CFTC offers respite from 1 March margin rules deadline
15 February 2017 Washington DC
Image: Shutterstock
Swaps dealers have been gifted a seven-month grace period to finalise their compliance infrastructures for the new variation margin requirements set to come into force on 1 March.
The US Commodity Futures Trading Commission (CFTC) issued a time-limited no-action letter recommending that the commission's Division of swap dealer and intermediary oversight (DSIO) should refrain from enforcing the rule until 1 September.
The letter acts as a compromise between unprepared industry participants and regulators that do not wish to be seen as going easy on banks in the wake of the 2008 financial crisis.
鈥淭he DSIO no-action letter does not postpone the 1 March 2017 compliance date for variation margin, rather it allows market participants a grace period to come into compliance,鈥� explained the CFTC in a statement on the decision.
鈥淲ithout a proper transition, DSIO believes there could be a significant impact on the ability to hedge positions for pension funds, asset managers, and insurance companies that manage Americans鈥� retirement savings and financial security. This sort of phased compliance has been used many times in the implementation of the swaps rules contained in the US Dodd-Frank Wall Street Reform and Consumer Protection Act.鈥�
The US Commodity Futures Trading Commission (CFTC) issued a time-limited no-action letter recommending that the commission's Division of swap dealer and intermediary oversight (DSIO) should refrain from enforcing the rule until 1 September.
The letter acts as a compromise between unprepared industry participants and regulators that do not wish to be seen as going easy on banks in the wake of the 2008 financial crisis.
鈥淭he DSIO no-action letter does not postpone the 1 March 2017 compliance date for variation margin, rather it allows market participants a grace period to come into compliance,鈥� explained the CFTC in a statement on the decision.
鈥淲ithout a proper transition, DSIO believes there could be a significant impact on the ability to hedge positions for pension funds, asset managers, and insurance companies that manage Americans鈥� retirement savings and financial security. This sort of phased compliance has been used many times in the implementation of the swaps rules contained in the US Dodd-Frank Wall Street Reform and Consumer Protection Act.鈥�
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