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Update: Margin rules delay is in the air

The industry’s call for a delay in the margin rules, expected to apply from 1 December 2015, may finally receive a positive response from the regulators[1].

These rules on risk-management of uncleared derivatives will impose collection of Initial Margin (IM) and Variation Margin (VM). The global phase-in timeline was set by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO)[2].

As a departure from the global timeline is likely to cause further inter-jurisdictional fragmentation, the EU might be rallying other key regulators to its cause. The ideal action would involve a revised timeline vetted by BCBS/IOSCO.

In light of the developments on this issue, the 1 December 2015 deadline may warrant a question mark, but not yet a strike-through.

[Update: On 23 January 2015, Tim Massad, chairman of the CFTC hinted[3] that a delay in the margin rules may also be possible in the United States, offering additional momentum for a coordinated delay of the margin rules.]

[1] Hat tip to Reuters for sharing the words of Steven Maijoor, chair of ESMA, who confirmed on 19 January 2015 that this challenging deadline is being looked into by the European regulator

[2] BCBS/IOSCO Margin requirements for non-centrally cleared derivatives are discussed in an earlier post

[3] Hat tip to the FT

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