CFTC Issues Amended Margin Comparability Determination for Japan

CFTCJapan is deemed comparable for two additional aspects of Margin for Uncleared Swaps

The Commodity Futures Trading Commission (CFTC) today unanimously approved an amended comparability determination that would extend the substituted compliance permitted for Japan’s margin requirements for uncleared swaps as compared to the uncleared swap margin provisions of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and CFTC regulations.  

“Substituted compliance helps preserve the benefits of an integrated, global

J. Christopher Giancarlo
CFTC Chairman J. Christopher Giancarlo

swap market by reducing the degree to which market participants will be subject to multiple sets of regulations,” said CFTC Chairman J. Christopher Giancarlo. “Today’s amended comparability determination is further evidence that the Commission is committed to showing deference to foreign jurisdictions that have comparable regulatory and supervisory regimes.”

Substituted compliance describes the circumstances where the CFTC would permit swap dealers or major swap participants subject to the rules of a foreign jurisdiction but whose swaps activities bring them within the scope of certain CFTC regulations, to use compliance with regulations in the foreign jurisdiction as a substitute for compliance with the relevant CFTC regulations.  This approach builds on the CFTC’s long-standing policy of recognizing comparable regulatory regimes based on international coordination and comity principles with respect to cross-border activities involving futures and options.

In accordance with the CFTC’s policy framework described in its Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants – Cross-Border Application announced May 24, 2016 (See CFTC Press Release 7370-16), a comparability determination is part of substituted compliance with respect to CFTC regulations applicable to swaps activities outside the U.S. The CFTC’s action today amends the comparability determination for Japan issued by the CFTC in September of 2016 (81 FR 63376, Sept. 15, 2016).

The CFTC’s approval also reflects a collaborative effort with authorities and market participants from Japan.  Working with authorities in Japan, the CFTC has extended the 2016 determination to two additional requirements (see summary chart below). 

Uncleared Swap Margin Requirements:

Summary of Further Comparability Determination for Japan

The following table presents, in summary form, the further determinations of the U.S. Commodity Futures Trading Commission (CFTC) with respect to the comparability in outcome of the margin requirements for uncleared swaps under the laws of Japan as compared to margin requirements for uncleared swaps under the Commodity Exchange Act and CFTC’s regulations.


Japan Uncleared Swap Margin Requirements

Entities Subject to Uncleared Swap Margin Requirements


Treatment of Inter-Affiliate Swaps

Regulation § 23.159