Search Results for keywords:"margin requirements"

The Securities and Exchange Commission is reviewing a proposed rule change by the Options Clearing Corporation (OCC) to enhance its methods for assessing the risks of short-dated options. The OCC plans to adjust how it aligns day-count conventions between option price smoothing and implied volatility scenarios and extend the term structure to better account for options with less than one month to expiration. These changes aim to improve the accuracy of margin and stress testing components, ensuring that the financial risks are well-managed. The rule also outlines the potential impacts on margin requirements and clearing funds, with slight increases expected for accounts with a high concentration of short-dated options.

The Options Clearing Corporation (OCC) submitted a rule change to the Securities and Exchange Commission (SEC) to update its documentation on how it calculates margin requirements for its members. This new document, called the STANS Methodology Description, aims to improve transparency about OCC's risk-based margin system by replacing a previous document while excluding certain outdated or redundant details. The SEC approved the proposal, believing it aligns with existing laws and regulations, and helps OCC manage risk in the event that a member defaults, thereby protecting the funds and securities in its care.

The Commodity Futures Trading Commission (CFTC) has introduced a new rule requiring futures commission merchants (FCMs) to ensure customers maintain enough funds to meet initial margin requirements before allowing withdrawals. This rule also allows FCMs to treat separate customer accounts as if they belong to separate entities, under certain conditions, to manage risks effectively. The new rule aims to protect customer funds, prevent systemic risks, and ensure the integrity of financial markets. It extends existing requirements for margin management currently applicable through DCOs to FCMs who are not clearing members.

The Commodity Futures Trading Commission (CFTC) has amended the margin rules for uncleared swaps for swap dealers and major swap participants without a prudential regulator. The new rules allow for a minimum transfer amount (MTA) of up to $50,000 for each separately managed account (SMA) of a legal entity. They also permit separate MTAs for initial and variation margin, provided they don't exceed $500,000 combined. These changes aim to reduce operational burdens while ensuring the swaps market continues to function smoothly and safely.

Cboe Exchange, Inc. has proposed a rule change to amend how it calculates the "current market value" for certain options, specifically Exchange-Traded Fund (ETF) options, to determine the necessary margin requirements. Currently, the closing trade prices for these options are used at 4:15 p.m. Eastern time. The proposal suggests using quotes from 15 minutes before the close of trading, aligning the valuation time with related index options for better consistency in market evaluations. This change aims to reduce potential risks and price distortions for market participants involved in both ETF and related index options trading.

The Securities and Exchange Commission approved a proposed rule change by the Options Clearing Corporation (OCC) to formally document its practices for adjusting margin requirements during periods of high market volatility. OCC uses high-volatility parameter controls to ensure that the margin requirements do not spike unreasonably during volatile times, which helps protect against the possibility of clearing members defaulting on their payments. These adjustments are part of OCC's system for calculating margin requirements, which already includes methods for setting and reviewing both regular and high-volatility parameters, monitoring market conditions, and overseeing the implementation of these controls. The rule change aims to improve clarity and governance without altering OCC's existing practices.

The Financial Industry Regulatory Authority, Inc. (FINRA) has filed a proposed rule change with the Securities and Exchange Commission to extend the implementation date of certain amendments to their Rule 4210, which concerns margin requirements, to October 26, 2021. These amendments, related to specific types of financial transactions, have been postponed to allow further consultation with industry participants and regulators to avoid disruption to the market. The change is immediate and does not involve any alterations to the wording of FINRA rules. Public comments are invited regarding this proposed extension.