On April 6th, a bipartisan letter was sent to regulators urging them to consider a number of important end-user issues. The letter was written and signed by key Congressional chair-persons for the House Agriculture Committee, House Financial Services Committee, Senate Agriculture Committee, and Senate Banking Committee. The letter reiterated the importance to “exempt end-users from margin requirements” and to “limit other regulatory burdens that could have the unintended effect of driving up costs for end users and increasing systemic risk for our economy.” In addition, regulators were encouraged to coordinate their rule making process with each other and with international regulators, especially on rules that will impact end-user costs. For more on the letter, please read it here.
The letter comes at a crucial time. The CFTC and FDIC are expected to propose their end-user margin rules on April 12th. As we have highlighted recently in this update, bank regulators (including the Fed and the FDIC) will have the most impact on end-users as their regulatory authority covers the vast majority of derivatives dealing activities. As such, Chatham will be watching the April 12th meetings closely to provide you with timely updates on the end-user margin issue.