On March 3, ISDA, the Alternative Investment Management Association and the Investment Association sent a follow-up letter to the Bank of England and the Prudential Regulation Authority about making permanent the UK European Market Infrastructure Regulation temporary exemption for certain equity options from exchanging initial margin and variation margin.
In the letter, the associations highlight that single stock equity options and index equity options play a significant part in the real economy and are used for multiple purposes aside from transactions between dealers, including hedging exposure to the purchase price in the context of a merger and acquisition transaction or share buy-back by companies. The associations’ members believe the rationale for the original temporary exemption remains valid and that alignment with the US is important to avoid disruption to cross-border business.
The associations request that UK authorities communicate their intentions as soon as possible to avoid the damaging effects of a cliff edge on January 4, 2024.
Documents (1) for Letter to PRA and BOE on UK EMIR Equity Option Exemption
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