CFTC Proposes to Streamline Uncleared Swap Segregation Rules

August 6, 2018

On July 24, 2018, the Commodity Futures Trading Commission unanimously approved a Notice of Proposed Rulemaking (the “Proposal”) to amend its regulations governing the right of counterparties to elect segregation of initial margin posted to swap dealers (“SDs”) and major swap participants (“MSPs”) in connection with uncleared swap transactions (the “IM Seg Rules”).

The Proposal responds to concerns regarding the high degree of complexity in administering the IM Seg Rules, which goes beyond what is required by the Commodity Exchange Act and places significant burdens on SDs, MSPs and their counterparties, despite the fact that a very small minority of counterparties have elected to segregate margin pursuant to the IM Seg Rules. Accordingly, the Proposal is designed to align the requirements of the IM Seg Rules more closely with the statutory text.

The Proposal identifies specific questions for comments and requires that all comments be submitted by September 28, 2018.