On February 5, the Prudential Regulators—the five federal banking regulators for swap dealers that are banks—proposed technical amendments to their margin rules for uncleared swaps. The amendments aim to harmonize the definition of Eligible Master Netting Agreement (EMNA) in the margin rules with recent changes made to the definition of “Qualifying Master Netting Agreement” (QMNA) in the capital and liquidity rules applicable to banks.

The proposed amendments make two key changes to the swap margin rules. First, the definition of an EMNA is changed so that any agreement that qualifies as a QMNA for capital purposes also will constitute an EMNA for margin rule purposes. Second, the amendments will allow parties to amend their master agreements to conform to banking law requirements without affecting the legacy status of swaps executed before the swap margin rule compliance date. (Without that second change, such an amendment would convert legacy trades into new trades subject to the margin rules.)

The Commodity Futures Trading Commission is likely adopt to similar conforming amendments to its swap margin rules for non-bank swap dealers in order to keep the playing field level for all swap dealers.