ICI Calls for Revisions to CFTC's Margin Requirements for Uncleared Swaps

The Investment Company Institute ("ICI") suggested revisions to the CFTC's proposed rule on the cross-border application of margin requirements for uncleared swaps.Specifically, ICI suggested that the proposed rule:

• include an exception to the definition of "U.S. person" for a pool, fund or other collective investment vehicle if it is publicly offered only to non-U.S. persons and not to U.S. persons;
• permit substituted compliance without qualification if the CFTC finds a foreign jurisdiction's margin requirements to be comparable to the margin rules;
• adopt a method for comparability determinations that considers the margin rules of a jurisdiction in their entirety, instead of making separate determinations for each element of the margin rules;
• properly exclude transactions from the margin requirements when they are between certain non-U.S. covered swap entities and non-U.S. persons (such as non-U.S. regulated funds) and neither party has a significant connection to the U.S.; and
• expand the exclusion to cover transactions between a non-U.S. person and a U.S. branch of a non-U.S. covered swap entity or a foreign consolidated subsidiary of a non-U.S. covered swap entity whose obligations are not guaranteed by a U.S. person.

ICI also encouraged the CFTC, the SEC, U.S. prudential regulators and non-U.S. regulators to continue to work together to develop consistent margin rules before adopting any final rule.