CFTC Provides Clarification on Customer Initial Margin Requirements

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The Commodity Futures Trading Commission’s staff has issued interpretive guidance regarding the intended implementation of CFTC Rule 39.13(g)(8)(ii), which provides that each derivatives clearing organization (DCO) must require its clearing members to collect initial margin from their customers for non-hedge positions at a level that is greater than 100 percent of the DCO's initial margin requirements. First, the staff made clear that the rule is not intended to change existing practice in which exchange members and certain other customer accounts are designated as “member” or “hedge” accounts that are subject to a lower initial margin requirement. The staff further indicated that it generally would not object to the application of clearing or maintenance margin requirements to customer omnibus accounts or to the imposition of higher initial margin requirements for positions within a clearing member’s house account

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