As you are no doubt aware, the yield on ten-year Federal bonds (Bunds) slipped into negative territory in the middle of last year – for the first time ever, incidentally. So, to generate one percentage point more of yield, banks today need to extend maturities to a considerably greater extent than previously – with corresponding consequences for interest rate risk.
Capital and margin requirements are central to the prudential regulation of financial institutions active in derivatives markets as well as to the internal risk-management processes of such firms. Title VII requires that the CFTC, the SEC, and prudential regulators adopt capital and margin requirements for the noncleared swap activity of swap dealers and major swap participants.