CFTC Eases Margin Rules for Seeded Funds and Collateral
New amendments reduce initial margin burdens for start-up investment funds and expand the scope of eligible collateral for uncleared swaps.
The Commodity Futures Trading Commission is amending margin requirements for uncleared swaps applicable to swap dealers and major swap participants not subject to prudential regulator rules. The changes target the definition of "margin affiliate" to provide relief for collective investment vehicles that receive start-up capital from a sponsor entity.
Under the Seeded Funds Amendment, eligible seeded funds will not be deemed to have margin affiliates, nor will they constitute margin affiliates of other entities when calculating thresholds that trigger initial margin exchanges. This removes the requirement for swap dealers and major swap participants to post and collect initial margin with these funds for up to three years from the fund's trading inception date.
The Commission is also expanding the types of assets that qualify as eligible initial margin collateral. The Eligible Collateral Amendment eliminates a provision that previously disqualified securities from pooled investment funds—such as money market and similar funds—if their asset managers transferred assets through repurchase agreements, securities borrowing, or similar arrangements.
To support this expansion, the Commission is updating the haircut schedule for eligible margin collateral to specifically address the haircuts applicable to money market and similar funds.
These rules take effect August 17, 2026.