At an open meeting on July 22, the Commodity Futures Trading Commission heard presentations on three proposals for changes to the margin requirements for uncleared swaps. The proposed changes, which originate from recommendations made by the Margin Subcommittee of the CFTC Global Markets Advisory Committee (GMAC), are as follows:
- A proposal to amend the definition of Material Swaps Exposure (MSE) to change the calculation of MSE from June, July and August of the prior year to March, April and May of the then current year, with the initial margin start date in every year after 2022 being changed to September 1. This change will synchronize the CFTC rules with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions framework.
- A proposal to codify certain no-action relief by allowing separate minimum transfer amounts of up to $50,000 for each separately managed account of an entity. The CFTC is also proposing to allow the minimum transfer amounts to be split between initial margin and variation margin.
- A proposal to amend Rule 23.154(a) to codify No-Action Letter 19-29 and allow small swap dealers to rely on the initial margin models of a larger swap dealer counterparty.
The CFTC did not vote on these proposals, but Chairman Tarbert signaled that they will become official notices of proposed rulemakings in the not too distant future. No written description of the proposals is available.
The GMAC recommendations are available here.