It's confirmed: U.S. banking regulators want companies that use over-the-counter swaps to post margin, at least those nonfinancial firms deemed riskier credits by their bank counterparties.
Five federal banking regulators issued a proposal Tuesday that would require nonfinancial companies to post margin on swap transactions if the net market value of their positions exceeds thresholds determined by their bank counterparties' normal credit processes. Companies with riskier credit profiles would face lower thresholds and vice versa.
A separate proposal from the Commodity Futures Trading Commission, also announced yesterday, would not require the swap dealers it regulates to develop thresholds for corporate customers. However, the CFTC's jurisdiction is limited to nonfinancial swaps dealers, such as energy companies.
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