The CFTC passed an interim final rule to allow uncleared swaps to retain "legacy status" under the CFTC margin requirements in the event of a "no-deal" Brexit. The vote was unanimous. According to statements at the open meeting, the rule is intended to be consistent with a recent interim final rule adopted by the prudential regulators.

CFTC Commissioner Dan Berkovitz, who supported the action, noted that "these actions are all taken pursuant to, and are consistent with, the existing regulations and guidance in place at the CFTC governing cross-border activities." CFTC Commissioner Brian Quintenz stated that the interim final rule will provide legal certainty to market participants." Mr. Quintenz said that it is correct for the rule to "exempt a legacy swap" from the CFTC's uncleared margin requirements if the swap is modified due to a no-deal Brexit.

Commentary / Nihal Patel

If this relief is consistent with the relief granted by the prudential regulators, then, as previously noted, market participants may find that it is somewhat narrow in scope and does not provide additional clarity as to what kind of changes otherwise bring a "legacy" swap in scope for margin requirements.

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