The FCA welcomes the statements made by the European Supervisory Authorities(link is external) and the International Organization of Securities Commissions(link is external) on 23 February 2017.
The European Supervisory Authorities (ESAs – European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority) have published a statement in response to industry requests relating to operational challenges in meeting the deadline of 1 March 2017 for exchanging variation margin.
Bill: Press release attached below.
First, the good news. The number of credit support annexes (CSAs) that had been amended to meet new regulatory variation margin requirements more than doubled during the past week. The bad news is the overall proportion is still very low, at just 4.43%. With less than three weeks before deadline, it’s difficult to see how every one of the thousands of firms affected will be ready and able to continue accessing derivatives markets from March 1.
Securities financing transactions (SFTs) can contribute to leverage in the financial system. One of the main issues related to leverage is procyclicality, which can manifest itself in many different ways and can incorporate risks for financial stability.
This new information changes the timeline we published previously, see the commentary below from DRS and be prepared for sudden change.
Today’s Risk magazine quotes a number of unofficial sources who expect the EC to finalise the non-cleared margin RTS at a meeting on 4 October. The adoption would then be published in the OJ late November, entering into force 20 days later and entering into application one month after that. This projected timeline would result […]
The three European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs), published today their Opinion addressed to the European Commission expressing disagreement with its proposed amendments to the final draft Regulatory Technical Standards (RTS) on risk mitigation techniques for OTC derivatives not cleared by a central counterparty, which were originally submitted for endorsement on 8 March 2016.
It’ll probably come as no surprise that one of the major preoccupations for ISDA and many of its members over the past week has been the implementation of non-cleared margin requirements. On September 1, 20 or so of the largest derivatives users began exchanging initial and variation margin on their non-cleared trades under rules that took effect in the US, Japan and Canada. Barring some teething problems, the rollout went relatively smoothly given the scale of the change and the time given to the industry prepare for it.
With today being the start of the new era of OTC business, the bilateral margin rules are now applicable in the US, Japan and Canada, you might like to learn more about the new margin platforms from our Breakfast Briefing we held earlier in the year. You can watch the video sessions here including a piece by David White at TriOptima which is one side of the Blazer coin.
Harmonization and coordination are easy enough to identity as objectives, but harder to achieve. Regulators can take a lot of credit, then, for their efforts to develop a coordinated global margining framework for non-cleared derivatives. As part of that, each national regulator agreed to adopt the same implementation schedule, setting a start date of September 1 for the biggest banks.
The European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs) published today the final draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation (EMIR).
THIS MEANS THE RULES FOR MARGINING UN-CLEAR BILATERAL OTC BUSINESS, AND IS GENERALLY SEEN AS A BIG DEAL. I assume these draft rules then need approval by the European commission before being adopted officially.