On October 26, 2020, MFA and SIFMA AMG submitted comments to the CFTC urging it withdraw its “supplemental proposal” to its proposed part 190 bankruptcy rules. The supplemental proposal introduces a conceptual “springing provision” that would include a stay period following an order for relief for a systemically important DCO. The Associations are deeply concerned that the CFTC’s proposed stay, which would freeze the transfer of initial and variation margin, could fall consecutively with a stay under Title II Resolution Authority resulting in a potential stay of 5 or 6 calendar days. Such a scenario would expose market participants to multiple days of non-payment and significantly increase systemic risk during the stay period.
The Associations believe the CFTC should withdraw its supplemental proposal to the part 190 bankruptcy regulations.
