BCBS and IOSCO Delay Uncleared Margin Implementation

Commentary by Nihal Patel

The Basel Committee on Bank Supervision and IOSCO ("BCBS-IOSCO") deferred the final implementation phases of initial margin ("IM") requirements for uncleared derivatives.

As previously covered, industry associations, including ISDA and SIFMA, among others, urged the BCBS-IOSCO to issue a public recommendation to global regulators requesting an extension of the implementation deadlines for the Phase 5 and Phase 6 initial margin requirements for uncleared derivatives.

In an updated version of the Margin Requirements for Non-centrally Cleared Derivatives, BCBS-IOSCO stated that the final implementation ("Phase 6") will commence on September 1, 2022, with an intermediary step ("Phase 5") commencing on September 1, 2021 (rather than 2021 and 2020, respectively).

Commentary

While this does not have the force of law, market participants should have a reasonable expectation that this will be implemented by most relevant regulators (including the CFTC and US Prudential Regulators), who have generally followed the BCBS-IOSCO derivatives margin recommendations. (Except for the SEC, which has charted its own path.)

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