The CFTC Votes to Provide Firms More Time and Clarity Around Initial Margin for Uncleared Swaps


The Commodity Futures Trading Commission (CFTC) voted 5-0 during its open meeting on May 28 to adopt an interim final rule to extend the September 2020 compliance date (Phase 5) for regulatory Initial Margin (IM) , to September 1, 2021.

This action is in line with the April decision of the Basel Committee on Banking Supervision/International Organisation of Securities Commission (BCBS/IOSCO) and consistent with the recommendation of the CFTC’s Global Markets Advisory Committee (GMAC). Notably, the BCBS/IOSCO decision in April also extended the September 2021 compliance date (Phase 6) for regulatory Initial Margin (IM) by one year. Therefore, in addition to the May 28 action, the CFTC will consider proposed rulemaking planned by the Division of Swap Dealer and Intermediary Oversight, which will propose an extension of Phase 6. If approved, such a proposal would complete the harmonization of regulatory IM compliance dates with the April BCBS/IOSCO decision.

The CFTC’s approach of utilizing an interim final rule for the Phase 5 compliance schedule allows the public to comment after the rule is in place, while also giving the industry the immediate clarity needed ahead of what would have been an imminent deadline in the midst of the COVID-19 pandemic. The CFTC indicated that the regular notice and rulemaking process will be utilized for the later deadline applicable to Phase 6.

As the CFTC considers the notice of proposed rulemaking, as well as other GMAC recommendations pertaining to IM requirements for uncleared swaps, market participants should continue to follow developments in this area.