Implementation of Margin Requirements and Market Fragmentation

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

ISDA AGM Studio: Jacques Vigner, BNP Paribas

Jacques Vigner, ISDA board member and chief strategic oversight officer for global markets at BNP Paribas, speaks with Mark Gheerbrant, global head of risk and capital at ISDA, on the key obstacles to a consistent, risk-appropriate capital framework and how to...

ISDA AGM Studio: Future Leaders in Derivatives

Following publication of the latest whitepaper from the ISDA Future Leaders in Derivatives (IFLD) program, Collateral and Liquidity Efficiency in the Derivatives Market: Navigating Risk in a Fragile Ecosystem, Joel Clark talks to IFLD participants Koen Ottenheijm, senior treasury and...