NERA Economic Consulting issued a report claiming that initial and variation margin rules for uncleared swaps recently proposed by the Commodity Futures Trading Commission could result in incremental annual opportunity costs of US $411 million under normal market conditions and $871 million in periods of “elevated financial market stress.” Moreover, says NERA, “aspects of the proposed rule that are stricter than international standards … may reduce the competitiveness of domestic swap market participants with respect to foreign competitors, threatening domestic derivatives-related jobs.” NERA also claims that the CFTC’s proposed requirement that only cash be used to meet variation margin requirements would require firms to maintain additional cash and more liquid, risk-free assets on hand in order to “guard against liquidity crises.” This practice would cause firms to incur opportunity costs by not investing in higher-return assets. To minimize the impact of the CFTC’s proposed rules, NERA calls for the Commission (1) to raise the proposed threshold of firms subject to its margin rules to those with exposure in excess of US $11 billion (the international standard) as opposed to US $3 billion; (2) not to count inter-affiliate swaps in calculating the threshold exposure; and (3) to allow firms to determine an appropriate close-out period in their initial margin models, rather than use a fixed 10-day period. Separately, the Managed Futures Association filed a comment letter generally supporting the objectives of the CFTC’s proposed rules “to reduce risk in the swaps markets and incentivize central clearing of clearable swaps.” However, MFA recommended various changes to the CFTC’s proposed rules, including permitting customers to have their covered swap entity counterparties hold their initial margin in individual or omnibus segregated accounts, or to opt out of segregation altogether.