Response to PRA and FCA on Margin Requirements

On October 18, ISDA, the Investment Association, the Alternative Investment Management Association and the American Council of Life Insurers responded to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) consultation on margin requirements for non-cleared derivatives. In the response, the associations welcome the proposal to extend the temporary exemption from UK margining requirements under BTS 2016/2251 for single-stock equity and index options from January 4, 2024 until January 4, 2026, allowing the PRA and FCA to gather the evidence necessary to create a permanent regime. The associations believe a permanent exemption of equity options from the margin regulatory technical standards is warranted.

The associations also welcome the proposal to rely on existing supervisory powers and the current supervisory framework for assessing initial margin (IM) models and risk management rather than introduce a formal pre-approval requirement. As the final phase-in period for regulatory IM occurred on September 1, 2022, most market participants that intend to use an IM model like the ISDA Standard Initial Margin Model (ISDA SIMM) are already doing so, and this use is subject to oversight under the supervisory framework. Major market participants have been using the ISDA SIMM to calculate regulatory IM since September 1, 2016, and the introduction of a pre-approval requirement at this stage could prove disruptive, creating uncertainty on the permission of UK entities and their counterparties to continue to exchange IM based on the ISDA SIMM.

Documents (1) for Response to PRA and FCA on Margin Requirements

Key IRD Trends from BIS 2025 Survey

This paper highlights changes in over-the-counter (OTC) interest rate derivatives (IRD) markets between April 2022 and April 2025, based on data from the Bank for International Settlements (BIS) Triennial Central Bank Survey. The survey provides a comprehensive view of global...

RMB IRD Growth in Mainland China & Hong Kong

This report analyzes interest rate derivatives (IRD) activity in mainland China and Hong Kong, with a particular focus on renminbi (RMB)-denominated IRD. It examines market growth, structure and integration across onshore and offshore centers, and places these developments within the...