Federal Register: CFTC Proposes Amendments to Uncleared Swap Margin Rules

A CFTC proposal that would amend the uncleared swap margin requirements for which there is no prudential regulator and codify prior no-action relief related to the application of rules on minimum transfer amounts ("MTAs") was published in the Federal Register.

As previously covered, the proposal makes two core sets of changes to how the MTAs are handled under the rules. First, Rule 23.158 ("Margin documentation") would be amended to explicitly permit separate MTAs across initial and variation margin (the combined total must be below the overall amount - $500,000 - which remains as before). This is intended to be consistent with the approach taken under CFTC Letter 19-25.

Second, the proposal would make amendments to Rules 23.151 ("Definitions applicable to margin requirements") and 23.152 ("Collection and posting of initial margin") that would permit separate MTAs of $50,000 for "separately managed accounts" ("SMAs"). The definition of SMA in the proposal focuses on the use of an investment manager and the absence of netting across swaps of the legal entity outside of the particular SMA. This is intended to be largely consistent with the approach taken under CFTC Letter 17-12.

Comments on the proposal must be submitted by October 22, 2020.