Derivatives: The year ahead for U.S. commercial end users, funds, and other financial end users

• In the beginning of 2021, we expect swap dealers to contact you, if they have not already, regarding the ISDA 2020 IBOR Fallbacks Protocol (the Protocol).
• For those that are financial end users, on March 1, 2021, the three-month calculation period begins to determine whether your corporate group’s average aggregate notional amount of derivatives (AANA) exceeds the US$50 billion threshold and puts you in scope for the initial margin requirements as of September 1, 2021.
• August 6, 2021 marks the earliest possible compliance date for security-based swap dealers, ushering in the beginning of the U.S. Securities and Exchange Commission (the SEC) overseeing security-based swap dealers, paralleling the swap dealer regulations of the Commodity Futures Trading Commission (the CFTC). As a result, certain transaction-level requirements such as reporting and margin will begin to apply to security-based swaps, potentially resulting in the need to update additional trade documentation.
• Clients should be aware of the increased usage of electronic signatures and perhaps even the adoption of smart derivatives contracts by dealers.
• Finally, we discuss how the incoming Biden Administration may alter the CFTC’s policy agenda.

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