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

The Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight and Division of Clearing and Risk have issued CFTC Staff Advisory 19-17 (the Advisory), providing 1) guidance with respect to CFTC Rule 1.56(b); and 2) time-limited no-action relief with respect to CFTC Rule 39.13(g)(8)(iii), as those rules relate to the treatment of separate accounts of the same customer (i.e., beneficial owner). The Advisory responds to several requests for guidance following the publication of Joint Audit Committee (JAC) Regulatory Alerts #19-02 and #19-03.
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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 the extent they trade those instruments.
  • Margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.
  • Creation of a process for non-US SBSDs and MSBSPs to request substituted compliance with respect to the capital and margin requirements.
  • A requirement that nonbank SBSDs establish internal risk management controls compliant with Rule 15c3-4.


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On June 21, the Securities and Exchange Commission adopted a package of new rules and rule amendments to establish capital, margin and segregation requirements under Title VII of the Dodd-Frank Act.

The new rules address the following areas:

  • Capital requirements for security-based swap dealers (SBSDs) and major security-based swap participants (MSBSP), for which there is not a prudential regulator (nonbank SBSDs and MSBSPs).
  • Capital requirements for broker-dealers that trade security-based swaps or swaps and are not registered as an SBSD or MSBSP.
  • Minimum net capital requirements for broker-dealers that use internal models to compute net capital.
  • Margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.
  • Segregation requirements for SBSDs and stand-alone broker-dealers for cleared and non-cleared security-based swaps.


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On June 25, 2019, the Commodity Futures Trading Commission announced that it had approved the application of LedgerX LLC (LedgerX) for designation as a contract market under Section 5 of the Commodity Exchange Act (CEA) and Part 38 of the CFTC’s regulations. LedgerX has been registered with the CFTC as a swap execution facility and

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 or subject to the rules of a designated contract market (DCM) or swap execution facility (SEF Cleared Swaps) when determining whether it is a swap dealer, provided certain conditions are satisfied. The No Action Letter clarifies that the exemption is available even if the registered floor trader: (1) enters into swaps other than DCM and SEF Cleared Swaps; and (2) directly, or through an affiliated person, negotiates the terms of those other swaps. The No Action Letter also removes the condition that a registered floor trader must submit periodic risk reports as required by CFTC regulation 23.600(c)(2).


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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 rule compliance date applicable to swap dealer and its counterparty to an uncleared swap (a Legacy Swap) in existence on the compliance date will cause the Legacy Swap to be brought into scope for margin.

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On May 21, the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission a proposed rule (Rule Change) extending the implementation date for FINRA Rule 4240, which implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps that are security-based swaps. The implementation date has

On May 21, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission proposed amendments to NFA Bylaw 1301 regarding the schedule of dues and assessments for swaps firms. NFA Bylaw 1301 imposes dues and assessments on futures commission merchants (FCM) (for which NFA is the designated self-regulatory organization (DSRO)), introducing brokers (IB), commodity pool operators (CPO) and commodity trading advisor (CTA) Members that are approved swaps firms under Bylaw 301(l).
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