ISDA CEO Scott O'Malia commended the Basel Committee on Banking Supervision and IOSCO ("BCBS-IOSCO") statement on the implementation of derivatives margin requirements and urged additional action. As previously covered, the BCBS-IOSCO statement addressed the implementation of derivatives margin requirements as they relate to (i) benchmark reforms and (ii) initial margin thresholds.
Mr. O'Malia commended the BCBS-IOSCO statement for addressing the potential application of documentation and other requirements where parties fall below the EUR 50 million threshold in the BCBS-IOSCO margin framework, but noted that the statement "is not a cure-all and raises many questions about its global application and duration." Mr. O'Malia said that the statement should go further to limit the need for non-systemically important firms to run relevant notional calculations to determine if they are within scope, and reiterated ISDA's view that the most appropriate solution would be to raise the trigger for the initial margin requirements above the current EUR 8 billion level.
Commentary / Nihal Patel
The BCBS-IOSCO statement is a helpful step, but many important margin implementation issues still require attention from regulators. (See prior commentary.)
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
