CFTC and SEC Seek Public Feedback on Harmonizing Portfolio Margining Frameworks

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have issued a joint request for public comment to explore potential approaches for harmonizing regulatory frameworks governing portfolio margining. The initiative addresses margining practices across securities, security-based swaps, futures, swaps, and related asset classes. The agencies are seeking stakeholder feedback to determine whether closer alignment and regulatory coordination can bolster risk management efficiency, eliminate unnecessary market fragmentation, and strengthen customer protections under their statutory authorities. CFTC Chairman Michael S. Selig noted that closer cooperation between the two regulators regarding portfolio margining has the potential to unlock untapped capital while maintaining robust risk management and market safeguards. SEC Chairman Paul S. Atkins emphasized that harmonizing regulatory frameworks could prevent jurisdictional overlap from constraining financial innovation. He highlighted that cross-margining presents an opportunity to release liquidity currently partitioned across separate accounts. The joint consultation covers a broad spectrum of topics, including existing portfolio margining models, cross-product offsets, customer protection considerations, collateral and capital treatment, risk management methodologies, clearing agency and derivatives clearing organization (DCO) operations, and broader impacts on market liquidity and competition. Market participants and the public have been invited to submit comments on the proposed topics. The public comment window will remain open for 60 days following the publication of the joint notice in the Federal Register.