# Dodd-Frank bill sparks end-user margin fears

Derivatives end-users might have to post initial and variation margin for all swap transactions that are not centrally cleared, after US lawmakers working on new US legislation omitted a clause that would exempt them from margining requirements.

The conference committee, charged with reconciling the financial regulatory reform bills passed by the US Senate and House of Representatives, reached agreement after 20 hours of wrangling in the early hours of Friday morning, June 25 - and later briefly reopened the debate. The result of their efforts - dubbed the Dodd-Frank bill - is alarming end-users.

A clause present in both the Senate and House versions of the bill explicitly exempted commercial end-users from margining requirements in non-cleared swaps, but it has been omitted from the final legislation. End-users claim their ability to hedge would be severely hampered if they were forced to post margin on uncleared transactions because regular margin payments would gobble up precious working capital - a well-worn argument lobbyists deployed to defend corporate hedgers from mandatory clearing requirements.

"Our concern emanates from language deleted during the conference process," says Tom Deas, president of the National Association of Corporate Treasurers in Philadelphia. "However, we want to make it clear that while deletion of this language should not alter the often-expressed intent to exempt end-user trades from margin requirements, we also would support legislation to create an unambiguous exemption from margin requirements for end-users."

#### 7 days in 60 seconds

###### VM change, Libor fallback and DTCC blockchain

The week on Risk.net, November 10-16, 2017