Key takeaways

• The Division of Swap Dealer and Intermediary Oversight of the CFTC issued an interpretation of CFTC regulations 23.701 and 23.704, which impose certain notification and reporting obligations on swap dealers and major swap participants with respect to initial margin posted by their counterparties in uncleared swap transactions.
• The Interpretation clarifies the DSIO’s views that, subject to certain conditions: (1) the annual margin segregation notification requirement continues to apply in any year in which the SD or MSP enters into a new uncleared swap transaction with the counterparty; (2) this annual notification requirement and the related quarterly reporting requirement are not applicable if no initial margin is required to be posted by a counterparty or collected by an SD or MSP; and (3) an SD or MSP is not prohibited from relying on negative consent in order to fulfill its obligation to obtain confirmation of receipt of this notification and an election to require or not require segregation.