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Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Rules and Regulations
address this issue. The final rule explicitly prohibits any activities not carried out in the regular course of business and willfully designed to circumvent calculation at monthend to evade meeting the definition of material swaps exposure . . . . 7 The addition of this language to the final rules regulatory text will help ensure that CFTC
efforts at international harmonization will not come at the expense of the safety and soundness of the U.S. financial system.8 I
thank the Chairman and the CFTC staff for working with my office to include this provision.
The MSE and Initial Margin Final Rule will also allow SDs and MSPs for which there is no prudential regulator Covered Swap Entities or CSEs to rely on the initial margin calculations of the more sophisticated counterparties with whom they transact swaps to manage their risks. This flexibility is limited to circumstances where a CSE
enters into uncleared swaps with an SD, MSP, or swap entity to hedge its customerfacing swaps. This amendment to the Commissions existing rules could help promote liquidity and competition in swaps markets by increasing choice for end-users that are CSE customers.
The MSE and Initial Margin Final Rule provides helpful direction regarding the scope of hedging swaps for purposes of relying on a CSE counterpartys initial margin calculations. As set forth in the preamble to the final rule, a hedging swap must be consistent although not identical with the statutory definition of bona fide hedging transaction or position in CEA
section 4ac2B.9 The final rule also makes clear that existing Commission regulations require a CSE that relies on its counterpartys initial margin calculations to also take steps to monitor, identify, and address potential shortfalls in the amounts of initial margin generated by the counterparty on whose initial margin model the CSE is relying. 10
III. MTA Final Rule
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To reduce operational burdens associated with de minimis margin transfers, the Margin Rule provides that a CSE is not required to collect or post margin until the combined amount of initial margin and variation margin that is required to be collected or posted and that has not been collected or posted with respect to the counterparty exceeds $500,000the MTA.11 This MTA
level, in part, helps limit the amount of a counterpartys uncollateralized, uncleared 7 MSE and Initial Margin Final Rule at new 23.151 defining Material Swaps Exposure.
8 The preamble to the MSE and Initial Margin Final Rule also notes an analysis by the CFTCs Office of the Chief Economist indicating that the new month-end AANA calculation method captures substantially the same entities and total number of entities as the Commissions previous daily AANA
calculation method. As with any rulemaking, the Commission is free in the future to periodically review its data and confirm that the new AANA
calculation method is performing as expected.
9 7 U.S.C. 6ac2.
10 MSE and Initial Margin Final Rule at section IIB.
11 17 CFR 23.151.

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swaps exposure and mitigate any systemic risk arising from such swaps.
The MTA Final Rule addresses the application of the $500,000 MTA level to a counterpartys separately managed accounts, as well as the use of separate MTAs for initial and variation margin.12 The MTA Final Rule codifies separate treatment for separately managed accounts and permits an MTA of $50,000 for each such account of a counterparty. This approach responds to practical limits on the ability of asset managers, for example, to aggregate initial and variation margin obligations across multiple separately managed accounts owned by the same counterparty. The MTA Final Rule also provides that if certain entities agree to separate MTAs for initial margin and variation margin, the respective amounts of MTA must be reflected in their required margin documentation.
These new provisions balance concerns over operational inefficiencies and practical challenges in the Commissions MTA rules against concerns that they may result in the exchange of less total margin than would be the case under the Commissions current requirements. Comments in response to the proposed rule noted the difficulties that would be associated with creating numerous separately managed accounts solely to evade the comparatively low $50,000 MTA for separately managed accounts. The MTA
Final Rule also defines separately managed account so that the swaps of such account are not subject to a netting of initial or variation margin obligations. This potentially provides further disincentive to create separately managed accounts solely for the purpose of evading the $50,000 MTA level for such accounts.
IV. Conclusion Mitigating systemic risk to the U.S.
financial system was a primary objective of the Dodd-Frank Act in 2010, and of subsequent Commission rulemakings to implement Dodd-Frank, including the Margin Rule adopted in 2016. The Commission must remain committed to the Margin Rule and vigilant for any large pool of uncollateralized, uncleared swaps exposure. Todays targeted final rules, which codify existing practices, include embedded backstops, and provide tailored operational enhancements to the Margin Rule, are unlikely to present systemic risks.
I thank staff of the Market Participants Division for their work on these final rules.
FR Doc. 202027508 Filed 12221; 8:45 am BILLING CODE 635101P

12 Both aspects of the MTA Final Rule were the subject of CFTC staff no-action letters issued in 2017 and 2019, respectively.

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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration 50 CFR Part 679
Docket No. 2002210062; RTID 0648
XA805

Fisheries of the Exclusive Economic Zone Off Alaska; Pacific Cod by Catcher Vessels Using Trawl Gear in the Western Regulatory Area of the Gulf of Alaska National Marine Fisheries Service NMFS, National Oceanic and Atmospheric Administration NOAA, Commerce.
ACTION: Temporary rule; modification of closure.
AGENCY:

NMFS is opening directed fishing for Pacific cod by catcher vessels using trawl gear in the Western Regulatory Area of the Gulf of Alaska GOA. This action is necessary to fully use the A season allowance of the 2021
total allowable catch TAC of Pacific cod by catcher vessels using trawl gear in the Western Regulatory Area of the GOA.

SUMMARY:

Effective 1200 hrs, Alaska local time A.l.t., January 20, 2021, through 1200 hrs, A.l.t., June 10, 2021.
Comments must be received at the following address no later than 4:30
p.m., A.l.t., February 3, 2021.
ADDRESSES: Submit your comments, identified by NOAANMFS20190102
by any of the following methods:
Federal e-Rulemaking Portal: Go to www.regulations.gov/
!docketDetail;D=NOAA-NMFS-20190102, click the Comment Now! icon, complete the required fields, and enter or attach your comments.
Mail: Submit written comments to Glenn Merrill, Assistant Regional Administrator, Sustainable Fisheries Division, Alaska Region NMFS, Attn:
Records. Mail comments to P.O. Box 21668, Juneau, AK 998021668.
Instructions: NMFS may not consider comments if they are sent by any other method, to any other address or individual, or received after the comment period ends. All comments received are a part of the public record, and NMFS will post the comments for public viewing on www.regulations.gov without change. All personal identifying information e.g., name, address, confidential business information, or otherwise sensitive information submitted voluntarily by the sender will be publicly accessible. NMFS will accept anonymous comments enter DATES:

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