GFF: 11th-hour EMIR respite highly likely
25 January 2017 Luxembourg
Image: Shutterstock
Last minute relief for market participants from the looming derivatives margin rules is highly likely, with many expected to miss the 1 March deadline, according to panellists at the Deutsche Börse Global Funding and Financing Summit.
A poll of conference delegates in Luxembourg found that, with just over a month to go until the European Market Infrastructure Regulation’s (EMIR) derivatives margin rules come into force, only 17.3 percent are ready for the deadline.
A further 35 percent said they are still putting their agreements into place, but had already completed their operational changes.
Another bank representative panellist agreed with the prediction of a delay and stated that the 17.3 percent result was a surprisingly positive figure.
New non-cleared, over-the-counter derivatives margin rules under EMIR are aimed at reducing counterparty and credit risk.
Once implemented, all new derivatives trades will need to be backed by collateral in the form of initial and variation margin to cover the risk of a counterparty default.
The first phase of EMIR's margin rules rollout saw the US, Canada and Japan begin to utilise requirements in September 2016.
The Financial Stability Board first warned of the global market's inability to meet the deadline in August 2016, as part of its review of 24 markets' progress.
The review found that 10 countries were unlikely to be ready for implementation in the first half of 2017, while eight would not reach completion within the year.
Panellists declined to offer a prediction on when the deadline might be pushed back to.
A poll of conference delegates in Luxembourg found that, with just over a month to go until the European Market Infrastructure Regulation’s (EMIR) derivatives margin rules come into force, only 17.3 percent are ready for the deadline.
A further 35 percent said they are still putting their agreements into place, but had already completed their operational changes.
Another bank representative panellist agreed with the prediction of a delay and stated that the 17.3 percent result was a surprisingly positive figure.
New non-cleared, over-the-counter derivatives margin rules under EMIR are aimed at reducing counterparty and credit risk.
Once implemented, all new derivatives trades will need to be backed by collateral in the form of initial and variation margin to cover the risk of a counterparty default.
The first phase of EMIR's margin rules rollout saw the US, Canada and Japan begin to utilise requirements in September 2016.
The Financial Stability Board first warned of the global market's inability to meet the deadline in August 2016, as part of its review of 24 markets' progress.
The review found that 10 countries were unlikely to be ready for implementation in the first half of 2017, while eight would not reach completion within the year.
Panellists declined to offer a prediction on when the deadline might be pushed back to.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
