On Friday, the SEC and the CFTC issued a joint request for public comment on potential approaches to harmonize the regulatory frameworks that are applicable to portfolio margining across securities, security-based swaps, futures, swaps, and related positions. The press release announcing the request for comment notes:

The request for comment is intended to assist the agencies in evaluating whether greater coordination or alignment in portfolio margining requirements may improve risk management efficiency, reduce unnecessary market fragmentation, and enhance customer protections consistent with the agencies’ respective statutory authorities and responsibilities.

The issues addressed in the request for comment include:

– Existing portfolio margining models and practices
– Customer protection considerations
– Cross-margining and cross-product offsets
– Capital, segregation, and collateral treatment
– Risk management and margin methodologies
– Clearing agency and derivatives clearing organization considerations
– Operational and technical implementation issues
– Potential impacts on market liquidity and competition

The public comment period will remain open for 60 days following publication of the request for comment in the Federal Register. This joint request for public comment follows two similar joint requests for public comment that Meredith covered last week.

– Dave Lynn