I vote in favor of today’s final rule that first, amends a key definition used to determine whether a financial end-user must comply with the Commission’s uncleared swap margin regulations when trading with a swap dealer,[1] and second, codifies no-action relief providing additional flexibility for swap dealers to use the risk-based calculation of initial margin.[2]  With regard to the adjustment to the definition of material swap exposure, I support the fact that the rulemaking further aligns the Commission’s rules to the framework agreed upon by the international framework established by BCBS-IOSCO.  However, I continue to take issue with the reliance on notional value as the defining metric for determining whether a firm should be subject to the uncleared margin regulations.  The philosophy behind such a framework is that firms with small levels of swaps can have outsized impacts on the financial system.  Further, the fact that we, as an agency and as international regulators, continue to embrace a metric as useless, biased, and arbitrary as notional value is something I have long opposed, and I have never, not once, heard an acceptable or even rationale defense for doing so. 

[1] Definition of material swap exposure under reg. 23.151(a).

[2] CFTC Letter 19-29.