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

ISDA Response on Clearing Costs

On September 8, ISDA responded to consultation by the European Securities and Markets Authority (ESMA) on a draft regulatory technical standard on clearing fees and associated costs (article 7c(4) of the European Market Infrastructure Regulation (EMIR)). In the response, ISDA...

ISDA Response on Margin Transparency

On September 8, ISDA responded to a consultation by the European Securities and Markets Authority (ESMA) on a draft regulatory technical standard under the European Market Infrastructure Regulation (EMIR 3.0) on margin transparency requirements. ISDA’s members are supportive of margin...

Paper on Liquidity Assessment for Single-name CDS

On September 5, ISDA submitted a paper to the European Securities and Markets Authority (ESMA) and the European Commission in support of its earlier response to ESMA’s Markets in Financial Instruments Regulation (MIFIR) review consultation package 4 (CP4) on transparency...

Response to EC on Delegated Regulation

On September 4, ISDA responded to the European Commission’s (EC) consultation on amendments to delegated regulation (EU) 2017.567. The key area of interest for ISDA was the proposed insertion of a new article 16a that establishes what constitutes a post-trade...