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SEC Proposes Change to Margin Rules on Security Futures

The Securities and Exchange Commission (SEC) announced today that it has proposed to align the minimum margin required on security futures with other similar financial products.  The proposal—which, if the CFTC votes in favor of, would be a joint CFTC-SEC proposal—would set the minimum margin requirement for security futures at 15 percent of the current market value of each security future.

The SEC and the Commodity Futures Trading Commission (CFTC) (together, the Commissions) have joint rulemaking authority regarding margin requirements for security futures.  In 2002, the Commissions adopted rules establishing margin requirements for unhedged security futures products at 20 percent.  In light of lower margin requirements that have been established for comparable financial products and the resulting asymmetry, the SEC has determined that it is appropriate to re-examine the minimum margin required for security futures.

The CFTC has not yet voted on the proposal and has scheduled its vote for July 11, 2019.[1]  Should the CFTC vote to propose the release, it will be published in the Federal Register and the release will be replaced by the Federal Register version.

The public comment period will remain open for 30 days following publication in the Federal Register.

ENDNOTE

[1]Commodity Futures Trading Commission, CFTC to Hold an Open Commission Meeting on July 11 (July 2, 2019), available at: https://www.cftc.gov/PressRoom/PressReleases/7956-19.

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