On September 3, 2013, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), the Farm Credit Administration, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency (“OCC”) (in consultation with CFTC and Securities and Exchange Commission (“SEC”)) issued a notice of proposed rulemaking to establish margin requirements for swap dealers, major swap participants, security-based swap dealers and major security-based swap participants. The proposed rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), would establish minimum requirements for the exchange of initial and variation margin between covered swap entities and their counterparties to non-cleared swaps and non-cleared security-based swaps entered into after the proposed rule’s applicable compliance dates. The required margin would differ based on the relative risk of the counterparty and of the non-cleared swap or non-cleared security-based swap.
The proposed rule modifies and expands a rule first released by the agencies in April 2011 based on comments received on that rule. For example, the current proposed rule increases the types of collateral eligible to be posted as initial margin and also aims to promote global consistency by generally following the final framework for margin requirements on non-cleared derivatives that the Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) adopted in September 2013. The agencies have requested comments on the proposed rule no later than 60 days after the date of its publication in the Federal Register.
The proposed rule is available at: