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Singapore and Australia finalise VM compliance

To rephrase the old complaint- you wait for ages for a WGMR update then two arrive at once. The MAS in Singapore and the APRA in Australia have today issued revised and final timelines for compliance with their respective non-cleared margin rulesets. The APRA announced that Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivative (CPS 226) will commence on 1 March 2017. Variation Margin requirements will benefit from a six-month “transition period”. Transactions after the 1 March 2017 will be in scope but compliance will not be mandatory until 1 September 2017. The MAS has taken a slightly more urgent approach- their own Guidelines will apply from 1 March 2017 with a six month transition period during which covered entities “will be expected to make progress to meet the Guidelines as soon as practicable”. Covered entities will be expected to begin mutual margining as soon as the necessary documentation and other arrangements are in place. Both effectively choosing a single, but differentially delayed, VM “Big Bang”.

Any and all clarity, even Singapore’s slightly diffuse version, is to be welcomed with respect to WGMR timelines. The EU Council’s approval of the non-cleared RTS has been widely leaked, although the news is yet to filter through to the OJ. While the Phase 1 application date is now certain not to coincide with the year-end code freeze, time is of the essence to formally confirm the EU schedule.

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