US Securities and Exchange Commission - VALIC

CFTC and SEC Invite Public Comment on a Joint Proposal to Align Margin Requirements for Security Futures With Requirements for Similar Financial Products

SECWashington D.C., July 9, 2019 — The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) (together, the Commissions) have approved a joint proposal to align the minimum margin required on security futures with other similar financial products. The proposal would set the minimum margin requirement for security futures at 15 percent of the current market value of each security future.

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 Commissions have determined that it is appropriate to re-examine the minimum margin required for security futures and are proposing an adjustment.

This proposal is one component of the Commissions’ ongoing efforts to further harmonize their regulatory regimes for the benefit of investors and the markets. The Commissions have a long history of cooperation concerning the regulation of security futures. The agencies look forward to receiving public comments on this proposal and continuing to work together on this and other matters.

J. Christopher Giancarlo
CFTC Chairman J. Christopher Giancarlo

“This proposal represents an important step taken by the Commissions to consider margin requirements for a jointly regulated financial instrument,” said CFTC Chairman J. Christopher Giancarlo. “I am hopeful that the Commissions will continue this work and examine other ways to increase efficiencies for consumers while maintaining adequate protections against risk in the overall financial system.”

“The proposal highlights the ongoing collaboration between the two Commissions and our progress in harmonization of our respective regulatory regimes,” said SEC Chairman Jay Clayton. “I want to thank our colleagues at the CFTC for their efforts and cooperation, and I look forward to continuing efforts in this area.”

“This proposal to adjust margin requirements for security futures contracts, which are jointly regulated by our agencies, is the product of much hard work and cooperation between CFTC and SEC staff,” said CFTC Commissioner Brian Quintenz. “I appreciate staffs’ diligent efforts and look forward to engaging with market participants on this issue.”

“I appreciate the staff’s collaboration with CFTC staff on this proposal,” said SEC Commissioner Hester Peirce.  “I look forward to reviewing public comments in response to the Commissions’ proposal.”

The public comment period will remain open for 30 days following publication in the Federal Register. All comments will be posted on both the CFTC’s website and the SEC’s website.