for the Smaller Portfolio Group from September 1, 2021, to September 1, 2022, to avoid market disruption due to a large number of entities being required to comply by September 1, 2021, under the revised compliance schedule.

Comments must be received on or before September 8, 2020.

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