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CFTC Proposes Delay of "Phase Six" Initial Margin Requirements's picture
Commentary by Nihal Patel

The CFTC proposed changing the compliance date for "Phase Six" of initial margin requirements from September 1, 2021 to September 1, 2022. The proposal follows on an interim final rule in which the CFTC delayed "Phase Five" from September 1, 2020, to September 1, 2021.

The added delay would affect entities with $8 billion to $50 billion in derivatives notional over the relevant measuring period. The CFTC indicated that the proposed delay is intended to align with a recent delay adopted as part of a BCBS/IOSCO revised framework for uncleared derivatives margin.

Comments on the proposal must be submitted within 60 days of publication in the Federal Register.

CFTC Commissioner Statements

While the vote on the proposal was unanimous, two commissioners issued written statements questioning the need for the delay. Commissioner Dan M. Berkovitz said he is "not presupposing that the full extension is necessary," and noted that both small and large portfolio entities "will have had plenty of time to spread the negotiation and implementation process out over [these] many years." Commissioner Rostin Benham questioned as "counterintuitive" the idea of delaying IM requirements "as a means to provide temporary, targeted relief to address increased market volatility." Commissioner Benham also stated that he would not support any further relief without "truly compelling facts and lockstep agreement with the prudential regulators."


The eventual delay of Phase Six seems fairly inevitable at this point, though as they say, anything is possible. Perhaps most interesting here is for APA junkies comparing why the CFTC felt the need to act through standard notice-and-comment rulemaking for this action while the bank regulators felt an interim final rule was sufficient.

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