SIFMA AMG Urges CFTC to Take Up Prior Requests on Trading and Margin

SIFMA AMG urged the CFTC to address its members' concerns on market structure, margin requirements and clearing access.

In a letter to CFTC Acting Chair Caroline Pham, SIFMA AMG offered "Priority Issues for Consideration," including outstanding previous requests for Commission action. SIFMA highlighted:

• Approval of Japanese Clearing Houses to clear for US market participants. SIFMA AMG said it had recommended previously that the CFTC approve the application of the Japan Securities Clearing Corporation ("JSCC") to allow US market participants to clear Japanese Yen-denominated interest rate swaps through non-US clearing members of JSCC.
• Block Trade Thresholds and Period. In multiple letters, (see 2020 letter, 2023 letter and 2024 letter), SIFMA AMG said it had recommended previously: (i) "that the CFTC address concerns that the [size requirements] are substantially too high;" (ii) that the CFTC revisit the methodology used to determine block and cap sizes and formulate an approach for the periodic reconsideration of block and cap sizes; and (iii) that the CFTC grant requested no-action relief pending such re-examination of the calculation methodology.
• Initial Margin Concerns. SIFMA AMG said it recommended previously that the CFTC (i) exempt "seeded funds" from initial margin requirements and (ii) eliminate a provision disqualifying money market funds and similar funds from being eligible collateral under the margin rules.
• Limited Grace Periods for Margin Transfers for Separately Managed Accounts. SIFMA AMG said it recommended previously (see 2019 letter, 2023 letter and 2024 letter), that the CFTC permit FCMs to continue to have discretion to agree on a limited grace period for margin transfers, based on their own credit assessment and consistent with their risk management programs. SIFMA AMG asked the CFTC to clarify that a limited grace period for margin transfers is permitted under CME Rule 930K ("Liquidation of Accounts"). 
• Confirm US Treasury ETFs as eligible IM collateral. SIFMA AMG asked the CFTC to "[a]dopt the March 2024 GMAC Recommendation to clarify that qualified UST ETFs can be eligible IM collateral through (1) aligning with the SEC's guidance that treats ETF shares as 'redeemable securities' under Section 2(a)(32) ["Definitions"] of the Investment Company Act of 1940, and (2) clarifying that ETFs that hold qualifying assets meet the redeemability requirements under CFTC regulation 23.156 ["Forms of margin"]."