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

January 5, 2021 – The CFTC is adopting amendments to its margin requirements for uncleared swaps for swap dealers (SDs) and major swap participants (MSPs) for which there is not a prudential regulator. The CFTC is amending the CFTC Margin Rule to revise the calculation method for determining whether certain entities come within the scope of its initial margin (IM) requirements for uncleared swaps beginning in the last phase of the phased compliance schedule, which starts on September 1, 2022, and the timing for compliance with the IM requirements after the end of the phased compliance schedule. These amendments align certain aspects of the CFTC Margin Rule with the BSBS & IOSCO Framework for margin requirements for non-centrally cleared derivatives.

The CFTC is also amending the CFTC Margin Rule to allow SDs and MSPs subject to the CFTC Margin Rule to use the risk-based model calculation of IM of a counterparty that is a CFTC-registered SD or MSP to determine the amount of IM to be collected from the counterparty and to determine whether the IM threshold amount for the exchange of IM has been exceeded such that documentation concerning the collection, posting, and custody of IM would be required.

This rule is effective on February 4, 2021.

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