Federal Register: Protection of Collateral of Counterparties to Uncleared Swaps; Treatment of Securities in a Portfolio Margining Account in a Commodity Broker Bankruptcy

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Gavel.png FINAL RULE: This page refers to the proposed rule on protection of collateral for uncleared swaps. To view the final rule click here.
Dodd-Frank Timeline, Protection of Collateral of Counterparties to Uncleared Swaps
Proposal Date Final Rule Issue Effective Date
December 3, 2010 November 6, 2013 January 6, 2014

On November 19, 2010, the Commodity Futures Trading Commission (CFTC) held its fifth in the series of open meetings to consider the issuance of proposed rulemakings under the Dodd-Frank Act. One of the agenda items was rule proposal regarding the protection of collateral for uncleared swaps.<ref>Open Meeting on Fifth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on March 10, 2011.</ref>

The Proposal[edit]

The Dodd-Frank Act requires, among other things, that the commission issue final rules regarding swap dealers (SDs) and major swap participants (MSPs). Requirements of the rule:

  • (SDs) and (MSPs) must notify their counterparties that such counterparties have "a right to require that any initial margin which they post to guarantee uncleared swaps be segregated at an independent custodian;"
  • The custodian must be an "independent third party;"
  • There must be in place a signed custody agreement;
  • Such segregated funds may be invested according to existing CFTC rules governing futures customers; and
  • Final rule will reflect new rules regarding, among other things, protection of funds before and after commodity broker bankruptcies.

Related Documents: Fact Sheet, Q&A, and Rule Proposal as it Appeared in the Federal Register[edit]


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