FIA and ISDA have submitted a joint response to a request for comment on the CFTC and SEC's administration of portfolio margining and cross-margining programs, welcoming the agencies' efforts to expand appropriately tailored risk-based margin frameworks across securities and derivatives markets.
The associations commend the agencies for proactively examining how their respective regulatory structures, with increased inter-agency coordination and cooperation, can better support these programs, reducing unnecessary liquidity demands for market participants and strengthening the competitiveness of US markets.
The letter notes that the current approval process for portfolio and cross-margining programs has proved cumbersome and fragmented, relying on bespoke, case-by-case approvals that create uncertainty for market participants. The associations urge the agencies to establish a coordinated framework for reviewing, approving and supervising the programs, while providing greater legal certainty regarding insolvency treatment and customer protections.
The letter also encourages the agencies to remove duplicative regulatory requirements, align oversight expectations and address operational barriers that limit broader adoption. The associations call on the CFTC and the SEC to work with prudential and international regulators to ensure that the benefits of portfolio and cross-margining are recognised consistently across capital, margin and cross-border regulatory frameworks.
Read the response here.
