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Less marginal- final draft IM/VM RTS delivered

The European Supervisory Authorities (ESAs) comprising the EBA, ESMA, and EIOPA yesterday released the final draft RTS on margin for non-cleared derivatives. The long-awaited RTS details margin requirements for uncleared derivatives under Article 11 EMIR.  The final draft implementation timeline is unchanged, the requirements will enter into force on 1 September 2016, subject to the following phase-in:

Variation Margin (VM)

  • 1 September 2016 for entities with group’s notional amount of derivatives above EUR 3 trillion
  • 1 March 2017 for all other entities

Initial Margin (IM)

  • 1 September 2016 for entities with group’s notional amount of derivatives above EUR 3 trillion
  • 1 September 2017 for those above EUR 2.25 trillion
  • 1 September 2018 for those above EUR 1.5 trillion
  • 1 September 2019 for those above EUR 0.75 trillion
  • 1 September 2020 for those above EUR 8 billion

The final draft has been submitted to the European Commission which has three months to endorse the RTS before passing it to the Parliament and the Council for their objection period. It is unlikely to encounter any obstruction at these stages.

Although we do not expect any surprises in the final draft, any significant changes from previous “near-final” drafts will be highlighted and analysed in a subsequent post. In addition, the DRS Research desk shall shortly be posting a comprehensive cross-jurisdiction comparison of uncleared margin rules.

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