Reflecting strong industry pressure and growing concerns about market structure, the banking agencies have joined others with which they share jurisdiction to propose a significant revision reducing the capital cost of the 2015 margin rule for non-cleared derivatives. This is accomplished via proposed repeal of current inter-affiliate initial-margin requirements with very few restrictions.  However, it is possible that the Fed will tighten overall inter-affiliate transaction restrictions to reduce some of the relief afforded by this NPR.  The NPR also expands the class of swaps designated as legacy swaps grandfathered under current standards to retain their grandfather even if they are amended to replace LIBOR with a new benchmark rate.

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