EC says IM full speed ahead

Risk magazine (subscription) reports an email statement from Patrick Pearson, head of the financial market infrastructure and derivatives unit at the EC, that there are no plans to delay Phases 5 and 6 of IM.

“The amendments to the current regulatory technical standard on margins to implement the internationally agreed timeframe are currently in the final stages of the adoption process. They can be expected to be adopted by the European Commission shortly. They will then be sent to the Council and the European Parliament as usual for scrutiny, before being published in the Official Journal,”

Mr Pearson is far from being a minor functionary and the EC is typically univocal on major Regulatory matters. Equally, we have to assume that Regulators are still coordinating on areas where its lack would lead to injurious liquidity fragmentation. Given the rapidly-evolving circumstances globally, it may seem surprising that the EC has nailed it’s colours to the mast in respect of IM deadlines.

Market participants should take Mr Pearson at his word, it would be highly speculative to take the foot off the IM accelerator by gambling on a change in IM deadlines. There remains the possibility that compliance enforcement may be relaxed post-deadline, an easier process for many Regulators to implement. However, the unconfirmed possibility of gentler enforcement does not offer the prospect for project relaxation.

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