CFTC Plants Seed For Targeted Fund Relief And Grows Eligible Collateral Base In Proposed Changes To The Uncleared Swap Margin Requirements

On July 26, 2023, the CFTC proposed rule amendments to the non-bank swap dealer uncleared margin requirements (UMR) in an open meeting.¹ If adopted, the notice of proposed rulemaking (NPRM) would amend non-bank swap dealer UMR by adopting two separate advisory committee recommendations made by the Global Market Advisory Committee (GMAC) in 2020. This illustrates the importance of the Commission's advisory committees and members, as the NPRM would adopt revisions to the UMR largely as recommended by the GMAC.

The NPRM (1) excludes certain sponsored collective investment vehicles (Seeded Funds) and their non-bank swap dealer counterparties from the requirement to exchange initial margin (IM) (Seeded Fund Proposal); and (2) permits non-bank SDs and their counterparties to use additional money market funds (MMFs) as eligible collateral in satisfaction of IM requirements by removing asset transfer restrictions that prohibit MMFs from being used in securities financing