The Commodity Futures Trading Commission said it will delay enforcement of new margin rules for uncleared swaps, which had gone into effect Thursday.
Some market participants Thursday were unable to clear some swaps because they could not “fully comply” with requirements that counterparties' initial margin — collateral based on worst-case potential losses for a future — be held by a third-party custodian, the CFTC said in a statement.
Enforcement of the margin rules will be delayed until Oct. 3, the CFTC said.
The International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association had made the delay request to the CFTC.
“CFTC staff has been made aware that some dealers have not been able to complete all documentation required to comply with the custodial arrangements required by CFTC rules, due to the limited number of providers of such services and the volume of custodial agreements that market participants are requesting,” CFTC Chairman Timothy Massad said in a separate statement.
Mr. Massad said the enforcement delay will be allowed “provided that a swap dealer is still collecting and posting margin, working in good faith to complete such arrangements, and meeting certain other requirements. This limited relief should help minimize the risk of problems due to any difficulty in arranging such services.”