Federal Register: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants

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Dodd-Frank Timeline, Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants, CFTC
Proposal Date Comment Period Reopened New Comment Deadline
May 12, 2011 July 12, 2012 September 14, 2012

On April 12, 2011, the Commodity Futures Trading Commission (CFTC) held its thirteenth in the series of open meetings to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was a proposed rule regarding margin requirements for uncleared swaps.[1]


The Dodd-Frank Act includes a mandate for the CFTC to create specific rules for swap dealers and major swap participants, including the setting of policies for margin requirements for uncleared swaps. These rules would only apply to swap dealers (SDs) and major swap participants (MSPs) not subject to oversight by prudential regulators, such as the U.S. Department of the Treasury, the FDIC and the Federal Reserve. Margin and capital rules for SDs and MSPs subject to such oversight by prudential regulators can be found in a separate proposal from April 12, 2011.

The Proposal

Under the CFTC Proposal, margin requirements will vary depending upon the counterparty of the SD/MSP:

  • The rules would not impose margin requirements on commercial end users, defined under the proposed rules as non-financial entities.
  • For trades between two SD/MSPs, each party must collect and pay initial and variation margin.
  • For trades between a SD/MSP and a financial entity, the SD/MSP must collect, but not pay, margin.
  • For trades with a non-financial entity ("commercial end-user"), no margin is required, but rather a counterparty credit agreement must be arranged and abided by.
  • Calculation of margin would entail the use of a margin model from a derivatives clearing organization (DCO), prudential regulator, or other model approved by the commission.
  • Margin must be posted in the form of an approved asset class, and would be required to be held at a third-party custodian.

Related Documents: Fact Sheet, Q&A, Federal Register Entry


Larry Tabb - TABB Group [INTERVIEW]

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Larry Tabb is the founder and CEO of TABB Group, an advisory and research firm focusing on issues surrounding financial markets. His research and publication topics include trading and trade processing systems, market structure, regulatory issues, and technology trends. He is a contributing editor for Wall Street & Technology and Advanced Trading magazines, and is a frequent speaker at major business and industry conferences. John Lothian News editor-at-large Doug Ashburn spoke with Tabb about the future of OTC derivatives, capital and margin requirements. Published November 9, 2011. For more video, visit MarketsWiki.tv.


  1. Open Meeting on Thirteenth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on April 15, 2011.

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