Many OTC swaps traders shouldn’t have to prepare for upcoming margin standards, CFTC chief says

3 May 2019 2:17am
The US Federal Reserve and the US Commodity Futures Trading Commission should find that hedge funds and banks with little derivatives activity need not prepare their systems for uncleared-swaps margin standards next year, CFTC Chairman Christopher Giancarlo said.

In a letter to Fed Vice Chairman Randal Quarles, he said that as the planned rule stands, many small traders will have to get models ready for documentation, custodial and operational requirements even though they won’t be providing enough margin to be subject to the standards.

“They will soon be required to incur the time and expense of preparing to exchange initial margin even though they will not be required to exchange margin,” Giancarlo’s letter today said.