Since becoming effective on January 27, 2021, an amendment to US Commodity Futures Trading Commission (“CFTC”) Regulation 39.13(g)(8)(ii), passed in January 2020 (the “2020 Amendment”)1, has raised concerns among some market participants about futures commission merchants (“FCMs”) coming under commercial pressure to collect less initial margin, leading to heightened overall risk. At the core of these concerns is a change in terminology that, some market participants believe, allows FCMs to exercise greater discretion when distinguishing between clients who are required to post only the baseline level of initial margin required by the relevant clearing house and higher risk customers who are required to post initial margin above the baseline level.

The CFTC’s Division of Clearing and Risk (“DCR”) has published a memorandum (the “Memorandum”)2 in which DCR states that it does not expect to see significant changes in margining practices in response to the 2020 Amendment. However, we encourage Clients to remain in dialogue with their FCMs to ensure that their accounts remain appropriately categorized under Regulation 39.13(g)(8)(ii).

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