The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission (CFTC) has issued no-action relief to derivatives clearing organizations (DCOs) from the CFTC’s recently adopted daily reporting requirements.
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variation margin
ESAs Publish Final Report Aiming to Align Variation Margin Rules for FX Forwards With Supervisory Guidance in Other Key Jurisdictions
By Carolyn H. Jackson & Guy C. Dempsey Jr. on
Posted in Derivatives, EU Developments
On December 18, 2017, the European Supervisory Authorities (ESAs) published a final report aiming to align the treatment of variation margin for physically settled foreign exchange forward transactions (FX Forwards) with supervisory guidance applicable in other key jurisdictions.
The amended draft variation margin regulatory technical standards on risk mitigation techniques for over-the-counter (OTC) derivatives not cleared by a central counterparty (Draft RTS) limit the requirement to collect variation margin for FX Forwards to only transactions concluded between “institutions,” defined by the ESAs as credit institutions and investment firms, or with an equivalent entity located in a third country that would meet the definition of “institution” if located in the European Union (EU).
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CFTC Clarifies That Variation Margin Constitutes Settlement
By James M. Brady & Kevin M. Foley on
Posted in CFTC, Derivatives
The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission has issued an interpretive letter clarifying that payments of variation margin, price alignment amounts and other payments in satisfaction of outstanding exposures on a counterparty’s cleared swap positions constitute “settlement” under the Commodity Exchange Act (CEA) and CFTC Regulation 39.14. The CEA and CFTC Regulation 39.14 provide that a derivatives clearing organization (DCO) must effect a settlement at least once each business day and ensure that settlements are final when effected.
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ESAs Publish Statement On Variation Margin Exchange
By Carolyn H. Jackson & Nathaniel Lalone on
Posted in EU Developments, Financial Markets
On February 23, the European Supervisory Authorities (ESAs), which consist of the European Banking Authority, European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority, published a joint statement (Statement) in response to industry requests relating to operational challenges in meeting the deadline of March 1 for exchanging variation margin imposed by the European Market Infrastructure Regulation (EMIR).
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CFTC Provides Time-Limited Relief for Variation Margin and Minimum Transfer Amount Provisions
Posted in CFTC, Derivatives
On February 13, the Division of Swap Dealer and Intermediary Oversight (Division) of the Commodity Futures Trading Commission (CFTC) provided time-limited no-action relief for failure of a swap dealer (SD) that does not have a prudential regulator to comply with the CFTC’s variation margin requirements by the March 1 compliance date (March 1 Requirements). (There are now a total of 104 swap dealers registered with the CFTC, and 51 of these have a prudential regulator.) Under the CFTC margin rules, SDs must collect and post variation margin with each counterparty that is an SD, major swap participant or financial end user starting March 1.
Continue Reading CFTC Provides Time-Limited Relief for Variation Margin and Minimum Transfer Amount Provisions