Requesting Relief from the Minimum Liquidation Time for Non-Commodity Swaps

The Asset Management Group of SIFMA (SIFMA AMG) provides comments to the Commodity Futures Trading Commission (CFTC) requesting the CFTC take prompt action to provide relief from the terms of the minimum liquidation time of 5 days for non-commodity swaps, Rule 39.13(g)(2)(ii). In particular, the SIFMA AMG expresses support to the requests made by Bloomberg L.P. for a Motion for Stay dated April 24, 2013 and for relief from the 5-day minimum liquidation time required for the calculation of initial margin requirements for swaps (other than swaps on agricultural commodities, energy commodities and metals) cleared on derivatives clearing organizations. 

SIFMA AMG believes that the minimum liquidation time of 5 days for non-commodity swaps:

• is arbitrary and overly conservative; 
• is based on a fundamentally flawed  assumption as to a difference in liquidity between futures and swaps: 
• creates an artificial economic incentive for market participants to use futures rather than swaps: and
• is contrary to Congress’s goal of promoting trading of swaps on swap execution facilities.