On Wednesday, five federal agencies reopened the comment period on a proposed rule to establish margin and capital requirements for the swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants they oversee.

The comment period, which originally ended in July 2011, will now be open until Nov. 26, 2012. Re-opening of the comment period is intended to allow affected entities to better analyze the issues they face in light of a Consultative Document on margin requirements for non-centrally-cleared derivatives recently published for comment by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO).

On May 11, 2011, the agencies—the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Farm Credit Administration, and Federal Housing Finance Agency—published a notice of proposed rulemaking that would establish minimum margin and capital requirements in the Federal Register. That rule would apply to entities that are overseen the five regulators and comply with requirements presented in sections 731 and 764 of the Dodd-Frank Act.

Applying the proposed margin requirements to transactions involving foreign swap entities or foreign counterparties could subject those transactions to multiple, and potentially conflicting, requirements and raise questions of competitive equality among U.S. and foreign firms. Margin standards that are developed and harmonized on an international basis could help address those issues, the agencies wrote in their joint statement.

In October 2011, the BCBS and IOSCO established a Working Group on Margin Requirements to develop harmonized international margin standards for non-cleared swaps. On July 6, they published “Margin Requirements for Non-Centrally-Cleared derivatives” outlining possible margin requirements for non-centrally-cleared derivatives.

The Consultative Document addresses a number of topics, including: the instruments that would be subject to margin requirements; the market participants that would be subject to margin requirements; initial margin and variation margin methodology; eligible collateral; treatment of provided margin; treatment of inter-affiliate transactions; and treatment of cross-border transactions.BCBS and IOSCO are requesting comments on these proposals by Sept. 28.

As part of the international efforts to implement consistent global standards for non-centrally-cleared derivatives, the five U.S. agencies intend to consider the final policy recommendations of the BCBS and IOSCO when adopting final U.S. rules for margin for non-cleared swaps. Detailed instructions for submitting a comment can be found here.