CFTC Subcommittee Unanimously Backs DLT, Tokenized Assets as Derivatives Collateral
The CFTC's Global Markets Advisory Committee (GMAC) subcommittee on digital assets has voted unanimously in favor of three recommendations to embrace Distributed Ledger Technology (DLT) and tokenized assets as collateral for margin in derivatives markets.
Currently, derivatives markets mandate the posting of margin to mitigate price swing risks, including initial margin and variation margin. However, the use of non-cash collateral, currently allowed by the CFTC, is limited due to transfer delays and office hour restrictions.
The subcommittee, chaired by an unnamed individual, voted 27-0 to adopt DLT and tokenized assets as collateral. This move aims to address the challenges posed by traditional non-cash collateral. The proposals now await adoption by the full GMAC Committee before the CFTC considers their implementation.
The CFTC's GMAC subcommittee has paved the way for a potential shift in derivatives markets, endorsing DLT and tokenized assets as collateral for margin. The full GMAC Committee will now review these proposals, potentially leading to a more efficient and flexible margin system.
