Buy-Side Trade Associations Submit Follow-up Letter to SEC on CDS Portfolio Margin

The Managed Funds Association ("MFA"), the American Council of Life Insurers ("ACLI"), and the Alternative Investment Management Association ("AIMA") (collectively, the "Associations") submitted a joint follow-up letter requesting that the SEC address buy-side concerns related to the customer margin regime for the cleared credit default swaps ("CDS") portfolio program.

Upon expiry of the temporary customer initial margin regime as of January 31, 2014, the SEC will require each clearing member of ICE Clear Credit to have its own individual customer margin methodology. The new methodology must have exposure calculated at a rate materially higher than that applied to dealers, rather than applying on a permanent basis the clearing agency margin plus any add-on required by the registered broker-dealer/futures commission merchant to address individual counterparty credit risk. The Associations requested that the SEC facilitate voluntary clearing of single-name CDS by making permanent the initial margin regime now in place.

See: Joint Letter to SEC. Related news: Buy-Side Trade Associations Submit Joint Letter to SEC on CDS Customer Portfolio Margining (September 20, 2013); MFA: Update on SEC Interim Relief for CDS Customer Portfolio Margining (June 3, 2013) MFA: Update on SEC Interim Relief for CDS Customer Portfolio Margining (May 13, 2013).