CFTC Proposes Amendments To Swap Margin Rules

The CFTC proposed changes to its uncleared swap margin requirements. The proposed amendments would prevent unintentional regulatory burdens that may result from rules recently adopted by prudential regulators with regard to qualified financial contracts ("QFCs"). The CFTC proposal is designed to ensure that swap dealers and major swap participants are not subjected to additional margin requirements as a result of amending contracts to comply with the prudential regulators' new rules.

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the FDIC recently adopted rules that restrict the cancellation rights that can be included in QFCs in the event of bankruptcy or resolution proceedings (the "QFC Rules"). The QFC Rules require global systemically important banking institutions and other covered entities to amend certain existing QFCs with a counterparty (and its affiliates) to the extent that they enter into new QFCs