In anticipation of Brexit, US regulators address status of certain swaps under the Swaps Margin Rule

  • United States
  • 04/02/2019
  • Norton Rose Fulbright

With the next 10 days being crucial in the Brexit process, following the UK House of Commons rejecting the draft withdrawal agreement for a third time and the European Council calling an emergency summit for April 10, 2019, the Commodity Futures Trading Commission (“CFTC”) and the US banking, farm credit and housing agencies have issued interim final regulations to address regulatory requirements of certain swap transactions subject to US regulations in the event of a non-negotiated withdrawal of Britain from the EU, sometimes referred to as a “hard” Brexit. These interim final rules would take effect only if a hard Brexit occurs.

Background

Under regulations (the “Swap Margin Rules”) adopted by the CFTC and federal banking, farm credit and housing agencies (the “Agencies”), swap dealers and security-based swap dealers under the Agencies’ respective jurisdictions are required to exchange margin with their financial counterparties for swaps not otherwise centrally cleared (“uncleared swaps”). You can access previous blog posts on the Agencies’ Swap Margin Rules (continue)...

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