While the rules provide some clarity, the global market still awaits the finalization of the CFTC and the European margin rules.

With the clock ticking on the countdown to finalization of uncleared swap margin rules mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the Prudential Regulators1 were the first to issue final rules at the end of October,2 establishing minimum margin requirements for uncleared swaps and uncleared security-based swaps (the PR Margin Rules).3 The PR Margin Rules apply to swap dealers, security-based swap dealers, major swap participants and major security-based swap participants that are subject to supervision by the Prudential Regulators, such as bank holding companies and insured depository institutions (collectively referred to herein as PR Covered Swap Entities). In an effort to address industry concerns, the Prudential Regulators eased certain aspects of their 2014 proposed rules (the PR Proposed Margin Rules),4 for example lessening collateral requirements, expanding the collateral eligible to be posted for variation margin in transactions with financial end-users, narrowing the cross-border reach of the rules, raising the initial margin threshold amount and providing some accommodations for inter-affiliate uncleared swaps. These changes bring the rules (including the compliance period) into closer alignment with the recommended international guidelines for uncleared margin published by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) in September 2013.5 Compliance with the rules will be phased in over a period of time beginning in September 2016. Though the finalization of the PR Margin Rules is a key piece of the puzzle with respect to the margin framework for uncleared swaps and uncleared security-based swaps, market participants are still waiting for the US Commodity Futures Trading Commission (the CFTC), the US Securities and Exchange Commission (the SEC) and the European regulators to finalize their respective margin rules for uncleared derivatives.