SEC, CFTC approve new minimum margins on futures

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have both approved a proposal to align the minimum margin on security futures with similar financial products. The commissions, which have joint rulemaking authority on margin requirements for security futures, set the minimum margin requirement at 15 percent of the current market […]

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The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have both approved a proposal to align the minimum margin on security futures with similar financial products.

The commissions, which have joint rulemaking authority on margin requirements for security futures, set the minimum margin requirement at 15 percent of the current market value of each security future.

The commissions jointly adopted rules establishing margin requirements for unhedged security futures products at 20 percent in 2002. However, since then, lower margin requirements have been established for comparable financial products. So, to correct this asymmetry, they found it appropriate to re-examine and lower the minimum margin.

“This proposal represents an important step taken by the Commissions to consider margin requirements for a jointly regulated financial instrument,” CFTC Chairman J. Christopher Giancarlo said. “I am hopeful that the Commissions will continue this work and examine other ways to increase efficiencies for consumers while maintaining adequate protections against risk in the overall financial system.”

This is just one element of their joint efforts to cooperate and harmonize their regulatory regimes.

“The proposal highlights the ongoing collaboration between the two Commissions and our progress in harmonization of our respective regulatory regimes,” SEC Chairman Jay Clayton said. “I want to thank our colleagues at the CFTC for their efforts and cooperation, and I look forward to continuing efforts in this area.”

The agencies will accept public comments on this proposal after it is published in the Federal Register.

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