CFTC Approves Interim Final Rule Deferring Phase 5 Implementation of Initial Margin Requirements for Non-Cleared Swaps
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May 29, 2020 TO: ICI MembersICI Global Members
Derivatives Markets Advisory Committee
ICI Global Trading & Markets Committee SUBJECTS: Compliance
Derivatives
International/Global
Investment Advisers
Trading and Markets RE: CFTC Approves Interim Final Rule Deferring Phase 5 Implementation of Initial Margin Requirements for Non-Cleared Swaps
On May 28, 2020, the CFTC unanimously approved an interim final rule to defer Phase 5 compliance with its initial margin requirements for non-cleared swaps for an additional year until September 1, 2021.[1] The CFTC issued the rule to provide relevant entities with additional time for compliance due to the operational challenges and risk management demands caused by the COVID-19 pandemic.
The deferral is consistent with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ (BCBS/IOSCO) recent revisions to the implementation schedule for margin requirements for non-centrally-cleared derivatives (UMR).[2]
The rule, however, does not provide a deferral for Phase 6 compliance, for which BCBS/IOSCO recommended a one-year delay to September 1, 2022. The CFTC stated that it intends to propose such a deferral in a separate rulemaking in the near future.
The interim final rule will be effective when published in the Federal Register and comments are due 60 days after the date of publication.
Nhan Nguyen
Counsel, Securities Regulation
endnotes
[1] See https://www.cftc.gov/media/3916/votingdraft052820b/download.
[2] See ICI Memorandum No. 32351, BCBS and IOSCO Announce Deferral of Final Implementation Phases of UMR (Apr. 3, 2020), available at https://www.ici.org/my_ici/memorandum/memo32351. We previously joined a letter to BCBS and IOSCO requesting that they recommend deferring Phase 5 and 6 compliance. See ICI Memorandum No. 32323 (Mar. 26, 2020), available at https://www.ici.org/my_ici/memorandum/memo32323.