In response to the global financial crisis of 2008-2009, the Group of 20 nations agreed to a financial regulatory reform agenda covering the over-the-counter derivatives markets and market participants, among them recommendations for the implementation of margin requirements for non-centrally cleared derivatives. The Basel Committee on Bank Supervision and International Organization of Securities Commissions subsequently developed and finalized their Final Framework on Margin Requirements for Non-Centrally Cleared Derivatives, which sought to establish international standards for such requirements, to be phased in over time.
As agreed in the revised implementation timeline to the final framework, the uncleared margin rules (UMR) began to be phased-in on September 1, 2016 for the largest market participants. Broader implementation of variation margin (VM) requirements occurred in March 2017, while initial margin (IM) requirements continue to phase-in annually through 2020.
The final phases of the UMR will occur on September 1 of 2019 and 2020, when a large number of additional counterparties will be brought into scope for IM requirements. The fundamental challenges for market participants during the final phases of IM implementation are distinct from and more intense than those experienced in previous phases, and therefore likely to result in broader systemic impact.
In this paper, ISDA and the Securities Industry and Financial Markets Association (SIFMA) seek to highlight the significant challenges market participants will encounter during the final phases of IM implementation and identify the key tasks and resulting hurdles that must be overcome to ensure an orderly implementation that avoids disruption to the functioning of the derivatives market.
Documents (1) for Initial Margin for Non-Centrally Cleared Derivatives: Issues for 2019 and 2020
Latest
The ISDA Notices Hub: One Year On
In times of war, armed forces are often required to mobilize over large distances at short notice. The most dreaded response to the question of how they are to be transported is ‘by LPC’, meaning ‘leather personnel carrier’ – the...
ISDA Response to OSC Call for Feedback
On June 26, ISDA responded to the Ontario Securities Commission’s (OSC) consultation on facilitating access to its regulatory framework and reducing the burden for capital markets participants by publishing a machine-readable dataset of regulatory instruments. ISDA's comments are supportive of...
ISDA Comments on EP's MISP Draft Reports
On July 15, ISDA shared comments with policymakers in the European Union on the European Parliament’s (EP) draft reports by Member of the European Parliament (MEP) Markus Ferber and MEP Eero Heinäluoma on the Market Integration and Supervision Package (MISP)....
Building Markets, Creating Opportunity
Deep and liquid derivatives markets are fundamental to the development of well-functioning financial markets and healthy economies. They support lending, investment and financial stability, creating the certainty needed for economic growth. But strong derivatives markets do not emerge by chance....