CFTC Approves Deferral of Phase 5 Implementation Deadline for Regulatory Initial Margin Requirements as Result of COVID-19 Pandemic

May 29, 2020

On Thursday, May 28, 2020 the CFTC approved an interim final rule that will defer the September 1, 2020 Phase 5 compliance date of the regulatory initial margin requirements for uncleared swaps. Under the new rule, market participants that are in-scope for Phase 5 implementation will have until September 1, 2021 to complete preparations for compliance. This is consistent with the recent revisions to the initial margin implementation schedule published by BCBS/IOSCO that were intended to address the impact of the COVID-19 pandemic on firms’ preparations for implementation of these requirements.

While this interim final rule addresses Phase 5 only, the CFTC noted that it intends to issue a proposed rule with respect to the September 1, 2021 Phase 6 compliance deadline “in the near term.” The expectation is that the CFTC will approve a deferral of Phase 6 until September 1, 2022, consistent with the BCBS/IOSCO guidance.

This interim final rule will be effective upon publication in the Federal Register, and any comments may be submitted for 60 days after publication.

We will continue to monitor any developments related to the implementation of regulatory initial margin and update our clients and friends as necessary.

Seward & Kissel has established a COVID-19 Resource Center on our web site to access all relevant alerts that we distribute.