ISDA Submits Letter to BCBS and IOSCO Regarding Concerns with Implementation of Derivatives Rules

ISDA submitted a letter to the Basel Committee on Banking Supervision and IOSCO in which it voiced concerns about the timing issues for margin rules for uncleared swaps. ISDA suggested that the implementation date of the proposed rules should be delayed and that the requirements for variation margin should be phased in over time.

ISDA argues that the initially-proposed effective date of December 2015 is too early, citing significant issues in implementing EU proposals and the time needed for the rulemaking process to run its course in various countries around the world. ISDA requested a period of two years after the rules are clarified and finalized for market participants to have time to put the margin arrangements in place in Europe, Japan and the United States. ISDA further suggested that the implementation dates should not fall in December or January, since financial institutions' internal procedures generally do not allow technological changes to internal systems during those times, given the need to generate annual reports of various types.

ISDA additionally renewed its request for a phase-in period for variation margin, stating that requiring all market participants to be fully compliant with the variation margin rules as of a single compliance date is "unnecessary and potentially systemically dangerous."

See: ISDA Letter to BCBS and IOSCO. See also: Final BCBS and IOSCO Report on Margin Requirements for Non-Centrally Cleared Derivatives (September 2013); SEC Proposed Rule for Capital, Margin, and Segregation Requirements for Security-Based Swap Dealers and Major Swap Participants and Capital Requirements for Broker-Dealers (January 2013); U.S. Bank Regulators' Margin and Capital Requirements for Covered Swap Entities (April 2011). Related news:Basel Committee and IOSCO Release Margin Requirements for Non-Centrally Cleared Derivatives Final Framework (September 3, 2013).