Associations support regulatory reform efforts
28 September 2018 Basel
Image: Shutterstock
The Associations support regulatory reform efforts and margin requirements for derivatives, it was cited in the Initial Margin Phase In Implementation Joint Trade Association Comments.
In accordance with the Basel Committee on bank supervision and international organisation of securities commissions, ‘final framework’ regulators have established standards for margin requirements for uncleared Margin Rules (UMR), to be phased in over time.
These requirements are a key aspect of the G20’s financial regulatory reform agenda covering the over-the-counter derivatives markets and market participants.
The Associations consist of: the International Swaps and Derivatives Association, the Securities Industry and Financial Markets Association, and the American Bankers Association.
The Global Foreign Exchange Division of the Global Financial Markets Association and the Institute of International Bankers are also part of the Associations.
The Associations urge regulators around the globe to address impending challenges associated with the final phases of UMR.
According to the associations, the final phases of the UMR implementation pose a substantial challenge for market participants, with diminishing policy benefits.
Without regulatory action, issues are likely to occur. Consequently, firms may be unable to meet the September 2020 deadline and may limit their access to the derivatives market.
The Associations recommend that global regulators modify UMR by recalibrating IM requirements to more appropriately address systemic risk.
It was also recommended that regulators should remove the burden to use globally approved IM Models.
Additionally, it was requested that global regulators clarify that the regulatory IM compliant documentation needn’t be required until counterparty’s regulatory IM calculation exceeds a certain sub-threshold.
In accordance with the Basel Committee on bank supervision and international organisation of securities commissions, ‘final framework’ regulators have established standards for margin requirements for uncleared Margin Rules (UMR), to be phased in over time.
These requirements are a key aspect of the G20’s financial regulatory reform agenda covering the over-the-counter derivatives markets and market participants.
The Associations consist of: the International Swaps and Derivatives Association, the Securities Industry and Financial Markets Association, and the American Bankers Association.
The Global Foreign Exchange Division of the Global Financial Markets Association and the Institute of International Bankers are also part of the Associations.
The Associations urge regulators around the globe to address impending challenges associated with the final phases of UMR.
According to the associations, the final phases of the UMR implementation pose a substantial challenge for market participants, with diminishing policy benefits.
Without regulatory action, issues are likely to occur. Consequently, firms may be unable to meet the September 2020 deadline and may limit their access to the derivatives market.
The Associations recommend that global regulators modify UMR by recalibrating IM requirements to more appropriately address systemic risk.
It was also recommended that regulators should remove the burden to use globally approved IM Models.
Additionally, it was requested that global regulators clarify that the regulatory IM compliant documentation needn’t be required until counterparty’s regulatory IM calculation exceeds a certain sub-threshold.
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
