New Margin Requirements for Uncleared Swaps

One of the fundamental changes that the Dodd-Frank Wall Street Reform and Consumer Protection Act made in the financial markets has been to force most over-the-counter swap transactions onto exchanges and impose regulations on transactions that remain uncleared by a central counterparty. At the same time, laws and regulations adopted by the European Commission and other nations have imposed similar, but by no means identical, requirements on swap markets outside the United States. In this article, SRZ partners Craig Stein and Paul N. Watterson, Jr. review one aspect of these changes in the over-the-counter swap markets: the new margin requirements for uncleared swaps.