cross-border margin rule

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On October 13, the Commodity Futures Trading Commission and the European Commission (EC) made three announcements that are significant for cross-border swap activity between the United States and Europe.

  1. CFTC Margin Rule Comparability Determination.

The CFTC has made a determination that the margin rules for uncleared swaps that apply in the European Union are comparable to the CFTC’s margin rules. This determination activates the substituted compliance provisions found in Section 23.160(b)(2)(iii) of the CFTC margin rules that until now have not been available to EU entities registered as swap dealers.
Continue Reading Three Developments Concerning EU-US Cross-Border Swaps

On February 1, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued No Action Letter 17-05, which allows certain swap dealers to substitute—for a limited period of time—compliance with the non-centrally cleared OTC derivative margin requirements applicable in the European Union (the “EU Rules”) for compliance with certain of the CFTC’s uncleared swap margin requirements in cross-border transactions with counterparties subject to the EU Rules. The overall CFTC framework for substituted compliance is identified in the CFTC Cross-Border Margin Rule (81 FR 34818 (May 31, 2016)) and is conditioned in the case of each other jurisdiction on a determination by the CFTC that the rules of the other jurisdiction are “comparable” to the relevant CFTC rules. The effect of the relief is to suspend that condition for the EU. The no-action relief only applies to swap dealers that do not have a prudential regulator (i.e., non-bank swap dealers) and is effective from (and including) February 4 to (and excluding) May 8.
Continue Reading CFTC Releases Time Limited No-Action Relief for Swap Dealers Complying With EU Requirements