On November 19, the Commodity Futures Trading Commission approved a final rule to amend its margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no prudential regulator (CFTC Margin Rule). As a part of the Project KISS initiative, the amendments were designed to harmonize the CFTC Margin Rule with related rules that certain prudential regulators have adopted (QFC Rules).
The CFTC Margin Rule establishes minimum requirements for swap dealers and major swap participants to collect and post margin for certain swaps not cleared by a registered derivatives clearing organization or by a derivatives clearing organization exempt from CFTC registration. The amendments to the CFTC Margin Rule revise the definition of “eligible master netting agreement” to confirm that master netting agreements of entities subject to the CFTC Margin Rule are not excluded from the definition of eligible master netting agreement based on the agreements’ compliance with QFC Rules. In addition, the amendments clarify that any uncleared swap entered into before the CFTC Margin Rule’s effective date that is not currently subject to the CFTC Margin Rule margin requirements will not become subject to such requirements if it is amended to comply with QFC Rules.
The final rule amendments go into effect on December 26.
More information on the final rule is available here.