Today’s notice of proposed rulemaking (“NPRM”) is necessitated as a result of global policy and domestic regulatory considerations to address the impact of the COVID-19 pandemic on potential market disruption that could result from a large number of entities simultaneously coming into compliance with the initial margin (or “IM”) requirements of the CFTC Margin Rule.[1]  In our attempts to remain consistent with revisions to the BCBS/IOSCO international framework’s implementation schedule, we have now created an additional compliance phase, moving from five to six, and postponing full compliance by one year to September 1, 2021.[2]  This seems reasonable, save for the fact that our last action to provide relief for those who would have to come into compliance in September of this year has resulted in a reuniting of phases five and six, reintroducing the same set of concerns regarding potential market disruptions we sought to avoid.  Accordingly, we are here today with a new NPRM to further postpone the compliance date for the final phase, phase six, to September 1, 2022.

I will support the NPRM today because it is, at this time, being presented as the swiftest means to establish a realistic compliance deadline for which we will hold covered entities accountable.  The circumstances of the COVID-19 pandemic are significant cause for concern, and I believe the Commission has responded with workable, targeted solutions aimed at ensuring our policies remain intact when the rigor of our regulations prove too burdensome to balance with competing overarching financial stability concerns.

However, as I have maintained throughout this process, delaying IM requirements as a means to provide temporary, targeted relief to address increased market volatility seems counterintuitive.[3]  Moreover, as we continue to prolong compliance, we inevitably invite further requests for deferral of an indefinite nature.  As the ten year anniversary of the Dodd-Frank Act[4] approaches, we cannot presume that the risks this core-reform seeks to address have morphed into anything of lesser concern, and I will not support any further relief absent truly compelling facts and lockstep agreement with the prudential regulators responsible for establishing margin requirements for swap dealers and major swap participants within their respective jurisdictions.