Forum Statement on Inter-Affiliate Initial Margin Requirements

17 Sep 2019

Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today regarding a proposed rule from the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of Currency (OCC) to harmonize initial margin requirements for inter-affiliate swap transactions:

Current margin requirements for swaps are inconsistent across the regulatory framework, both here and abroad, and put U.S. banks, consumers and businesses at a serious disadvantage.  While the details must be carefully reviewed, this proposal reflects common-sense reforms that aim to help level the playing field for domestic banks, lower the costs for end-users, and promote safety and soundness within the global financial system. Importantly, the proposal preserves core safeguards to the derivatives markets, like the variation margin on inter-affiliate swaps and initial margin with third-party swaps, while promoting centralized risk management. We look forward to reviewing the proposal in its entirety and working with regulators to develop a final rule that will harmonize the treatment of margin requirements.”

Earlier this year, Fromer, along with Securities Industry and Financial Markets Association CEO Kenneth E. Bentsen, Jr. penned an op-ed in the American Banker regarding the benefits of eliminating initial margin requirements for certain inter-affiliate swaps.”

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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States.  Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
 

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