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ARTICLE · 03 JANUARY 2018

Permanent Exemption From Variation Margin Obligation For FX Forwards?

Arendt & Medernach
Arendt & Medernach
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Earlier this week, ESAs published draft amendments to EMIR-related regulatory technical standards that align the treatment of variation margin for FX forwards with the supervisory guidance...

LuxembourgFinance and Banking
Daniel Petsch
Daniel Petsch
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Earlier this week, the European Supervisory Authorities (ESAs) published draft amendments to EMIR-related regulatory technical standards (RTS) that align the treatment of variation margin (VM) for FX forwards with the supervisory guidance applicable in other key jurisdictions. More specifically the draft amendments propose that the requirement to exchange VM for physically settled FX forwards shall only target transactions between institutions (credit institutions and investment firms).

The publication of the draft amendments follows on discussions at European level regarding a permanent exemption for certain counterparties entering into non-centrally cleared OTC derivatives from the obligation to exchange variation margin (VM), with the ESAs (EBA, ESMA and EIOPA) having published a statement in this respect back in November 2017. In this statement the ESAs announced that they would be working on new regulatory technical standards containing a permanent exemption for

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