By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Global securities regulator, the International Organisation of Securities Commissions (IOSCO) and Basel Committee on Banking Supervision said on Wednesday they have amended the framework for margin requirements for non-centrally cleared derivatives.
Both agencies said relative to the 2013 framework, the revisions delay the beginning of the phase-in period for collecting and posting initial margin on non-centrally cleared trades from 1 December 2015 to 1 September 2016.
“The full phase-in schedule has been adjusted to reflect this nine-month delay. The revisions also institute a six-month phase-in of the requirement to exchange variation margin, beginning 1 September 2016,” a statement from IOSCO, Basel Committee disclosed.
Both agencies say they will continue to monitor progress in implementation to ensure consistent implementation across products, jurisdictions and market participants. “The Basel Committee and IOSCO will also liaise with industry as market participants continue their work to develop initial margin models that will be required to comply with the margin requirements,” the statement said.
IOSCO, Basel Committee further affirmed that the engagement will help ensure that emerging quantitative initial margin models are consistent with the framework but will not provide an explicit review or approval of any initial margin model.
The framework was originally published in September 2013, after two (2) public consultations.
It affirmed that recognising the complexity of implementing the framework, the Basel Committee and IOSCO have agreed to (i) delay the implementation of requirements to exchange both initial margin and variation margin by nine months; and (ii) adopt a phase-in arrangement for the requirement to exchange variation margin.
“Consistent with their mandate, the Basel Committee and IOSCO will continue to monitor progress in implementation to ensure consistent implementation across products, jurisdictions and market participants. This includes monitoring domestic rule-making as well as considering guidance on the validation and backtesting of models for margining,” the statement added.
