U.S. derivatives and securities regulators are proposing to reduce the margin requirements for security futures, bringing them in line with comparable financial products.
The U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) issued a joint rule proposal that would cut the minimum margin requirement for security futures to 15% of current market value, down from 20%.
The regulators initially set the margin requirement at 20% back in 2002. Since then, an unlevel playing field has developed with similar products that enjoy lower requirements, which prompted regulators to re-examine the requirements for security futures.
The proposed rule change reflects an ongoing effort by the SEC and CFTC to further harmonize their regulatory regimes.
“This proposal represents an important step taken by the commissions to consider margin requirements for a jointly regulated financial instrument,” CFTC chairman Christopher Giancarlo said in a statement.
“I am hopeful that the commissions will continue this work and examine other ways to increase efficiencies for consumers while maintaining adequate protections against risk in the overall financial system,” he added.
The proposal is out for a 30-day public comment period.