---
kind: "section"
citation: "17 C.F.R. § 23.159"
title: "17"
number: "23.159"
heading: "Special rules for affiliates."
url: "https://uscodex.org/cfr/17/23.159"
---

# §23.159. Special rules for affiliates.

- (a) **Initial margin.**
  - (1) Except as provided in [paragraph (c)](#c) of this section, a covered swap entity shall not be required to collect initial margin from a margin affiliate provided that the covered swap entity meets the following conditions:
    - (i) The swaps are subject to a centralized risk management program that is reasonably designed to monitor and to manage the risks associated with the inter-affiliate swaps; and
    - (ii) The covered swap entity exchanges variation margin with the margin affiliate in accordance with [paragraph (b)](#b) of this section.
  - (2)
    - (i) A covered swap entity shall post initial margin to any margin affiliate that is a swap entity subject to the rules of a Prudential Regulator in an amount equal to the amount that the swap entity is required to collect from the covered swap entity pursuant to the rules of the Prudential Regulator.
    - (ii) A covered swap entity shall not be required to post initial margin to any other margin affiliate pursuant to [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md).
- (b) **Variation margin.** Each covered swap entity shall post and collect variation margin with each margin affiliate that is a swap entity or a financial end user in accordance with all applicable provisions of [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md).
- (c) **Foreign margin affiliates.**
  - (1) For purposes of this section, the term outward facing margin affiliate means a margin affiliate that enters into swaps with third parties.
  - (2) Except as provided in [paragraph (c)(3)](#c-3) of this section, each covered swap entity shall collect initial margin in accordance with all applicable provisions of [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md) from each margin affiliate that meets the following criteria:
    - (i) The margin affiliate is a financial end user;
    - (ii) The margin affiliate enters into swaps with third parties, or enters into swaps with any other margin affiliate that, directly or indirectly (including through a series of transactions), enters into swaps with third parties, for which the provisions of [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md) would apply if any such margin affiliate were a swap entity; and
    - (iii) Any such outward facing margin affiliate is located in a jurisdiction that the Commission has not found to be eligible for substituted compliance with regard to the provisions of [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md) and does not collect initial margin for such swaps in a manner that would comply with the provisions of [§§ 23.150 through 23.161](/cfr/17/23.150..23.161.md).
  - (3) The custodian for initial margin collected pursuant to [paragraph (c)(1)](#c-1) of this section may be the covered swap entity or a margin affiliate of the covered swap entity.

## Notes

### Source

Source: 81 FR 695, Jan. 6, 2016, unless otherwise noted.

### Authority

Authority: 7 U.S.C. 1a, 2, 6, 6a, 6b, 6b-1, 6c, 6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21. Section 23.160 also issued under 7 U.S.C. 2(i); Sec. 721(b), Pub. L. 111-203, 124 Stat. 1641 (2010).

### Source

Source: 77 FR 2628, Jan. 19, 2012, unless otherwise noted.