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01/09/2017

US - DTC Proposal to Provide Segregated Accounts for Swap Margin

On 22 June 2017, the Depository Trust Company (DTC) filed with the Securities and Exchange Commission (SEC).

On 22 June 2017, the Depository Trust Company (DTC) filed with the Securities and Exchange Commission (SEC) a proposed rule change in order to allow the segregation of securities held at DTC that are intended to be pledged as swap margin in conformity with certain regulations applicable to swap counterparties posting swap margin. The proposal would allow participants to transfer deposited securities to an account (Swap Margin Segregation Account) of a Pledgee designated for the purpose of segregating interests in deposited securities securing margin obligations with respect to uncleared swaps and security-based swaps (Swap Margin) subject to applicable Swap Margin Segregation Rules. Proposed Rule 36 will provide for the establishment and maintenance of one or more Swap Margin Segregation Accounts by a Pledgee, for the purpose of holding Swap Margin. There would be two types of Swap Margin Segregation accounts in Pledgee ledger:

  • First one where only the Pledgee may issue instructions (Restricted Access Swap Margin Account);
  • Second one where either a Pledgee or Pledgor may issue instructions (Shared Access Swap Margin Account).

    The proposed rule change has been implemented on 15 July 2017