This afternoon, the Federal Reserve, Federal Deposit Insurance Corp, Office of the Comptroller of the Currency, Farm Credit Administration, and the Federal Housing Finance Agency (the "Prudential Regulators") released re-proposed rules requiring swap dealers and major swap participants* to hold margin for uncleared swaps (the "Re-Proposed Margin Rules"). The Re-Proposed Margin Rules are available here. The Federal Reserve press release on the Re-Proposed Margin Rules is available here.
The Re-Proposed Margin Rules, if adopted, would apply to swap dealers and major swap participants that are regulated by a Prudential Regulator. The CFTC has released proposed margin rules for swap dealers not regulated by a Prudential Regulator and it is unknown at this time whether the CFTC will finalize those margin rules or re-propose new margin rules.
The Prudential Regulators initially released proposed rules on requiring swap dealers to hold margin for uncleared swaps in 2011 (the "Initial Margin Rules") under the Dodd-Frank Act provisions regarding swap dealer regulation, but the rules were never finalized. Since the release of the Initial Margin Rules, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions produced a framework for margin requirements on uncleared swaps, which the Re-Proposed Margin Rules generally follow.
Comments on the Re-Proposed Margin Rules will be due within 60 days after the proposal is published in the Federal Register.
Stay tuned for further updates on margin rules for uncleared swaps. The Swap Report
* These also apply to security-based swap dealers and major swap participants, but for ease of reference, we only refer to swap dealers in this post