Chairman Wetston of the Ontario Securities Commission discussed the rule proposed by the CFTC that a DCO shall not set a minimum capital requirement of more than $50 million for any person that seeks to become a clearing member in order to clear swaps.  Chairman Wetston commented that he agrees with the CFTC’s initiative to improve access for persons seeking to become clearing members and supports setting DCO minimum capital requirements at a level that does not restrict DCO membership to only the largest swap market participants.  Chairman Wetston believes that setting the capit

Representatives of life insurance company discussed issues raised in the August 16, 2011 comment letter from Principal Life Insurance Company, especially in support of expanding the types of collateral acceptable for variation margin (VM). Under the proposed rule for uncleared swaps, VM is limited to cash and treasuries, and the representatives from Principal support including high quality, readily marketable securities as VM, as is current practice today for OTC derivatives.

Representatives for CFA, AFR, and Better Markets further discussed the views expressed in their August 29th, 2011 comment letters to the SEC and CFTC.  The letters are available on the Commission's website in connection with the external attendees' September 16, 2011 meeting with CFTC staff.

KfW is 100% owned by federal and state governments in Germany.  KfW also said its obligations are fully guaranteed by the German federal government pursuant to statute.  Because of this guarantee, KfW does not post collateral (in the normal sense) with respect to its swaps.  KfW is concerned that for this reason, it’s current uncollateralized exposure under the major swap participant (“MSP”) tests would be high and it could be designated as an MSP.  KfW said, however, that it does not raise systemic risk because of the guarantee and it therefore should not b

Discussion of various implications of the proposed "look through" in the definition of Eligible Contract Participant (ECP) in CEA section 1a(18), and whether ECP status could apply under prong (v) of the definition if persons cannot satisfy prong (iv) thereof.  Also discussion of various possible interpretations of the “subject to regulation” language in (iv)(II).

Representatives of the Public Pension Funds discussed the views expressed in their August 29 letter to the SEC.

Meeting to discuss the Clearing Member Risk Management rulemaking.

Representatives for CFA, AFR, and Better Markets further discussed the views expressed in their August 29th, 2011 comment letters to the SEC and CFTC.

CFTC staff received the attached email from representatives of ABC/CIEBA.  The email was also sent to SEC staff.

Topics discussed:  NGX’s products, the decision process for mandatory clearing, and use of letters of credit for initial margin.