Senators Introduce Legislation to Extend Margin Call Time to FCMs

Senators Pat Roberts (R-KS) and Heidi Heitkamp (D-ND) introduced legislation, titled "The Risk Hedging Protection Act" (S. 2601), which would provide futures customers with additional time to meet their margin calls.

S. 2601 would require futures customers to deliver sufficient funds to their FCMs to meet their margin requirements by the end of the business day after a trade rather than the morning following a trade. This bill is a response to the CFTC's residual interest rule proposal, which would have required futures customers to deposit the cash required to fully cover the margin of their futures contracts by the morning of the day following a trade.

Current CFTC regulation requires a customer margin to be posted within three days of a trade. Starting in November, under CFTC customer protection rules adopted last fall, the deadline will be extended to 6 p.m. on the day following the futures trade (T+1) and, four years later, is scheduled to move to the morning of T+1. The Roberts-Heitkamp bill would repeal the "morning of" requirement for margin posting that is scheduled to be applied in 2018 and provide additional time until 6 p.m., Eastern time, on T+1, allowing sufficient time for futures customers not to be required to pre-margin their accounts.

Companion legislation, H.R. 4413, was approved by the House on June 24, 2014.

See: S. 2601.Related news: House Votes to Reauthorize the CFTC (June 24, 2014); House Committee on Rules Releases Amended Customer Protection and End User Relief Act (June 12, 2014); House Agriculture Committee Approves Bipartisan Legislation to Reauthorize CFTC (with Lofchie Comment) (April 9, 2014); House Agriculture Committee Introduces Legislation to Reauthorize CFTC (with Lofchie Comment) (April 8, 2014).