U.S. Prudential Regulators To Propose Amendments To Swap Margin Rules

The FDIC proposed amending its rules governing margin requirements for uncleared swaps and security-based swaps.

The proposal would make five substantive changes to the derivatives margin rules:

• Inter-Affiliate Margin. The proposal would remove the requirement that dealers collect initial margin from their affiliates. (Variation margin would continue to be required.)
• Benchmark Amendments. The proposal would not subject "legacy" transactions to margin requirements as a result of amendments to replace terms based on interbank offered rates (e.g., LIBOR) and other interest rates determined to have lost relevance as reliable benchmarks.
• Compliance Period. The proposal would amend the compliance schedule for initial margin to conform to a recent BCBS-IOSCO statement providing that the September 2020 "phase-in" would apply to entities whose "daily aggregate notional amount" of swaps exceeds $50 billion over a measuring period, and that full compliance for