On March 27, 2014, in connection with rules finalized under Section 724(c) of the Dodd-Frank Act, which requires swap dealers (SDs) and MSPs to notify their non-SD/non-MSP swap counterparties of their right to require segregation of any initial margin collateral posted in connection with uncleared swaps entered into between them (see Practice Note, The Dodd-Frank Act: Derivatives Margin Collateral Rules: Title VII Rules on Segregation of Uncleared Swap Margin Collateral), ISDA® released:

Under CFTC Regulation 23.701, SDs and MSPs must notify their non-SD and non-MSP swap counterparties of their right to require the SD or MSP to segregate with an independent third-party custodian the initial margin collateral they post with the SD or MSP in connection with uncleared swap transactions between them (see Legal Updates, Final Rules on Segregation of Initial Margin for Uncleared Swaps Issued by CFTC and Market Advisory on Upcoming Dodd-Frank Collateral Segregation Rules Issued by ISDA).

Note that Section 4s(l) of the CEA sets out the rights of swap counterparties to SDs and MSPs with respect to the segregation of money, securities or other property used to margin, guarantee or otherwise secure uncleared swaps. CFTC Regulation 23.701 covers the obligations of SDs and MSPs with respect to counterparty notification of these segregation rights.