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December 30, 2015
Commentary by Steven Lofchie

SIFMA provided notice to banking regulators (the Board of Governors of the Federal Reserve, the Office of the Comptroller of the Currency and the FDIC) of a forthcoming change in the treatment of variation margin payments for over-the-counter derivatives by central clearing counterparties ("CCPs"). Historically, variation margin payments have been treated as collateral for outstanding exposure, a treatment that a SIFMA comment letter refers to as the "collateralized to market" ("CTM") model. Going forward, the CCPs will adopt a model by which variation margin payments are treated as settlement