Uncleared Margin Rules

Seek harmonization between the SEC and CFTC uncleared margin rules for swaps

The initial margin (IM) requirements for uncleared margin rules (UMR) have been adopted by regulators in the U.S. and many non-U.S. jurisdictions. These rules are important because they broadly subject the entire U.S. swaps market to a new margining regulatory regime.

In early 2019, MFA submitted letters to the U.S. prudential regulators and the CFTC recommending the adoption of another phase-in category that would divide market participants currently under Phase 5 into two groups: one group with a notional amount of trades greater between US$8 billion and US$100 billion, and a second group with a notional amount of trades below in 2020. MFA also recommended that regulators push back the implementation timing for the second group to 2021.

In July 2019, the Basel Committee on Banking Supervision and IOSCO adopted recommending staging solutions, which included a recommended one-year implementation delay. In October 2019, the CFTC and U.S. prudential regulators issued proposed UMR amendments proposing to adopt these recommended. In November and December 2019, MFA submitted letters to the prudential regulators and the CFTC, respectively, among other things, supporting the proposed one-year delay.

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