In recent weeks both the Commodity Futures Trading Commission (CFTC) and the U.S. prudential banking regulators have proposed rules that would delay the phase-in of initial margin (IM) requirements for swap dealers’ non-cleared swaps with certain smaller financial end users. The CFTC’s proposed rules, highlighted in this client alert, would postpone until September 1, 2021 the phase-in of IM requirements for swaps with financial end users with $50 billion or less in average daily aggregate notional amount of non-cleared swaps, non-cleared security-based swaps, foreign exchange forwards and foreign exchange swaps. The prudential regulators’ rules, which we summarized in this further client alert, would provide, for swap dealers subject to prudential banking regulation, a parallel postponement for IM for swaps with such financial end users. The prudential regulators’ rules would also, among other things, end IM requirements for inter-affiliate swaps and clarify that certain amendments of legacy swaps (including to accommodate the transition away from LIBOR) may be made without jeopardizing their grandfathered status under the margin rules.
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