The Commodity Futures Trading Commission’s Market Participants Division issued an interpretation clarifying what assets qualify as eligible margin collateral for certain uncleared swap transactions under CFTC Regulation 23.156. Under the interpretation, shares of certain U.S. Treasury exchange-traded funds (UST ETFs) may be treated as “redeemable securities in a pooled investment fund” and therefore qualify as eligible initial margin (IM) and variation margin (VM) collateral, subject to the conditions in Regulation 23.156. The division’s view would permit swap dealers to post and collect such UST ETF shares as IM for uncleared swap transactions with any covered counterparty, and as VM for uncleared swap transactions with financial end users. The interpretation follows a recommendation from the CFTC’s Global Markets Advisory Committee and was prepared by its Global Market Structure Subcommittee.
Commodity Futures Trading Commission 2025-04-14
Commodity Futures Trading Commission clarifies when U.S. Treasury ETFs qualify as eligible collateral for uncleared swap margin
The Commodity Futures Trading Commission's Market Participants Division clarified that certain U.S. Treasury exchange-traded funds (UST ETFs) qualify as eligible margin collateral for uncleared swap transactions under Regulation 23.156. This allows swap dealers to use UST ETF shares as initial and variation margin with covered counterparties and financial end users. The clarification follows a recommendation from the CFTC’s Global Markets Advisory Committee.