The CFTC Division of Swap Dealer and Intermediary Oversight
("DSIO") clarified that "Phase Five" initial
margin ("IM") documentation requirements will not apply
to trading relationships where initial margin requirements have not
gone above the $50 million threshold. As previously covered, CFTC Chair J. Christopher
Giancarlo urgedU.S. regulators (including banking regulators) to
provide relief of this nature.
The advisory states that, while no specific documentation is
required, it is expected that swap dealers will have required
documentation in place when the threshold is reached. The advisory
provides the following additional guidance on relevant
requirements:
- Noting that Rule 23.504 ("Swap
Trading Relationship Documentation") requires appropriate
steps to ensure timely execution of IM documentation as required by
the CFTC margin rules, the advisory states that if a swap dealer
opts to post IM below the threshold it must require that the
collateral be held at
