Federal Register, Volume 77 Issue 134 (Thursday, July 12, 2012)[Federal Register Volume 77, Number 134 (Thursday, July 12, 2012)]

[Proposed Rules]

[Pages 41109-41110]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2012-16983]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 23

Margin Requirements for Uncleared Swaps for Swap Dealers and

Major Swap Participants

AGENCY: Commodity Futures Trading Commission.

ACTION: Extension of comment period.

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SUMMARY: On April 28, 2011, the Commodity Futures Trading Commission

(“Commission” or “CFTC”) published in the Federal Register a notice

of proposed rulemaking that would establish initial and variation

margin requirements on uncleared swaps for swap dealers (“SDs”) and

major swap participants (“MSPs”).1 In October 2011, the Basel

Commission on Banking Supervision (“BCBS”) and the International

Organization of Securities Commissions (“IOSCO”) established a

Working Group on Margin Requirements (“WGMR”) to develop harmonized

international standards for uncleared swaps. BCBS and IOSCO recently

published a consultative paper prepared by the WGMR that outlines

possible margin requirements for non-centrally cleared derivatives

(“consultative paper”).2 The Commission is extending the comment

period for its proposed margin rules for uncleared swaps for swap

dealers and major swap participants in order to give interested parties

the opportunity to comment on the consultative paper and the CFTC’s

proposed rules concurrently.

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1 See 76 FR 23732.

2 The WGMR is comprised of representatives from over 25

domestic and international regulatory authorities, including the

CFTC.

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DATES: Comments must be submitted on or before September 14, 2012.

ADDRESSES: You may submit comments, identified by RIN 3038-AC97, and

Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap

Participants by any of the following methods:

The Agency’s Web site, at http://comments.cftc.gov/.

Follow the instructions for submitting comments through the web site.

Mail: David A. Stawick, Secretary of the Commission,

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st

Street NW., Washington, DC 20581.

Hand Delivery/Courier: Same as mail above.

Federal eRulemaking Portal: http://www.regulations.gov.

Please submit your comments using only one method.

[[Page 41110]]

All comments must be submitted in English, or if not, accompanied

by an English translation. Comments will be posted as received to

www.cftc.gov. If you wish the Commission to consider information that

you believe is exempt from disclosure under the Freedom of Information

Act, a petition for confidential treatment of the exempt information

may be submitted according to the procedures established in Sec. 145.9

of the Commission’s regulations.3 The Commission reserves the right,

but shall have no obligation, to review, pre-screen, filter, redact,

refuse or remove any or all of your submission from http://www.cftc.gov

that it may deem to be inappropriate for publication, such as obscene

language. All submissions that have been redacted or removed that

contain comments on the merits of the rulemaking will be retained in

the public comment file and will be considered as required under the

Administrative Procedure Act and other applicable laws, and may be

accessible under the Freedom of Information Act.

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3 See 17 CFR 145.9.

FOR FURTHER INFORMATION CONTACT: John C. Lawton, Deputy Director,

[email protected], Division of Clearing and Risk, or Jason A. Shafer,

Attorney Advisor, Division of Swap Dealer and Intermediary Oversight,

[email protected], Commodity Futures Trading Commission, Three Lafayette

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Centre, 1155 21st Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: On April 28, 2011, the Commission published

in the Federal Register a notice of proposed rulemaking that would

establish initial and variation margin requirements on uncleared swaps

for SDs and MSPs.4 In October 2011, BCBS and IOSCO established the

WGMR to develop harmonized international standards for uncleared swaps.

BCBS and IOSCO recently published a consultative paper prepared by the

WGMR that outlines possible margin requirements for non-centrally

cleared derivatives.5 The consultative paper addresses a number of

topics, including: (i) The instruments that would be subject to margin

requirements; (ii) the market participants to be subject to margin

requirements; (iii) initial margin and variation margin methodology;

(iv) eligible collateral; (v) treatment of provided margin; (vi)

treatment of inter-affiliate transactions; and vii) treatment of cross-

border transactions.6

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4 See 76 FR 23732.

5 The WGMR is comprised of representatives from over 25

domestic and international regulatory authorities, including the

CFTC.

6 The consultative paper is available on the Bank for

International Settlements (“BIS”) Web site (www.bis.org), the

IOSCO Web site (www.iosco.org) and the CFTC Web site (www.cftc.gov).

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BCBS and IOSCO are requesting comment on the initial proposals set

forth in the consultative paper. After reviewing and evaluating any

comments received, the WGMR will issue final policy recommendations for

margin requirements for non-centrally cleared derivatives.7 As part

of the international effort to implement consistent global standards

for margin requirements for non-centrally cleared derivatives, the CFTC

will consider the final policy recommendations set forth by the WGMR

when adopting its final rules for margin for uncleared swaps and may

adapt its final rules to conform with the final policy recommendations

set forth by BCBS and IOSCO. Accordingly, the Commission believes it is

appropriate to extend the comment period for its proposed margin

requirements in order to give interested parties the opportunity to

comment on the consultative paper and the CFTC’s proposed rule

concurrently.

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7 Concurrently with the comment period for the consultative

paper, BCBS and IOSCO also will conduct a quantitative impact study

(“QIS”) to assess the costs and benefits of margin requirements.

The results of the QIS will be considered along with the comments

submitted on the consultative paper in formulating a final joint

proposal on non-centrally cleared derivatives.

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Therefore, the Commission is extending the comment period until

September 14, 2012, for all aspects of its proposed margin rules on

uncleared swaps and specifically requests quantitative data and

analysis on the comparative costs and benefits of the CFTC’s proposed

rule and the initial proposals set forth in the consultative paper.

Issued by the Commission, this 5th day of July 2012.

David Stawick,

Secretary of the Commission, Commodity Futures Trading Commission.

Note: The following appendix will not appear in the Code of

Federal Regulations

Appendix 1–Statement of Chairman Gary Gensler

I support the formal reopening of the comment period on the

CFTC’s initial margin proposal so that we can hear further from

market participants in light of work being done to internationally

harmonize an approach to margin.

The CFTC has been working with the Federal Reserve, the other

U.S. banking regulators, the Securities and Exchange Commission and

international regulators and policymakers to align margin

requirements for uncleared swaps. I think it is essential that we

align these requirements globally, particularly between the major

market jurisdictions. The international approach to margin

requirements in the consultative paper (sponsored by the Basel

Committee on Banking Supervision and the International Organization

of Securities Commissions) released today is consistent with the

approach the CFTC laid out in its margin proposal last year. It

would lower the risk of financial entities, promote clearing and

help avoid regulatory arbitrage.

[FR Doc. 2012-16983 Filed 7-11-12; 8:45 am]

BILLING CODE 6351-01-P

Last Updated: July 12, 2012