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The Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission has issued an advisory clarifying that the initial margin documentation requirement for swap dealers does not apply until the initial margin amount exceeds the regulatory posting threshold of $50 million (which is measured on a group basis). More specifically, DSIO’s advisory provides that swap dealers subject to the CFTC’s margin requirements are not required to complete documentation governing the posting,…
On June 21, the Securities and Exchange Commission adopted a panoply of final rules dealing with the following aspects of the regulation of security-based swaps (SBS): Capital requirements for nonbank SBS Dealers (SBSDs) and Major SBS Participants (MSBSPs). Increased minimum net capital requirements for broker-dealers that use internal models to compute net capital (ANC broker-dealers). Capital requirements tailored to security-based swaps and swaps for broker-dealers that are not registered as an SBSD or MSBSP to…
On June 27, 2019, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission issued a no-action relief (No Action Letter) for registered floor traders from compliance with certain conditions of a CFTC regulation related to the de minimis exception to the swap dealer definition. Under paragraph (6)(iv) of the swap dealer definition in CFTC regulation 1.3, a registered floor trader does not need to consider cleared swaps executed on…
On May 29, the International Swaps and Derivatives Association (ISDA) issued calculation guidance for swap market participants seeking to determine if they might become subject in 2020 to mandatory initial margin requirements for swaps executed with swap dealers registered with the Commodity Futures Trading Commission. Under both the CFTC margin rules and the margin rules adopted by the prudential regulators for bank swap dealers, any “financial end user” (as defined in the margin rules) that…
On June 6, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission issued no action letter 19-13 to permit swap dealers and their counterparties to make certain changes to current swaps without subjecting the swaps to the CFTC swap margin rule. The need for the relief stems from the anti-avoidance position taken by the CFTC when the swap margin rule was enacted that any change made after the margin…
On April 29, Commodity Futures Trading Commission Chairman Chris Giancarlo sent a letter to Randy Quarles, the Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, in which he proposed that the US regulators responsible for the administering the margin rules for uncleared swaps should collaborate in providing some relief to non-dealer swap market participants who may become subject to initial margin requirements in 2020. The specific relief would be…
Although the pending reforms to the European Market Infrastructure Regulation (EMIR), commonly referred to as EMIR REFIT, have not yet gone into effect, US and other non-EU managers of non-EU alternative investment funds (AIFs) should start determining now whether they will be affected, and, if so, commence preparations for compliance. Any non-EU AIF that is currently classified as a third-country non-financial counterparty (NFC) that is below the applicable EMIR clearing thresholds (NFC-) is likely to be affected. For…
On April 23, the Board of Governors of the Federal Reserve System proposed revisions to the portions of its regulations that relate to determinations of whether a company has the ability to exercise a controlling influence over another company for purposes of the Bank Holding Company Act or the Home Owners’ Loan Act. The highlight of the proposal is a tiered framework that would substantially revise and clarify the Board’s existing regulatory presumptions of control.…