MFA Coalition Joint Letter on CDS Customer Portfolio Margining

The MFA, the American Council of Life Insurers ("ACLI"), and the Alternative Investment Management Association ("AIMA") (collectively, the "Associations") submitted a joint letter to SEC Chairman White and CFTC Chairman Gensler with a request for action by the two commissions to improve coordination and to facilitate portfolio margining for customers in the cleared credit default swaps ("CDS") market - and, more specifically, to lower margin requirements, particularly on single-name CDS regulated by the SEC. In the letter, the Associations expressed members' concerns with the SEC Staff's imposition of high initial margin requirements on customers who want to participate in ICE Clear Credit's ("ICC") cleared CDS portfolio margining program for CDS indices and single-name CDS. SEC Staff are imposing a temporary level for customers at 1.5 or 2 times the level imposed on dealers using the same CDS portfolio margining program. The Associations requested that the SEC issue final approval of the margin methodologies of the seven broker-dealer/futures commission merchants that have applied for evaluation by SEC Staff and FINRA in a coordinated manner, at a level that matches the approved level for dealers, and as soon as possible in advance of the CFTC's June 10 mandatory clearing deadline for Category 2 entities. In the interim, the Associations requested that the SEC modify the temporary customer margin levels to the ICC baseline margin level to match the level approved for dealers.

View letter in full here (links externally to MFA website).