Trade Associations Ask Prudential Regulators To Drop Inter-Affiliate IM Requirements

Several trade associations asked U.S. prudential (bank) regulators to eliminate the requirement that swap dealers collect initial margin from their affiliates.

In a joint letter, the trade associations requested that the prudential regulators exempt transactions between affiliates ("inter-affiliate swaps") from swaps initial margin ("IM") requirements. The trade associations noted that the CFTC, as well as regulators in the EU, Japan and other G20 jurisdictions, do not require initial margin between affiliates. The trade associations stated that the affiliate IM requirements:

• impose a competitive, growing economic burden on U.S. firms;
• incentivize firms to engage in risky and complex activity;