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Margin requirements for non-centrally cleared derivatives – Second consultative document

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Margin requirements for non-centrally cleared derivatives – Second Consultative Document, February 2013

  • “The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) have today published a second consultative paper which represents a near-final proposal on margin requirements for non-centrally-cleared derivatives. Several features of the near-final proposal are intended to manage the liquidity impact of the margin requirements on financial market participants. The proposed requirements would allow for the introduction of a universal initial margin threshold of €50 million. The results of a quantitative impact study (QIS) conducted in 2012 indicate that application of the threshold could reduce the total liquidity costs by 56% relative to a margining framework with a zero initial margin threshold, which was initially proposed in the July 2012 first consultative paper. Today’s proposal also envisages a gradual phase-in to provide market participants with sufficient time to adjust to the requirements. The requirement to collect and post initial margin on non-centrally cleared trades is proposed to be phased in over a four year period beginning 2015 and begin with the largest, most active and most systemically risky derivative market participants.”
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