August 31, 2023 (NO COMMENTS)

Industry welcomes proposal to lift ban on repo-using funds as eligible IM, but some warn MMFs bring risks

Industry sources have largely welcomed proposals by the Commodity Futures Trading Commission to allow a wider array of US government money market funds (MMFs) to be used as initial margin for non-cleared derivatives, but some warn the plans will introduce extra risk into the system. While shares in MMFs that utilise the short-term repo market are deemed eligible collateral for initial margin on cleared derivatives, US regulators have banned its use for non-cleared derivatives positions. After