ISDA Response to ESMA 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 transparency but believe transparency can be achieved in a more efficient manner. EMIR 3.0 and the proposed ESMA rules set an architecture under which central counterparties (CCPs) provide model transparency and simulators to clearing service providers, clearing members and clients providing clearing services, and these clearing service providers provide transparency and simulations to clients. ISDA proposes a more direct approach whereby CCPs make model documentation and simulators available directly to clients.

A sample of seven ISDA members that provide clearing services in the EU showed that only 7% of clients on average pay a margin multiplier or any form of additional margin requirements higher than CCP margin requirements. Access to CCP simulators should therefore suffice for most clients. Additionally, clearing service providers could share worked hypothetical examples of how these factors could apply in practice by providing examples of ‘If X occurs, then Y multiplier may be applied’. When a client is charged a client-specific add-on, then clearing service providers can provide further information on the multiplier upon request or provide historical illustrative examples.

Documents (1) for ISDA Response to ESMA on Margin Transparency

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...

Paper on Proposal 6 on Margin Transparency

On November 16, ISDA published a document that looked at proposal 6 in the final Basel Committee on Banking Supervision (BCBS), Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) report on margin transparency. Proposal...

Tender Issued for DC Administrator Role

ISDA and the Credit Derivatives Governance Committee have issued an invitation to tender for an independent regulated entity to serve as the administrator for the Credit Derivatives Determinations Committees (DCs), which includes assuming the role of DC secretary. The DC...