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Swap margin delay non-shock

The BCBS\IOSCO twins confirmed yesterday that the imposition of margin requirements for uncleared swaps will be delayed by nine months. The phase-in schedule for the mandatory posting of initial and variation margin will now begin in September 2016, while still adhering to its four-year schedule, beginning with “the largest, most active and most systemically important derivatives market participants”. The Working Group on Margin Requirement’s final framework called for initial implementation by 1 December 2015. Although the US, EU and Japan have published proposals, there are no final national rules yet in place, much less in force. As always, the devil is in the details; while banks cannot be accused of over-enthusiasm in their compliance with the raft of new regulations, it is at best challenging to prepare for rules which remain unfinished. ISDA was quick to welcome (and share credit for) the extension, “the revised implementation date should give firms additional time to develop, implement and test new systems. We are grateful that regulators have listened to concerns expressed by ISDA and other market participants on this issue.” Given the many legal, operational and technological challenges posed by the margin requirements, even a delay of nine months looks optimistic.

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