The Commodity Futures Trading Commission approved final rules for uncleared swaps for Swap Dealers and Major Swap Participants. In general, in connection with each swap transaction, the rules require the two-way posting and collection of initial margin by SDs and MSPs that are not subject to oversight by prudential regulators (e.g., the Board of Governors of the Federal Reserve System)—so called “covered swap entities”—in swaps transactions with any registered SD or MSP and certain enumerated financial end users with so-called “material swaps exposure.” Initial margin will not be required for swap transactions between covered swap entities and commercial end users. The receiving party must segregate mandatory initial margin with a custodian that is not an affiliate. Variation margin requirements will differ depending on the types of counterparties. The CFTC rules generally follow rules recently adopted by US prudential regulators with one major exception: swaps between affiliated entities may not be subject to initial margin requirements under prescribed circumstances. (Click here for a discussion of US prudential regulators’ final margin rules for uncleared swaps in the article, “OCC and FDIC Approve Final Margin Rule for Uncleared Swaps; Other Prudential Regulators Expected to Follow” in the October 25, 2015 edition of Bridging the Week.) In a dissenting statement to the release of the CFTC’s final rules, Commissioner Sharon Bowen objected to this difference claiming that, “[b]y not requiring the collection of interaffiliate initial margin … we lose a vital shock absorber that is intended to help immunize institutions and the system against the risk of default.” CFTC Chairman Timothy Massad defended the difference, arguing that “[i]mposing the same third-party transaction standards on these internal activities of consolidated entities is likely to significantly increase costs to end-users without any commensurate benefit.” The final rules will be effective April 1, 2016 but will be phased-in in stages, beginning September 1, 2016.