Rule 18a-3, Security-Based Swap Margin Requirements for Non-Prudentially Regulated Entities

Rule 18a-3, 17 CFR 240.18a-3, establishes minimum margin requirements for nonbank security-based swap dealers (“SBSDs”) and nonbank major security-based swap participants (“MSBSPs”) for non-cleared security-based swaps. Under Rule 18a-3(e), nonbank SBSDs are required to monitor the risk of each account that holds non-cleared security based swaps for a counterparty and to establish, maintain, and document procedures and guidelines for monitoring the risk of accounts as part of its risk management control system required under Exchange Act Rule 15c3-4. In addition, Rule 18a-3(d)(2) provides that a nonbank SBSD seeking approval to use a model to calculate initial margin will be subject to an application process consistent with Exchange Act Rule 15c3-1e and Exchange Act Rule 18a-1(d), as applicable, governing the use of internal models to compute net capital. The information collections in Rule 18a-3 are recordkeeping requirements and are designed to facilitate the collection of adequate levels of margin assets by nonbank SBSDs to protect them against counterparty default on both current and potential future exposures.

The latest form for Rule 18a-3, Security-Based Swap Margin Requirements for Non-Prudentially Regulated Entities expires 2028-09-30 and can be found here.

Rule 18a-3(e) – Counterparty Risk Monitoring Procedures

Federal Enterprise Architecture: Economic Development - Financial Sector Oversight