European Commission Adopts Final Rules For Mitigating Risk In Non-Cleared OTC Derivatives Transactions

The European Commission published the final Regulatory Technical Standards ("RTS") on October 4, 2016, which moves the technical standards for the EU rules on margin for non-cleared OTC derivatives another step closer to the effective date.

The European Supervisory Authorities intended to reject several provisions of the European Commission's RTS draft, in particular, the relaxation of concentration limits on initial margins for pension funds. However, in its final RTS, the Commission reiterated the view that it is more appropriate to replace the concentration limits for pension funds with specific management risk tools to monitor potential risks (to be reviewed after three years of implementation).