Swap Traders Could Reduce Margin Under Proposed U.S. Rules
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U.S. regulators plan to allow hedge funds and other credit-swap traders to reduce the amount of collateral needed to back transactions through the use of accounts that offset different types of trades.
The Securities and Exchange Commission and Commodity Futures Trading Commission are close to allowing collateral offsets for credit swaps that are tied to indexes and single securities through a process known as portfolio margining. Atlanta-based Intercontinental Exchange Inc., owner of the largest clearinghouse for credit swaps, Citadel LLC and other hedge and mutual funds and banks spent more than a year pushing regulators to support the system for client trades.