On June 30, 2016, ISDA published a Regulatory Margin Self-Disclosure Letter (2016 SDL). This self-disclosure letter (SDL) is a standard form letter designed to help parties comply with regulatory margin requirements for uncleared swaps in the US, EU, Japan, Canada, and Switzerland (the jurisdictions) by making certain elections and representations.

Update: On January 15, 2021, ISDA published the ISDA US Self-Disclosure Letter (US SDL) to assist firms in determining whether compliance with certain CFTC, prudential, and/or SEC margin rules is required, as well as whether a firm's trading relationships are or will become subject to US margin requirements. The US SDL supersedes the US portion of the 2016 SDL for purposes of determining applicability of US margin requirements. For details, see Legal Update, ISDA Publishes US Self Disclosure Letter for Margin Compliance. The 2016 SDL remains applicable for margin rules in the non-US jurisdictions.

The 2016 SDL is designed to:

Compliance dates for rules requiring the exchange of initial margin and variation margin between certain parties to uncleared derivatives are approaching in the US and certain other jurisdictions (though the EU recently delayed its rules – see Legal Update, EU Delays Margin Rules for Uncleared Swaps).

The 2016 SDL assists parties with the exchange of the information that is necessary to establish the extent to which their trading relationship is or will become subject to uncleared swap margin requirements in any of the jurisdictions. The 2016 SDL includes a specific module for each jurisdiction so that parties can choose only to complete the module that corresponds to the jurisdiction(s) applicable to their transaction.

The 2016 SDL provides a format for each party to make certain elections and representations, and respond to a standard set of questions, in order to determine if and how margin regulations apply to transactions between it and each of its uncleared swap counterparties. Application of the rules in each jurisdiction is based on the regulatory status of one or both of the counterparties.

For further detail on the 2016 SDL, see Practice Note, The New ISDA® Credit Support Annexes and Global Margin Compliance for Uncleared Swaps: ISDA Margin Compliance Self-Disclosure Letter (SDL).

For details on the US margin rules, see Practice Note, The Dodd-Frank Act: Margin Posting and Collection Rules for Uncleared Swaps.

For information on the EU margin rules, see Practice Note, EMIR: Risk Mitigation Requirements for Uncleared OTC Derivatives.