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 Response to FCA on Fund Tokenization
On November 21, ISDA responded to the Financial Conduct Authority’s (FCA) consultation paper CP25/28 on progressing fund tokenization. In the response, ISDA focuses on the use of tokenized assets as both cleared and non-cleared derivatives collateral. Tokenization presents a significant...
ISDA Requests FASB to Consider ASC 815
On November 19, ISDA submitted a request to the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB) to clarify whether FASB Accounting Standards Codification (ASC) 815 does not prohibit using the spot method to assess hedge...
ISDA Response to CFTC Tokenized Collateral and Stablecoin Initiative
ISDA has responded to the CFTC’s Request for Input on the Tokenized Collateral and Stablecoin Initiative, offering perspectives on how tokenization and GENIUS Act–compliant payment stablecoins might contribute to more efficient and resilient collateral practices in derivatives markets. The letter...
Protected: 2025 Year-End Bonus Election Form
This content is password protected. To view it please enter your password below: Password:
