CFTC Division Of Clearing And Risk Determines Variation Margin Payments Are Settlements

The CFTC Division of Clearing and Risk (“DCR”) issued an Interpretive Letter clarifying that variation margin (“VM”) for cleared swap positions constitutes the daily settlement of exposure and not collateral under the Commodity Exchange Act (“CEA”). In the letter, the DCR explained that VM for cleared swaps may be transferred under either of two separate legal models: […]