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WASHINGTON U.S. asset managers pleaded on
Tuesday for a delay to international rules on variation margin,
the collateral posted for swaps, saying in a letter to
international regulators that many will not be ready by the
March 1 start date.
Two trade groups, the Securities Industry and Financial
Markets Association and the Investment Adviser Association, said
that asset managers have “massive” amounts of work to complete
before the operative deadline and need six more months.
The U.S. rule, part of the Dodd-Frank reform law passed in
2010, is intended to require adequate collateral for covering
positions in swaps that are not cleared by a third party. It
sets limits on what can be used as variation, or daily, margin
and who must post it.
Other countries have similar requirements on variation
margin set to come on-line around the same time.
“The associations believe that relief is urgently required
to protect asset managers’ clients given that implementation
efforts will not cover investors’ needs,” they wrote in a
The letter was sent to six U.S. regulators: the Federal
Reserve Board, Commodity Futures Trading Commission,
Comptroller’s office, Federal Housing Finance Agency, Farm
Credit Administration and the Federal Deposit Insurance
The letter was also sent to four European regulators
including the European Commission, as well as the United Kingdom
Financial Conduct Authority and the Japan Financial Services
Agency, all of whom have similar requirements slated to start
around the same time.
“Asset managers, as fiduciaries serving these investors,
continue to have concerns about their ability to hedge, manage
investment risks, implement investment strategies, and achieve
best execution on behalf of their clients,” they wrote.
U.S. regulators may take the request seriously. The CFTC
attempted to bring a different set of margin requirements for
uncleared swaps on-line this summer and stirred up derivatives
markets around the world because other countries had delayed
implementing their rules. The agency, which regulates
derivatives and commodities, then had to push back the
compliance date for a month.
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