Securities Regulation Daily Wrap Up, SWAPS—CFTC-approved final rule eases margin requirements for swap dealers and major swap participants, (Jul 14, 2026)

By Rebecca E. Hoffman, J.D.

The rule will become effective 30 days after publication in the Federal Register.

The CFTC approved a final rule on July 14 amending margin requirements for uncleared swaps applicable to swap dealers (SDs) and major swap participants (MSPs) for which there is no prudential regulator. The Commission largely adopted amendments proposed in 2023, but made changes in response to public comment.

Amendment overview. The rule revises the definition of “margin affiliate” to relieve SDs and MSPs of certain margin requirements for seeded funds. SDs and MSPs subject to the Commission’s uncleared swaps margin rules will not be required to post and collect initial margin with eligible seeded funds, as defined in the final rule, for up to three years after the asset manager begins investing on behalf of the fund.

Another amendment expands the scope of assets that qualify as eligible collateral for uncleared swaps, eliminating a restriction that had disqualified many money market and similar funds from serving as eligible collateral when their asset managers used repurchase agreements and similar transactions.

The rule also adds an inadvertently omitted footnote to the haircut schedule.

“‘Today’s final rule related to seeded funds … unlock[s] liquidity for capital allocators and expand[s] the types of assets that qualify as eligible collateral for certain derivatives transactions, striking the right balance between streamlining regulation and upholding the market protections and robust risk management standards that make America’s commodities markets the gold standard,’” CFTC chair Michael Selig said in a press release.

Alterations to the proposal. In the original proposal, a seeded fund was treated as having no margin affiliates for purposes of calculating the fund’s own material swaps exposure and initial margin threshold, but the fund would still count as a margin affiliate of its sponsor for the sponsor’s calculations. Citing industry concerns about operational burdens and information-sharing requirements, however, the CFTC decided in the final rule that during the three-year seeding period, an eligible seeded fund would be deemed not only to have no margin affiliates, but also not to constitute a margin affiliate of any other entity.

As a result, sponsors and affiliated entities generally will not have to include the seeded fund’s swaps exposure in their own material-swaps-exposure or initial-margin-threshold calculations during the three-year seeding period.

The final rule also eliminated two proposed eligibility requirements for seeded funds: that a seeded fund has an affiliate already subject to uncleared-swaps initial-margin rules and that sponsors maintain a written plan to reduce their ownership stakes. The CFTC said existing market and regulatory incentives provide sufficient safeguards.

The rule’s effective date will be 30 days from the date of publication in the Federal Register.

RegulatoryActivity: CFTCNews ClearanceSettlement ExchangesMarketRegulation Swaps