Washington DC
16 February 2017
Reporter: Drew Nicol

CFTC offers respite from 1 March margin deadline


Swaps dealers have been gifted a seven-month grace period to finalise their compliance infrastructures for the new variation margin requirements set to come into force on 1 March.

The US Commodity Futures Trading Commission (CFTC) issued a time-limited no-action letter recommending that the commission's Division of swap dealer and intermediary oversight (DSIO) should refrain from enforcing the rule until 1 September.

The letter acts as a compromise between unprepared industry participants and regulators that do not wish to be seen as going easy on banks in the wake of the 2008 financial crisis.

“The DSIO no-action letter does not postpone the 1 March 2017 compliance date for variation margin, rather it allows market participants a grace period to come into compliance,” explained the CFTC in a statement on the decision.

“Without a proper transition, DSIO believes there could be a significant impact on the ability to hedge positions for pension funds, asset managers, and insurance companies that manage Americans’ retirement savings and financial security. This sort of phased compliance has been used many times in the implementation of the swaps rules contained in the US Dodd-Frank Wall Street Reform and Consumer Protection Act.”

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