SEC Grants No-Action Relief From Initial Margin Requirements

The SEC Division of Trading and Markets (the "Division") granted no-action relief to security-based swap dealers ("SBSDs") from certain initial margin requirements for security-based swaps ("SBS") under SEA Rule 18a-3(c)(1)(ii)(B) ("Margin Requirements"). The no-action relief was a response to a request from ISDA and SIFMA.

The relief provides that the Division will not recommend enforcement action if an SBSD does not collect initial margin from certain counterparties in connection with an uncleared SBS entered into prior to September 1, 2022. In particular, the relief applies to any counterparty, referred to as a "Phase 6+ Counterparty," that, collectively with its affiliates, had a daily average aggregate notional amount of $50 billion or less in uncleared swaps, uncleared SBS, foreign exchange ("FX") swaps and FX forwards in March, April and May of 2021. (The relief contains limited exceptions for certain inter-affiliate transactions and certain transactions