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New CFTC head to ease March 1 deadline for new derivatives rule
January 18, 2017 / 5:18 PM / 8 months ago

New CFTC head to ease March 1 deadline for new derivatives rule

NEW YORK, Jan 18 (Reuters) - The top U.S. derivatives and commodities regulator will take steps in the coming weeks to ease a March 1 deadline for financial firms to post cash to cover uncleared derivatives transactions, the incoming acting chairman of the agency said on Wednesday.

The hard deadline is not realistic and smaller firms, including U.S. pension and retirement funds, may not be able to complete the process in time, said Christopher Giancarlo, the sole Republican commissioner at the U.S. Commodity Futures Trading Commission (CFTC).

The result would be that those firms would have to stop hedging their portfolios at a time of rapid change in global financial rates and asset values, Giancarlo said in a speech at a derivatives conference in New York.

Giancarlo will be acting head of the Commission after Jan. 20 and is widely expected to be named the permanent chairman.

Beginning in March, financial firms will be expected to post a so-called “variation” margin on swaps trades that have not passed through a third-party clearing house to facilitate the trade.

The rule is among the key global reforms agreed by world leaders at the height of the 2007-09 financial crisis aimed at making the $544 trillion derivatives market safer and more transparent.

Last month, Singapore, Hong Kong and Australia said they would allow for a six-month phase-in of the new variation margin rules to allow for a smooth transition, said Giancarlo, who was previously an executive vice president at wholesale brokerage GFI Group.

“As Acting Chairman, I also intend to look at solutions to ease the March first transition in a responsible manner,” he said. “Look for the CFTC to have more to say about this in the weeks to come.” (Reporting by John McCrank; Editing by David Gregorio)

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