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EMIR margin rule changes not marginal

The EBA/ESAs have launched a second consultation on the draft RTS on rules for uncleared margin under EMIR. The consultation contains a number of material changes as a consequence of industry feedback from its April 2014 predecessor. A short summary of the most notable revisions follows:

  • 3rd Country NFC- exemption. Non-EU, non-financial companies that are below the clearing threshold will not be subject to EMIR’s uncleared margin requirements
  • No haircuts for FX cash collateral. The consultation clarifies that cash collateral in a currency other than that of the related trade will not be subject to an FX haircut
  • CCPs exempted for CM default trades. A proposed exemption for trades initiated by CCPs consequent upon the default of a Clearing Member.
  • Concentration limits adjusted for Government Bonds. The 50% concentration limit for non-cash collateral will only apply over a €1 bn. threshold in the specific case of government bonds
  • Adjustments to uncleared margin model. A number of amendments intended to facilitate the development and implantation of internal models
  • Confirmation of EU conformity to BCBS/IOSCO international timeline

The second consultation runs until 10 July 2015– given its focus on a limited set of topics, further adjustments are expected to be minimal. The final draft will be presented for EC approval in September or October.

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