Swap Dealers and Major Swap Participants Regulation - Comment Letter - American Bankers Association - July 11, 2011

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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

Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants
July 11, 2011 From the comment letter:
"The ABA and ABASA strongly urge the regulators not to impose margin requirements on “end users” that use uncleared swaps to hedge or mitigate commercial risk. Requiring end users to post margin would be contrary to Congressional intent and the Dodd-Frank Act statutory language. Both the prudential regulators and the CFTC have acknowledged that non-financial end users pose less risk to swap entities and the U.S. financial system. Imposing margin requirements on end users would be contrary to this finding and would also vitiate the clearing exception.

"Furthermore, the regulators should not to impose the proposed margin rules on affiliate transactions. Affiliate transactions are distinctly different from swap transactions with third parties because affiliate counterparties have better information about each other and can take action more quickly as needed to make a collateral call or unwind a swap. Moreover, the Dodd-Frank Act provisions calling for margin requirements are different in purpose and language than those subjecting swaps to the affiliate transaction restrictions of Sections 23A and 23B of the Federal Reserve Act."


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