Jurisdictions across the globe have implemented margin requirements for non-cleared derivatives, largely in line with the standards agreed by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO). Since implementation of the first phase of the requirements in 2016, the US, European Union (EU), Japan and others have extended the requirements in line with the phase-in schedule agreed by BCBS/IOSCO.
Consistency in requirements has enabled ISDA to develop and implement industry solutions to aid compliance, including standard initial margin (IM) and variation margin (VM) documentation, the ISDA Standard Initial Margin Model (ISDA SIMMTM) and ISDA Create – IM, an online tool for negotiating and executing IM documents.
Nonetheless, differences in the implementation across jurisdictions still exist in certain key areas – for example, eligible collateral, settlement time frames and treatment of inter-affiliate transactions. These inconsistencies create unnecessary complexity and costs for derivatives users and contribute to market fragmentation.
This paper highlights the main areas of difference in the implementation of margin requirements for non-cleared derivatives across jurisdictions, and makes recommendations on how to resolve them.
Click on the attached PDF to read the paper.
Documents (1) for Implementation of Margin Requirements and Market Fragmentation
Latest
ISDA Response on Hedge Accounting Guidance
On August 14, ISDA responded to an exposure draft from the Financial Accounting Standards Board (FASB). ISDA broadly supports the FASB’s proposed targeted improvements to hedge accounting, including allowing interest rate hedging of held-to-maturity (HTM) debt securities, recognizing all Secured...
Joint Response to EBA Consultation
On August 12, ISDA and the Association for Financial Markets in Europe (AFME) responded to the European Banking Authority’s discussion paper on certain taxonomy key performance indicators (KPIs) and other aspects of the Disclosures Delegated Act under Article 8 of...
Response to JSCC on Clearing Fund Consolidation
On August 12, ISDA responded to the Japan Securities Clearing Corporation’s (JSCC) consultation on its proposal to consolidate clearing fund consumption, calculation and deposit segmentation across six clearing qualifications under the Financial Instruments and Exchange Act. ISDA members broadly support...
Response on CSDD Guidelines
On August 6, ISDA responded to the European Commission’s (EC) consultation on due diligence guidelines under the Corporate Sustainability Due Diligence Directive (CSDDD). While ISDA acknowledges that model contractual clauses can be a helpful resource for in-scope companies, there are...