SIFMA Asks Prudential Regulators to "Consider" CFTC's Cross-Border Margin Rule (with Lofchie Comment)

In light of recent CFTC-proposed rulemaking on the cross-border treatment of margin rules for uncleared swaps, SIFMA urged prudential regulators to reconsider the CFTC's rule proposal when deciding how to finalize the cross-border application of their own margin rules. The "prudential regulators" mentioned in the comment letter are the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Farm Credit Administration.

In its comment letter, SIFMA criticized the CFTC's cross-border proposal as follows: "Based on our initial review . . . we have concerns that certain aspects of the CFTC's proposal, such as the limited availability of substituted compliance, would not be consistent with the objectives of maintaining open and competitive global swap markets and fostering internationally harmonized cross-border margin requirements." SIFMA then made the following request: "Since these considerations also bear on the Prudential Regulators' margin rules, we ask that the agencies defer finalization of the cross border-application of their margin rule in order to have the opportunity to review and consider the CFTC's proposal and related public comments."

Lofchie Comment: This letter could be clearer. The request that the prudential regulators "consider" the CFTC's proposal suggests that SIFMA would like them to go along with the CFTC's requirements. However, the text of the rest of the letter suggests the opposite, indicating that SIFMA hopes the prudential regulators will put the kibosh on the CFTC's proposal because they view it as inconsistent with the goal of maintaining open global markets.

See: SIFMA Submits Comments to Prudential Regulators on the Cross-Border Margin Rule.Related news: CFTC Issues Proposed Rule on Cross-Border Margin (Fed. Reg.) (July 14, 2015).