The International Swaps and Derivatives Association (ISDA), together with the Institute of International Finance (IIF) responded last year to the consultative paper on margin practices (the Response). Back then there were some issues that we acknowledged but could not develop further in the time available.
This paper provides some additional thoughts on these topics. In addition, we also address some discussions within industry over the last year.
In summary, we cover:
- Intraday variation margin (VM) collection practices: We consider the potential costs and benefits of CCPs paying out intraday margin, and note that there are pros and cons that need to be discussed with participants in each market.
- Measurement of procyclicality: To support comparability between models, measurement of procyclicality should be easy to implement and to understand.
- Governance considerations around anti-procyclicality (APC) tools: We flag the importance of governance of anti-procyclicality (APC) tools.
- Notice for margin rate increases: We consider whether CCPs can provide advance notice of margin rate changes, especially if the use VaR models.
- Forward-looking margin transparency: We propose simple scenarios as a basis for forward-looking margin simulators.
Documents (1) for Additional Thoughts on Margin Practices
Latest
ISDA Trading and Treasury Forum: CEO Remarks
ISDA Derivatives Trading and Treasury Forum London, September 16, 2025 Opening Remarks Scott O’Malia ISDA Chief Executive Officer Good morning, and welcome to the ISDA Derivatives Trading and Treasury Forum. Thank you to CME Group for partnering with us...
Recognition of Cross-product Netting is Critical
US regulators are in the process of making important changes to the regulatory capital framework by proposing modifications to the enhanced supplementary leverage ratio, which should help stop it from acting as a non-risk-sensitive constraint on bank capacity – a...
ISDA, GFXD Response to FCA on SI Regime
On September 10, ISDA and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association responded to the Financial Conduct Authority's (FCA) consultation paper CP25/20 on the systematic internalizer (SI) regime for derivatives and bonds. ISDA and the...
ISDA, IIF Response to PRA on Market Risk Framework
On September 12, ISDA and the Institute of International Finance (IIF) submitted a joint response to the Prudential Regulation Authority’s (PRA) consultation on adjustments to the market risk capital framework (CP 17/25). ISDA and the IIF strongly believe the market...