US Regulators Offer Margin Relief for Legacy Swaps No Deal Brexit Scenario

The Commodity Futures Trading Commission has unanimously approved an interim final rule that will allow swap dealers and major swap participants to, in the event of a no-deal Brexit scenario, transfer legacy swaps entered into before the compliance date of the CFTC's margin requirements for uncleared swaps to an affiliate without triggering such requirements. The CFTC's interim final rule is substantively identical to an interim final rule adopted by the U.S. Prudential Regulators, which provides the same relief for legacy swaps entered into before the compliance date of their margin requirements for uncleared swaps.

Both interim final rules apply only to legacy swaps that are transferred solely for relocation purposes. They do not cover economic changes to legacy swaps, such as amendments that modify payment amount calculation methods, maturity date or notional amount of the uncleared swap.

The interim final rules are each effective immediately upon their respective publication in the Federal Register, and the transfer relief will apply for a period of one year following the U.K.'s withdrawal from the EU in the event of a no deal Brexit.

Although the interim final rules are effective immediately, comments on the CFTC's interim final rule may be received within 60 days of its publication in the Federal Register, and comments on the Prudential Regulators' final rule may be received within 30 days of its publication in the Federal Register.

View the CFTC's interim final rule.

View the Prudential Regulators' interim final rule.

View the CFTC's press release.

View the Prudential Regulators' press release.

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