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ISDA Publishes IM Segregation Notification

Following entry into force of the final CFTC rules on initial margin segregation on 6 May 2014 (see this blog post for more detail), ISDA has published a “Form of CFTC 23.704 Quarterly Notice” on its website.  The notice is intended to assist market participants in implementing the reporting requirement under regulation 23.704 relating to back office procedures regarding margin and collateral requirements under uncleared swap agreements.

Enacted under the Dodd-Frank Act, CFTC rule 23.704 requires the chief compliance officer of each swap dealer or major swap participant to report to each counterparty that does not choose to require segregation of initial margin pursuant to rule 23.701, on a quarterly basis, on whether or not the back office procedures of the swap dealer or major swap participant relating to margin and collateral requirements were, at any point during the previous calendar quarter, not in compliance with the agreement of the counterparties.

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