CFTC adopts uncleared cross-border swap margin rule

Author: Edward Price | Published: 31 May 2016

The Commodity Futures Trading Commission (CFTC) has adopted a final rule for applying its uncleared swap margin requirements in cross-border transactions. Counsel, welcoming the rule’s adoption, nonetheless see unnecessary complexity in the CFTC’s choice of an elements-based approach.

The final CFTC rule was long-awaited. Prudential regulators finished their rules in November and the CFTC finished their substantive margin rules in January. There are now two global compliance dates under the Basel Committee on Banking Supervision (BCBS) and International Organization of Securities Commissions (Iosco) framework, adhered to by both CFTC and prudential regulators. The first is September 1 for larger entities, and the second March 1 for most others. That means the market has just over three months to digest and implement the CFTC’s final rule.

James Schwartz, Morrison & Foerster Crucially, the CFTC has opted for an elements-based approach instead of a holistic regime. As such, the...