On July 20, ISDA responded to a consultation paper from the Clearing Corporation of India Ltd (CCIL) on a proposal to introduce stress loss margin (SLM).
ISDA members are supportive of the introduction of SLM for the derivatives segment as it collects higher margins from members, driving stress losses beyond a certain limit, and reduces loss mutualization among members by limiting their default fund requirements, moving towards a defaulter pay model. This is a positive development aligning CCIL’s risk management practices with that of global CCPs such as LCH and Eurex.
ISDA also highlights some suggestions to help members adapt to the SLM requirements, addressing procyclicality of SLM to ensure adequacy of the default fund, as well as introducing SLM in the non-derivatives segment. Comments also included a clarification on the impact of threshold parameters and a request to accept government bond securities as one of the resources accepted to settle SLM.
Documents (1) for ISDA Responds to CCIL Consultation on Stress Loss Margin
Latest
How and Why Pension Funds Use Derivatives
With over $58 trillion in assets globally, pension fund managers are major participants in financial markets and play a vital role in helping to provide post-retirement incomes for plan employees. Meeting such an important goal requires careful consideration of investment...
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
Climate Risk Scenario Analysis Phase 4
Climate scenario analysis has become a useful tool for banks and financial institutions to understand the short- and long-term financial risks associated with climate change, particularly in light of evolving regulations and an increased emphasis on reducing the impact of...
ISDA & EMTA Market Practice 45
ISDA & EMTA jointly published the attached updated market practice regarding the determination of barrier events for Brazilian Real non-deliverable continuously monitored barrier option transactions.