Cybersecurity
CFTC Approves Rule Giving Wall Street Break on Billions in Swaps
- Bank units won't have to post initial margin to affiliates
- Regulator backs parallel version of FED, FDIC swaps rule
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Wall Street can breathe easier after a key regulator signed off on a rule Wednesday that will free the industry’s U.S. banking units from having to post billions of dollars of collateral for certain derivatives trades.
The Commodity Futures Trading Commission’s rule endorses the move by banking regulators to soften requirements from an earlier proposal despite the objections by one commissioner and prominent supporters of tougher standards including senators Elizabeth Warren and Sherrod Brown. The result of the CFTC measure, approved with a 2-1 vote, is a one-sided posting of margin when a swaps-trading division of a company trades with its banking unit, instead of making both sides collect collateral from each other.