Voglio sapere a riguardo di…

Federal Register / Vol. 86, No. 14 / Monday, January 25, 2021 / Rules and Regulations
jbell on DSKJLSW7X2PROD with RULES

changes to Regulations 23.152b3 and 23.153c to incorporate the change to the definition of MTA in Regulation 23.151.
The baseline for the Commissions consideration of the costs and benefits of this Final Rule is the CFTC Margin Rule. The Commission recognizes that to the extent market participants have relied on Letters 1712 and 1925, the actual costs and benefits of the amendments, as realized in the market, may not be as significant.
The Commission notes that the consideration of costs and benefits below is based on the understanding that the markets function internationally, with many transactions involving U.S. firms taking place across international boundaries; with some Commission registrants being organized outside of the United States; with leading industry members typically conducting operations both within and outside the United States; and with industry members commonly following substantially similar business practices wherever located. Where the Commission does not specifically refer to matters of location, the following discussion of costs and benefits refers to the effects of the Final Rule on all activity subject to the amended regulations, whether by virtue of the activitys physical location in the United States or by virtue of the activitys connection with activities in, or effect on, U.S. commerce under section 2i of the CEA.51
As previously discussed, the Commission received six comment letters expressing support for the Proposal. Commenters generally noted that the proposed amendments are beneficial for market participants and characterized them as helpful and practical accommodations that reflect the realities of the marketplace and facilitate compliance with the CFTC
Margin Rule. Several commenters elaborated on specific benefits of the amendments, noting for instance that the amendments would eliminate burdens associated with the application of a single MTA across SMAs of a counterparty, provide regulatory certainty and contribute to global consistency in regulatory standards.
Some commenters also addressed concerns that the Commission had raised in the Proposal, pointing out mitigating factors.52
51 7

U.S.C. 2i.
e.g., ICI at 7 and MFA at 3 addressing the concern that permitting the application of a reduced, individualized MTA, as proposed, to an indefinite number of SMAs may incentivize SMA
owners to create additional separate accounts.
52 See
VerDate Sep<11>2014

17:40 Jan 22, 2021

Jkt 253001

1. Benefits The amendments to Regulation 23.151
allow CSEs to apply an MTA of up to $50,000 to SMAs of a counterparty.
Under the current requirements, a CSE
must apply the MTA with respect to each counterparty to an uncleared transaction. As a result, in the context of a counterparty that has multiple SMAs through which uncleared swaps are traded, with each SMA potentially giving rise to IM and VM obligations, the amounts of IM and VM attributable to the SMAs of the counterparty must be aggregated to determine whether the MTA has been exceeded, which would require the exchange of IM or VM.
As previously discussed, because the assets of SMAs are separately held, transferred, and returned at the account level, and CSEs and SMA asset managers do not share trading information across SMAs, aggregation of IM and VM obligations across SMAs for the purpose of determining whether the MTA has been exceeded may be impractical, hindering efforts to comply with the CFTC Margin Rule. The Commission acknowledges, however, the possibility that, in certain contexts, an owner of SMAs, such as a pension fund that administers investments for beneficiaries, may be set up to perform collateral management exercises and may have the capability to aggregate collateral across SMAs. Nevertheless, according to industry feedback, the only practical alternative to fully ensure compliance with the margin requirements is to set the MTA for each SMA at zero, so that trading by a given SMA does not result in an inadvertent breach of the aggregate MTA threshold without the exchange of the required margin.
The amendments to Regulation 23.151, by allowing the application of an MTA of up to $50,000 for each SMA
of a counterparty, will ease the operational burdens and transactional costs associated with managing frequent transfers of small amounts of collateral that counterparties would incur if the MTA for SMAs were to be set at zero.
In addition, the amendments give flexibility to CSEs, owners of SMAs, and asset managers to negotiate MTA levels within the regulatory limits that match the risks of the SMAs and their investment strategies, and the uncleared swaps being traded.
Furthermore, because the amendments to Regulation 23.151
simplify the application of the MTA in the SMA context, thereby reducing the operational burden, market participants may be encouraged to participate in the uncleared swap markets through
PO 00000

Frm 00009

Fmt 4700

Sfmt 4700

6855

managed accounts, and account managers may also make their services more readily available to clients. As a result, trading in the uncleared swap markets may increase, promoting competition and liquidity.
The amendment of Regulation 23.158a could likewise lead to efficiencies in the application of the MTA. The amendment, as adopted, states that if a CSE and its counterparty agree to have separate MTAs for IM and VM, the respective amounts of MTA
must be reflected in the margin documentation required by Regulation 23.158a. CSEs will thus be able to maintain separate margin settlement workflows for IM and VM to address the differing segregation treatments for IM
and VM under the CFTC Margin Rule.
The Commission notes that the application of separate MTAs for IM and VM has been adopted in other jurisdictions, including the European Union, and the practice is widespread.
The amendments, by aligning the CFTC
with other jurisdictions with respect to the application of the MTA, advance the CFTCs goal of promoting consistent international standards, in line with the statutory mandate set forth in the DoddFrank Act.
Finally, the amendments, as adopted, provide certainty to market participants who may have relied on Letters 1712
and 1925, and could thereby facilitate their efforts to take the operation of the Commissions regulations into account in the planning of their uncleared swap activities.
2. Costs The amendments to Regulation 23.151
could result in a CSE applying an MTA
that exceeds, in the aggregate, the current MTA limit of $500,000. That is because the amendments, as adopted, permit the application of an MTA of up to $50,000 for each SMA of a counterparty, without limiting the number of SMAs to which the $50,000
threshold may be applied. The amendments thus could incentivize SMA owners to increase the number of separate accounts in order to benefit from the higher MTA limit. As a result, the collection and posting of margin for some SMAs may be delayed, since margin will not need to be exchanged until the MTA threshold is exceeded, which could result in the exchange of less collateral to mitigate the risk of uncleared swaps.
The amendment to Regulation 23.158a, as adopted, states that if a CSE and its counterparty agree to have separate MTAs for IM and VM, the respective amounts of MTA must be reflected in the margin documentation
E:FRFM25JAR1.SGM

25JAR1