promote its economic mandate of full employment and price stability. however, because there seems to be considerable interest in the income produced by the portfolio, let me touch on it briefly. given the uncertainty about how the balance sheet and interest rates may evolve, there is a wide range of outcomes for the income stream from the soma portfolio. 13 at this point, if interest rates and the balance sheet were to unfold in the manner that appears to be expected by market participants, the asset purchase programs should produce a substantial amount of cumulative income. the soma annual report for 2010 presents some projections for the portfolio income under an illustrative set of assumptions for the evolution of interest rates and the balance sheet. 14 under that projection, the portfolio produces about $ 500 billion of cumulative income over the period from 2009 to 2018, which is about $ 90 billion in excess of what we project would have been realized in the absence of asset purchases. of course, the realized stream of income could differ substantially from these projections, depending on how interest rates and the balance sheet evolve. in any event, it is worth repeating that the realized income is much less important than the economic outcomes that are achieved from the programs. conclusion i hope these comments have provided you with some insights into how the soma portfolio has been managed to date and some perspectives on its evolution going forward. in general, the federal reserve will continue to have a meaningful presence in the treasury market and in the agency debt and agency mbs markets for a number of years. however, with effective communications about potential balance sheet actions and careful implementation of any such actions by the desk, the markets should be able to adjust to the evolution of the soma portfolio without considerable problems. thank you. all soma income is remitted to treasury after paying for the operating expenses and capital needs of the federal reserve. of course, the federal reserve is being compensated for assuming this risk in the same manner as other market participants, because the assets were obtained at market prices that embed premiums for the various risks involved. our presence in the market likely reduced these risk premiums, but they appear to have remained positive on average for the assets purchased. see “ domestic open market operations during 2010 ”, a report by the markets group of the federal reserve bank of new york, march 2011. bis central bankers ’ speeches

variation margin requirements for swap dealers and major swap participants ( swap entities ) on swaps that are not centrally cleared. these requirements are intended to ensure that the counterparty risks inherent in swaps are prudently limited and not allowed to build to bis central bankers ’ speeches unsustainable levels that could pose risks to the financial system. in addition, requiring all uncleared swaps to be subject to robust margin requirements will remove economic incentives for market participants to shift activity away from contracts that are centrally cleared. the federal reserve and four other u. s. agencies originally issued a proposed rule to implement these provisions of the dodd - frank act in april 2011. following the release of the original proposal, the bcbs and the international organization of securities commissions began working to establish a consistent global framework for imposing margin requirements on uncleared swaps. this global framework was finalized last september. after considering the comments that were received on the april 2011 u. s. proposal and the recently established global standards, the agencies issued a reproposal last week. under the reproposal, swap entities would be required to collect and post initial and variation margin on uncleared swaps with another swap entity and other financial end user counterparties. the requirements are intended to result in higher initial margin requirements than would be required for cleared swaps, which is meant to reflect the more complex and less liquid nature of uncleared swaps. in accordance with the statutory requirement to establish margin requirements regardless of counterparty type, the reproposal would require swap entities to collect and post margin in connection with any uncleared swaps they have with nonfinancial end users. these requirements, however, are quantitatively and qualitatively different from the margin requirements for swaps with financial end users. specifically, swaps with nonfinancial end users would not be subject to specific, numerical margin requirements but would only be subject to initial and variation margin requirements at such times, in such forms, and in such amounts, if any, that the swap entity determines is necessary to address the credit risk posed by the counterparty and the transaction. there are currently cases where a swap entity does not collect initial or variation margin from nonfinancial end users because it has determined that margin is not needed to address the credit risk posed by the counterparty or the transaction. in such cases, the reproposal would not require a change in current practice. the agencies believe that these requirements are consistent with