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October 11, 2023

CFTC Must Protect Margin Requirements as Safeguard for Financial Stability

WASHINGTON, D.C.—Cantrell Dumas, Director of Derivatives Policy, issued the following statement in connection with the filing of a comment letter to the Commodity Futures Trading Commission (CFTC) in response to a proposed rule amending margin requirements for uncleared swaps applicable to swap dealers and major swap participants for which there is no prudential regulator.

“Margin, similar to a down payment when buying a house, represents the cornerstone of risk management and systemic stability. The CFTC’s proposed rule, which would allow swap dealers to circumvent the requirement to post and collect initial margin with certain seeded funds, threatens to weaken this essential safeguard, gradually eroding the effectiveness of the Dodd-Frank margin requirements—an approach reminiscent of a ‘death by a thousand cuts.’

“The CFTC’s approach conflicts with the clear language and intent of the Dodd-Frank Act, the comprehensive set of reforms designed to prevent future financial crises.  Moreover, it reflects a cavalier attitude towards a key financial market safeguard.  Just like a down payment, margin is not an added expense, but a vital buffer designed to protect all parties involved in transactions and the overall stability of the financial system. It should not be seen as a dispensable feature to be waived for cost-cutting purposes but rather as a steadfast requirement aimed at reducing risk and enhancing systemic stability.

“Additionally, Better Markets urges the CFTC to reconsider its intention to increase the use of money market funds as eligible non-cash collateral for swap dealers for initial margin. Money market funds are far too susceptible to systemic instability to serve as reliable margin.  At the very least, such an approach would have to wait until the SEC establishes further safeguards against money market fund run risk, including a uniformly floating net asset value and significant capital buffers.

“In the complex world of financial regulations, it’s crucial to remember that eroding Dodd-Frank is like playing a game of Jenga. Removing a single piece may appear inconsequential at first, but with each successive extraction, the entire structure becomes less stable and more likely to collapse. It is imperative that the CFTC remain steadfast as it implements Dodd-Frank, ensuring that it fortifies our markets against crises and prioritizes the public interest, much like skillfully maintaining the stability of a Jenga tower as it grows taller and more complex.”

You can read our full public comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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