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House OKs Margin Exemption

Even if measure becomes law, corporate end users of derivatives could face higher costs. (Michael Bopp of Gibson Dunn & Crutcher)

By John Hintze | Updated on March 30, 2012
The U.S. House of Representatives passed a bill this week that exempts corporate end users of derivatives from margin requirements. End users are still likely to face higher costs for uncleared swaps, though, depending on how other Dodd-Frank Act proposals pan out.

The measure, H.R. 2779, sponsored by Reps. Steve Stivers (R-Ohio) and Marcia Fudge (D-Ohio), was approved March 26 on a 370-24 vote. The exemption was removed at the eleventh hour from Dodd-Frank, which has been interpreted by banking regulators as requiring margin for some end users.

The Senate has yet to take up a similar bill to reinstate the exemption. Michael Bopp, a partner at Gibson Dunn & Crutcher and counsel to the Coalition for Derivatives End-Users, says the coalition is still searching for a Senate sponsor.

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