A covered swap entity shall execute trading
documentation with each counterparty that is either a swap entity
or financial end user regarding credit support arrangements that:
(a) Provides the covered swap entity and its counterparty with the
contractual right to collect and post initial margin and variation
margin in such amounts, in such form, and under such circumstances
as are required by this subpart, and at such time as initial margin
or variation margin is required to be collected or posted under section
237.3 or section 237.4, as applicable; and
(b) Specifies:
(1) The methods, procedures,
rules, and inputs for determining the value of each non-cleared swap
or non-cleared security-based swap for purposes of calculating variation
margin requirements; and
(2) The
procedures by which any disputes concerning the valuation of non-cleared
swaps or non-cleared security-based swaps, or the valuation of assets
collected or posted as initial margin or variation margin, may be
resolved; and
(c) Describes the methods, procedures,
rules, and inputs used to calculate initial margin for non-cleared
swaps and non-cleared security based swaps entered into between the
covered swap entity and the counterparty.
