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December 16, 2015

Statement Following CFTC Vote on Margin Rules

Wednesday, December 16, 2015
Contact: Jeff Gohringer, 202-618-6430 or

Better Markets Statement Following CFTC Vote on Margin Rules

Washington, DC — Better Markets President and CEO Dennis Kelleher issued this statement following the vote today by the Commodity Futures Trading Commission (CFTC) on the final margin rules for swap dealers:

“Margin, like the down payment on a house purchase, is the most basic risk management tool, a best practice and a foundation for systemic stability. Recognizing that, the CFTC proposed a very strong initial margin rule for uncleared swaps in September 2014. However, today it finalized a much weaker rule that eliminates initial margin entirely for such swaps among affiliates. This is unwarranted and dangerous.

Just like subprime mortgages with no down payments, the lack of initial margin in uncleared swaps creates a ticking time bomb. As is too often the case, the mistakes and poor judgment reflected in today’s rule won’t be visible for years until we’re in the middle of the next financial crisis. No initial margin means insufficient shock-absorbers and that means that taxpayers are once again being put at grave risk of having to again bailout the financial industry.

Lastly, some in the financial industry have lobbied hard for years to eliminate or reduce margin as much as possible. They incorrectly characterize margin as a ‘cost’ to swaps trading, and have made headway with regulators in categorizing inter-affiliate trades as a place costs can be cut. However, margin is not an additional cost, in the same way that a down payment on a house is not an additional ‘cost’ to your mortgage. It is a critical buffer designed to protect both parties to the transaction as well as the financial system. Margin should not be seen as a feature that can be stripped away or waived in the name of cutting costs. It should be an ever-present requirement to reduce risk and increase systemic stability.”

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis 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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