SEC and CFTC Open 60-Day Comment Window on Portfolio Margining Overhaul

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on June 26 jointly invited public comment on a coordinated regulatory framework for portfolio margining across securities, security-based swaps, futures, swaps and related positions. The agencies said they are assessing whether closer SEC'CFTC alignment could improve the efficiency of risk management, curb market fragmentation and enhance customer protection. SEC Chair Paul Atkins said cross-margining could free up liquidity currently dispersed across separate accounts. CFTC Chair Mike Selig said deeper cooperation on portfolio margining could unlock underutilized capital while supporting a stronger risk-management and market-protection framework. The request for comment covers the existing portfolio margining model and market practices, customer-protection considerations, cross-margining and cross-product hedging, capital/segmentation/collateral treatment, risk-management methodologies, issues involving clearing houses and derivatives clearing organizations, operational and technical implementation, and potential effects on market liquidity and competition. Comments are due within 60 days after the notice is published in the Federal Register.