UK gets round to IM timetable update
(Last updated: )
The PRA and FCA yesterday launched a joint consultation on whether to align UK EMIR margin requirements with the rest of the world and continuing market practice. One would hope that if any responses are received by the 19 May 2021 deadline, they would be unanimously supportive. The consultation covers the following aspects:
IM phase- in deadlines and thresholds
- The removal of the “old” the Tuesday 1 September 2020 phase 5, and splitting it into two phases to assist with Covid-19 mitigation
- The introduction of a “new” 1 September 2021 phase 5 applicable to firms with over €50 billion AANA
- The introduction of a “new” 1 September 2022 phase applicable to firms with over €8 billion AANA
Exemptions
- The PRA/FCA propose to exempt physically settled FX forwards and swaps from the VM regime. The requirement would only apply to “institutions” as defined in Article 4(1)(3) of Capital Requirements Regulation (CRR) (or those 3rd country firms, that would be so if if established in the UK)
- The PRA/FCA propose extending the temporary exemption for single-stock equity and index options until 4 January 2024, as per the EU derogation
- Note that the derogation in respect of intragroup transactions is separately addressed in “The Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2019’”
Obviously, the above is entirely in line with much earlier BCBS/IOSCO recommendations and EU amendments. The proposed changes would be effective on publication of a final technical standards instrument, planned for 1 July 2021.
It’s hard to imagine any affected parties waiting with bated breath for the result.
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